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Teabaggers Fail Again
Posted Nov 20, 2009 4:02pm
by Robert Cruickshank, Courage Campaign
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Posts with the tag deficit
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:
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:
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.
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.
Below is the text of a letter I sent to members of the LGBT Legislative Caucus and Equality California, in response to an email EQCA sent on May 16, on behalf of the LGBT Caucus which urged "Yes" votes on Propositions 1A-1E.
I am writing to express my disappointment in both EQCA and the members of the LGBT Caucus for the email regarding the May 19 special election. First of all, I want to say that I understand that the propositions on the ballot exist only because California has a totally screwed-up budget process and that these propositions were part of the compromise that finally saw the budget ratified. I appreciate that the LGBT Caucus is probably merely holding up their end of the bargain in urging a blanket "Yes" vote on all the propositions -- at least I hope that is their reason. I also respect the fact that as the primary LGBT-lobbying organization in the state, EQCA has a reciprocal relationship with members of the LGBT caucus and, though without taking an official position on the propositions in question, did the Caucus a political favor by sending this message out to the EQCA listserv.
But now I want to take a moment to hopefully help you to understand my situation, and why I am so tremendously disappointed in both the LGBT Caucus and EQCA for what I believe is ultimately a cynical, political accommodation that will have grievous effects on many families. A simple disclaimer does not absolve EQCA of its social responsibility to the members of the LGBT community who look to them to provide sound political and legislative advice. Nor does being LGBT entitle the Caucus to use an organization like EQCA to facilitate its backdoor political deals. Read More »
I am writing to express my disappointment in both EQCA and the members of the LGBT Caucus for the email regarding the May 19 special election. First of all, I want to say that I understand that the propositions on the ballot exist only because California has a totally screwed-up budget process and that these propositions were part of the compromise that finally saw the budget ratified. I appreciate that the LGBT Caucus is probably merely holding up their end of the bargain in urging a blanket "Yes" vote on all the propositions -- at least I hope that is their reason. I also respect the fact that as the primary LGBT-lobbying organization in the state, EQCA has a reciprocal relationship with members of the LGBT caucus and, though without taking an official position on the propositions in question, did the Caucus a political favor by sending this message out to the EQCA listserv.
But now I want to take a moment to hopefully help you to understand my situation, and why I am so tremendously disappointed in both the LGBT Caucus and EQCA for what I believe is ultimately a cynical, political accommodation that will have grievous effects on many families. A simple disclaimer does not absolve EQCA of its social responsibility to the members of the LGBT community who look to them to provide sound political and legislative advice. Nor does being LGBT entitle the Caucus to use an organization like EQCA to facilitate its backdoor political deals. Read More »
April is the state's big revenue month, as personal income taxes flow into the Franchise Tax Board and refund checks flow out (leaving me a whopping $200 richer). Unsurprisingly, this April's receipts were significantly below expectations:
So we're already $9 billion in the hole. If Propositions 1C, 1D and 1E fail, as it looks like they will, then the deficit could grow to $16 billion.
The size of the May 20 deficit suggests the need for Democratic legislators - the same people who constantly ask "what's YOUR plan?" of progressive opponents of the flawed May 19 propositions - to answer that question themselves. A $9 billion deficit doesn't seem like a good time to straitjacket ourselves further with a spending cap and a "rainy day fund on steroids" via Prop 1A, or blow a $2 billion hole in the budget by selling more lottery bonds than there are lottery revenues.
And so today Dan Walters asks the same question I asked a couple weeks ago - What's Plan B?:
This is where the absence of a coordinated progressive and Democratic pushback against the demand to cut spending and the ideologies that underlay it is so vital. Instead Democratic legislators have cast the post-May 19 spending cuts as somehow inevitable, instead of rallying the base to fight those cuts. Had that rallying effort been done I am convinced that there would be greater support from Democrats and progressives for the May 19 propositions.
The May 20 strategy, as I see it, involves at least these pieces:
Walters speculates that with record low approval ratings the legislature isn't in any position to lead these kind of changes. Here I disagree. I think their low ratings are precisely /because/ they haven't yet offered these kinds of solutions.
The other argument is of course that none of the above are possible because of Republican obstruction. But that's begging the question. It is *long past time to challenge Republican obstructionists.* This is a party that has hardly any public support any longer. They are vulnerable to attack.
The best place to start is higher income taxes on the wealthy. 75% of voters support those taxes, according to the recent Field Poll. Democrats should pick a *big* fight on that starting on May 20. Force Republicans to use the 2/3 rule to kill those taxes - and you've got yourself on hell of a winning issue for 2010. Or you actually force Republicans to climb down and back those taxes.
The point is that no matter what happens on May 19 we're going to have a massive deficit and therefore a fight on our hands on May 20. Let's come together as progressives and Democrats, no matter our views on the propositions, to prepare to win that battle.
April, by far the largest tax collection month for California, ended in a whimper, coming up more than $1.8 billion short in personal income and corporate taxes.
