11th
California: Fiscal “Armageddon”
George Skelton (LAT’s Capitol Journal) compares it to Groundhog Day, but I think it more closely resembles the opening scene from T2: Judgment Day.
The LAO recently revised up its estimates for the budget shortfall: $41.8 billion by July 2010. (Yes, for those playing at home, that’s ~40% of the operating budget for an entire year.)
Mac Taylor, the CA Legislative Analyst — and, in his off days, lead investigator on CSI:Sacto — gave this presentation to a joint session of the legislature, in what I think is a superbly blunt delineation of what precisely the Governor means when he says “armageddon.”
(Keep in mind, we’re talking about the man who was stoically calm throughout the duration of the Terminator trilogy, so when he bandies about the A-word, it’s in implicit comparison with a catastrophic nuclear conflict against an army of independently-sentient machines.)
One of Mac’s slides merits particular attention in the context of statements like this one from Senate minority leader Dave Cogdill (R-Modesto):
“Republicans have been working for years to stimulate the economy…Now we’ve been told that unless we support tax increases — which would harm the economy — the Legislature will not consider enacting these common sense reforms.”
Uhhhh… cut to Mac (I find it best to imagine Mr. Taylor flailing his arms wildly in front of both houses, speaking mostly in half-coherent screams, and occasionally calming briefly with a sip from his flask):
If Gap Was Solved Through Spending Reductions Alone
- Eliminate funding for UC and CSU
- Eliminate funding for welfare payments
- Eliminate funding for developmental services, mental health, and In-Home Supportive Services
First, I’m beginning to think that California Republican legislators simply don’t understand what the words “stimulate”, “economy”, or “the” mean. Do they not understand that infrastructure projects are in fact the very definition of “stimulus” in the context of a massive recession and capital-flight? Do they understand that if the state is insolvent, they can’t sell bonds which finance projects in the absence of private-sector investment, projects that are important in their own right, but magnified given that construction-employment in California down 7.6% from October last year? Hell, unemployment in Modesto is 11.8% (a 1.4 %age-point increase from last month); how the hell does the honorable Mr. Cogdill retain his job, with so many of his constituents losing their own at such a pace?
Or if they don’t buy that Keynesian bull, are they really willing to make cuts on the scale of abolishing public higher education in the state?
I understand a desire for smaller, more efficient government; I understand wanting to keep lower marginal tax rates on businesses; I even understand why someone might choose to live in Modesto.
Where I lack understanding is the Republicans’ desired endgame here, practically speaking. Is it actually insolvency? It seems like someone in the caucus starting reading about the “starve the beast” strategy, got super-duper excited and called up Mike Villines, then forgot to finish reading all the way to the end. And how does increasing the Vehicle Licensing Fee even impact business? (Okay, less consumer spending maybe, but that’s more than offset by the impact failure to close the gap would have on aggregate demand, given a total collapse of government spending; and let’s remember too that state employees and infrastructure-workers consume too.)
(So let’s add that to the to-do list: research basic empirical estimates of state govt spending’s contribution to demand vs. an increase in the VLF/income-tax.)
So what is to be done? I see two possibilities:
- Sensible governance: Democrats do what they usually do. Surrender enough that the Republican hissy fit ends, and slash important spending for the sake of a quick-fix that will continue the trend of a formal “budget crisis” declaration every two years.
- Let it burn: Let the state become insolvent. Let the schools close down. Let the social workers go. Let Medical collapse. Stop negotiating with the Republicans, and instead shift focus to politics. Steal their financiers. Spend loads of cash. Attack them in their own districts. Let Californians see what a broken fiscal system really looks like, and wait for the emergency constitutional convention to repeal Prop 13, repeal the 2/3 budget requirement, and, hell, why not, mandate — not legalize — gay marriage.
You know what, Schwarezenegger was right. The relevant movie reference here is in fact Armageddon. The state Republicans are Steve Buscemi — whacked out with space dementia, and straddling a nuclear warhead like it’s a pony. I say the Democrats refuse to play Bruce Willis. Don’t pull him off and duct-tape him in the cock-pit while you fix everything.
Hop on the warhead, and ride that sucker all the way to Hell. But make sure Dave Cogdill remains clearly visible in front of you.
(Skip to about 1:40 below.)
This unseemly rant brought to you by Mike Villines, Dave Cogdill, and the California GOP.
