California’s Debt “Problem” Isn’t Really A Problem

Thanks to Mário De Sá Campos

Much has been made about California’s debt as one of the hurdles we’ll face in becoming an independent nation. But a closer look at the numbers really brings that obstacle down to size.

  • California’s debt is around $400B.
  • But California’s GDP is $2.5T ($2,500B) and accounts for 1/8 of the overall GDP of the USA.
  • We have a budget of $160B with a budget surplus of $2.8B.

In contrast, the US is almost $20T in debt with a GDP of $18.7T, a budget of $3.8T with a budget deficit of $0.5T. So California’s debt is less than 20% of our GDP while the US has a debt greater than 100% of GDP.

In 2012, the last year which all the information is available, $59B of California’s taxes went directly to other states. And that’s just one year out of many since the 1980s when California paid much more to the federal government than we received. So it bears mentioning that our debt wouldn’t even be close to where it is if we weren’t constantly subsidizing other states over the past 30+ years and forcing ourselves to borrow against our own future.

California is one of 50 states, yet, as mentioned above, we provide 1/8 of the GDP of the USA. And for that distinction we’re rewarded with being treated like a piggy bank to subsidize many other states while having our voting power watered down to a fraction of theirs. We can do better.