PPIC is out with its May 2010 poll, and boy is it a doozy. It shows improving numbers for Democrats, confirms the collapse of Meg Whitman’s lead, and perhaps most important of all, leaves absolutely no doubt whatsoever that Californians want higher taxes instead of spending cuts.

First, the campaign numbers (March 2010 in parentheses):

GOP Gubernatorial primary: Whitman 38 (61), Poizner 29 (11), Undecided 31.

Gubernatorial general election:

Brown 42, Whitman 37

Brown 45, Poizner 32

Just look at the collapse in Whitman’s numbers. She’s spent $68 million dollars and only has a single-digit lead with 31% of the wingnut electorate undecided. Wow.

As a result, Jerry Brown’s numbers have recovered against Whitman, over whom he now has a small lead. As expected, Brown fares better against Steve Poizner.

The GOP US Senate primary numbers are even more interesting: Fiorina 25, Campbell 23, DeVore 16, undecided 36. Tom Campbell is out of money, Sarah Palin is feeling very defensive over her Fiorina endorsement, and the fact that Chuck DeVore is actually gaining support can’t make the other two feel any better. It’s a wide-open race, especially given the fact that the Senate candidates and their message, such as it is, has been lost amid the scorched earth TV war between Whitman and Poizner.

As to the general election matchups, Boxer is looking much better:

Boxer 46, Campbell 40

Boxer 48, Fiorina 39

Sure, she’s under 50%, but given that 2010 is not an incumbent-friendly year, it’s a better position for Boxer than it could be. And it shows the need for Democrats to work particularly hard to ensure she gets re-elected, as control of US Senate may ride on this one race.

PPIC took a look at some ballot propositions. They found Prop 14 was backed by 60% of likely voters, including 61% of Dems. On marijuana, they found a bit less favorable numbers than the campaign – 49-48 among likely voters, and 48-49 among all adults. Legalization supporters have work to do with women (only 42% support it), Latinos (62% are opposed) and voters over 55 (only 42% support it).

But the true importance of this PPIC poll comes on the budget and taxes. PPIC found 51% support a majority vote budget, and 47% support a majority vote for budget and taxes.

That’s just the start. The numbers on specific cuts and specific taxes are extremely important. PPIC finally did what nobody else appears to have done – they polled Californians about the kind of taxes approved by Oregon voters last January. Here’s what they found:

Raising income taxes for the wealthiest Californians: 67% support, 30% oppose.

Raising state taxes paid by California corporations: 58% support, 39% oppose.

Here’s what PPIC found when they asked whether voters preferred to raise taxes so as to prevent spending cuts (yes means they support taxes):

K-12 education: 69% yes, 29% no

Higher education: 54% yes, 43% no

Health and human services: 54% yes, 43% no

I don’t know how much clearer the people of California can be, or how much more loudly they’ll have to shout it, but the message is unmistakable: Californians do not want these spending cuts, and instead want the wealthy to pay to prevent the cuts from happening.

It’s true that the 2/3rds rule makes it difficult for these taxes to simply be put on the ballot. But even so, 67% support for higher income taxes and 69% support for new taxes to restore education funding are numbers that cannot be ignored.

These numbers provide a very clear roadmap for Sacramento Democrats when dealing with the state budget deficit in the coming weeks and months. They have nothing to lose and everything to gain by insisting on getting new revenues from the rich as part of the 2010-11 budget. If Republicans resist, then the voters will see who the Republicans really care about – and who really cares about the voters.

I’ve been saying this for some time: austerity budgets, particularly spending cuts, are the worst and last thing California needs if we are to have economic recovery. We’ve had four summers of spending cuts, dating back to 2007, and what’s happened to our economy? We now have the worst unemployment rate in the state in 60 years, no real growth, and gutted public services that make it difficult to see real recovery.

Now others are making this point as well. Richard Koo, an economist who is very familiar with the Japanese experience of the last 20 years – characterized by deflation, stagnation, and occasional downward lurches into recession – is pointing out that austerity will merely “crush” economies and produce worse budget deficits.

