California vs Trump

On election day, Californians favored Hillary Clinton over Donald Trump by a near 2 to 1 margin — 61.7 percent to 31.6 percent.  Now, faced with a President many of us detest, California’s best stance is to become a model of Democratic principles.  But the Golden State faces intriguing challenges.

California is not an independent state; we’re not going to be able to secede from the union.  Nonetheless, we are the 6th largest economy in the world and Trump is not going to be able to ignore us.

California can have the most impact on the national political environment by demonstrating that the best way to grow good jobs and provide a healthy democratic environment is by a judicious combination of taxes and regulation.  The Golden State can serve as a vital alternative to the Republican model: minuscule corporate taxes and zero governmental oversight, which has turned states like Louisiana into sewer pits with deplorable public health, while failing to create the promised jobs.

On November 8th, Trump prevailed because many Americans believed that he, rather than Clinton, would create good jobs.  At this writing, Trump’s jobs program is a composite of an ill-defined effort to rebuild America’s crumbling infrastructure, threats to force manufacturers to “make it in America,” and, primarily, tax cuts and deregulation.  The Trump infrastructure plan will probably bog down in Congress, where GOP “deficit hawks” are understandably wary of a trillion-dollar unfunded initiative. Meanwhile, California has its own $12 billion  infrastructure initiative to modernize our water-distribution system.

Obviously, corporate tax cuts would benefit all US companies not just those in California.  However, threats to “make it in America” could have a major impact on California technology companies such as Hewlett-Packard and Apple.  Both corporations have a substantial overseas manufacturing presence.  If Trump took steps to ensure that final assembly of  most products was done in the U.S., his actions could have major consequences for California corporations — for example, the Apple iPhone contains parts from all over the world and final assembly happens in China and other countries.

After jobs, the Trump policies having most impact on California are immigration, climate change, and health care.  Trump’s immigration policies will be hotly contested by most Californians.  However, Trump’s plan to build a wall along the southern border isn’t going to affect Hispanic immigration; last year more Chinese immigrants came into California than did Mexican immigrants.

A national roundup of undocumented immigrants would primarily impact California’s agricultural sector; it’s the nation’s largest but represents only 2 percent of the California’s economy.  (Ironically, California’s farmers, typically Republicans, were strong advocates of the “pathway to citizenship” initiative that Trump’s GOP has abandoned.) Many agricultural workers are undocumented but typically have been in the state at least a decade. A national roundup would drive up agriculture prices.

Of course, a national roundup of undocumented immigrants would be a huge political issue in California.  The Golden State’s population of 39 million includes 15 million Hispanics (the largest group).  There are an estimated 2.67 million undocumented immigrants in California; about 1 million of these live in Los Angeles County.  (By the way, there are roughly 250,000 “Dreamers” in California.)

Across the board, California public officials have pledged to protect undocumented immigrants.  However, Trump has promised to punish those who oppose his initiative; for example, by penalizing sanctuary cities which include Los Angeles, San Francisco, Sacramento, and Oakland. Theoretically, this could have a major financial impact on the Golden State.

After immigration, California’s biggest conflict with Trump will regard global climate change.  Trump is a climate-change denier and appears ready to gut the Environmental Protection Agency and other federal agencies that fund climate scientists.  Meanwhile, California leaders such as Governor Jerry Brown take climate change seriously and have led multiple initiatives to protect the Golden State’s air and water and natural beauty.  (California is the number one U.S. tourism destination.)

Finally, millions of Californians depend upon Obamacare.  If Trump repeals affordable healthcare, this act would present a huge challenge for the Golden State.  It’s likely that some residents would lose coverage. For example, 3 million low-income Californians are covered by Medicaid, which is entirely paid by the federal government.

As strong as the California economy is, the Golden State each year depends upon the federal government for approximately $96 billion — 36 percent of our budget. (By the way, California is “a giver” not “a taker;” we contribute more than $300 billion in federal taxes.) Of the $96 billion, $69 billion goes for health and human services, primarily insurance coverage for the poor, children, and seniors.  Trump could impact this directly by repealing Obamacare or indirectly by withholding federal funding, on the basis that California is not in compliance with US Immigration and Customs Enforcement policies.

If the Trump Administration threatened to withhold some of the $96 billion, the Golden State would have to make tough choices: comply with Trump policies to keep the $ flowing, cut services, or increase taxes to offset loss of Federal funds.  It’s possible that Californians could raise their own taxes to thwart the Trump Administration.  But probably not income taxes.  Californians could repeal the notorious Proposition 13, which would raise $ billions in property taxes.  In addition, the Golden State favors carbon taxes; a variety of these taxes (for example, taxing transport of fossil fuels such as coal) could erase much of the $ billion potential deficit.  Another possibility is a “tourism” tax.

The battle is joined: the Trump resistance begins in California.