During this pandemic, Gov. Newsom of California has been ruling the state by executive decree (under highly questionable Constitutional authority) [0,0.1]. And he has been on a spending spree. Some of his more notable expenditures are listed below:
- 70,000 tablets were given to children [1,2].
- California is providing $125 million to undocumented immigrants as stimulus checks: $500 per person and up to $1000 per family.
- $50 million was spent on animal shelters to prevent euthanasia of dogs and cats in California [4,5].
- $750 million was spent on purchasing hotels and converting them to homeless shelters .
- $15 billion of federal disaster relief aid was spent, much of which has been allocated to counties .
One might consider each of the above purchases worthwhile. But, as any project manager or economist will tell you, a leader must succeed with the limited resources made available to him/her. In that sense, Newsom has failed. For, even though he entered the year with a $7 billion budget surplus, he has spent his way into a $54 billion budget deficit [11,12].
You might think that this was an unforeseen financial catastrophe and that there was no way to prepare for it. However, this would not be accurate. Although this particular cause of catastrophe could not be forseen, financial catastrophic events follow a power law . There’s always an unforseen catastrophic event that disrupts the economy! In my lifetime, I’ve seen the tech bubble burst, the bombings of September 11th, the housing market crash, and the Covid-19 pandemic. Moreover, the economy had been on a very tenuous tear for over 10 years, and already there were signs that it was faltering. For example, the Federal Reserve had begun inserting hundreds of billions of dollars into the overnight liquidity market before the pandemic . Newsom made no preparations for any significant downfall.
San Francisco has converted hotels into homeless shelters and has gone as far as providing homeless with methodone, alcohol, and cannibus . The state has not threatened to remove the city’s relief funding. Tulare county has gone against the Governor’s mandate to continue house arrest and business closures; in response, the state is threatening to withdraw approximately $50 million in funding to the county [9,10]. So, under Newsom, a county can use state funds to provide illicit drugs to its residents with impunity, but if it permits its residents to work (and generate taxes), it has its funding withdrawn.
Newsom released 3500 prisoners suspected of getting infected from Covid-19 from prisons against law enforcement advice [15,16]. Anyone on earth with any knowledge of game theory could have easily predicted what happened next. And yet, it was a total surprise to Newsom. In hopes that they too would get released, other prisoners began attempting to infect themselves . So, in response to his actions, prisoners with Covid-19 were released into the public and more prisoners were infected.
As a result of his unconstrained spending, the state is now heavily underwater. And so, additional loans and budget cuts are required.
- California became the first state to borrow from the Federal government to pay its unemployment benefits; Newsom borrowed $350M and opened a line of credit of $10B .
- Newsom is closing a Veteran’s home in Barstow to save $100,000 in the first year (and, ultimately, to save $14 million per year) .
- Newsom is cutting school budgets by $19B [19.1].
- California universities are having their funding reduced.
- All state employees will receive a 10% pay cut [19.2].
I am a postdoctoral scholar at UCSF. I saw, first hand, the awesomeness of the university as it transitioned its astounding abilities towards addressing the Covid-19 pandemic. Within two weeks, UCSF researchers had identified 69 available drugs that could address Covid-19 infection; one of them was Remesdivir . Two hospital wide clinical trials were underway to investigate the possible benefits of Remesdivir and Hydroxychloroquine . And, shortly after, a UCSF researcher developed a CRSPR based test for coronavirus infection with results in less than an hour .
We, the researchers at UCSF, have just been notified that Newsom is cutting our budget by at least 5% and we should prepare accordingly. Gov. Newsom is reducing funding to the public institution in California that has made significant strides towards developing a treatment and a test!
After spending all of the state’s money, including $16B in savings [22.1], and all of the Federal bailout money, Newsom is demanding more. Like an insolent teenager who has spent all of his/her allowance, Newsom is going to the Federal government and saying that they must give him more money . Indeed, he’s blaming Trump for all of the state’s woes. But Newsom’s spending shows that he’d rather give drugs to homeless and keep cats alive than house homeless veterans, permit people to work, and develop a treatment for Covid-19. The Federal government would be remiss to continue to fund such recklessness.
 Silver, Nate. The Signal and the Noise