The San Francisco Chronicle's article on the Alameda parcel tax for schools vote posits a false choice. The article by Carolyn Jones makes it sound as if Alamedans have to decide between their schools and their businesses. In reality, the choice is between good schools and strong businesses on the one hand, and bad schools and declining business on the other.

If it passes, many small business owners, already struggling with the recession, say they'll be forced to close, stripping Alameda of its mom-and-pop charm. If the measure fails, the district's superintendent warns that half the schools in town would close.

"If this doesn't pass, all bets are off in Alameda," said Encinal High School Principal Mike Cooper, a fifth-generation Alamedan. "We're watching the collapse of public education. We've been trying to make this work, but something's got to give."

Business owners agree that at this point, all bets are off.

"If this passes, then God help us, there'll be no end," said Ed Hirshberg, who owns numerous commercial properties in Alameda but lives in Oakland. "The schools want more money from us, but the problem is there's no money available."

The article goes on to make it clear that to most Alameda residents, good schools are the foundation of the community. And that makes sense - people want a good future for their kids, want them to be educated, want them to have opportunities and a better life. Only a sick and demented human being would choose profits over that better life for their kids.

Alameda businesses should want that as well. If Alameda schools close, it could trigger a flight of parents with children to other districts that have not been so reticent to fund their schools. And Alameda businesses will suffer as a result, when their prosperous customers, especially those with families, leave.

So the complaints of Alameda businesses are misguided. The parcel tax is necessary for their own survival as well as that of their own community. However, Alamedans do have a very good point when they say it should never have come to this:

The 9,500-student district has managed to scrape through the past few years, but with the latest round of state cutbacks, the district now finds itself on the precipice of disaster, Superintendent Kirsten Vital said.

"It's devastating and abysmal," she said. "We're looking to Alameda voters because the state of California is not funding education as it should."

That is exactly right. Because of Republican opposition to taxes, schools and students have been punished with massive cuts. Of course, poll after poll after poll shows that big majorities of Californians will support new taxes to prevent cuts to schools. If Sacramento wanted to stop cities like Alameda from having to raise local taxes, they could do so by proposing or even enacting a statewide tax increase on the wealthiest Californians and the largest businesses to support schools. It *will* pass.

It's time for the defenders of public education in California to make this move. CTA has been planning to bring the corporate tax breaks to the ballot, but that's just $2 billion a year. The public is willing to approve much more, especially if the upper income tax brackets of the Pete Wilson era were restored, especially if the corporate tax rates of the 1980s were restored.

Of course, one wonders if Alameda businesses that are complaining about the Measure E proposal support these kind of solutions. If not, it's time they did so, because their survival depends on California restoring and improving the funding we give to our schools. There's no justification for being cheap with our children's future.

Facing a growing revolt over his previous budget cuts, including the devastating cuts to public schools, Arnold Schwarzenegger's May Revise 2010 takes a very different approach to insane and reckless spending cuts than was proposed back in 2009. Understanding this difference is key to defeating him.

In 2009, Arnold's cuts hit everyone, and hit everyone hard. Well, everyone except the rich, who Arnold believes should be immune from being asked to contribute to solving the budget crisis. The middle-class saw services cut, particularly schools. State parks were slated for closure, and local government funds were stolen.

In response, a backlash has formed here in 2010 on all fronts. Proposals such as AB 656 (oil severance tax for higher ed) and the simply brilliant Stop the Cuts video starring Megan Fox and denouncing education cuts are just two pieces of a much broader public revolt against education cuts that's brewing. Another overt cut to education would have turned that revolt into a major political force that would threaten the low-tax privileges of the wealthy.

And while schools are still getting hit - they need restored funds, and without federal stimulus aid Arnold's 2010-11 budget is a /de facto/ cut to schools below their 2009-10 allotment - Arnold isn't cutting any deeper, realizing that a middle-class revolt against Republicans and against budget cuts would be very bad for the right-wing shock doctrine agenda.

Similarly, state parks are going to get full funding, after a year where mass closure was proposed. That mass closure fueled a state parks initiative, based on a John Laird proposal, that would increase the vehicle license fee to fund state parks AND let Californians go to the parks for free. Another cut to the state parks budget would have guaranteed that initiative's success (it's likely to pass anyway), just as another raid on local government funding would guarantee passage of a new initiative to permanently ban state raids on such local funds.

And all of this has begun to fuel widespread public support for rolling back the corporate tax breaks that were scandalously demanded and won by Arnold during the 2008 and 2009 budget deals. Worth noting, of course, that Meg Whitman wants to enact similar tax breaks should she become governor.

What this shows is that the way to counter a right-wing shock doctrine is to reject it, say "no" and organize people to fight back at the ballot box. Facing this revolt, Arnold has taken a very different approach to his 2010-11 budget: *hurt the poor.*

Now it must be said that it's not just the poor who will suffer under this budget. But the budget cuts are quite obviously calculated to hit those Californians without a voice, who are seen as marginal, whose funding can be cut with the least public outcry. The elderly who will lose some or all of their IHSS benefits and the children who will lose health care services are not necessarily "poor"; those cuts will hit the middle-class as well.

But the biggest cut, the elimination of CalWORKS, is designed to wedge the middle-class and the working- and underclass apart from each other. It's a replay of the "demonize the poor" tactic that worked so well for Reagan in the '80s and Republicans in the '90s. Arnold is implicitly telling the middle-class "either you screw these poor families or we're cutting something you want" and counting on the middle-class to react the same way they did in the '80s and '90s - by saying "go ahead, we won't stop you."

CalWORKS is itself a shell of its former self. Cuts in 2008 and 2009 have already reduced the maximum grant to a lower number than a family could receive in 1989, despite the fact that the cost of living is much higher today - and despite the fact that we're in a recession. The elimination of CalWORKS and Temporary Assistance to Needy Families is going to cause widespread suffering among many families, especially to children, and will make it more difficult for many Californians to find work, dragging down our state's economic recovery and in turn worsening the budget deficit.

We can't fall for Arnold's wedge. Arnold is shifting tactics because he's scared of us - scared of the public reaction against three years of austerity. Now is the time to ramp up the attack on that austerity, to move beyond tired old Reaganite claims that there's some difference between the needs of the middle-class and the needs of the poor. Many middle-class families have benefited from the very safety net programs Arnold now proposes to cut or eliminate, and many more middle-class families benefit - at their jobs and businesses - from less fortunate families having at least some state assistance.

One of the scariest things to a Republican - especially a corporate Republican like Arnold Schwarzenegger - is an alliance of the middle-class, the working-class, and the poor against their policies that favor the rich. Austerity budgets are merely reinforcing the fact that those groups see they have common interests, especially as 30 years of neoliberal economics have begun to obliterate the old divides between the non-wealthy classes as everyone is watching their standards of living fall, watching their future evaporate before their eyes.

We've got Arnold on the run. Now is the time to come together to defeat him and his budget plans for good. Californians want prosperity, not austerity. Let's give it to them.

Later today Arnold Schwarzenegger will release his "May Revise" of his proposed 2010-11 state budget. It is going to be an extremely cruel and destructive proposal. But it will be defended as a necessity given the economic times and the resulting collapse in tax receipts.

