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Dont let facts get in the way!
Posted: May 4, 2010
Assistant Police Chief Roy Bermudez shakes his head and smiles when he hears politicians and pundits declaring that Mexican cartel violence is overrunning his Arizona border town.
"We have not, thank God, witnessed any spillover violence from Mexico," Bermudez says emphatically. "You can look at the crime stats. I think Nogales, Arizona, is one of the safest places to live in all of America."
Clarence Dupnik, the sheriff of Pima County, said there always has been crime associated with smuggling in southern Arizona, but today's rhetoric does not seem to jibe with reality.
"This is a media-created event," Dupnik said. "I hear politicians on TV saying the border has gotten worse. Well, the fact of the matter is that the border has never been more secure."
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So...because the numbers of - sm
[ In Reply To ..]criminal activity have decreased somewhat....we should just forget about the numbers of criminal activity still being done. Oh yeah...that makes sense. (rolls eyes)
What don't you people get? ILLEGAL IS ILLEGAL!!!!
If you want to blind yourself to the criminal activity that is going on, fine...but just keep this in mind. We spend billions of dollars a year on illegals in our country. That is tax dollar money that illegals are paying into that are used for some of their housing, for all of their education, and all of their medical care. As a country, we cannot afford it.
The cost of illegals as well as the crime that comes from some of them....is enough for me to be for any enforcement of the federal law...which is what the AZ immigration bill is.
A big reason why California is bankrupt is because of the cost for illegals. How is this NOT a problem????
Could you post info on the expense? - I keep hearing
[ In Reply To ..]how the expense is bankrupting us yet I cannot find any info supporting this.
Here ya go - sm
[ In Reply To ..]Governor Arnold Schwarzenegger declared that the great state of California is in a fiscal emergency. At the time of the governor's declaration, the cumulative state deficit was estimated to be $14.5 billion dollars.
Since then, the Legislative Analysts Office has revised the deficit upwards to $16 billion. Clearly, California needs to rein-in its out-of-control spending, and do so quickly.
Until now, the governor and the legislature have all but ignored the fact that California spends as much as $10.5 billion a year on state-funded programs that support illegal aliens.
In other words, California taxpayers have been driven to bankruptcy by legislators who spend billions of dollars on people who should not even be in America, much less feeding at the public trough.
But this is the estimate by FAIR - check this FactCheck - on an email that
[ In Reply To ..]has been circulating since last year. It's kind of long, but reading the whole thing is pretty interesting. Also, I want to add that I'm not supporting any spending at all on illegals, just looking for a real amount for curiosity's sake.
Cost of Illegal Immigrants
April 6, 2009
Q: Do illegal immigrants cost $338.3 billion dollars a year? More than the Iraq war?
A: A chain e-mail that makes this claim is loaded with errors and misleading assertions. Published studies vary widely but put the cost to government at a small fraction of that total.
FULL QUESTION
I wonder if much of this is true? Is this on your radar screen?
This is astounding and infuriating. Why isnât this in the papers? Please read and pass it on.
⬠Click to expand/collapse the full text â¬
WHY ARE WE BANKRUPT?
Informative, and mind boggling!
You think the war in Iraq is costing us too much? Read this:
Boy am I confused. I have been hammered with the propaganda that it is the Iraq war and the war on terror that is bankrupting us.
I now find that to be RIDICULOUS.
I hope the following 14 reasons are forwarded over and over again until they are read so many times that the reader gets sick of reading them. I have included the URLâs for verification of all the following facts.
1. $11 Billion to $22 billion is spent on welfare to illegal aliens each year.
Verify at: http://tinyurl.com/zob77
2. $2.2 Billion dollars a year is spent on food assistance programs such as food stamps, WIC, and free school lunches for illegal aliens.
Verify at: http://www.cis..org/articles/2004/fiscalexec.html
3. $2.5 Billion dollars a year is spent on Medicaid for illegal aliens.
Verify at: http://www.cis..org/articles/2004/fiscalexec.html
4. $12 Billion dollars a year is spent on primary and secondary school education for children here illegally and they cannot speak a word of English!