Koo’s argument is that we are in what he calls a “balance sheet recession” where the private sector is deleveraging – purging debt. That is inherently deflationary and destroys economic growth. Unless government supports the economy with deficit spending and increased budgets, the deleveraging will become economically destructive.

I wrote about Koo’s assessment a year ago when assessing Arnold’s 2009-10 budget. Here’s how one analyst summarized Koo’s concept of a “balance sheet recession”:

Richard Koo goes further in his book “The Holy Grail of Macro Economics.” Here, he argues that the unwind of great bubbles suffers from what he labels a ‘balance sheet recession.’  In essence, companies go from maximizing profits, as they had done in normal times, to a post-bubble concern of reducing debt. Regardless of how much priming of the pump monetary authorities do, the psychology of debt reduction will limit the effectiveness of monetary policy as a policy tool.

In sum, the psychology after a major bubble is very different than the psychology before its collapse.  The post-bubble emphasis becomes debt reduction and savings, making monetary policy ineffective, not because financial institutions are unwilling lenders but because companies and individuals are unwilling borrowers. These are forces to be reckoned with for some to come.

In the video at right, Koo points out that in 1997 Japan went ahead with massive budget cuts, an austerity that produced a serious and deep recession, prolonging and worsening Japan’s ongoing “lost decade.”

We’re going to see the same thing in California if Arnold’s reckless austerity budgets aren’t rejected. This recession is indeed different than the last three, which were ended by debt-fueled asset bubbles. The solution for the state in those recessions was to cut spending temporarily, and when debt began to fuel a new asset bubble and new growth, suddenly the budgets looked good, economic health looked to be restored, and all was good.

This recession is totally different. California austerity will prolong and deepen the recession, because consumers need help to purge the debt. They need a safety net – if people are worried about losing their job, they’ll stop spending in order to pay down debts and build up savings, wrecking the economy. They need reduced costs – if people have to pay more for transportation because of bus and rail cuts, if they have to pay more for health care and child care because of spending cuts, if they have to pay more for education because of spending cuts, then that leaves less money freed to both purge the debt and spend at the local business.

Who knows whether Arnold Schwarzenegger understands any of this or not. It may be irrelevant to him, since his entire governing philosophy is “protect the rich and the large corporations at all costs.”

For the rest of us, it’s very important that we understand the reality of this recession and why further budget cuts will be so damaging and destructive.

The Legislative Analyst is out with his review of the 2010-11 budget Arnold proposed last Friday. Some of it is very sensible, including recognition that eliminating CalWORKS and state subsidies for child care is fiscally stupid, and that we need new revenues. Some of it is quite reckless and nonsensical, including the call to eliminate the minimum funding guarantee for schools.

Overall it indicates the limitations of a purely numbers approach to the budget – further cuts to public schools would destroy the state’s economy for a long, long time to come – and suggests the LAO doesn’t truly understand the nature of California’s economic crisis.

Here’s what the LAO had to say on the proposed elimination of CalWORKS:

By eliminating CalWORKs and child care, the state would be foregoing major amounts of federal funding. In CalWORKs, the state would forego the annual $3.7 billion federal Temporary Assistance to Needy Families (TANF) block grant. Moreover, California would forego hundreds of millions of dollars in Emergency Contingency Funds (ECF) authorized by the 2009 federal stimulus package. (The ECF provides 80 percent federal financial participation in costs for cash grants, nonrecurring short-term assistance, and subsidized employment which exceed their corresponding costs in 2007.) Although the ECF is scheduled to expire on September 30, 2010, both the President’s budget and the Governor’s budget assume it will be extended for one more year.

In other words, Arnold’s cruel cuts will actually cost the state more money in the long run, in addition to the economic problems they’ll cause. The LAO proposes new revenues to close the gap:

Alternatively, some of the most severe cuts proposed by the Governor could be avoided by adopting selected revenue increases-from fee increases and other nontax revenues, changes to tax expenditure programs, delays in previously scheduled tax reductions or expirations, and targeted tax increases. We urge the Legislature to put these types of solutions in the mix.