That is precisely the *wrong* kind of thinking to use at this time. This latest round of Hooverism will be an economic catastrophe for California, in addition to the human toll it will take. If California does not embrace new revenues to fund the services and jobs we need to produce economic recovery, then California faces a catastrophic slide into a prolonged depression.

The problem we face is that few in Sacramento or in the media have adapted their thinking to this new crisis. They're still locked in the outdated thinking of the last 30 years, which says that if we just cut back on spending, somehow economic recovery will magically appear, and that the spending cuts have no relationship to said recovery.

But it is extremely difficult to see how there can be any economic recovery if we've laid off 30,000 teachers and raised tuition at public colleges and universities to unaffordable levels, destroying the education of an entire generation. The same goes for taking away health care from children and the elderly - someone has to pay those costs, and if it's coming out of family budgets, that reduces their ability to spend money and therefore acts as a drag on the economy.

Austerity budgets like this are inherently deflationary. They make it harder, not easier, to produce economic recovery. They make it harder, not easier, to deal with California's debt problems, small as they are.

And they will merely worsen future budgets. It's no accident that this is the fourth summer in a row where budget cuts are being seriously proposed. The cuts begun in 2007 have produced a downward spiral, where the economy worsens due to lack of state support, causing deeper declines in tax revenues and therefore exacerbating the budget shortfall.

In a situation like this, someone has to pay to close the gap. Arnold Schwarzenegger believes it must be the poor, the sick, the young and the old who must pay. Why? In order to prevent the wealthy and the large corporations from paying.

By closing corporate tax loopholes and raising other taxes on those with high incomes, California can just about close the entire $20 billion deficit expected to be announced today. We can close it without making any further cuts to schools and health care services. We can close it without causing long-term damage to our economy.

The usual argument, of course, is that such tax increases will cause large employers to not hire workers. I'm skeptical that would be the case, and the evidence suggests it won't be the case. In 1991 California pushed through billions in tax increases. It didn't prevent economic recovery from taking hold soon thereafter, and didn't prevent the 1990s boom from taking place. In April 2009, taxes went up in California, and it did not worsen the recession, nor has it prevented a slow and halting recovery from beginning.

But there's a more fundamental issue that needs to be dealt with regarding the question of taxes and jobs. The current budget process, where taxes on large corporations are kept at all-time lows and forcing devastating cuts to services, favors the big businesses over the small ones. It's those small businesses that need our support. Those are the businesses that create jobs, that keep money in the community and in the state, and that ultimately will provide the basis of a 21st century economy in California.

California isn't Greece. We don't need to follow this road to ruin. Instead, by rejecting the concept of spending cuts as well as the specific cuts that will be proposed today, we can begin to provide economic recovery to California and position ourselves to lead the 21st century economy while providing prosperity for everyone.

RJ Eskow has a excellent post up examining "Meg Whtiman's shady Goldman Sachs past" and what it might portend for California's future if she were to get elected.

Whitman was a Goldman Sachs board member from 2001 to 2002, when she resigned under a cloud of suspicion for her role in an IPO scandal:

Whitman has said she did nothing wrong by accepting the IPO shares and that the offerings did not help Goldman Sachs win additional business from eBay, which has paid the Wall Street firm $8 million for investment banking services since 1996, the Wall Street Journal reported.

In October, Congressional investigators disclosed that Goldman allocated shares of more than 100 IPOs to Whitman since 1996 and she then quickly sold those shares for a profit, in a practice known as "spinning."

Whitman's connections to Goldman Sachs are quite relevant, as Eskow explains, showing that Goldman Sachs has a long record of screwing California taxpayers:

What kind of business relationship can Californians expect their state to have with Goldman Sachs and firms like it if Meg Whitman becomes governor? Here's a clue: In a report called "Corporate cash boosts Whitman," the Associated Press reported that "The biggest donations came from New York investment bankers, hedge fund managers, attorneys and others." If there's one thing these guys know it's how to prime the pump.

Not that Whitman's old pals at Goldman haven't already been profiting off California's misery. They were hired to manage some multibillion dollar state bond offerings but, as reported in the Los Angeles Times, millions in fees didn't stop Goldman from secretly undermining California's credit rating. That hurt the very sales they were hired to manage. As the Times states, the firm "urged some of its big clients to place investment bets against California bonds" by "proposing a way for ... clients to profit from California's deepening financial misery."

Goldman Sachs's role in serious government debt crises is getting greater scrutiny over in Europe, where they appear to have played the leading role in hiding Greek debt levels in order to massively profit off of Greece's heavy borrowing in preparation for the Athens Olympics. This unsustainable lending has spawned a European Union investigation while the EU works to deal with the crisis Goldman Sachs helped create with the Greek debt. Eskow cites reporting that indicates Goldman Sachs has screwed around with California debt, in this case undermining state bond sales for their own profit.

As it turns out, it's not just Goldman Sachs that is screwing with Californians and their debt sales. JP Morgan, Lehman Brothers (before their collapse) and UBS have all been implicated in an alleged conspiracy to cheat municipal governments by paying below-market interest rates to those governments. Remember that, as Eskow noted, many of Meg's donors are investment bankers.

The picture this all paints is extremely clear. California has been cheated out of millions - at least - by Goldman Sachs and its fellow investment banking houses. Meg Whitman represents them and their interests, and will almost certainly enable this misbehavior to continue.

It's also further evidence of the need for California to develop its own state bank, as was done by North Dakota nearly 100 years ago, in order to remove as much state borrowing as possible from the greedy clutches of Goldman Sachs and its fellow henchmen.

UPDATE: An op-ed by Faith Bautista and Preeti Vissa at Capitol Weekly draws more attention to the issue and calls for a legislative investigation.

In 2009, 16,000 teachers and other public school employees lost their jobs. The devastating effect on the quality of education in this state is just beginning to be felt. Now we learn that insane policy of mass firings of teachers and school employees is going to be renewed, as 23,000 more have received pink slips this month:

Faced with another year of potentially deep budget cuts, California's public schools have sent out 22,000 pink slips to teachers and school employees, according to the state's superintendent.

"Our state budget crisis has forced districts to lay off thousands of teachers over the past few years," said Jack O'Connell, the state superintendent of public instruction. "The governor has proposed cutting another $2.4 billion from public education. While the education community opposes these cuts, our schools are forced to prepare for this potential outcome by issuing a massive wave of potential layoff notices."

(Note: CTA reports today that the number of layoffs is now 23,225)

Arnold Schwarzenegger's office tried to spin this as not their fault, and even claimed the governor wasn't making further cuts to K-12 budgets:

Still, a spokesman for Gov. Arnold Schwarzenegger, Aaron McLear, took umbrage with O'Connell's characterization of the governor's January budget proposal, noting that Schwarzenegger has proposed allocating the same amount of money for K-12 and community colleges as he did last year.

What McLear didn't say is that because of the (senseless) expiration of federal stimulus funds, keeping K-12 budgets the same in 2010-11 as in 2009-10 is a /de facto/ budget cut. Last March over 30,000 pink slips were issued, and it appears stimulus funds helped about half of those employees to get rehired for this current school year, most of whom were on 1-year temporary contracts. Without stimulus funds, and with a freeze in education spending, those teachers will get laid off for good this summer.

So far none of the gubernatorial candidates have addressed the destruction of our schools. Sure, Meg Whitman pledges to "fix education" but also pledges to blow an enormous hole in the state budget deficit with her tax cuts for the rich. How will she do both?