Verify at: http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.0.html
5. $17 Billion dollars a year is spent for education for the American-born children of illegal aliens, known as anchor babies.
Verify at http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html
6. $3 Million Dollars a DAY is spent to incarcerate illegal aliens.
Verify at: http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html
7. 30% percent of all Federal Prison inmates are illegal aliens.
Verify at: http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html
8. $90 Billion Dollars a year is spent on illegal aliens for Welfare & social services by the American taxpayers.
Verify at: http://premium.cnn.com/TRANSCIPTS/0610/29/ldt.01.html
9. $200 Billion Dollars a year in suppressed American wages are caused by the illegal aliens.
Verify at: http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html
10. The illegal aliens in the United States have a crime rate thatâs two and a half times that of white non-illegal aliens. In particular, their children, are going to make a huge additional crime problem in the US
Verify at: http://transcripts.cnn.com/TRANSCRIPTS/0606/12/ldt.01.html
11. During the year of 2005 there were 4 to 10 MILLION illegal aliens that crossed our Southern Border also, as many as 19,500 illegal aliens from Terrorist Countries. Millions of pounds of drugs, cocaine, meth, heroin and marijuana, crossed into the U. S from the Southern border.
Verify at: Homeland Security Report: http://tinyurl.com/t9sht
12. The National Policy Institute, âestimated that the total cost of mass deportation would be between $206 and $230 billion or an average cost of between $41 and $46 billion annually over a five year period.â
Verify at: http://www.nationalpolicyinstitute.org/pdf/deportation.pdf
13. In 2006 illegal aliens sent home $45 BILLION in remittances back to their countries of origin.
Verify at: http://www.rense.com/general75/niht.htm
14. âThe Dark Side of Illegal Immigration: Nearly One Million Sex Crimes Committed by Illegal Immigrants In The United States.â
Verify at: http://www.drdsk.com/articleshtml
The total cost is a whopping $ 338.3 BILLION DOLLARS A YEAR AND IF YOUâRE LIKE ME HAVING TROUBLE UNDERSTANDING THIS AMOUNT OF MONEY; IT IS $338,300,000,000.00 WHICH WOULD BE ENOUGH TO STIMULATE THE ECONOMY FOR THE CITIZENS OF THIS COUNTRY.
Are we THAT stupid? YES, FOR LETTING THOSE IN THE U.S. CONGRESS GET AWAY WITH LETTING THIS HAPPEN YEAR AFTER YEAR!!!!!
If this doesnât bother you then just delete the message. If, on the other hand, if it does raise the hair on the back of your neck, I hope you forward it to every legal resident in the country including every representative in Washington, D.C. - five times a week for as long as it takes to restore some semblance of intelligence in our policies and enforcement thereof.
FULL ANSWER
This chain e-mail has been forwarded to us by readers many times over the past year. The most recent version adds a new angle, claiming that the amount of money taxpayers spend on illegal immigrants would be enough to "stimulate the economy." But no matter the spin, the e-mail is rife with errors.
It also contains several red flags that should tip off readers that this is more bogus than believable. For one thing, the figures given donât add up to a "whopping $338.3 billion dollars a year" spent on illegal immigrants in the U.S., as the e-mail claims.
The e-mail lists 14 claims about illegal immigrants, all of which were included in a longer list penned by anti-immigration activist Frosty Wooldridge and published on the conservative Web site NewswithViews.com on Jan. 22, 2007. Another NewswithViews columnist, Lynn Stuter, included Wooldridgeâs list, with some updated links, in an article posted on April 15, 2008.
The source cited for at least nine of the items is either the conservative Center for Immigration Studies (CIS) or the Federation for American Immigration Reform (FAIR), both of which call for more restrictive immigration laws. CIS spokesman Bryan Griffith told us that he had never seen the e-mail but that he suspected something was out there because of occasional surges in traffic that forced him to rewrite Web pages. When told about the e-mailâs contents and conclusion of a $338.3 billion yearly cost, he responded that CIS "never said anything of the like and is not going to comment on a chain e-mail that is in no way scientific."