Unfortunately, the LAO undermines the positive and sensible trend of their report by calling for a massive cut to public education funding – even after 30,000 teachers have been laid off, even after students are being packed 35 or 40 to a classroom:

Given the state budget situation, there is a real question whether California can afford to fund the current-law Proposition 98 minimum funding level. Rather than adopt strained legal interpretations of the funding guarantee, as presented by the Governor, the Legislature should forthrightly suspend Proposition 98 if the minimum guarantee is above the level of funding that the state can afford.

This is a ridiculous proposal. The LAO’s notion of what “the state can afford” is very, very deeply flawed. Is the LAO saying with a straight face that California cannot afford to properly educate its children?

Or are they suggesting that the only money we can use to fund education is whatever we take in from existing taxes? Because California can clearly afford to fully fund education under current Prop 98 rules – if we ask the wealthy and the corporations to pay their fair share.

The January 2010 PPIC poll found huge majorities support raising taxes to fund K-12 education. If such a proposition were to be put to voters, its chances of passage would be high.

But the LAO apparently dismisses this, out of a flawed approach that suggests we can’t “afford” those kind of revenues. That view is very dangerous to our state’s economic future. California cannot afford to destroy our schools through further budget cuts. Doing so will cause long-term economic distress, slow job growth, and ensure that high unemployment persists. Without an educated and trained population, new businesses won’t be created here, and existing businesses will look elsewhere to hire workers.

For California to have any meaningful economic recovery, we absolutely must increase education spending. For all the other good aspects of the LAO’s report, their reckless recommendations on education spending need to be rejected entirely if we are to avoid further economic and budgetary pain.

Sometime in 1987 or 1988, my dad and I drove to Santa Ana for some reason I can no longer recall. While there, we saw the growing Latino community, made up largely of immigrants from Mexico. My dad pointed to a billboard in Spanish and said to me, “when I was a kid this whole area was white and everyone spoke English.” My reaction was a shrug – so what if that’s how it was in the ’60s, this is how it is in the ’80s. I didn’t care.

It’s one of many, many vignettes I recall from my youth in Orange County in the 1980s and 1990s that indicate white unease at the growing Latino presence in their communities – an unease that is still very much there (just a few years ago I was visiting my parents and stood in on a conversation with neighbors worried about their property values because a Latino family moved in down the street). But that unease, so often expressed as anti-immigrant sentiment and anti-immigrant politics, is a very generational thing.

Whereas my parents’ generation grew up believing Latino immigrants were strangers and foreigners, my generation generally views them instead as neighbors, sometimes as friends, sometimes even (in my case, after my marriage) as family. It’s a stark difference that speaks to the importance of social and political environments and attitudes in shaping the views of whole generations – and how those experiences shape our present politics.

In 1960s California, many young people grew up as supporters of the Civil Rights Movement. But that happened in a very specific context. 1960s California was seen as a white California, a place where white people of European ancestry dominated, a paradise for whites. People of color, primarily African Americans but also some Latinos, whether immigrants from the mid-century or descendants of the original European inhabitants of the state, were here in smaller numbers.

And more importantly, they lived in segregated neighborhoods. Blacks were seen as living in only Watts and Oakland, Latinos seen as living in only East LA and East San Jose. Reality was more complex and the patterns of settlement more diverse, but that was the overall assumption.

That made it easy for many white Californians to support the Civil Rights Movement – but only to a point. It was easy to say “don’t discriminate against those people living in another part of the state.” But when the prospect of sharing communities with non-whites was raised, white Californians reacted very negatively.

In 1964 California voters approved Prop 14, which overturned a ban on residential segregation, by a 2-1 margin (the US Supreme Court later threw out the law). Two years later one of the leading proponents of Prop 14, the actor Ronald Reagan, was elected governor on a platform of white backlash to the Civil Rights Movement in the wake of the Watts Riots.

Many Baby Boomers rejected those things. But they were still very much shaped by their time and by the notion that California is white, Latinos are foreign, and immigration is unusual, strange, and maybe even threatening.

My generation – the Millennials – are very much shaped by our time and by the notion that California is diverse, Latinos are just as much a part of this state as anyone else, and that immigration is normal.