As Joe Garofoli points out, it might have something to do with her attack on public employee unions. Apparently she thinks teachers and other public workers, who make a middle-class living and retire with a decent though by no means generous pension, make too much money and should learn to do with less.

That's not going to solve the problems of our schools. If teacher pay decreases, it will become even more difficult to keep qualified teachers in the classroom to provide the education students deserve.

But that seems to be Whitman's approach, since she is on record as opposing new taxes. As California's schools suffer, Meg Whitman is showing no sign of wanting to help reverse the trend.

The Field Poll is out with a new look at Californians' attitudes on the state budget crisis. The results are being reported as "Californians prefer spending cuts, not taxes" as a way to solve the budget deficit. And even though that headline misstates what is in the poll, the bigger issue is the general and vague nature of the poll itself.

Here's what Field asked:

California lawmakers face a deep budget deficit again next year, with a gap that may reach $20 billion between projected revenues and current spending levels. How would you prefer to have this deficit closed – only through tax increases, mostly through tax increases but with some spending cuts, through an equal mix of tax increases and spending cuts, mostly through spending cuts but with some tax increases, or only through spending cuts?

The responses, of statewide registered voters:

Cuts only: 31%
Mostly cuts: 19%
Equal mix of cuts and taxes: 29%
Mostly taxes: 9%
Taxes only: 4%
No opinion: 8%

So the way this is being reported in the media strikes me as being pretty flawed. The way I read this says 61% of voters want taxes to be some element of the solution to the budget mess, and only 31% want cuts-only.

Sure, those numbers could and should be better. But even in spite of progressives' inability to deliver those messages to Californians, 61% don't want an all-cuts budget. It should be noted that such a budget is exactly what Arnold Schwarzenegger and Meg Whitman propose for California.

What the poll didn't ask is about specific programs. In January PPIC found that 2/3rds of Californians would pay higher taxes if it went to education. That suggests that the rather vague and unspecific nature of this Field Poll means its utility for driving policy is very, very limited.

Field Poll also examined attitudes on the upcoming initiative to change the 2/3rds rule to a simple majority on budget (but not on taxes) that may make the November ballot. They found it was close: 43% support, 47% oppose. The initiative likely to go forward would include financial penalties to legislators if a budget isn't passed on time, which as I understand it boosts the poll numbers for this proposal significantly.

But what we also see is that just as Democrats in Washington, DC have failed to drive home the message that Republican obstruction is responsible for a large part of the political problems the country faces, Democrats in Sacramento have had similar problems. When Field asked about whether we could solve California's problems "if lawmakers are willing to compromise and work together" or if we needed constitutional changes, they found 20% said "constitutional change" and 75% said "politicians should work together."

While the construction of that question is iffy (of course voters will say they want their politicians to work together), it does indicate that Sacramento Democrats have not done an effective job of explaining that Republican obstruction is the reason why nothing gets done.

Ultimately this poll gives a roadmap to Speaker Pérez: insist that taxes be part of the budget solution, link them to specific programs that people want (particularly education), and make sure Californians know that it is Republicans who are standing in the way of that happening.

California Watch has a new article out examining payouts of accrued vacation time. Some employees have accrued so much unused vacation time that they get six-figure payouts upon leaving/retiring.

My first reaction to this is "so what?" It's an extremely common practice for employers to pay out unused vacation time as pay. It's better and fairer to the workers than "use it or lose it" policies regarding vacation time that tend to penalize workers for not making immediate use of benefits they have been given. This is especially true in an American working environment where vacations are discouraged as we quite wrongly believe that constant work is good either for the employer or the employee.

The California Watch article's point, of course, is that this practice is detrimental to the state at a time of budget crisis:

Amid a crippling fiscal crisis, managers throughout California’s government have routinely allowed their employees to amass unused vacation time, enabling hundreds of workers to end their public-service careers with payouts topping $100,000, a California Watch investigation has found.

One worker combined vacation and compensatory time to walk away with more than $800,000, records show.

In the past four years, nearly 500 government workers earned six-figure paychecks mostly for unused vacation. In total, the state spent $486 million between 2006 and mid-2009 to pay more than 52,000 employees for time-off benefits – which includes a small percentage of unused comp time and holidays that weren’t taken.

$486 million sounds like a lot of money. But that is just 2.43% of the current $20 billion deficit. In other words, if we had eliminated that practice in 2006, or capped it, the budget deficit would not be meaningfully impacted. In fact, given that we've had about $60 billion in budget shortfalls since 2007, these vacation payouts are 0.81% of the overall deficit.

So I don't understand why this is all that newsworthy. Sure, there might be some point to capping the payout at $100K or $200K, but even then it would be a very minor fix that would do nothing to address the deeper budget mess.

Of course, these kinds of articles help build a larger narrative that the budget problem is in large part caused by greedy public sector workers who are paid too much. The actual numbers here indicate that the vacation payouts are not a meaningful part of the budget problem at all. Similarly, Meg Whitman's desire to layoff 40,000 state workers would probably save about $2.5 billion (assuming those workers make the state average). That's a bigger chunk of the projected $20 billion deficit, but it's still only 12.5%. Whitman and other critics of public employees need to come up with solutions for the other 87.5% of the deficit.

Maybe one place to start is by looking at how the rich evade their tax obligations. Last week the LA Times's Michael Hiltzik showed that Frank and Jamie McCourt paid no federal or state income tax between 2004 and 2009. Many wealthy Californians and large corporations have similarly evaded taxes.

There's a lot there for investigative journalists to pore over. For example, California Watch could examine how much money some of California's largest corporate landowners have cost the state by using shell companies to get around property tax reassessments at sale, unfairly extending Prop 13 protections. Or they could examine how many other California CEOs follow Meg Whitman's lead and use offshore tax shelters. There is much more money the state loses through these means than the paltry $486 million over 3 years cited in the California Watch article.

But instead they seem to be focusing on attacking public workers. It's a sad reflection of the fact that in today's California, workers are seen as an acceptable punching bag, but corporations and the wealthy aren't.

Privatization is typically a very costly and wasteful way to deal with public services. Usually it is little more than a transfer of public wealth to well-connected people in the private sector, done in spite of the fact that that it's usually unnecessary and forces the public to spend more money than they would have before the privatization.

That scenario is likely to repeat itself in the upcoming privatization of 11 state office buildings:

California has put up the "for sale" sign on 11 state office buildings, including the San Francisco Civic Center and Ronald Reagan building in Los Angeles.

Real estate firm CB Richard Ellis began marketing the buildings Friday on behalf of the state.

Vice chairman Kevin Shannon says the firm is pitching the sale worldwide as a low-risk investment because the state is planning to lease the space back, giving the new owners a steady stream of income.

The sale was adopted as part of last year's budget agreement between Gov. Arnold Schwarzenegger and lawmakers to raise money for the state. California is facing a $20 billion shortfall through the middle of next year.

The sale is expected raise more than $2 billion.

Read that again. The sale is pitched as "low risk" because you and I will give the new owners a steady stream of income. We're going to rent these buildings indefinitely, ultimately at much greater cost than $2 billion.

