On the Budget: “We’re All Supply-Siders Now”
In another time of economic distress, President Richard Nixon famously said, "We’re all Keynesians now," referring to his turn toward the government stimulus policies espoused by economist John Maynard Keynes, usually rejected by Republicans like Nixon. Given the budget plan put forth by Governor Jerry Brown and the Democrats in the legislature you would think we are all supply-siders now. Or we better be if this budget is to succeed.
Supply-side economics suggests that tax cuts will stimulate the economy through increased consumer spending, resulting in increased revenue to government.
The Democrats new budget estimates $4 billion in new revenue. The failsafe is a trigger to cut education and other services if the revenue does not live up to projections.
Is this real money or more gimmickry to claim a balanced budget? Indications are that revenue is above projection for May and June so the prognosticators may be on to something.
Budget Balancing Done Easy
Gee, if Gov. Jerry Brown knew it was this simple, we could have had a budget last January.
Instead of months of boring meetings, angry phone calls and furious finger-pointing, he just could have announced during his budget statement that state revenues are going to increase by, oh, let’s say $20 billion over the next year, and that California’s financial problems are over. At least on paper.
Problem is, the state has to pay its bills not on paper but with the cash money that only exists in the real world, not the sort of blue sky guesstimates that are good enough to "balance" next year’s budget.
But what does that matter if the new agreement means legislators will start collecting their paychecks again?
What I Saw at the Deliberative Poll
This past weekend, more than 300 Californians – chosen at random, as part of an audience shaped to reflect the views and demographics of the state’s registered voters – gathered at a Torrance hotel for California’s first-ever Deliberative Poll.
They spent a few hours each talking in small groups – and then asking questions of experts together in one large room – about possible changes in California policy on four topics: the initiative process, legislature and representation, state-local government relations, and taxation.
I closely observed two different sub-groups during the poll. These groups may or may not be representative of the larger whole, and I don’t have poll results. The first preliminary results are due to be issued this Wednesday during a lunchtime event at the Commonwealth Club in San Francisco. But here, based on my own observation, are a few impressions:
-No ideological bias.
The Fight for Jobs in Salinas
There may be tough economic times, but that can serve as the impetus for local governments to make tough choices. Some find ways cuts; others find ways of growing revenues, and that doesn’t always mean raise taxes.
In Salinas, unemployment remains a pervasive problem. So when once of the area’s major employers began strategically reviewing its assets and portfolios that made Mayor Dennis Donohue wonder how that could impact Salinas. On Thursday, he launched Salinas for Jobs, a business retention and attraction campaign. As part of his drive for economic development, Salinas for Jobs, working with companies like HSBC and others, hopes to create thousands of jobs in the private industry, and thereby increase the city’s tax base by tens of millions of dollars.
California’s Future Depends on the Skills and Creativity of Its Citizens
Californians have thrived both economically and socially
because of the creativity and skills people have developed in our higher
education systems. But California is losing ground, with other states and
nations surpassing us in terms of both traditional four-year degrees and
focused technical training beyond high school.
This lack of a skilled workforce is already beginning to undermine the
potential for a strong economic recovery in California.
Sixteen respected business leaders and mayors from across
California have joined together to form the California Competes Council, a
nonpartisan effort to ensure that the state has college graduates with the
skills needed to drive the future California economy. I am serving as the lead staff person for the
Council.
The Council’s task is to analyze the well-documented gap
between emerging human capital demands and the projected number and quality of
graduates of California’s college and occupational training programs. By
bringing together leaders from both industry and government, the California
Competes Council will develop recommendations for improvement of the state’s
higher education systems to reinvigorate our pool of human talent and restore
it once again to be the envy of the nation.