The e-mail also continually blurs the important distinction between legal and illegal immigrants â a sign of sloppy and untrustworthy work.
Summary
Because weâre gluttons for punishment, weâve gone through each claim in turn and report on each in detail farther down. But here are a few highlights (or lowlights) of what we found:
The e-mail includes a link to a CIS report that contradicts some of the e-mailâs own claims. The report found that illegal immigrant welfare use "tends to be very low." It also estimates the total federal net cost of households headed by illegal immigrants at under $10.4 billion, a small fraction of what this message claims.
One "paper" that is cited is a non-peer-reviewed, non-scientific study that essentially fabricates a number for illegal immigrant criminals.
Five of the links lead to transcripts of Lou Dobbsâ cable television show, which fulminates regularly against illegal immigration and is hardly a neutral source. Furthermore, in all instances, the e-mail then takes the original Dobbs reporting out of context.
So, how much do illegal immigrants cost federal, state and local governments in the U.S.? Estimates vary widely, and no consensus exists. The Urban Institute put the net national cost at $1.9 billion in 1992; a Rice University professor, whose work the Urban Institute criticized, said it was $19.3 billion in 1993. More recently, a 2007 report by the nonpartisan Congressional Budget Office examined 29 reports on state and local costs published over 15 years in an attempt to answer this question. CBO concluded that most of the estimates determined that illegal immigrants impose a net cost to state and local governments but "that impact is most likely modest." CBO said "no agreement exists as to the size of, or even the best way of measuring, that cost on a national level."
The Details
For those who want more, we take on each of the e-mailâs claims in order:
1. "$11 Billion to $22 billion is spent on welfare to illegal aliens each year."
This item is completely false. The link given to "verify" the claim actually leads to an issue brief by the conservative Federation for American Immigration Reform. But the FAIR brief says nothing of the sort. It says: "Each year, state governments spend an estimated $11 billion to $22 billion to provide welfare to immigrants." Thatâs welfare payments in 2001 to all immigrants â both legal and illegal â plus households including U.S. citizens if they are headed by a person who was born outside the United States.
The site says the FAIR report was last updated in October 2002, but a footnote credits this statistic to a March 2003 report from the Center for Immigration Studies. CIS began as an off-shoot of FAIR. But the CIS report doesnât actually say anything about $11 billion or $22 billion. And it explains that its references to "immigrant households" include persons here legally and persons born outside the U.S.
CIS report: Like the Census Bureau, and other academic work that has examined this question, this report looks at welfare use by immigrant and native households. Households are defined as immigrant or native based on the nativity of the household head. As already indicated, this report uses the terms immigrant and foreign-born synonymously.
CIS estimated that welfare payments to illegal immigrant households averaged $1,040 per household in 2001, mainly Medicaid "on behalf of their U.S.-born children." But the report did not attempt to come up with a total for all such households.
2. "$2.2 Billion dollars a year is spent on food assistance programs such as food stamps, WIC, and free school lunches for illegal aliens."
3. "$2.5 Billion dollars a year is spent on Medicaid for illegal aliens."
These figures supposedly come from a 2004 report by CIS that estimated the costs to the federal government of households headed by illegal immigrants in 2002. But the CIS report actually put the costs of food stamp, WIC and free school lunch programs to "illegal alien households" at $1.9 billion, not the $2.2 billion claimed in the e-mail. The $2.5 billion figure for Medicaid to such households is quoted accurately, but again, much of this was in benefits for U.S.-born children, who are citizens.
Most interesting is that the CIS report includes a total net cost estimate to the federal government for illegal immigrants of just under $10.4 billion for the year, after accounting for the taxes these immigrants paid. That doesnât include any potential costs to state or local governments, but itâs a far cry from this e-mailâs cost claim of $338.3 billion.
CIS report: Households headed by illegal aliens imposed more than $26.3 billion in costs on the federal government in 2002 and paid only $16 billion in taxes, creating a net fiscal deficit of almost $10.4 billion, or $2,700 per illegal household.
