The American Spectator : Our Very Own Greece-California

The American Spectator : Our Very Own Greece

The major difference is that California has an even bigger budget deficit than its Balkan cousin.

Stock, commodity, and currency markets have been on a roller-coaster ride in recent days as Greece's election results leave that nation without a functioning government, and without a clear path toward staying in the euro currency.

The right answer, albeit a very painful one, may be for Greece to take their medicine and leave the euro, and for Europe to stop bailing out a dysfunctional country that can never be competitive without a less expensive currency. Wednesday marked an all-time low in the Greek stock market.

More important, however, and where few Americans seem to be looking, is our very own Greece: California.

Since California doesn't have the option of seceding from the union, one wonders when the state will ask the IMF for a Greek-style bailout.

California's economy, with a Gross State Product of about $1.9 trillion, is more than six times the size of Greece's. At $90 billion, the state's budget (excluding the few hundred billion dollars of federal money distributed there) is only sixty percent of the size of Greece's national budget. But, California's budget deficit, estimated at $16 billion for the current fiscal year unless substantial changes are made, represents a stunning 17.5 percent shortfall and a huge miss from January predictions of a $9.2 billion deficit. Greece is now anticipating a deficit under 7 percent of GDP, but even allowing for typical politician optimism, the Greek deficit problem is arguably small compared to California's.

While both places are full of union members and socialists (pardon my redundancy) focused on preventing cuts in government spending, California does have one advantage: it is not full of people who make a full-time job of tax evasion as is the case in Greece. According to a fascinating article on the subject, "the gap between what Greek taxpayers owed last year and what they paid was about a third of total tax revenue, roughly the size of the country's budget deficit."