Governors Wilson and Davis on Prop 30 and the “Fiscal Cliff”

Joel Fox
Editor of Fox & Hounds and President of the Small Business Action Committee

Fox Business News anchor Neil Cavuto yesterday explored with former governors Pete Wilson and Gray Davis if by passing Prop 30 California’s action could represent a remedy for Washington’s “Fiscal Cliff” – the scheduled automatic spending cuts and across-the-board tax increases if no alternative budget solution is found.  Cavuto noted that California has cut spending and focused a tax increase on high-end taxpayers. That is a similar solution put forward by President Barack Obama – cut spending and tax the rich.

Davis said it “might be” the solution but he warned that the California tax increase should not be misread. Davis said it was a one-time event to protect schools.

Cavuto suggested a fear game was played by the Prop 30 campaign with the threat to cut schools. Davis responded there was “some fear” involved, but a “lot of truth” in the Yes campaign, as well.

When asked by Cavuto if he thought the tax increase would help boost California’s economic situation, Wilson responded, “Good God, no!” Wilson insisted the tax increases would make things worse.

However, when Cavuto suggested that voters must have thought differently, Wilson responded that he did not know what voters thought but admitted that there had been a “shift” in voters approach to taxes. He did note that voters, generally, were voting to raise the tax burden on someone else, meaning the rich.

Which gets back to the question whether Prop 30 is a “harbinger,” a word used by Cavuto a number of times, for a national solution.

Governor Jerry Brown thought so soon after the election when he told television host Candy Crowley that he believed California’s approach would serve Washington well.

During the Fox Business News interview of the former governors, a graphic on the screen spelled out that there are “Signs Democrats will take California-like tax hikes nationwide.”

Both the proposed Obama tax increases and the Prop 30 tax increases hit the same taxpayers – those making $250,000 and more.

Davis talked about both taxes and reigning in the appetite of those who want to spend more.

Cavuto was concerned that only one side in the debate would give in to avoid going over the fiscal cliff, implying spending cuts would not come if taxes were raised. Davis responded if only one side gives in there would be no deal, to which Cavuto added: good point.

Since the president’s plan to deal with the fiscal cliff was on the table before California voters made their decision about Prop 30 on Election Day, there is a question whether California’s vote presages a national solution. Certainly, supporters of the tax increase will point to California and say that voters agree with the idea of taxing the rich to fix a fiscal crisis. Yesterday’s Washington Post poll affirmed taxing the rich is a popular approach with voters.

For better or worse, California bellwether’s ring may be heard across the country again.

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