Public ownership of office buildings is a much cheaper way to operate government. We pay back the construction loan and the ongoing maintenance, and that's usually more affordable than leasing from a landlord who seeks profit in the arrangement. The costs come out of our pockets, especially if we're cutting other services down the road to pay the privatization cost.

We can expect much more of this if Meg Whitman becomes governor. In fact, I would expect she will make mass privatization a core element of her plans to "solve" the state's budget mess. California Closed indeed.

Meg Whitman is a master of slick campaigning. Her feelgood radio and TV ads are designed to make her seem like a moderate, pragmatic person who will help cure what ails California. Just today she launched her second TV ad, one in which the word "Republican" is *never mentioned*.

When it comes to the #1 task our next governor will face - solving the budget crisis - she is offering a continuation of Arnold Schwarzenegger's slash-and-burn cuts. But you wouldn't know that from Whitman's ads. She doesn't make reference to her refusal to embrace new revenues to save popular and vital services, even though the public supports doing so. Instead she offers vague pleasantries that mask her true intentions to destroy what remains of the California Dream.

That needs to change. The Courage Campaign is taking the initiative by launching a new TV ad showing what will happen if Whitman's proposed cuts become reality. We're calling it "Meg's California" and we're going to air it on TV screens across the state - with your help. If you pitch in and donate to air the ad, we can finally get some progressive narratives out there challenging Whitman's emphasis on cuts.

Here's the background.

California currently faces a $20 billion budget deficit for both the remainder of the 2009-10 budget year (about $6 billion) and the 2010-11 budget year (about $14 billion). The Legislative Analyst's Office projects an annual $20 billion deficit for years to come, including most if not all of the first term of our next governor. So let's say that the next governor has to deal with an annual $20 billion shortfall, largely owing to the structural revenue shortfall - the fact that we have artificially low tax levels designed to make it impossible to fund our ongoing core services.

How will Whitman deal with it? She has not yet offered a comprehensive budget package, and may not do so at all during the entire campaign. She's likely to try and keep skating by with vague promises of "fixing California" and "solving problems" - but as we've seen, California's budget crisis needs genuine solutions.

Whitman's website emphasizes "spending" as her budget category, showing that she continues the right-wing framing of our budget problem being a spending problem. Whitman has also called for widespread tax cuts that, although undefined in nature and amount, will widen further the existing budget gap.

So it's clear that Whitman rejects tax increases as a solution (otherwise the Howard Jarvis Taxpayers Association wouldn't have endorsed her). That leaves her with budget cuts and cuts alone as the solution to the state's crisis.

Whitman's proposed cuts are also generally vague and unspecific. But there is no way she can offer a cuts-only budget without hammering hard schools, parks, libraries, health care services, and the other services the Courage Campaign ad defends.

Specifically, Whitman wants to fire 40,000 state workers, apparently out of the belief that higher unemployment is good for the state. The average base pay for California state employees in 2008 was $63,815. Multiply that by 40,000 and you get $2,552,600,000. Just $2.5 billion, which would leave Whitman with another whopping $17.5 billion left to cut out of the budget.

That's about the total amount the state spends on higher education and on prisons. Medi-Cal, IHSS, Cal-WORKS, and other important human services take up billions themselves. If Whitman wants to close the budget deficit with no new taxes - and even wants new tax cuts - she's going to have to make massive cuts to the kinds of services we featured in our ad.

In short, she's going to hang "closed" signs on public services and buildings and parks across California.

We expect Whitman to respond to this ad by saying she's not actually proposing to cut schools, parks, libraries, health services, etc. As I just demonstrated above, such a response is simply not credible given the size of the deficits she'll face as governor, and given her own refusal to countenance new revenues.

This is just the start of the Courage Campaign's efforts to hold Meg Whitman accountable. Her bad math and flawed budgeting stands completely opposed to the priorities of the people of California. With your help, we're going to show that to the people of this state. Click here to get "Meg's California" on the air.

Below is the email we sent to our members today:   Read More »

In 2004 Paul Krugman published a book that, at the height of the Bush Administration and less than a year after Arnold Schwarzenegger seized power in the 2003 recall vote, described 21st century America as embarking upon a "Great Unraveling" as the accomplishments of the 20th century were being undone by right-wingers.

As it turned out, the unraveling was only just beginning. It has taken the worst recession in 60 years to give that unraveling its full force and power here in California. Here in 2010, everywhere around us we see collapse, decay, and suffering - and a state government whose procedures are rigged to empower the small right-wing minority that is enthusiastically cheerleading the unraveling they've wrought.

Interestingly enough it's two articles in today's New York Times that show most clearly the depth of suffering and decay taking place in California. The first is Tom Friedman's column, which riffs off of the insane news that Tracy is going to charge for 911 calls, an example Friedman uses to show the lack of desire to rebuild this country and pull us out of crisis:

But now it feels as if we are entering a new era, “where the great task of government and of leadership is going to be about taking things away from people,” said the Johns Hopkins University foreign policy expert Michael Mandelbaum.

Indeed, to lead now is to trim, to fire or to downsize services, programs or personnel. We’ve gone from the age of government handouts to the age of citizen givebacks, from the age of companions fly free to the age of paying for each bag....

Our parents truly were the Greatest Generation. We, alas, in too many ways, have been what the writer Kurt Andersen called “The Grasshopper Generation,” eating through the prosperity that was bequeathed us like hungry locusts. Now we and our kids together need to be “The Regeneration” — the generation that renews, refreshes, re-energizes and rebuilds America for the 21st century.

That isn't going to happen as long as others in Friedman's generation continue to prioritize wealth extraction and tenacious, even bitter defense of the status quo over "The Regeneration." I see this all the time in my work in support of the high speed rail project, where prosperous homeowners in Palo Alto are doing everything in their power to try and stop the train project, merely because they think it will make their communities look ugly. They've even been able to convince the city's mayor, Pat Burt, to reverse his position in support of HSR and to instead call for a delay in the project, despite a 30% unemployment rate among Peninsula construction workers.

The same attitude extends to our schools, which are facing a serious crisis as teachers are laid off, campuses closed, and educational opportunity shrinks; to our health care system, which careens from one crisis to another; and to our overall economy, which is increasingly dominated by a wealthy few who prefer to extract wealth that already exists, rather than invest in making new things that can create new wealth.

This isn't a new phenomenon. But here in 2010, we're seeing an almost colonial approach to economic development that destroys public resources and infrastructure combining with long-term unemployment (since wealth extractors have no interest in creating lasting jobs or prosperity) to produce a worsening social crisis. The NYT's Peter Goodman explored this in Orange County:

Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come.

Yet the social safety net is already showing severe strains. Roughly 2.7 million jobless people will lose their unemployment check before the end of April unless Congress approves the Obama administration’s proposal to extend the payments, according to the Labor Department.

Here in Southern California, Jean Eisen has been without work since she lost her job selling beauty salon equipment more than two years ago. In the several months she has endured with neither a paycheck nor an unemployment check, she has relied on local food banks for her groceries.

The article is worth reading in its entirety, telling stories of middle-aged, middle-class Californians who are not only out of work, but do not have the resources to make some necessary adjustments. Food stamps, welfare, and Medi-Cal are being cut precisely when the middle-class and others need it to avoid homelessness and starvation. We're cutting college classes and making it more expensive to even attend a community college and get some valuable retraining skills. Add in California's ongoing lack of public housing and public job creation and you have a recipe not just for long-term unemployment, but for a massive expansion of an already-persistent underclass.

