Lessons for U.S. in the Greek debt crisis
Commentator Todd Buchholz
TEXT OF COMMENTARY
Kai Ryssdal: Ever since the Greek debt crisis started brewing a couple of months ago, there have been comparisons to the U.S. How the European Union is having to bail out one of its member states, while there are some American states in just as much trouble as the Greeks.
Commentator Todd Buchholz says the analogy is more on the nose than we know.
Todd Buchholz: I'm trying to figure out the difference between California and Greece. Our coastal climate is Mediterranean. Our governor used to look like Hercules. Our public employees threaten strikes. And our finances smell like yesterday's fish haul.
Greeks must pay higher interest rates than Germans. And in Europe, it looks as if Germany and France will end up bailing out Greece. But who will bail out Californians? Texans?
California's jobless rate is 12.6 percent compared to just 8.2 for Texas. And it's not just a big state on the West Coast. Tiny states in the East like Rhode Island, hobbled with a budget gap nearly 25 percent of state GDP!
Here's the problem: States like Rhode Island, California, Massachusetts, New York and New Jersey have been chasing away private jobs and paying public union employees too much. Each year about 100,000 private workers in California pack up their woodies, strap surfboards to the roof and drive east into the desert where there's no ocean! It's "California, Here We Go!"
How do these states chase away jobs? Well, they all rank near the top for the highest tax rate.
Because public pensions are so large, in some states it seems as if half the people go to work each morning just to prop up the other half. And the public workers -- prison guards, teachers, nurses, asphalt repairmen -- are highly organized and brilliant at scare tactics.
In California, all Governor Schwarzenegger has to do is mumble through his cigar that we need to cut spending, and the radio airwaves buzz with slick commercials warning governor wants to pull the plug on grandma, fire great teachers and then give felons jobs as school playground monitors.
Schwarzenegger played Kindergarten Cop in the movies, but he's been under house arrest since he took office. Just like the rest of us in this golden state and in states throughout the U.S. that better learn some lessons from the fall of Greece.
RYSSDAL: Economist Todd Buchholz was an adviser to the first President Bush. His most recent book is called "New Ideas From Dead CEOs."