Last weekend, the Executive Committee of the CA Republican Party voted overwhelmingly to oppose the Budget Package – Measures 1A through 1F. That vote mirrored the two to one opposition within the Party’s Initiative’s Committee and the opposition of the Party Delegates as well. In simple political terms, if politics is the art of the possible, and I think it is, it is simply not possible for the Republican rank and file to overlook the included tax increase or a government going out of control.
It is not possible in their minds for several reasons but one principle reason: for nearly all Republicans, being against tax increases is the final line in the sand. It is their core belief. Some, including the Governor, view that as being politically inflexible. I beg to differ.
The Republican grassroots believes that an ever growing government is not the answer to our problems – but, instead, has caused many of them. Believing that, they cannot abide by the fact that, despite claims of yearly budget crises since 2003, government has managed to grow in size every year. Last year alone, state government added over 2,000 jobs. For many of them, asking them or others to pay more taxes when government continues to grow is neither art – nor possible.
Beyond that, the simple truth remains that billions of dollars in savings remain locked away in the pages of the California Performance Review. If those $6 billion in savings per year had been instituted 5 years ago, then perhaps we would have no deficit today. Even if all of those savings could not be realized, the Republican rank file would know that, before government asked others to sacrifice, government cleaned its own house first. They believe that to be possible – in addition to being the right thing to do.
For myself, I continue to be disappointed that our leaders won’t come to the simple understanding that higher tax rates yield less revenue over time than lower rates. At the meeting, I continued my efforts to press the case that our high tax policies will not solve our deficit but instead prolong it indefinitely. I quoted none other than John Maynard Keynes who stated that:
“Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance, than an increase, of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more–and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss.”
While we can differ over spending priorities, we must come to an understanding on how best to collect those tax revenues that are needed. Simply stated, lower tax rates yield higher revenues over time; higher rates reduce economic activity and yield lower returns. If Keynes, Kennedy and Reagan can all hold that view, then we should be able to understand that that view is not political, it is not conservative, it is not moderate, and it is not liberal. It is common sense and we need so very much of that now.
Going forward, we need to have a balanced discussion about bring jobs back to California through a sustained economic recovery. Today, however, the California economy is burdened with the highest tax rate and the highest regulatory rate in the Country. That is not now – nor every will be – a recipe for success. We need to move those rates back to the center so our state can return to prosperity. It can be done; it is not a question of a way, it is a question of will.