Monday, January 03, 2011

New Governor- same old budget crisis

New Governor; same old speeches.
Well, we have a new governor. His  inaugural speech did not say much.  Yes, there will be draconian budget cuts.  At least half of the current budget crisis was caused by the national economic crisis.  This crisis was created by finance capital and banking, mostly on Wall Street ,ie. Chase Banks, Bank of America,  Washington Mutual, AIG, and others.   Finance capital produced a $ 2 trillion bailout of the financial industry, the doubling of America’s unemployment rate and the loss of 2 million manufacturing jobs in 2008.  Millions are out of work.  You and I, and college students did not create this crisis.  Finance capital stole the future of many young people.
Budget cutting to balance the budget will not get us out of this hole.  Look at Ireland, Greece, or Spain.  Budget cuts only start a downward spiral of pain. We can not simply cut our way out of the crisis, budget cuts and lay offs make the recession worse.

School funding reveals the nature of crisis.  In the last two years the k-12 budget “solutions” have cut 4.6 billion dollars from the schools. We have larger classes and fewer teachers.  School reform has stopped- except for the politicians’ hot air.  School funding makes up a total of 30% of the state budget.  Any crisis in the state budget and any cuts in the state budget will make school budgets worse.
California will need to raise taxes to fund the schools and to repair the social safety net.  Anti tax radicals and Republicans  oppose any tax increases.   The state ‘solutions’ of the last three years depended upon receiving federal stimulus money.  The stimulus monies are almost finished and with the Republican winning control  of Congress there will probably not be more funds.
Since Governor Brown did not say much concrete, we will need to wait for the budget next week to see where are the conflicts.
Peter Schrag points out one alternate route.

By Peter Schrag
 
According the best numbers available, the Obama-GOP tax deal that Congress approved earlier this month will save the wealthiest 148,000 Californians – those in the top one percent in income, who make an average of $1,775,000 a year – an average of $95,000 each.
The numbers come from new data compiled by the liberal Washington-based Citizens for Tax Justice and the 2008 tax statistics of the California Franchise Tax Board, the most recent available. Combined, they show that California’s richest taxpayers will be saving about $14 billion annually.
The next wealthiest 4 percent, with an average income of $310,000, will save another $6.5 billion. All told, about 740,000 California taxpayers fall into those two rarefied regions.
Together, that amounts to some 75 percent of California’s projected budget deficit for this year and next.  As Sacramento scrabbles to get out of its budget deficits, those are numbers worth considering.
 Even half from the richest among us-- $10 billion – would make a big difference. 
In every recession there are loud claims that California’s taxes are killing business and driving jobs out of state. We had one just the other from the California Republican Party. No doubt that even an attempt by the legislature and governor to go after a fraction of the Obama-GOP windfall will lead to yet another set of warnings from groups like the Business Roundtable and the Howard Jarvis Taxpayers Association about an impending stampede to Arizona, Texas and Nevada.
But the more likely damper on economic development and the creation of new jobs would be still further declines in state support for education, higher and lower, still further erosion in police and fire protection, still more under-maintained roads and bridges, already rated among the worst in the country, still greater deterioration in the state’s parks and recreational facilities. .
So now the first, obvious, question is, do we want to compete with the low tax, cheap labor states? Whether by intent or sheer ignorance, that’s clearly where we’ve been headed in the last decade or so. If there have been any big winners in those years, it’s been those in the highest four or five percent of the nation’s income groups.
The extension of the Bush tax cuts – theoretically only for a couple of years, but very likely for much longer -- will make it even more difficult for the federal government to help the states, many of which are suffering  fiscal problems as great as California’s, and in a few cases greater.
There is no way that California can dig its way out of its deficit,  and the predicted deficits yet to come, without more revenue -- not without further truncating the school year and cutting yet more programs and courses, not without further cuts in university classes and higher tuition, not without still further damaging California’s economy and quality of life .
All that so that the richest among us can keep their big tax-cut windfall? All that in our mindless worship of the bitch-goddess “no new taxes”?


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