Referring the Tax Shuffle
The tax and fee scheme dreamed up by legislative Democrats and probably soon to be signed into law by Gov. Schwarzenegger is rightly called the “nuclear option” because it blows away legislative Republicans by allowing tax increases to be passed with a majority vote. This is probably the first step in rendering Republicans powerless because the Democrats are sure to come up with a way to get around the two-thirds budget vote as well.
This is nothing new – it has been around for a long time. It was just never triggered until now. Here’s how it works: Democrats are raising sales, income and oil company taxes but lowering the gas tax, thus creating a “tax neutral” situation. Their lawyers tell them this does not trigger the constitutional two-thirds vote requirement for tax increases, it can be done with a majority vote. Democrats then replaced the gas tax with a 39 cent per gallon “fee.” “Regulatory fees” are majority vote thanks to a 1997 court case called Sinclair Paint. In 2000, business tried to pass an initiative to disallow majority vote fees but it failed.
The Advice Arnold Didn’t Take
As I watch Gov. Schwarzenegger declare that the state has to have a real balanced budget plan — with tax increases and spending cuts — I can’t help but think of Ed Leamer.
Leamer is the director of the UCLA Anderson Forecast. But he’s important to the story of Arnold the Politician because of advice he gave back in 2003, when Schwarzenegger was running for governor.
Leamer met with Schwarzenegger during one of the policy session he held with experts early in his 2003 gubernatorial campaign. Leamer also was part of the “economic recovery team” of advisors that Schwarzenegger invited to an LAX-area hotel early in his campaign. This group, headlined by billionaire Warren Buffett and former Secretary of State George Shultz, had a private meeting on Aug. 20, 2003, that went for more than an hour.
The state faced a massive budget deficit (roughly as large as some of the estimates for the current problem). Schwarzenegger was running against taxes, so he and his advisors were pitching a convoluted argument that the shortfall could be broken into pieces, with borrowing and a spending limit bringing the budget back into balance. But Leamer didn’t buy it.
From Christmas 1944 to Today
Christmas 1944 was a pivotal time for the Allied efforts to defeat Nazi Germany. In the 6 months since the D-Day landings they had driven the Wehrmacht out of France and were poised to cross the Rhine into Germany proper. The soldiers of the Allied armies were exhausted and their supply lines were stretched to the breaking point.
While they rested, regrouped and resupplied the Germans had other plans. Hitler and his generals threw everything they had into a final offensive. The plan was to drive a wedge of men and materiel into the American lines thereby splitting the Allied armies in two and then sprinting to the Belgian coast to cut off their supplies. The attack was launched 16 December 1944.
It was a bold move born out of desperation and in the beginning they routed the Americans overrunning their positions and capturing, killing or wounding thousands. The situation was bleak as the Allied High Command scrambled to thwart the German offensive.
Here Come the New CA Legislators: Judges
California is going to be governed from the courtroom. November’s most controversial ballot measure, Proposition 8 on gay marriage, is court-bound. And, the legislature’s Democrats have offered up a complex approach to raise revenue in an attempt to sidestep the state’s standard operating procedure. If this maneuver gets the governor’s signature, the courts will be rendering a verdict on this as well.
Of course, it’s not uncommon for courts to decide the fate of laws. But in both the Prop 8 and tax law cases it appears judges will be going beyond the role of umpire in precedent setting ways.
In the Proposition 8 case, Attorney General Jerry Brown has taken the unusual position of declaring he will not defend the law passed by the voters, but argues that Proposition 8 is in conflict with “inalienable rights” which cannot be altered by an initiative constitutional amendment.
This argument will bring the judges into the long debated issue of natural rights versus legal rights. Natural rights are not based on laws, customs or political beliefs. Thomas Jefferson, in the Declaration of Independence, asserted that a people coming together to govern themselves may do so under the “Laws of Nature and of Nature’s God.” These natural laws cannot be set aside by civic action.