(OPINION) The financial guru who correctly predicted the disastrous Lehman Brothers collapse in 2008 offered a dismal outlook on the future of California.
Robert Kiyosaki, the author of Rich Dad Poor Dad, is known for making hyperbolic predictions about the US economy – and this time he has a grim prognosis for the most populous state in the nation.
‘The problem is California is going broke,’ he wrote on X. ‘California will begin raising taxes and cutting subsidies to the poor, to prisons, environmental problems, and teachers unions. That means crime will spread as police will be cut.’
He believes even Americans who don’t live in the Golden State should care about its prospects because it’s a bell weather for the rest of the country.
‘Since California is a Bell Weather state and is going broke, which states will follow?’ he asked.
So, is California actually going broke?
Despite being the fifth largest economy in world according to Governor Gavin Newsom – a fact that’s been disputed in the past – California is indeed staring down a huge hole in its budget.
Back in December 2023, the state’s Legislative Analyst’s Office reported a massive deficit of $68 billion because of a ‘severe revenue decline’ in the 2022-2023 fiscal year.
By May 2024, a month before state lawmakers had to pass a budget, Newsom announced the state was still $26.7 billion in the red, though the true figure was closer to $45 billion, the Associated Press reported.
The official budget was passed at the end of June, which included $16 billion in spending cuts.
Most of the cuts were to the exact things Kiyosaki warned about, though its important to note that he made his predictions over a month after the state released its budget.
Spending on affordable housing programs was shaved by $1.1 billion, while expenditures allocated to the California Department of Corrections and Rehabilitation will go down by $358 million.
Kiyosaki’s premonition about tax hikes was also reflected in the budget, as Newsom agreed to raise the Managed Care Organization (MCO) tax, which pays for Medi-Cal, the state’s Medicaid program.
As to Kiyosaki’s second claim – that crime will rise due to these policy changes – it’s unclear whether these things will have a direct impact on that at this time.
Overall violent crime in California was up 3 percent in 2023 when compared to 2022, according to the state’s Department of Justice.
But if you zoom out and compare the 2023 numbers to 2019 – before the pandemic crime wave took hold all across the country – violent crime has skyrocketed 15 percent.
Property crime is also on the rise, with shoplifting offenses jumping 61 percent in Los Angeles alone over the last four years.
Oakland might be in the worst shape of all of California’s major cities, with brazen scenes of criminality becoming all too common.
Among the most shocking include a mass shooting at a Juneteenth celebration at Lake Merritt and an elderly woman getting attacked and robbed in broad daylight.
Just last month, 100 robbers tore a gas station apart and picked the shelves clean, their conduct not generating a timely police response.
Days after that incident, the Oakland Police Department admitted it only has 35 officers on patrol at any given moment for a city with over 400,000 people.