California was about $750 million short of projected tax collection after March, and April's shortfall puts it $2.5 billion behind for the fiscal year ending June 30.
So we're already $9 billion in the hole. If Propositions 1C, 1D and 1E fail, as it looks like they will, then the deficit could grow to $16 billion.
The size of the May 20 deficit suggests the need for Democratic legislators - the same people who constantly ask "what's YOUR plan?" of progressive opponents of the flawed May 19 propositions - to answer that question themselves. A $9 billion deficit doesn't seem like a good time to straitjacket ourselves further with a spending cap and a "rainy day fund on steroids" via Prop 1A, or blow a $2 billion hole in the budget by selling more lottery bonds than there are lottery revenues.
And so today Dan Walters asks the same question I asked a couple weeks ago - What's Plan B?:
More taxes? Rejection of Proposition 1A, the linchpin measure, would not only short-circuit the taxes enacted in February but probably make any additional levies politically impossible. Democratic leaders could try again to enact taxes without Republican votes but would face a legal challenge and political fallout. A massive bailout from Washington? Unlikely.
This is an immense mess, partly caused by the recession, partly caused by years of fiscal irresponsibility. And it may be the day of reckoning that Capitol politicians had long avoided, compounded by the obvious anger of voters....
Wholesale slaughter of state spending may be their only option. This is a pivotal point in California political history, a fiscal Armageddon.
This is where the absence of a coordinated progressive and Democratic pushback against the demand to cut spending and the ideologies that underlay it is so vital. Instead Democratic legislators have cast the post-May 19 spending cuts as somehow inevitable, instead of rallying the base to fight those cuts. Had that rallying effort been done I am convinced that there would be greater support from Democrats and progressives for the May 19 propositions.
The May 20 strategy, as I see it, involves at least these pieces:
- Majority vote budget
- Wealth taxes
- Reverse corporate tax cuts
- Push repeal of the 2/3rds rule
- Immediate and meaningful prison reform
- Legalization, regulation and taxation of marijuana
Walters speculates that with record low approval ratings the legislature isn't in any position to lead these kind of changes. Here I disagree. I think their low ratings are precisely /because/ they haven't yet offered these kinds of solutions.
The other argument is of course that none of the above are possible because of Republican obstruction. But that's begging the question. It is *long past time to challenge Republican obstructionists.* This is a party that has hardly any public support any longer. They are vulnerable to attack.
The best place to start is higher income taxes on the wealthy. 75% of voters support those taxes, according to the recent Field Poll. Democrats should pick a *big* fight on that starting on May 20. Force Republicans to use the 2/3 rule to kill those taxes - and you've got yourself on hell of a winning issue for 2010. Or you actually force Republicans to climb down and back those taxes.
The point is that no matter what happens on May 19 we're going to have a massive deficit and therefore a fight on our hands on May 20. Let's come together as progressives and Democrats, no matter our views on the propositions, to prepare to win that battle.
With the latest figures about the state budget deficit - $28 billion over the next 2 years - it seems beyond all doubt that Arnold Schwarzenegger is a failure as governor. The sole reason he took office in 2003 was to replace Gray Davis, who faced a similarly large budget deficit. Arnold promised to end this, and it is clear he has failed to deliver. Instead the state of California stands on the precipice of bankruptcy and crippling service cuts that will dramatically worsen the economic downturn.
And it is clear this is primarily Arnold's fault. His first act as governor was to roll back the VLF, blowing a $6 billion annual hole in the state budget (roughly half the annual deficit - remember that the $28 billion figure is for two years). That act of irresponsibility was compounded by using borrowing to close the rest of the 2003-04 deficit. As the budget deficit returned in 2007 Arnold stubbornly refused to admit the need for new revenues.
He has also refused to engage in the necessary lobbying to produce a budget solution - instead he wishes and hopes Republicans will see the light despite years of evidence suggesting they instead see a budget crisis as an opportunity to ram through far-right ideas that nobody really wants.
The Legislative Analyst Office, under its new leader Mac Taylor, directly calls for taxes as the solution to the budget deficit. The report is a bit too favorable to Arnold's plan and suggests too many cuts, but it makes this all-important point about spending cuts:
Here again I think the new LAO is being too moderate. The report notes that much of the upward pressure on spending is coming from increased usage of Medi-Cal, for example, suggesting that government services are becoming more necessary in a recession. It's the safety net at work - and cutting the safety net is the last thing we ought to be doing.
Republicans like Mike Villines might be peddling books by Arthur Laffer, but as the California Budget Project explains the evidence proves that tax increases are the best way to provide a budget fix that doesn't hurt the economy.
And of course, spending cuts and tax increases hit different Californians. Spending cuts hit working and middle-class people particularly hard, especially the truly insane proposals to increase student fees for higher ed. But a return to the pre-1998 tax levels would hit the wealthy while providing the working and middle classes with the safety net and economic opportunities they need.