The stories Goodman tells are not new to California. They are familiar to anyone with any experience in East Oakland, South Los Angeles, or other communities that had been cut off from public support and economic opportunity for decades now, owing largely to the skin color of their residents. We are now seeing those problems grow deeper by becoming broader.

To bring it back to the great unraveling, the attitude of California's right-wing politicians, who govern this state by virtue of the 2/3rds rule, is that this suffering is a good thing. Chuck DeVore believes the unemployed should just leave California. Meg Whitman has made a call for higher unemployment a key campaign pledge.

They have allied with the wealth extractors to reach out to some of those who still have some financial resources left - longtime homeowners, those still making good money - to recruit them to support the destruction of California. They argue against any and all tax increases because if they don't, then the public might get the idea that some tax increases are indeed good and worthwhile, then California might follow Oregon voters and raise taxes on the rich and large corporations.

But it will take more than aggressively and persistently pushing for new investment in public services. As Friedman and Goodman both indicate, we also need to reorient our thinking. Our work and our society need to emphasize creating and making things, instead of making money on finances (rising home values, investment income, etc).

California has reached the end of a 60-year long model that emphasized massive consumption of non-renewable resources that caused major environmental problems, the most significant of which is global warming. We have the expertise, the workers, and the financial resources to address those problems by democratizing the economy, empowering more people to create sustainable ways of life, and building public services to provide the foundation upon which it depends.

Progressives will have to lead the creation of that new model for California. Nobody else will, because nobody else wants to.

Pundits like to claim California voters are anti-tax. Of course, we've raised various kinds of taxes at the state level, including the Prop 10 cigarette taxes in 1998, and the Prop 63 millionaire's tax for mental health programs passed in 2004. Still, even though our reputation remains, we've got nothing on Oregon, where no tax has been approved by statewide voters since 1930.

Until now.

Yesterday Oregon voters delivered a huge victory for progressives by approving Measures 66 and 67, raising taxes on incomes over $125,000 and on corporations to generate $733 million to close the state's budget deficit. The Oregon legislature had approved the taxes last summer, but a corporate/teabagger alliance organized to put it to voters in a referendum.

One wonders if the national media will cover this victory at all - much less at the levels of the Massachusetts Senate race. Although they'll almost certainly ignore it, the lessons for California are enormous and extremely important.

The opposition ran a well-funded campaign, led by Nike, Columbia Sportswear, and other big businesses. They were joined by Ari Fleischer's FreedomWorks and the libertarian publisher of the Oregonian, who used to be at the Orange County Register before it went belly-up. Together they ran a campaign arguing that the tax increases would worsen unemployment. But 55% of voters have rejected that, and instead showed that when a truly progressive campaign is waged, the right-wingers can be beaten. Even on taxes.

What it also shows is that progressive policies, supported by smart progressive organizing led by folks such as former US Senate candidate Steve Novick and the Oregon Bus Project, which reached out to younger voters and had a strong ground game, can beat well-funded, well-organized corporate/teabagger alliances.

Their message was deeply progressive:

These reforms protect nearly $1 billion in vital services like education, health care and public safety. These funds preserve class sizes, save jobs for teachers, provide seniors with in-home care, and provide health care for thousands of Oregonians through the Oregon Health Plan. In this time of economic crisis, we must protect those who have been hit the hardest — seniors, children and the unemployed — without putting more of a burden on the middle class.

It's a message that works nationally. And it's a message that'll work here in California. Voters don't like seeing their neighborhood schools close, or mass layoffs of teachers, or ending care for the disabled, or kicking kids off of health care. They don't want it, and are willing to raise taxes to prevent it.

All eyes now turn to Sacramento. Oregon proved, beyond any doubt, that anti-tax sentiment can be beaten by progressive taxes on the wealthy and corporations in order to save programs people like. The message could not possibly be any clearer. Voters want their programs saved, and are willing to tax the elite to do it.

Oregon netroots activist Carla Axtman may have had the best take on the victory:

Dear OR Legislators: When you take bold, progressive action--we have your back. Remember this night.

There is no reason now for California Democrats to not propose doing the same. We know that the 2/3rds rule is a huge obstacle that Oregon did not have. But if Democrats are to avoid making horrific choices like ending Healthy Families, it's time they took the fight to the Republicans, and made them defend these policies to the public by making them oppose progressive taxes.

We know a progressive message, selling progressive policy, backed by progressive organizing, can win. All California waits to see whether Sacramento Democrats know it too.

Arnold Schwarzenegger has released what is, mercifully, his final budget. It is a shocking "fuck you" to the people of California, a brazen hostage taking that proposes to eliminate basic social services unless the feds pony up $7 billion dollars. Even if they do so, Arnold plans to propose the same cuts that were rejected by the voters and the courts in 2009. This budget, more than any other proposal he has offered since he became governor in late 2003, shows the massive contempt Arnold Schwarzenegger has for his fellow Californians.

Although we may seem used to this kind of thing, the full details show just how horrifying and thuggish this governor and his budget are. It is a budget designed to protect the wealthy by making everyone else suffer, by driving the economy deeper into recession and strangling what little economic recovery we have witnessed.

• Massive cuts to (and essentially, the elimination of): CalWORKS, IHSS, Healthy Families. The IHSS cuts were done last year and have been blocked by the courts; Arnold's contempt for the law continues to know no bounds

• However, if the feds come through with $7 billion, the above can be spared. The other cuts described below, however, would happen anyway

• Changing gas tax to an "excise tax" to enable state to make further cuts to public transportation, part of Arnold's war on public transportation and his desire to shackle Californians to their cars, to rising oil prices, and to his oil company buddies - and would force $2 billion in further cuts to schools under Prop 98

• Raiding Prop 10 and Prop 63 funds *even though voters rejected this in May 2009*

• Approving the Tranquillon Ridge offshore oil drilling project and giving the funds to state parks, partly to block the ballot initiative to raise the VLF to fund parks

• $1.2 billion cut to school administrators. Before you say "but admin is bloated" - most school administrators are making $50K-$60K if that, and are basically solidly middle-class folks looking to make ends meet

• 14% pay cut to 200,000 state workers, though their furloughs would end

• $1.2 billion cut to prison medical care, even though the federal courts have said this is not possible

• No Medi-Cal benefits to legal immigrants who have been in the US less than 5 years, Healthy Families eligibility slashed to 200% FPL, elimination of adult health daycare

• No new taxes, and preservation of the indefensible corporate tax cuts made in the 2008 and 2009 budget deals

And a host of other things that have likely not yet come to light.

This budget is Arnold's parting shot - literally - to the people of California, his effort to prove that he really is, as David Dayen put it yesterday, "the worst, absolute worst chief executive in national history."

In the wake of Arnold's State of the State address, most legislators made silly and obsequious statements to the effect of "we like what Arnold had to say, we can work with him!" One of the only legislators to give a proper response was Ted Lieu, who equated the prison privatization plan to Blackwater and pointed out that many groups, including religious groups, are vehemently opposed to private prisons.

Will Sacramento Democrats fold in the face of this crappy budget? Or will they follow Ted Lieu's lead, and House Speaker Tip O'Neill's lead from the 1980s, and declare Arnold's budget DOA? Refuse to even consider it?

