by Brandon Smith, Alt Market:
This past week California governor Gavin Newsom appeared on Fox News to debate Sean Hannity about the policies and governance of the “Golden State” as well as its obvious cultural and economic decline. To be clear, I don’t care for Hannity and obviously I find Newsom to be a reprehensible little weasel of a man, so I don’t really have a stake in which side comes out on top. That said, the interview/dispute is being heralded by the political left as a “win” for Newsom as they claim he “destroyed” Hannity on his own show.
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I have to examine this kind of rhetoric with some amusement because generally leftists don’t view debates the same way normal people do. They don’t care about being factually correct, they only care about winning by any means necessary. And winning can and often does include lying or misrepresenting statistics to confuse or deflect their opposition. Hannity just didn’t come prepared for the flurry of disinformation and cherry-picked data Newsom was armed with.
Democrats and the corporate media in general have invested an intense amount of energy into a propaganda campaign that paints California as the central pillar of the US economy and American governance. According to them, California is a socialist Utopia essentially holding the rest of the nation up on its shoulders, and without such blue states we would spiral into oblivion.
For the sake of focus, I will only break down California’s mismanagement here. Specifically, I think it’s important to debunk many of the false fiscal claims made by Gavin Newsom; the same claims which are spreading like a cancer into leftist talking points all over the internet. Let’s begin, shall we?
Lie #1: High Tax Blue States Like California Subsidize Red States
This argument is false for a number of reason, but let’s start with how Democrats present the claim – They argue that red states are among the top states receiving federal welfare dollars and subsidies, and that blue states like California are paying high taxes into those subsidies. This is why you will often hear leftists say that “red states would not be able to survive without blue states.”
Here’s why this is nonsense – Out of the top ten most indebted states in the US, seven of them are Democrat controlled. California has the most debt by FAR with $519 billion in the red, around 60% more debt than New York and Texas which are #2 and #3 on the list. California also anticipates a $32 billion deficit in 2023. The state does not have the funds to support itself, let alone red states.
The bottom line? California takes far more money from the federal government that they pay out.
As of the most recent tax year for which figures are available, Californians paid $234 billion in federal income taxes. However, the state has already been allotted over $390 billion in funds from the federal government so far in 2023 and the year is only half done. Not only that, but CA took even MORE federal money from 2020 – 2022 ($400 billion to $500 billion) each year. Meaning, on average, CA is taking around $150-$200 billion more in federal money than it pays back in federal taxes every year.
Gavin Newsom often brags about California’s amazing budget surplus during covid, but the reality is that all of that cash was fed to the state by the federal government and the federal reserve printing press. For example, California defaulted on almost $19 billion in unemployment debt during their lockdowns, which they then had to borrow from the federal government to cover. They then passed that debt on to struggling business owners, forcing them to shoulder the burden through extra taxation while Newsom expanded deficit spending.
To be sure other states had to take federal funds as well to avoid unemployment default, many of them Democrat controlled because of their pointless extended mandates and business closures. Most states are in the hole when it comes to federal cash. But, the fact remains that California is a money pit; a prostitute for federal funds that creates exponential debt while leaching far more than their fair share. Blue states like California don’t foot the bill for red states. They can’t, because they are broke.
Lie #2: California’s GDP Is So Large That It Debunks All Economic Criticism
This was one of Newsom’s primary responses to Hannity during their debate over California’s decline – California has the 4th largest GDP in the world (over $3 trillion), therefore no criticism of its economy is valid. With that in mind, I’m going to tell you one of the biggest open secrets about how states like California, the federal government and the federal reserve calculate GDP:
They count a majority of government spending towards total GDP.
Yes, that’s right, California takes large amounts of tax dollars from citizens, takes hundreds of billions of dollars from the federal government, spends it all on numerous programs from welfare, to student loans to medicare/medicaid, then adds it all to their total GDP as if the government actually produces something other than debt.
