The deal is terrible. Pass it now.
The tax increases don’t make sense. (Sales tax hikes in a bad recession—not smart. And where’s that severance tax?). The spending cuts are huge. And another $11 billion in borrowing. Who’s going to loan us the money? And where’s the economic stimulus the governor talked about.
It’s a terrible deal, one that will hurt the state and its economy.
And the legislature needs to pass it immediately. (Don’t bother reading it, lawmakers. It’ll only upset you).
Why? Because the costs of a horrible deal are lesser than the costs of no deal. The state is simply out of time, short on the cash to pay its bills. Even with this deal, the state will still be short of cash for the foreseeable future. But a deal, any deal that has tax increases and spending cuts, allows California to step away from the abyss and begin to dig out of its hole and restore its credit rating.
Will the S.S. California Avoid the Iceberg?
From the details we know so far of the proposed budget deal, will it be enough to prevent the California ship of state from meeting disaster? The S.S. California is heading toward an iceberg. The question state legislators, and eventually voters, will have to ask themselves is: Should it be allowed to crash or is the budget deal acceptable?
Some argue it should crash. Then the spending system can be rebuilt anew. But if the ship does crash, many will suffer. Turning the ship in the right direction and away from immediate danger will have a cost as well, a cost we all will pay. And in the case of tax increases, this is no light matter. It will delay recovery and keep us in choppy waters for some time.
But navigating those choppy waters must be played against the destructive force of doing nothing and hitting the iceberg.
Watching the Corporate Masters of the Universe Do the TV ‘Perp Walk’ Before Congress
You’ve all seen the ‘Perp Walk,’ where they parade the alleged perpetrator of some alleged crime before the TV cameras amid throngs of pushing and pushy reporters armed with microphones and shouted questions. It has become an American media staple. I recorded TV coverage of the ‘Perp Walk’ by the corporate Masters of the Universe before a Congressional Committee Wednesday and it was really something to behold.
With each talking head, MSNBC put up the amount of BailOut Billions that each one’s corporation received. Vikram Pandit, CEO of Citigroup: “We did not adjust quickly enough to this new world,” explaining Citi’s purchase of a “foreign-made corporate jet” for a mere $50 Million of your and my tax dollars. With appropriate-looking contrition on his face, Pandit continued: “and I take personal responsibility for that mistake. In the end I cancelled delivery . . . I get the new reality and I will make sure Citi gets it as well,” having ridden into Washington from his New York office via Amtrak, learning well from the mistakes of the heads of US AutoMakers who had come hat in hand to Congress last Fall on corporate jets, only to be rebuffed and nailed for their arrogance, then to return via more appropriately humble transportation.