There may be signs that the Sacramento Democrats have found their spines. According to Capitol Weekly Senate President Pro Tem Darrell Steinberg's response was "you have got to be kidding" and "we are going to take a different approach." That's a start, but Steinberg needs to reject this out of hand.

Progressives and Democrats across the state will be watching their legislators very closely and carefully in the coming weeks and months to ensure they take a strong, firm stand against this reckless and insane budget. California Democrats will have a very, very difficult time motivating their base to show up in November if they yet again give in to Arnold's thuggery. It's time they stood up and said "no" in a firm, loud, and collective voice.

Back in the February budget battle, notorious right-wing SoCal talk show hosts John and Ken put the heads of Republican legislators who voted for the tax increases on sticks as a threat of grassroots wingnut revolt. Their primary enemy became GOP Assemblymember Anthony Adams (AD-59), who they targeted with a recall effort, gathering and submitting signatures to put a recall on the ballot. It was to be the biggest demonstration yet of the power the KFI duo have over California politics - and the Republican Party.

Except they failed.

We learned today that the recall effort will fall 11,000 signatures short of qualifying for the ballot, according to the random sampling projections. John and Ken turned in 58,000 signatures but the sampling projects less than half - about 24,500 - will be valid, short of the 35,825 they needed to make the ballot.

Chalk this up as a pretty big FAIL on the part of John and Ken and their own SoCal version of the teabagger movement. Armed with one of the West Coast's most powerful radio signals and one of the highest rated shows in the region

On Twitter I noted that if they couldn't get the recall on the ballot, maybe John and Ken aren't so powerful after all. Anthony Adams agrees. Once again, the great anti-tax revolution of 2009 is a mouse that failed to roar.

Late last week we learned that California's unemployment rate dropped 0.1% in September, from 12.3% to 12.2%. That stat obscures far more than it reveals, including the fact that the 12.3% rate for August was an upward revision of the earlier reported number.

More significantly, the stat is not an accurate reflection of the job market in California. We actually lost 39,000 jobs in September. The only reason the rate appears to have dropped is that a significant number of the long-term unemployed have stopped looking for work and are no longer counted as "unemployed.

Nearly 1/3 of those lost jobs came from the public sector, as Steven Levy explained:

The state's job losses were especially pronounced in construction, which lost 14,100 jobs over the month, and government, which lost 12,700.

Cutbacks in government employment, which includes public schools, are partly to blame for the state's lackluster performance this month, said Stephen Levy of the Center for the Continuing Study of the California Economy.

"We are disproportionately hit in the government sector because our state and local governments are having worse budget shortfalls than in other states," he said. (LA Times, 10/17/09)

As Atrios said, that's not the way it's supposed to work. Government needs to be the employer of last resort, especially in a state that has the highest unemployment levels in 60 years. When 12,700 government employees lose their jobs, that translates into less consumer spending, which in turn means pressure to lay off more workers, all of which results in less tax revenue for the state, which merely exacerbates the vicious circle.

Yet Arnold Schwarzenegger simply doesn't care about the unemployment crisis. Instead of working to create private sector jobs through the preservation and expansion of public sector jobs, Arnold has engaged in a right-wing shock doctrine attack on the basic services of the state, an attack that was never going to succeed before the recession hit.

Once upon a time conservative Republicans claimed job creation was their #1 task, and that we had to give corporations whatever they wanted to create jobs - tax cuts, regulation cuts, etc. California did so - and as a result we have a far larger recession and unemployment numbers than we've ever had when Big Government supposedly ruled our political economy.

Today, you'll hear nary a peep out of the Republican Party about jobs. Sure, the Cal Chamber will publish its list of "job killer" bills, but that's only the public excuse to give Arnold the reason he needs to veto bills he'd have vetoed anyway. Instead you have a party that simply does not care about unemployment and the jobless. Instead, to hear Chuck DeVore tell it, the unemployed should just leave California.

California Republicans see unemployment as an unalloyed good, something to be embraced as a tool to destroy what remains of the New Deal and create a working class utterly dependent upon and unable to resist corporate power. California's economic policy has become nothing short of kleptocracy, justified by a constant media drumbeat demanding greater spending cuts, apparently for their own sake.

It is up to Democrats and progressives, then, to make the case to California that jobs matter, that jobs are what this state desperately needs, and that Republicans have not just given up on providing jobs, but are actively cheerleading unemployment and attacking the jobless.

Of course, we don't need jobs for their own sake. We need quality jobs, jobs that pay a living wage, jobs that are sustainable and not dependent on the latest asset bubble Ponzi scheme. And just as we learned in the 1930s, we need government to step in and provide them - instead of actively destroying them.

A few weeks back the Guardian's Sunday paper, the Observer, published a long article titled Will California become America's first failed state? It was one of their most widely read and emailed articles that week, and generated a lot of responses. One of them was mine at Calitics.

The Guardian wanted a response to their article for their Comment is Free section of the website, and asked me to write it. The result is now available: From Golden State to failed state.

With a 700-word limit it was difficult to be more expansive than I could here at Calitics. But my article makes the basic points: the 20th century model of California, emphasizing sprawl and weighing government down with absurd, non-functional rules designed to protect that sprawl, have produced "a California that more closely resembles the world of Charles Dickens than that of the Beach Boys."

We need to craft a new vision of the California Dream for the 21st century. Go read the article to see what that would look like.

Just a few months into the 2009-10 fiscal year, and after three excruciatingly painful rounds of budget cuts (September 2008, February 2009, and July 2009) we learned today from John Chiang that California's budget is again in the red:

State revenue has already fallen more than $1 billion short of assumptions in the budget lawmakers passed less than three months ago, according to a new report from the state controller.

Disappointing income tax receipts are the main culprit, falling 11% below what lawmakers and Gov. Arnold Schwarzenegger expected when they agreed on a patchwork budget during the summer, halting the state’s issuance of IOUs. Sales and corporate taxes have also slid below projections.

"While there are encouraging signs that California's economy is preparing for a comeback, the recession continues to drag state revenues down,” said Controller John Chiang in a statement. He called the new figures “a major blow to a budget that is barely 10 weeks old.”

Even before the bad fiscal news, policymakers were bracing for a big budget deficit next year. The Department of Finance anticipates a $7.4-billion deficit in 2010-11. That’s a conservative estimate, because lawsuits have tied up or reversed some planned budget cuts.

As we've made quite clear here at Calitics, the previous budget deals did absolutely nothing to solve the state's economic and fiscal crisis. Despite those who would have us believe the problem is somehow caused by "overspending," we are actually seeing the effect of state budget cuts that have laid off thousands of workers, and caused them as well as those who remain to spend less money in the state. It was entirely predictable that the massive budget cuts would merely weaken the economy further and thereby exacerbate the cycle of decline in revenues.

But it should come as no surprise to us that such an outcome has taken place. At no time during the present recession have legislators and the governor given any thought to how they will produce economic recovery. The dominant impulse in Sacramento is to cut, to cut for its own sake, to cut when it costs money to do so, to cut when it is illegal to to do, to cut when it further weakens an already disastrous economy.

The last thing California needs are the further and deeper budget cuts that we're likely to hear suggested in the wake of this news. California instead desperately needs jobs, particularly unionized, well-paid and high-benefit government jobs.

