Wednesday, January 18, 2012

Governor Brown continues austerity program and failure

English: Jerry Brown's official picture as Att...
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Brown- further commitment to austerity.
Jerry Brown gave his required State of the State address today and committed himself to continuing budget cuts and austerity as an economic policy. 
The first problem is- austerity programs do not work !
 The Governor continues his poorly informed, misguided austerity program which proposes  to reduce the budgets through cut backs in services, reductions in public education, cuts to public employment, and reduction in public pensions.
Budget cutting to balance the budget will not get us out of this hole.  Look at Ireland, Greece, or Spain or Michigan, Wisconsin, and  Mississippi (each of these economies is smaller than California)?   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.  We have witnessed this for the last two years.
The current budget crisis was caused by the real estate crisis, the sub prime loan crisis, and 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,  Country Wide, AIG, and others.  
Brown says,  Again, I propose cuts and temporary taxes. Neither is popular but both must be done. In a world still reeling from the near collapse of the financial system, it makes no sense to spend more than we have. The financial downgrading of the United States, as well as of several governments in Europe, should be warning enough. It is said that the road to hell is paved with good intentions and digging ourselves into a deep financial hole--to do good--is a bad idea. In this time of uncertainty, prudence and paying down debt is the best policy.- This is the definition of an austerity program.

Brown’s proposals are modest- too modest.  The High Speed Rail authority is a stimulus plan, but California needs an educational stimulus plan and the funds to pay for the needed investment.

The Governor’s proposals for a temporary tax increase are too modest.  The political “professionals’ argue that this is all that can win a majority vote.  Perhaps.  But they are looking at California through a rear view mirror.
Our economy needs roads, bridges, telephone lines, communications systems, energy and quality education.  These services make freedom and prosperity possible. Conservative opposition to these services ignore the economy’s  need for infrastructure.  Prosperity depends upon having a viable educational system and a well functioning infrastructure.  Rather than invest in the future, the Republicans and Brown have starved public education.
Polling consistently shows that the California voters are willing to pay for a quality public education system.  The Brown proposals avoid giving the voters a choice on this.
We need to tax the very rich to produce needed revenue to create jobs and  to invest in the future.   The CA Federation of Teachers and others propose a  Millionaire's Tax on the November ballot.  The Millionaire's Tax would raise $6 billion for public education, safety, and infrastructure by raising additional taxes on those making more than $1 million a year.  It will be the only purely progressive income tax initiative on the ballot in November.  

Another option would be  significant tax on the sale of stocks, bonds, and financial instruments.  This is the same source as proposed by the AFL-CIO.  They argue for a 0.25 % tax on sales.  California  should propose a 2.5 % tax.  This would fund public jobs, infrastructure rebuilding.  Such a tax is called a financial transaction tax.  Others call it a Robin Hood tax.  Most of Europe already has such a tax.  We presently pay around 8% sales tax on most goods, but finance traders pay no tax when they sell stocks, bonds and derivatives.  

The Governor’s proposal assumes that voters approve a measure that would be placed on the November 2012 ballot that would raise $6.9 billion in 2011-12 and 2012-13. His proposed spending plan also includes $5.4 billion of additional spending cuts that would be triggered on if voters fail to approve the proposed tax measure.
The Governor’s proposals include deep cuts to health and human services programs, as well as to student aid and child care. Health and human services and child care programs would be targeted for $2.5 billion of the $4.2 billion in proposed spending reductions. The Governor also proposes $301.7 million of cuts to the Cal Grant Program, which provides financial aid to lower-income students pursuing post-secondary education.



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