Even CISâ figures have been questioned by other researchers. The Urban Institute reviewed a related 2003 CIS paper and concluded that its "methods overstate the percentage of the population receiving Medicaid and the share of immigrants on Medicaid, resulting in misleading conclusions about welfare use among immigrants."
Even so, the CIS report actually rebuts claims repeated by this chain e-mail:
CIS: Our findings show that many of the preconceived notions about the fiscal impact of illegal households turn out to be inaccurate. In terms of welfare use, receipt of cash assistance programs tends to be very low, while Medicaid use, though significant, is still less than for other households. Only use of food assistance programs is significantly higher than that of the rest of the population. Also, contrary to the perceptions that illegal aliens donât pay payroll taxes, we estimate that more than half of illegals work âon the books.â
4. "$12 Billion dollars a year is spent on primary and secondary school education for children here illegally and they cannot speak a word of English!"
5."$17 Billion dollars a year is spent for education for the American-born children of illegal aliens, known as anchor babies."
Both links given to "verify" these claims lead to an April 1, 2006, episode of "Lou Dobbs Tonight" on CNN. During the show, correspondent Christine Romans cited both of these stats and attributed them to FAIR. A FAIR research paper from 2005 does include these cost projections, but a closer look shows that the underlying assumptions are inflated or unsupported.
The FAIR report starts with the presumption that there are "1.5 million school-aged illegal immigrants residing in the United States." That figure is attributed to an Urban Institute presentation that doesnât actually say that. Instead, the Urban Institute said: "We estimate that there are about 1.4 million undocumented children under 18 with about 1.1 million of school age (5 -19)."
The FAIR report also assumes there are 2 million "U.S.-born siblings" of illegal immigrant families. However, the Urban Institute makes no estimates of U.S.-born siblings and FAIR gives no citation for its figure. And in any case, again, those U.S.-born children of illegal immigrants are themselves U.S. citizens and not "illegal aliens."
6. "$3 Million Dollars a DAY is spent to incarcerate illegal aliens."
7. "30% percent of all Federal Prison inmates are illegal aliens."
Both of these claims can be traced back to that same April 1, 2006, episode of "Lou Dobbs Tonight" on CNN, in the same segment, with the same correspondent, Christine Romans. But the e-mail misrepresents what Romans said. She gave figures for people who are "not U.S. citizens," a category that would include legal residents as well as "illegal aliens."
Romans said that "according to the Federal Bureau of Prisons, 30 percent of federal prisoners are not U.S. citizens," adding that "most are thought to be illegal aliens." Actually, the Federal Bureau of Prisons does not keep figures on illegal immigrants. What solid numbers we can find point to a much smaller figure. A Department of Justice report from 2003 found that only 1.6 percent of the state and federal prison populations was under Immigration and Customs Enforcement jurisdiction, and thus known to be illegal immigrants. Half of these prisoners were detained only because they were here illegally, not for other crimes.
The Bureau of Prisons does track prisoners by offense when information is available. By that metric, 10.7 percent of prisoners in federal jails were incarcerated for immigration offenses in 2009. In 2006, when Romans gave her report, the figure was 10.2 percent.
The "$3 million dollar a day" figure is based on the false assumption that 30 percent of all inmates are illegal immigrants, and thus is greatly inflated.
8. "$90 Billion Dollars a year is spent on illegal aliens for Welfare & social services by the American taxpayers."
The link to "verify" this claim is dead. However, we found a transcript of a Lou Dobbs episode on Oct. 29, 2006, in which Robert Rector of the conservative Heritage Foundation made the following statement:
Robert Rector, Oct. 29, 2006: Well, assuming that we have about 11 million immigrants in the U.S., the net cost or the total cost of services and benefits provided to them, education, welfare, general social services would be about $90 billion a year, and they would pay very little in taxes. Itâs important to remember that at least half of illegal immigrants are high school dropouts.
We checked with Rector, who said he was referring to both legal and illegal low-skill immigrant households (those headed by someone who doesnât have a high school diploma). His research also looked at many forms of government spending per household, including money spent on parks and transportation.
9. "$200 Billion Dollars a year in suppressed American wages are caused by the illegal aliens."
