Governor Brown unveiled a new theme on Monday to sell his budget solution: the Wall of Debt.
This approach targets Republicans and other voters skeptical of the need for tax extensions.
- The Governor specifically calls out the nearly $35 billion in borrowing and gimmicks devised by previous Administrations and Legislatures to paper over earlier deficits. The subliminal message: “Never again.”
- The debt retirement theme provides a landing zone for Republican legislators who might agree to tax extensions in return for a spending cap, where any revenues above the cap could be used to retire budgetary borrowing. The Governor expressed his support yesterday for an undefined spending cap.
- Raising the debt issue also provides a platform from which the Governor could insist on aggressive reforms in state and local pension obligations. Actuaries peg the unfunded liabilities of the two big state pension systems north of $150 billion. This off-budget debt was recently noted by Standard and Poor’s as a further threat to California’s anemic credit rating.
- Finally, the overall capacity of the government to take on debt will be front and center as the Congress debates whether and how to raise the federal government’s debt ceiling.
