Do Californians want the state to become Sweden?
In summary
In the 2022 session of the California Legislature, the state moved closer to the Western European model of comprehensive public services and benefits.
Last week, Governor Gavin Newsom closed the books on the 2022 legislative session by signing hundreds of bills into law.
Overall, the state budget passed in June and the flurry of measures passed in August is a significant step to the left. They move California closer to the Western European model of providing a comprehensive range of social, educational and medical benefits, one that progressive activists want California to emulate and lead the nation.
While Newsom has failed to create the single-payer health care system he promised during his 2018 campaign for governor, the budget came very close to universal medical coverage by expanding the Medi-Cal system to all undocumented immigrants.
The $308 billion budget also went toward universal preschool for children, another Newsom goal, expanded food assistance to older undocumented immigrants, expanded welfare benefits, helped low-income Californians pay overdue utility bills and, most spectacularly, authorized cash payments, known as tax refunds, to almost everyone who files an income tax return.
Newsom praised the budget, saying, “We’re building a better future for everyone, we’ll continue to model what progressive and responsible governance can look like, the California way.”
However, the budget was only the beginning of the state’s transition towards the Western European model.
The final month of the legislative session produced a series of bills sponsored by labor unions and other progressive groups, most spectacularly the landmark creation of a “Fast Food Council” within state government to set wages and working conditions for fast food workers.
The legislation was a high priority goal for unions and to some extent after the industry-wide “works councils” common in European countries.
Critics said it would undermine the franchise system by assuming that restaurant owners are not independent businessmen but rather parts of larger corporations such as McDonald’s or Burger King. The fast food industry immediately launched a referendum petition aimed at asking voters to overturn the new law.
Unions scored another major victory when Newsom signed a bill that changes voting procedures for farm workers organization elections. The United Farm Workers Union had long sought the legislation, which it believes will make it easier for the UFW to win representation elections.
The last month of the session also produced sharp increases in benefits for disabled workers and those taking time off for family obligations, another long-sought union goal.
Of course, California still has much more to do if the “California way” Newsom cites is to continue its transformation into a European-style social democracy. For example, it would have to remove out-of-pocket costs for higher education and perhaps create some form of guaranteed income. Newsom already has an adviser working on the latter.
But the more extensive the benefits become, the more expensive they become for the state budget. At some point, the state could no longer depend on only taxing high-income Californians, who now provide the majority of its revenue. California would have to raise taxes on the middle class, as European governments do through both income taxes and very high retail taxes.
A hint as to whether there is legislation that increases disability and family leave allowances. Those payments come from the state’s disability insurance, which is dependent on payroll taxes paid by the employees themselves. Not only does the bill eliminate the salary cap on these taxes, but state officials say the tax rate will also increase when the new benefits begin.
Hitting the middle class with new taxes would be the ultimate test of whether Californians want their state to become Sweden.