Again, this is from that same April 1, 2006, Lou Dobbs episode. On the show, Dobbs said that "estimates by the most authoritative and recent study put the suppressed wages at $200 billion a year, as a result of immigration, both legal and illegal." The e-mail continues its practice of ignoring any distinction between legal and illegal immigration.
We couldnât find any study that supported Dobbâs figure.
10. "The illegal aliens in the United States have a crime rate thatâs two and a half times that of white non-illegal aliens. In particular, their children, are going to make a huge additional crime problem in the US"
This is false. The "verify" link leads to yet another transcript of Lou Dobbs speaking with Robert Rector of the Heritage Foundation. This one is dated June 12, 2006, and Rector says, "Hispanics in the United States have a crime rate thatâs two and a half times that of white non-Hispanics."
Rector said Hispanics, not illegal immigrants, as the e-mail alleges. Considering there are 45.4 million Hispanics in the country, and an estimated 11.9 million illegal immigrants, the distinction is notable. Rectorâs statistic for all Hispanics is correct, according to a 2003 report from the Justice Department.
11. " During the year of 2005 there were 4 to 10 MILLION illegal aliens that crossed our Southern Border also, as many as 19,500 illegal aliens from Terrorist Countries. Millions of pounds of drugs, cocaine, meth, heroin and marijuana, crossed into the U. S from the Southern border. "
The link goes to a 2006 report written by the Republican staff of the House Subcommittee on Investigations of the Committee on Homeland Security. To start, the "19,500" number of "illegal aliens from Terrorist Countries" is nowhere to be found in this report. In fact, the report estimates the number of illegal immigrants coming over the southern border from countries known to harbor terrorists to be in the "hundreds." Weâve seen a similar scare tactic used previously in ads advocating for a border fence.
And the 4 million to 10 million statistic is extrapolated using some imprecise reasoning. The committee report figures that since "Border Patrol apprehended approximately 1.2 million illegal aliens" in 2005 and since "Federal law enforcement estimates that 10 percent to 30 percent of illegal aliens are actually apprehended," that "therefore, in 2005, as many as 10 to 4 million [sic] illegal aliens crossed into the United States." That simplistic math produces a figure starkly different from more widely accepted estimates. The Pew Hispanic Center estimated that in 2005 there were 11.1 million illegal immigrants total, living in the United States. The center also estimated that about 500,000 illegal immigrants a year came to the U.S. from 2005 to 2008.
12. "The National Policy Institute, âestimated that the total cost of mass deportation would be between $206 and $230 billion or an average cost of between $41 and $46 billion annually over a five year period.â "
No, it didnât. The National Policy Institute, a group that says it promotes the rights of "white Americans," ironically was citing figures from the liberal Center for American Progress in a report that argued against mass deportation of undocumented workers. CAP said such deportation would cost more per year than the entire Department of Homeland Security budget, illustrating "the false allure of deportation as a response to our broken immigration system."
13. "In 2006 illegal aliens sent home $45 BILLION in remittances back to their countries of origin."
This is another bogus figure. The emailâs link leads to the original Frosty Wooldridge article, which in turn cites as its source for this figure a link to a Contra-Costa Times article, which is no longer working. Nevertheless, we were able to find a news release from the Inter-American Development Bank stating Latin American immigrants sent $45 billion in remittances in 2006. But that figure applies to all immigrants, including legal residents.
14. "The Dark Side of Illegal Immigration: Nearly One Million Sex Crimes Committed by Illegal Immigrants In The United States."
Once again, the "verify" link is dead. But a little Internet research found the article cited. An independently published, non-peer-reviewed study did estimate that nearly a million sex crimes have been committed by illegal immigrants over a seven-year period, but it employs some highly creative math and interesting assumptions to get there. The "study" is actually a pretty good case study in bad research.
The author assumes that 2 percent of illegal immigrants are sex offenders after "examining ICE reports and public records," but does not say how that figure was calculated. A bibliography cites miscellaneous Immigration and Customs Enforcement press releases and media accounts of instances of apprehending illegal immigrants who were sex offenders (seemingly manufacturing a "rate" based on anecdotal evidence). The author then makes no distinction between male and female illegal immigrants when estimating the number that are "sex offenders."
