Stanford University’s pension tracker database pegs the market value of California’s total pension debt at $1 trillion or $93,000 per California household in 2015, that is up from $77,700 in 2014. They are underfunded by one trillion dollars.
The pension fund investments are at or below zero percent annually. Of all fifty states, California has the second highest pension debt. Alaska’s was higher at $110,538 though for different reasons.
These bubbles can be seen throughout the country.
They will blow up eventually,
Underfunding in California has grown 157% in 8 years and part of the problem is the low discount rates which artificially keep the economy from blowing up.
A profligate state like California, has failed to reduce the growth in its spending and continues to face sizeable deficit and accumulate debt. Gov. Brown predicts a $4 billion dollar deficit by the summer of 2020.
Lawmakers in California and Illinois have proposed tax increases to offset revenue shortfalls. Rather than pay down existing debt, they use the increased revenue to fund additional government spending like fat pigs at a troth.
Higher tax states discourage long-term economic growth compared to lower tax states. Because they require more money to meet their more expensive budgets, they have become increasingly dependent on federal transfers. Much of that federal money is used to fund entitlement programs such as Medicaid, which allows states to get more than a dollar in federal money for every dollar they spend. It doubled in 2012 alone.
There is a high probability that state pension funds will not be able to meet their massive, growing obligations. When that occurs, states such as California and Illinois—which have already accumulated hundreds of billions of dollars in debt in their retiree pension and health care programs—will not be able to bailout these failed plans.
California continues to be a leader in poverty, host to massive numbers of poor illegal immigrants and champion of the welfare state. It’s not likely to change any time soon.
California now a Democrat Socialist state has a depressed economy with one-party dominance which is a direct outgrowth of liberal policies and massive illegal immigration. A few areas, mostly in the Bay Area’s technology industry, are doing well, but the job-growth rate is mediocre, the unemployment rate is 10th highest, and underemployment rate is third highest. California is Number 1 in poverty with nearly a quarter of Californians impoverished.
In 2012, The Wall Street Journal called California’s dive into a welfare fiefdom nothing less than a Greek Tragedy:
California’s rising standards of living and outstanding public schools and universities once attracted millions seeking upward economic mobility. But then something went radically wrong as California legislatures and governors built a welfare state on high tax rates, liberal entitlement benefits, and excessive regulation. The results, though predictable, are nonetheless striking. From the mid-1980s to 2005, California’s population grew by 10 million, while Medicaid recipients soared by seven million; tax filers paying income taxes rose by just 150,000; and the prison population swelled by 115,000.
Conditions in some areas of the state “are like a third-world country” due to the multi-year megadrought. There is no backup plan.
The state is victim to wildfires, mudslides, high taxes, crime, gang violence, traffic, wildly extreme political correctness, and a nightmarish business environment.
When California experiences a resurgence, Democrats demand an increase in spending for social programs for the poor which only serves to increase the number of poor.
The pressure is on to increase anti-poverty welfare programs and even the GOP doesn’t resist as long as taxes are raised to pay for them. California’s governor welcomed illegal immigrants to the state and he has made it possible for them to receive a free college education and he wants them to have free healthcare, something else the citizens will have to pay for.
Californians, including the economic immigrants, would prefer a good job and affordable housing to a bigger government-assistance check but Democrats have no idea how to make that happen.
Victor Davis Hanson warned of the coming apocalypse and chronicled California’s putrefaction into a welfare state.
“What happened in California is spreading throughout the nation. Liberals will say it’s because the GOP was booted out due to their unwelcoming nature but the GOP can’t welcome a welfare state and still remain the GOP. A welfare state is inconsistent with the values of our nation and what once made us great but Barack Obama and his Socialist ilk are telling us what our values now.”
Maybe Calexit isn’t such a bad idea. With the fifth largest economy, they could take us all down.