Californians also need affordable health care. They need affordable transportation. They need also more educational options. As Paul Krugman pointed out today, the cuts to education are weakening our economy and will cause permanent damage:

For example, the Chronicle of Higher Education recently reported on the plight of California’s community college students. For generations, talented students from less affluent families have used those colleges as a stepping stone to the state’s public universities. But in the face of the state’s budget crisis those universities have been forced to slam the door on this year’s potential transfer students. One result, almost surely, will be lifetime damage to many students’ prospects — and a large, gratuitous waste of human potential.

Krugman calls for an emergency package of aid to state and local budgets, a call we at Calitics heartily second.

But we must also work hard to stop the 121 Herbert Hoovers in Sacramento from doing further harm to an already stressed state. We've tried Republicans' neo-Hooverite solution. Democrats have insisted we had no choice to go along with it, but they have instead caused untold suffering and pain to the people of California without gaining anything in return.

As we prepare for the next budget battle, we need to also prepare to demand that Democrats abandon neo-Hooverism and stop embracing policies and budget deals that merely make the economic and fiscal crisis worse.

Yes, our state has severe structural governance problems that make truly progressive solutions difficult. But the first step toward fixing those structural problems is to articulate a clear vision for a fairer, more prosperous, and more economically secure California. Only then will Californians be willing to dismantle the structural barriers that have strangled our state over these last 30 years.

Earlier today at Calitics David Dayen leveled his criticism of the Sacramento Democratic establishment for their apparent failure to produce an initiative to roll back the 2/3rds rule and start fixing California's broken government.

Here I want to offer a slightly different perspective on the issue of what we need to do to win the battle. This isn't a disagreement with David, but instead a discussion of something related - the question of how it is we win this battle.

My own views on this have evolved somewhat over the last 6 months. I very much think we need to be "making the argument" for majority rule, and that so far this hasn't yet been done.

And the way that has to be done is to place the 2/3rds rule into a broader effort to emphasize progressive values. This is a twofold approach that requires us to do two things:

1. Show Californians where progressives want to take them: Universal health care, free higher ed, eliminate traffic, create sustainable jobs, etc. Articulate our end goals and get people excited about them, since it's hard to excite people about procedural questions.



2. Show Californians how we want to get there. Go populist and hammer the shit out of the corporations and wealthy folks who benefit from the current tax structure, and push for sensible revenue solutions consonant with that populism that can achieve the promised goals.

I think that to emphasize the procedural problems (the 2/3rds rule) before emphasizing the fundamental injustice and inequality of our tax code is to put the cart before the horse. If we are going to reverse the polling and win this, we need to first mobilize Californians behind the notion that our state's economic problems and our inability to properly fund schools or healthcare or parks or transit is because we are letting those with the money escape their obligations.

The PPIC and Binder polls (the one from the May 19 election) have both shown the public is willing to support certain taxes to preserve important services. So the move should be to push hard for an oil severance tax to fund schools, or closing corporate tax loopholes to expand Healthy Families, or to jack up taxes on the wealthy (particularly taxing unearned income) to bring down higher ed tuition, or something to that effect.

Dems should plan to move these things in the next legislative session and spend several weeks beforehand making this argument. Back Republicans up against a wall, make them defend the unpopular tax breaks for the unpopular bandits that have ruined out economy. And when the Republicans predictably use the 2/3rds rule to block those revenue solutions, then we will be in a much better position to win public support for majority vote on revenue.


We will have the opportunity over the next 12 months to move on this strategy, especially as outrage builds over the existing cuts. That outrage is not about process, but about the basic values of this state being violated and cast aside in order to enable the wealthy to get tax breaks at the expense of everyone else.

There are some folks in Sacramento who seem to get this. Lt. Gov. and future Congressman John Garamendi has been calling for an oil severance tax to fund higher education.

I know that leads some to criticize "ballot box budgeting" and argue that dedicating specific taxes to specific services doesn't help the problems with the general fund. I have always been much less critical of ballot box budgeting than others, partly because I see it as a necessary holding action until we resolve Prop 13 itself.

But more fundamentally, we need to overturn 30 years of anti-tax rhetoric that has sank very deeply into the minds of many Californians, including those who otherwise call themselves progressive. One of the core tenets of the anti-tax mentality is the notion that government would just waste new revenues. Public hostility to dumping money into the general fund is significant.

So what we have to do is rehabilitate the notion of using taxes to provide services. Californians need to see the connection between low taxes and failing schools, jammed roads, a lack of health care, and a lack of jobs. And they need to see that it is Republicans that are blocking those things from getting done, by the 2/3rds rule.

The only reason anyone in America knows about "reconciliation" in the Senate, or the "mark-up" process, or even the "filibuster" is because those things stand in the way of key progressive goals. Those Senate procedures have screwed us and have needed to be eliminated for a long time, but only when they stood in the path of something people wanted did awareness rise.

In short, we are not going to win this if it is framed as a procedural problem, or even as a way to fix a broken state. We win the majority vote by enfolding it within a broader narrative and a broader campaign that uses progressive populism to beat the stuffing out of the large corporations and their allies in the Republican Party, in the service of clear goals that people actively and strongly desire.

Steve Wiegand of the Sacramento Bee telegraphed his intention yesterday to spread the right-wing myth that California has a spending problem. And sure enough, that's what we got from Wiegand today in an article with the stunning title of "State officials spread loot like Santa." That quote comes from Dave Doerr, head of the right-wing California Tax Association, and furthers the myth that California "overspends" and is, unfortunately, *not* a reference to the "two Santa Claus" theory.

Wiegand's article repeats many of the right-wing frames about state spending - yet at the same time it actually examines the structural revenue shortfall. The two are related, of course - Wiegand's study of the structural deficit is vague and lacking much detail, and is used to buttress the argument that California overspends. In short, Wiegand is taking as gospel the right-wing claim that our state budget mess is a product of overspending, when in fact it is a problem of undertaxing. Take this section of the article, for example:

Doerr's observation is borne out by a Bee analysis of California's spending and debt patterns compared to other states', which found California spends more per capita than the national average in every government program except highways and public welfare - but consistently runs budget deficits and takes on more and more debt.

Why would that necessarily be a bad thing? Most other states are penurious with their public spending, and have economic and social problems that reflect such miserly policies.

Doerr appears again:

Doerr's reference is to a penchant of lawmakers and governors over the past three decades to spend whatever money they have on hand - and promise even more - then let succeeding budget drafters fend for themselves.

This is in fact a core conservative frame. They believe that when it comes to budgets, you can spend whatever you take in, and nothing more. If you have $100 billion in revenues one year and $80 billion the next, then you just have to cut $20 billion in spending, no matter the effect.

A progressive budget frame is that it is government's job to see to it that certain tasks get done because they are inherently valuable or necessary. This might include keeping open 220 state parks, or ensuring children under age 10 learn in classrooms of no more than 20 students, or that our state's children and poor families have access to health care no matter the state of the economy.

Under that frame, the "overspending" claims are rendered even more absurd than the Wiegand article shows them to be, given its lack of explanation in most places for what actually caused the spending spikes. California needs to find the revenue to maintain core services, and to maintain and even expand government employment as a counter-cyclical recovery measure. The UCLA Anderson Forecast showed that budget cuts have worsened CA's recession - but none of that seems to have made it into Wiegand's article.