That we have to face such choices at all is a testament to how epic a failure Arnold Schwarzenegger has been for California. The LAO's report is damning:
Those are shocking figures, and they should indicate to every progressive and Democrat just how important it is to push out our own fairer, sensible, long-term solutions.
And it is clear this is primarily Arnold's fault. His first act as governor was to roll back the VLF, blowing a $6 billion annual hole in the state budget (roughly half the annual deficit - remember that the $28 billion figure is for two years). That act of irresponsibility was compounded by using borrowing to close the rest of the 2003-04 deficit. As the budget deficit returned in 2007 Arnold stubbornly refused to admit the need for new revenues.
He has also refused to engage in the necessary lobbying to produce a budget solution - instead he wishes and hopes Republicans will see the light despite years of evidence suggesting they instead see a budget crisis as an opportunity to ram through far-right ideas that nobody really wants.
The Legislative Analyst Office, under its new leader Mac Taylor, directly calls for taxes as the solution to the budget deficit. The report is a bit too favorable to Arnold's plan and suggests too many cuts, but it makes this all-important point about spending cuts:
The state's main options for addressing its budget dilemma--cutting expenditures and/or raising revenues--would both have adverse effects on the economy. Either type of option would reduce money held by or received by individuals or businesses that otherwise could be used for consumption or investment purposes. Because the state's economy totals more than $1.7 trillion in economic activity each year, however, spending reductions or tax increases totaling between $20 billion and $30 billion would have a relatively small impact on the overall economy.
Here again I think the new LAO is being too moderate. The report notes that much of the upward pressure on spending is coming from increased usage of Medi-Cal, for example, suggesting that government services are becoming more necessary in a recession. It's the safety net at work - and cutting the safety net is the last thing we ought to be doing.
Republicans like Mike Villines might be peddling books by Arthur Laffer, but as the California Budget Project explains the evidence proves that tax increases are the best way to provide a budget fix that doesn't hurt the economy.
And of course, spending cuts and tax increases hit different Californians. Spending cuts hit working and middle-class people particularly hard, especially the truly insane proposals to increase student fees for higher ed. But a return to the pre-1998 tax levels would hit the wealthy while providing the working and middle classes with the safety net and economic opportunities they need.
That we have to face such choices at all is a testament to how epic a failure Arnold Schwarzenegger has been for California. The LAO's report is damning:
The state's revenue collapse is so dramatic and the underlying economic factors are so weak that we forecast huge budget shortfalls through 2013-14 absent corrective action. From 2010-11 through 2013-14, we project annual shortfalls that are consistently in the range of $22 billion, as shown below.
Those are shocking figures, and they should indicate to every progressive and Democrat just how important it is to push out our own fairer, sensible, long-term solutions.
Today's LA Times has an interesting series of op-eds by historians and authors examining how past governors dealt with budget crises. It's an interesting look not only at how those governors all helped build the prosperous state that we're living off of today, but also how the real problem with the budget isn't a lack of pragmatism or deal-making, but ideology. And since the articles were commissioned by California Forward they are particularly important in shaping how we will respond to this crisis. Read More »
Today's LA Times shows how the proposed budget cuts are sending school districts scrambling to get layoff notices out by the March 15 deadline. Although these notices may not always lead to an actual firing, they do have a destructive effect on teacher morale. Already several of my family and friends who teach K-12 in Orange County have begun dusting off their resumes in anticipation of losing their jobs.
In my post at Calitics on Sunday I argued that the cuts, if allowed to happen, would have a reckless and destructive impact on California's economy. The LA Times article points out that there is another potential catastrophe that these cuts might cause. If teachers are fired and class sizes increase, it is going to be more difficult than ever to meet the unreasonable mandates of the odious No Child Left Behind law.
Rialto Unified has made some recent academic gains, and its superintendent worries that deep cuts could stall progress. The district scored a 661 on California's latest Academic Performance Index, below the state's target of 800; the API measures schools and districts on student scores in math, English and other subjects.
While the state API is a different metric than NCLB, if a district is having trouble meeting the API target, it is likely to have trouble meeting the much more onerous NCLB targets. As most educators - and anyone who has been a student - knows, the larger the classes, the more difficult it becomes to learn and achieve.
Among the penalties for missing NCLB targets include "replacing staff" or a takeover by "a private education firm." Either outcome involves less schools, less local control, less parental involvement, and an even deeper economic hit to thousands of working Californians.
Arnold's proposed budget cuts could therefore touch off a cascade of events that delivers a crippling blow to our public education system. The always excellent California Budget Project has put together a detailed list of the impact of those cuts, including a district-by-district list of cuts. Most district will lose at minimum $500 per student, with some rural districts going well above $1,000 per student. Those are staggering numbers.
This was supposed to be the year of education. Perhaps it still can be - it can either be the year we saved education, or the year we destroyed it. Sometimes our choices really are that stark.
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