As weâve said before, anonymous chain e-mails making dramatic claims are quite likely to be false. And that goes even for those that may seem to cite legitimate sources. This one is yet another good candidate for the "delete" key.
â Justin Bank
Sources
Steven A. Camarota, âBack Where We Started: An Examination of Trends in Immigrant Welfare Use Since Welfare Reform,â Center for Immigration Studies, March 2003.
Camarota, Steven A., "The High Cost of Cheap Labor: Illegal Immigration and the Federal Budget," Center for Immigration Studies, August 2004.
Immigration and Welfare," Federation for American Immigration Reform, Oct 2002.
A Line in the Sand: Confronting the Threat at the Southwest Border," prepared by the Majority Staff of House Committee on Homeland Security, Subcommittee on Investigations, Nov 2006.
Goyle, Rajeev, "Deporting the Undocumented: A Cost Assessment," Center for American Progress. 26 July 2005.
Sending Money Home: Leveraging the Development Impact of Remittances," Inter-American Development Bank. 18 Oct 2006.
Schurman-Kauflin, Dr. Deborah, "The Dark Side of Illegal Immigration: Nearly One Million Sex Crimes Committed by Illegal Immigrants in the United States," Violent Crimes Institute, 2006.
Martin, Jack, "Breaking the Piggy Bank: How Illegal Immigration is Sending Schools Into the Red," Federation for American Immigration Reform. June 2005.
Fix, Michael and Passel, Jeffrey, "U.S. ImmigrationâTrends and Implications for Schools," Immigration Studies Program, The Urban Institute, 2003.
"Estimates of the Unauthorized Immigrant Population Residing in the United States: 1990-2000," Office of Policy Planning, U.S. Immigration and Naturalization Service, January 2003.
"Table 169, Current Expenditure Per Pupil in Fall Enrollment in Public Elementary and Secondary Schools, by State: 1969-70 to 1999-00," Digest of Education Statistics 2002, National Center for Education Statistics, U.S. Department of Education.
Cali going bankrupt - see message
[ In Reply To ..]"Why is California bankrupt??
California is going bankrupt because of Teacher's UNION pension funds and welfare!
http://www.realclearmarkets.com/arti...nia_go_ba.html
Should We Let California Go Bankrupt?
By Steven Malanga
A New York Times story about the budget deal that California legislators struck last week to close the stateâs monstrous deficit noted that, âCalifornia is an example of what you will see across the countryâ as state budgets come under pressure from the declining economy.
Hardly. While many states are grappling with budget problems, none are nearly as large as Californiaâs relative to its size--$41 billion in a state of 37 million, or $1,108 per resident. Even New York, the next most fiscally pressed state, clocks in with a mere $13 billion for 19 million residents, or $685 per capita.
Thereâs good reason why most states wonât fall down the fiscal black hole where California now dwells. This is a state whose politicians, public sector unions and advocacy groups have been living in a fantasy world of overspending, investment-deadening taxation and job-killing regulation. Looking out over the stateâs prospects and examining the budget deal that legislators have put together (jerry-rigged as it is with revenue gimmicks and unrealistic projections), the only question is who will be begging Washington for more money sooner, the banks, the auto companies or the Terminator?
The similarities between California and the auto companies are especially striking. Neither can afford their workforce. California schools pay their employees 35 percent more on average in wages and benefits than the national average (17 percent more when adjusted for the stateâs higher standard of living), a significant bite because the state funds much of local education (to the tune of $42 billion last year). Benefits are a big part of these costs. A public employee in California with 30 years of service can already retire at 55 with more than half of his salary as pension, and public-safety workers can get 90 percent of their salary at age 50.
Another budget buster is Californiaâs spending on social services, clocking in at about 70 percent more per capita than the national average. Leading the way is state spending on cash assistance programs (that is, welfare), where the state expends nearly three times more per resident than other states. Thereâs a good reason for this rich budget. Californiaâs legislature has only reluctantly embraced federal welfare reform, and for years the state has had one of the worst records in moving people from welfare to work because state law limits the ability of welfare administrators to sanction those who refuse to participate in work programs.
