The sequel, “Special Session 2, The Budget Monster is Still With Us” will have to end differently than “Special Session 1, Taming the Budget Monster.” You remember that one. It bombed at the box office, wasn’t around very long. In the end of that Special Session nothing much happened. The monster won.
So now a new cast of characters has joined the fight against the monster. Fortified by fresh blood from new recruits freshly arrived in Sacramento, the plan is to take down the monster this time. And there’s no question that this sequel will have a different ending. Because if nothing happens to the monster, quite a lot will happen to the state of California.
The state will run out of money to pay its bills. Vendors, recipients of state largess and probably public employees will feel the blow. But, all Californians will feel the effects. Interest rates on state bonds will explode, bankruptcies could ensue. It’s not a pretty picture.
And because this is a new legislature sworn in to manage the problem—a problem that is immediate, not next year’s budget as is the case when the annual budget squabble carries over the summer—there can be no “get out of town” budget because no one is getting out of town. The legislators will stick around and suffer the consequences.
Hard choices will have to be made. The situation did not get off to a rousing start when the SEIU public employee union proposed a budget solution calling for a huge tax increase of billions of dollars to solve the problem. This “solution” ignores the fact that such a tax increase will bring other problems like a deadened economy.
Economic growth is the way to make California whole again. Measures to spur job creation in the private sector are probably a more important tool than creating public sector jobs because the effects last for a longer time. More revenue comes into state coffers from economic growth than from tax increases over time.
Not that I don’t expect that there will be some revenue increases in a final budget package. I don’t like it, but I believe there will be. However, making sacrifices should not come from the private sector alone.
The private sector is certainly suffering. California unemployment has swelled to 8.2%. How about the public sector unemployment rate? Has that changed much? I don’t think so. Public sector workers even said they would not stand for a one day a month furlough that the governor proposed while many of their fellow Californians are joining the unemployment lines.
In this crisis, the majority Democrats have an opportunity to show they are not the puppets of the public sector unions. If we’re all in this together, let’s not see proposals like SEIU’s that slams the private sector with huge tax increases.
Maybe the legislators can lead the way with some symbolic action. How about taxing the tax-free per diem legislators get on top of their salaries. That would be like the automobile executives driving to Washington instead of taking a corporate jet.
If we come at the monster from a different direction, maybe this time we can take it down.