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January 15, 2008

A Budget Shock Attack

-- by Dave Johnson

This post originally appeared at Speak Out California

California is said to be having a budget "crisis." Last week the Governor signed an emergency proclamation forcing the legislature to meet and act on the budget within forty-five days.

"Crisis" and "emergency" are serious words, and the public is upset about hearing them. This is, of course, the intent of those using the words -- to get the public upset and demanding action. When people are shocked and worried they will accept solutions that might not be what they would accept if they had time to think, consider all reasonable alternatives and weigh all the consequences. In an "emergency" the public just wants the problem solved. (This is a "Shock Doctrine" approach.)

So having created a crisis atmosphere the Governor is asking for "across the board" cuts in state government spending. This is a tactic that let's him avoid specifying any particular cuts. The reason the Governor does not want to specify any particular spending cuts is because people will realize that such cuts are not a good idea.

Asking for cuts "across the board" sounds so fair. But not specifying also means not prioritizing. By setting no priorities for spending cuts the Governor is saying that one area of spending matters to him no more than another.

Let's be clear about what the Governor is doing. He is cutting police and other law enforcement and public safety. He is cutting schools -- when California already is 43rd in spending per pupil. He is letting prisoners out onto the streets. He is cutting disaster assistance. He is letting roads and bridges deteriorate. That is what government spending is -- and we are who it is for.

Each and every thing the Governor is asking to cut is important to all of us, the people of California. We, the people need and want what the state spends its money on. We need our police and public safety departments. We want our children educated in good schools. It is rare to find a person who claims that the state "spends too much" who can tell you just what we, the people of the state actually spend our money on. (Try it yourself - see if you can get specifics from anyone who claims that the state spends "too much.") That is why the Governor is calling for "across-the-board" spending cuts and not specifying where he thinks cuts should be made.

Meanwhile the Governor is not presenting the public with alternatives to spending cuts. There ARE alternatives, but they are only going to be part of the process if people pay attention to what is going on. Here are just a few examples of alternatives that should be considered:

Alternative: Restore the vehicle license fee. This would bring back $5 billion that we, the people should be collecting and using.

Alternative: Tax oil as it is taken out of the ground. The oil belongs to the people of California but we don't ask companies to pay us when they pump it. A California oil-severance tax would go a long way toward helping solve our budget problems. Alaska, for example, has no income tax, and in fact the state instead sends a check to citizens each year because they understand that the oil is a common resource and tax the companies that pump it out of the ground.

Alternative: Impose a surtax on upper incomes to balance the budget and pay off the bonds. Consider that the reason some people receive so much more income is because the infrastructure we Californians have built and the benefits that we the taxpayers have granted to corporations helps build prosperity. And one effect of having very high incomes is that they have large amounts of disposable income with which to pay taxes and still have plenty left over. This money can also be used to pay off the bonds that the Governor has issued to avoid making touch choices in the past. Currently we pay approx. $4 billion each year toward interest on these bonds. Paying down these bonds and reduces these interest payments and THAT is a spending cut we all want to happen.

Click to continue.

Posted by Dave Johnson at January 15, 2008 10:04 AM

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