The rich program of social service benefits is also burdensome because of the stateâs large low-wage immigrant population. As Milton Friedman observed in the mid-1990s, you canât have porous borders and a welfare state. The incentives are all wrong. California has become a case-study in that notion. A report by economists working for the National Academy of Sciences in the mid-1990s concluded that the average native-born California household paid about $1,100 in additional taxes because of government services used by immigrants whose own taxes donât come close to covering their cost to society. It would be very interesting to see what the numbers are today.
But California doesnât just have a spending problem. Increasingly it also has economic and revenue problems. Even as I write this other neighboring states are running ads in local newspapers inviting California businesses to move their headquarters out of the state. Thatâs advertising money well spent. A poll of business executives conducted last year by Development Counsellors International, which advises companies on where to locate their facilities, tabbed California as the worst state to do business in.
There are a host of reasons why California has become toxic to business, ranging from the highest personal income tax rate in the country (small business owners are especially hard hit by PITs), to an environmental regulatory regime that has made electricity so expensive businesses simply canât compete in California. That is one reason why even California-based businesses are expanding elsewhere, from Google, which built a server farm in Oregon, to Intel, which opened a $3 billion factory for producing microprocessors outside of Phoenix.
In the race for the exits, residents are accompanying businesses. In just one decade California made a remarkable turnabout, going from a state with one of the highest levels of net in-migration to the state with the second highest level of domestic net out-migration. Typically people either head for the exits because they are seeking more economic opportunity or because they are being driven out by high housing costs. You get a little bit of both in California because the stateâs zoning regulatory schemes keep housing production artificially low and housing prices high even in a mediocre economy.
As the economist Randall OâToole points out in his study of housing restrictions, The Planning Penalty, âThanks to a variety of land-use restrictions, California suffers from the least affordable housing in the nation.â The planning penalty, OâToole estimates, adds from $70,000 to $230,000 to the cost of a home in the Central Valley, $300,000 to $400,000 in Southern California, and $400,000 to $850,000 in the San Francisco Bay area because in California, 95 percent of the population lives on just 5 percent of the land. âThe problem is supply, not demand,â OâToole observes. âAustin, Atlanta and Raleigh are growing faster than California cities, yet have maintained affordable housing.â
In the last decade, people tried to solve the problem of how to afford expensive housing in California with fancy mortgage products, one reason why the state topped the nation with 523,624 foreclosures last year.
California politicians have been expert at avoiding dealing with these problems. In 2003, enraged citizens recalled Gov. Gray Davis after he announced an impending $38 billion budget deficit. Arnold Schwarzenegger promised reform but delivered only a year of it. When tax revenues spiked in the national economic recovery that started in 2004, California politicians went on another spending spree, increasing expenditures by $34 billion, or 32 percent, in just four years before revenues slumped again.
Then the California legislature wrangled for eight months over the current budget mess, forcing the government to shut down road projects and delay tax refunds because the state needed the extra cash to service its debt. While California technically canât file for bankruptcy, a default on its debt would have shut down financing options for Sacramento and its municipalities until the state agreed to lendersâ demands that it get its fiscal house in order. At least one of the stateâs municipalities, Vallejo, has already filed for bankruptcy and other cities and towns were on the brink before the budget compromise.
Californiaâs budget problems arenât going away this time. There is no housing boom (or bubble) about to inflate, as it did in 2004, to help burnish the stateâs economy, where the unemployment rate is now 9.3 percent, or two full percentage points above the national average. The current budget is only precariously balanced with revenue projections that the state probably wonât meet, and with fiscal gimmicks. And much of the federal stimulus money is geared to spending that increases the size of programs rather than fills in current deficits.
In other words, expect the Golden State to be in desperate need of a bailout soon, one that will certainly gain a receptive ear in the White House because Washington canât conceive of our largest state defaulting on its debt, even though the prospect has now sunk Californiaâs bond rating lower even than Louisianaâs.
