California's latest drought? Children. The state, according to a new report, is producing too few children to supply the workers and taxpayers it will need tomorrow. This deficit, coupled with California's fast-growing crop of aging retirees, bodes ill for the state's economic future.

California thus faces a more immediate, more extreme version of the problem confronting the U.S. at large--the so-called "demographic cliff." How California deals with it may influence policy makers in Washington.

The report, "California's Diminishing Resource: Children," was prepared for the Lucile Packard Foundation by the Price School of Public Policy at USC.