Written By Will Seykora
As the deadline to pass a budget quickly comes into view, the state legislature has agreed on a budget nearly mirroring Newsom’s proposed budget. With millions being poured into programs like Cal Grant and Cal Fresh, Californians are left wondering where this money is coming from. The governor has reassured Californians that the money is coming from a $70 billion surplus, however, he fails to mention that the state is over $20 billion in debt to the federal government.
Despite what it may look like, this debt is not the result of modern-day economic policy. The reason for this debt can be traced back to Governor Gray Davis, the last California Governor to be recalled, who bowed to the pressure of labor unions and increased unemployment benefits while not increasing payroll taxes to pay for those benefits. When the lockdowns were first put in place in March of 2020, California’s unemployment skyrocketed. This led to the inevitable reality that we are facing now, California is billions in debt to the federal government with no suggestions as to how to pay back this debt.
Newsom has the idea to spend $1.1 billion to start paying back the debt however President of the Business Roundtable points out the glaring flaws in this plan. He says “The massive debt is a looming threat for every business in California. If unaddressed, the debt will lead to an automatic tax increase on every business in the state at a time when they can least afford it.” He continues by saying “Businesses did not cause this recession and should not bear the burden of paying off this massive debt,”
We all know that Newsom is a fan of new taxes however with a recall election on the horizon there’s no doubt that he would rather let this debt continue to burden the state in hopes of saving face until the recall passes.
No matter what happens with the recall election this debt is going to be something Californians are burdened with until the State finds a way to pay this back with money from State pockets, not taxpayers.