But also expect Washington to take some heat if it simply bail outs out California, especially now that we have governors like Mark Sanford of South Carolina pointing out that the federal aid to states amounts to a subsidy by citizens of fiscally responsible governments to states where legislators have chucked responsibility out the window.
Back in the 1970s, New York City was on the verge of bankruptcy and despite a famous headline (Ford to City: Drop Dead), both the feds and New York State eventually bailed out Gotham, but under strict conditions. They imposed a financial control board which required demanding cuts to services, a new, more transparent budget process and several years of budgetary oversight. Maybe what Washington should impose on California will be a national version of a financial control board to shake some sense into state legislators.
Otherwise, we can always allow the state to default on debt and let its lenders start dictating the terms of Californiaâs budget reforms. Go ahead, California, make my day.
Obama is the mistake Americans will never forget!!"
Please answer me this.... - sm
[ In Reply To ..]If illegal immigrants are so beneficial to our country, then why isn't California raking in the money since they have the highest number of illegals in their state? Instead..the state is bankrupt and the cost of education and healthcare for illegals is substantial. How can you NOT see this as a problem?
Answer me this....where did I say it wasn't a problem? - ?
[ In Reply To ..]?????????????
Can't have it both ways. - sm
[ In Reply To ..]You sympathize with illegals. You want proof that illegals cost CA money. Then you turn around and say that you didn't say it WASN'T a problem.
You can't have it both ways here. You are either against tax payer dollars spent on illegals or you are for illegals.
You are assuming that since I could not find information on - illegals bankrupting
[ In Reply To ..]us, and asked for some that I sympathize with illegals and want to spend my money on them? Wow, wanting the real facts gets you a reputation around here pretty easily. lol.
Some of people aren't interested in facts. - sm
[ In Reply To ..]The moment you are given facts, you completely ignore them or refuse to take them as actual facts.
The fact of the matter is that illegals in CA have contributed to the bankrupting of CA.
LOL! You're a hoot. Guess you don't need any details or - supporting info
[ In Reply To ..]as long as it suits you huh? Not everyone has a motto of if it sounds good, believe it, no details necessary as you do.
Isn't that the whole basis of the crat party? - sm
[ In Reply To ..]Don't see what Obama does, just listen to his lies and believe him blindly.
Oh, I didn't know you were a crat. Well, doesn't matter - anyway
[ In Reply To ..]It's not good to assume as you have done. It's just ridiculous. I asked for supporting info and you ASSUMED big time. You're wrong.
If I am wrong on the money spent on illegals, - sm
[ In Reply To ..]show me factual documents with an amount then that proves me wrong. If you wanna play the fact game. Every time a number is presented...someone knocks it down as not good enough to be factual. So it is your turn....how much do we spend on illegals then.
What is the matter? I said you are wrong for assuming! - What
[ In Reply To ..]is so difficult for you to understand about that? I asked for information and you ASSUMED that I support illegal immigration. I DO NOT. Can't you get this through your head?
Asking for facts DOES IN NO WAY support your notion.
Didn't say YOU were a crat - sm
[ In Reply To ..]Just made an observation that that is how the crats roll.
Oh yes, let's not let the facts get in the way ... one or two possible counties (sm) - anonMT
[ In Reply To ..]out of possible thousands along the border are not reporting increased violence and yet there are many others out there that are.
What happened to the fact that we have laws that are being broken? These people are entering illegally ... look up the definition please, they are breaking our laws. Not all are stealing SSNs, drivers licenses, etc., to obtain jobs but a good majority are, again, breaking the law! Should we continue to turn the other cheek and let it happen? Should we just become a lawless country because in essence that is what you are indicating.
Maybe we could place the onus on the EMPLOYERS (sm) - Nikki
[ In Reply To ..]that hire these illegals for slave wages. Why do they get away with what they're doing?
As long as the illegals know they can get work from the slave drivers in this country, they will keep coming.
I believe that going after employers of - sm
[ In Reply To ..]illegals should be held accountable as well. If we do away with jobs for illegals and free govt handouts...they would no reason to come here in such large quantities.
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