I bet you thought the big winners from Facebook’s IPO would be Mark Zuckerberg and his top lieutenants. Hah! Their individual hauls are gonna be peanuts compared to what the State of California expects to collect in taxes on the newly minted millionaires’ windfalls.
Google’s IPO saw a $7 Billion influx of cash into California’s coffers. California’s politicians promptly spent $9.5 billion of it. If you’re thinking that the math there doesn’t exactly work out right, you’re not alone. But you’re also not a Democrat.
Facebook’s IPO promises to be bigger.
And California is teetering on the edge of bankruptcy. They’ll be out of cash by mid-March.
Unless they borrow against future tax revenues, predicated on Facebook’s IPO.
Already, interest groups and lobbyists are forming thick droves around state legislators, even when they go to the bathroom, to urge them to fund worthwhile programs and ridiculous boondoggles alike. After years of unpopular, nay detested budget cuts, pressures are immense from all sides to shovel money this way and that way before any of it has even arrived and plow it not only into one-time projects, but into ongoing programs that will then run out of money.
Let this be a lesson to anyone who says raising taxes is the only way to cure our national deficit. For every dollar of new revenue the government will find a way to spend $1.50. Deficit reduction is for suckers.