‘Help Us, Barack’
Let’s look quickly at a couple of the most interesting parts of Gov. Schwarzenegger’s speech:
On what voters were saying in the special election: "And that message was clear: Do your job. Don’t come to us with these complex issues. Live within your means. Get rid of the waste and inefficiencies. And don’t raise taxes."
My reaction: if only the message was as clear as Schwarzenegger says. Then the governor might have a chance of getting the state out of the crisis. But the message wasn’t at all clear. The voters said no overwhelmingly, but for very different reasons. Some voters were sending a strong anti-tax message. But others were sending a very different message — that they didn’t like budget cuts and wanted more in taxation. (David Binder’s exit polling on this for the union side of No of 1A shows this). And some voters appeared to be sending the message that they’re confused.
Such mixed messages are precisely what makes this state so hard to govern. And these messages also will make it nearly impossible for the legislature and the governor to come together to resolve the current crisis themselves. As I’ve predicted here previously, they’ll need the feds eventually to help out.
Schwarzenegger Speech Supports the Peoples’ “Powerful Message”
Declaring that California’s “wallet is empty, the bank is closed, and credit is dried up,” Governor Arnold Schwarzenegger today told a joint session of the legislature that it must produce a budget that spends no more than the revenue the state brings in. Pointing out that revenue is down 27% from the previous year this means the budget must be balanced with major cuts.
The governor’s message is not only appropriate, but also practical. Even if the majority believed there is an appetite for more revenue from the voters, there is no way that revenue could be approved and collected before the state runs out of funds in July. So the cuts have to be done and done quickly.
Acknowledging that cuts will bring fear and pain to some Californians, the governor said the legislature must heed the “powerful message” from the special election that the legislature must not come to the voters to solve its problems, but live within its means, create government efficiencies and don’t raise taxes.
California Court says No to Empathy
Within the space of a few hours, judicial tidal waves rolled across the country from opposite coasts last Tuesday morning. President Barack Obama secured the day’s first headlines, announcing Judge Sonia Sotomayor as his nominee to the U.S. Supreme Court.
But California grabbed its share of the spotlight shortly thereafter, when the state Supreme Court voted 6-1 to uphold Proposition 8’s ban on same sex marriage.
Aside from the relative rarity of court-generated news making the front page, let alone forcing urgent breaking news updates over the course of the day, the two announcements seemed to have little in common. But as Washington insiders debated whether Obama’s announced criteria of a justice’s “empathy” was a valid basis on which to base a judicial appointment, California’s Supreme Court was providing a real-world, real-time example of the relevance of such thinking.
Are Schwarzenegger’s Cuts for Real?
Does anyone really believe that when the final budget deals are signed, California is going to eliminate all welfare payments? What about red-penciling Cal Grant college scholarships? Or eliminating health insurance for low-income children?
Well, to listen to Gov. Arnold Schwarzenegger’s plans to close the state’s yawning $24 billion budget gap, he’s looking for the Legislature to make all those trims and more and get it done by the end of the month, please.
But does the governor really expect these particular cuts to be made, or is he trying to raise to raise a clamor from outraged Californians to show legislators just how grim the state’s budget situation really is?
Setting Unfortunate Records
If anyone needs further evidence that we are in the midst of a historic economic downturn in California, please consider the following charts. The fundamental drivers of the economy – employment, income and sales – are trending far, far below previous recessions. It’s no coincidence that these are also the economic engines driving state revenues, and provide another compelling reason why California residents and businesses simply cannot be asked to shoulder additional tax burdens to address the state budget deficit.
1. Since 1980, industry employment has never fallen more than five percent below previous employment peaks – until last month.
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Defeat of Prop. 1A is a Win for Business
The phrase “feeding the alligators” is a metaphor about the dangers
of appeasement. One may be able to buy temporary peace by feeding a
threatening alligator, but the problem is that the alligator will,
sooner or later, get hungry again. And because it was previously
fed, it is now larger and more dangerous.
Regrettably, the California business community has often chosen to
feed the ever-growing alligator of government when it comes to
important political battles. Thirty-one years ago, California
business interests were united in their opposition to Proposition 13
due to fear that if homeowners received tax relief, the Legislature
would try to make up the difference by raising levies on them. For
short term protection for themselves, business was willing to feed
average taxpayers and homeowners to the alligator.