Given the dearth of media coverage of California politics, it's especially unfortunate that when a major paper chooses to devote so much time and space to examining the budget crisis, they have not only gotten it so deeply wrong, but have wound up reinforcing right-wing dogma in the process.

Anytime a member of the media says there are "inarguable facts" about the state's economic and financial crisis, that's usually a sign that you should be extra dubious of their claims. Steve Wiegand uses that phrase in his Sunday SacBee article to essentially make the Parsky Commission's case for it, in advance of whenever it is exactly that they're going to produce an actual final proposal. Wiegand's article essentially rehashes the basic center-right argument about state government: our taxes are too volatile, and combined with "reckless spending" and the severe economic crisis, that explains the state budget mess:

Three inarguable facts dominate California's system of financing state government:

• It's a mess.

• It's currently a mess in large part due to the deepest and most pervasive global recession since the Great Depression of the 1930s.

• It's been a mess for much of the past three decades because the combination of an out-of date tax system, reckless spending and fickle voters has made state government extremely vulnerable to the ebbs and flows of the economy.

I'll grant Wiegand the first two points. Since 2007 California has had a total of about $60 billion in budget deficits. $47 billion of that is due to decline in taxes. But much of that decline is led by collapsing sales taxes. This recession is a balance sheet recession led by consumers working feverishly to pay down debt. Until the debt is purged and wages grow, the massive consumer spending binge of the last 20 years *is never coming back*.

That starts us down the path of realizing just how wrong Wiegand is in making his third point. Wiegand repeats the discredited "volatility" argument to infer that the reliance on personal income taxes is flawed:

Since California relies so heavily on those revenues – more than half of general fund income comes from income taxes – it makes state government extremely susceptible to swings in the economy.

"When the market tanks, those taxpayers sneeze," said H.D. Palmer, the veteran spokesman for the Department of Finance. "And when those taxpayers sneeze, the state budget catches pneumonia."

One of the reasons CA relies on that income is because Prop 13 has meant the state does not capture the wealth temporarily created by two massive real estate bubbles since 1978 (one in the 1980s and the other in the 2000s).

But Wiegand misses two other crucial points about income taxes. Both personal and corporate income taxes have held up better than sales taxes during this recession. This is an especially important point during this so-called economic "recovery" where those at the upper end of the income scale, along with large corporations, are weathering the storm pretty well. It is nutty to assume that they need their tax burden reduced.

Wiegand's entire embrace of the "volatility" argument is of course flawed from conception, since there is no government budget out there that I'm aware of that has been able to resist the stress of the economic downturn. Those states that haven't had significant budget crises, like North Dakota, also haven't been hit as hard by the recession. The underlying economy in California is volatile and has been since about 1980. It makes perfect sense that tax collections would reflect a boom-and-bust economy.

The rest of Wiegand's article focuses on the sales tax. As I argued above, any examination of state tax policy that does not examine the collapse of consumer spending, likely to be a long-term trend, is probably not going to be a very useful guide to what's actually happening. After mentioning in passing the notion of modernizing the sales tax, he quickly shifts to a trip down memory lane, to the widely-mocked 1991 "snack tax" that Pete Wilson and the Legislature used in their solution to the budget deficit that year. The "snack tax" was repealed at the ballot box in 1992, and Wiegand uses it to argue that California voters are reluctant to extend taxes to untaxed goods and services.

But is still actually the case? Polls from 2009 suggest voters are willing to raise taxes to protect existing state services. Taxing accounting services, for example, in order to keep teachers in classrooms or taxing soda and junk food to keep parks open may well be more popular today than it was 17 years ago.

Wiegand closes his article by letting David Doerr of the right-wing California Tax Association repeat the totally unverified and undefended claim that the other element in our state's fiscal crisis is "overspending":

"The tax structure has been pretty consistent in providing income," Doerr continued. "It's spending. They (elected officials) just can't say no."

This claim isn't supported by any evidence in the article, and as it's the very last sentence in the article, it is not rebutted. California's media takes it as a given - an "inarguable fact" as Wiegand said at the outset - that we have "reckless spending." They believe this is so self-evident that they don't actually have to prove it or explain it or justify the claim.

In fact, California's spending over the last 6 or 7 years has been flat. The largest amounts of spending have actually gone to tax cuts, with Arnold Schwarzenegger's $6 billion per year backfilling of the VLF cuts in 2003 being the most obvious example.

When will California's major media outlets start questioning the "reckless spending" myth? As long as they treat that myth as an "inarguable fact," it's not something I'm going to hold my breath to see.

You wouldn't know it by paying attention to the goings-on in Sacramento these days, but California is mired in one of the worst economic crises we've experienced in several decades. Over the Labor Day weekend our friends at the California Budget Project charted the depths of that crisis in a new study, "In The Midst of the Great Recession: The State of Working California, 2009."

The CBP's study has already been getting media coverage for its stat that 2 of 5 working-age Californians are jobless. But the report gives a fuller picture of just how bad things are out there. Among the conclusions:

• California has about the same number of jobs in July 2009 that it did in January 2000 - in other words, the recession has wiped out a decade's worth of job growth. Add in the fact that we have 3.3 million more people of working age and you can see how severe the recession is.



• Job losses have been more severe - in both overall number and the rapid rate of decline - than in any previous recession (at least those with available data).



• Wages are declining across the board, but the top wage earners have seen increases, and the top 1% is taking a share of the overall wealth at a rate unseen since the Roaring '20s, which as we know ended so well.



• More and more people are beginning to exhaust their unemployment benefits, a situation likely to worsen as high unemployment lingers for several more years.

There are several important conclusions I take from this study. You're unlikely to ever see these in what's left of the major media in this state, and even Democrats in Sacramento don't seem to be touting these stats or conclusions as evidence of a need for change.

1. Arnold Schwarzenegger is a job killer. He and his allies at the Chamber of Commerce like to tout their opposition to so-called "job killer" bills that usually increase taxes or regulations on businesses. And yet after 6 years of these policies California is far worse off than we were at the depth of recession that ultimately cost Gray Davis his job. If Democrats ever wanted evidence that anti-tax, anti-regulation policies are an economic disaster, California in 2009 is it.



2. Sacramento has nothing - nothing whatsoever - to offer the jobless or to this state's future. As I often remark, the only words forbidden to be spoken within the halls of the state Capitol are "economic recovery." Both Republicans and Democrats have agreed that their #1 task isn't economic recovery but to eviscerate government when it is most desperately needed; they merely disagree on the particulars. Economic recovery should take precedence over nutty demands to cut spending, but in Sacramento, it's been the other way around.



3. Specifically, we have yet to see *any* plans from either party in the state legislature for producing meaningful, lasting economic recovery. California voters took matters into their own hands last November by voting for Proposition 1A, to create 160,000 short-term jobs and 450,000 long-term jobs by building a high speed rail system. But HSR, to name but one example of possible government job creation programs, has very few defenders in the Legislature, and plenty of opponents (including Democrats like Sen. Alan Lowenthal).



4. Lacking any plan for economic recovery or job creation, the factors identified in the CBP report are going to get much worse. Wages will continue to drop for everyone who isn't already wealthy, as persistent unemployment perpetuates a weak economy and fuels a deflationary cycle.

So what do we do about this?   Read More »