Reparations Payments Could ‘Devastate California,’ Economist Says, Costing Trillions and Causing More Residents To Flee

As California’s legislature charges ahead with its plans to implement reparations for descendants of slaves in America and those suffering from its legacy, concerns are growing that they could further wreck the fiscally-strained Golden State and accelerate outmigration. 

The state’s Senate this week approved a trio of bills — sending them to the state assembly — which would create a new state agency, including a genealogy office, a fund in the state treasury, and a measure to compensate Black families for property taken by eminent domain. 

“Reparations would devastate California fiscally,” a senior fellow in business and economics at the Pacific Research Institute, Wayne Winegarden, tells the Sun. “They would require unprecedented increases in spending or unprecedented tax increases,” he notes, adding that the proposals would “weaken growth, reduce income growth, reduce employment opportunities, and encourage more people to migrate away from the state.”

Though California entered the Union in 1850 as a free state and deployed thousands of soldiers to fight for the North, the state has for several years been leading the way nationally on reparations that backers say will address the state’s “legacy of enslavement.”

After a law was passed in 2020 to create a Reparations Task Force, the group came up with a lengthy list of proposals released last summer that the Pacific Research Institute estimates would cost $2.8 trillion if implemented. 

Though the initial package of reparations legislation introduced by the California Legislative Black Caucus didn’t include direct cash payments, little is known so far about how much the other proposals would cost or where the funding would come from. A representative of the caucus did not respond to a request for comment. 

“Like much of the reparations discussions, the costs of the policies are not being considered while the proposals are being discussed,” Mr. Winegarden says, adding the lack of numbers is “fiscally irresponsible.”

One of the bills to advance this week would create a new state agency to oversee and implement recommendations of the state’s reparations task force that are approved by the legislature and governor. It also would create a “genealogy office” to help “confirm reparations eligibility” and expedite claims. 

Another bill that advanced would establish a fund in the State Treasury to implement reparations to address the harms that California has “caused to descendants of an African American chattel enslaved person or descendants of a free Black person living in the United States prior to the end of the 19th century.”

A third bill aims to compensate families who were affected by “racially motivated eminent domain.” 

“Of the three bills that passed, the one bill with large fiscal consequences is the proposal to compensate Black people for illegal property takings,” Mr. Winegarden notes. “No fiscal estimate has been given on these costs, which are not included in our $2.8 trillion cost. Depending on the property and qualification criteria, these costs could easily be in the trillions of dollars.”

Pew Research polling indicates that the majority of Americans view reparations negatively, with nearly 70 percent against descendants of slaves being repaid with land or money, although the views vary based on race. 

There are “lots of policies” besides reparations that could better help disadvantaged groups in California, Mr. Winegarden notes, including eliminating climate change policies and excessive regulations on gas that drive energy costs up and reforming zoning regulations to encourage more affordable housing. 

“The list goes on, but the common theme is to remove the barriers that make California an unaffordable place to live and the barriers that diminish economic opportunities that hurt the lowest-income families the most,” he says. “Such a policy will create opportunities to thrive for all Californians.”

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