The New York Times has found a very similar pattern across the country in a very good article in today’s paper. More over the flip.

In the wake of the new Arizona law allowing the police to detain people they suspect of entering the country illegally, young people are largely displaying vehement opposition – leading protests on Monday at Senator John McCain’s offices in Tucson, and at the game here between the Florida Marlins and the Arizona Diamondbacks.

Meanwhile, baby boomers, despite a youth of “live and let live,” are siding with older Americans and supporting the Arizona law.

The Times shows research and statistics that back up the points I made, and quotes from poll respondents who say things I’ve heard very frequently in Southern California:

Some older Americans acknowledge that how they grew up has shaped their opinions. Mike Lombardi, 56, of Litchfield, Ariz. – one of 1,079 respondents in the Times/CBS poll conducted from April 28 to May 2 – said his support for his state’s new law stemmed partly from the shock of seeing gaggles of immigrants outside Home Depot, who he assumed were illegal. Comparing the situation to his youth in Torrance, Calif., in a follow-up interview, he said, “You didn’t see anything like what you see now.”

And younger folks are quoted as saying it’s no big deal, something older folks should get used to the way we younger folks have:

Nicole Vespia, 18, of Selden, N.Y., said older people who were worried about immigrants stealing jobs were giving up on an American ideal: capitalist meritocracy.

“If someone works better than I do, they deserve to get the job,” Ms. Vespia said. “I work in a stockroom, and my best workers are people who don’t really speak English. It’s cool to get to know them.”

Her parents’ generation, she added, just needs to adapt.

“My stepdad says, ‘Why do I have to press 1 for English?’ I think that’s ridiculous,” Ms. Vespia said, referring to the common instruction on customer-service lines. “It’s not that big of a deal. Quit crying about it. Press the button.”

To be clear, as the NYT article points out, younger voters aren’t uniformly unconcerned about immigration. The difference is that those young people who might agree that immigration is a problem are generally fueled by economic arguments and not by a sense that the immigrants are interlopers who don’t belong. Those young people who do see immigration as a problem tend to rank it very low on the list of problems we face, whereas older generations rank it much higher. And not all young Californians are accepting of our state’s racial diversity.

And while there are many Boomers who never did buy into the notion that Latino = immigrant = foreign = undesirable, a huge number still believes that their America is a white America, with room for other people, but that those others should behave a certain way – and if they don’t, then it is some kind of existential threat to the very fabric of the nation.

Ultimately the generation gap on immigration is another feature of the primary motivating force in American society and politics today – a battle between those determined to defend a failed status quo in order to reclaim some long-lost past vision of America, and those who understand the status quo has failed and who reject obsolete 20th century values in order to embrace change in a diverse, sustainable society.

Unfortunately, the dying lash of a vanishing society can cause a great deal of damage. As those in their 50s and 60s refuse to let go of the 20th century and accept a more diverse 21st century, they have the power and the means to impose quite a lot of ugly laws, backed by even uglier prejudices, as part of their effort to deny reality and delay change. It’s our job as progressive Californians to make sure that doesn’t succeed – and that we embrace the California of 2010, instead of pining for a warped misinterpretation of the California of 1960.

Carla Marinucci has a profile of Mickey Kaus and his self-serving vanity campaign against Barbara Boxer for US Senate in today’s San Francisco Chronicle. While the article is a good overview to Kaus’s beliefs, it doesn’t fully explain that he is a marginal figure – at best – within the Democratic Party, and misses a chance to really get at the heart of the US Senate race. It’s a race that isn’t about the center, but about turning out the base.

Marinucci’s article seems to suggest that Kaus is an example of trouble Boxer is having with moderate Democrats. The problem, as anyone who is familiar with Kaus would know, is that Kaus is not at all a representation of a “moderate Democrat.” He is a garden-variety right-winger who makes a name for himself by claiming to be a Democrat, getting media attention for his totally unfounded claims that the modern Democratic Party is too far to the left because they don’t share his values.

Mickey Kaus doesn’t represent anyone or anything other than Mickey Kaus. He has no base – at all – in the Democratic Party. Democratic voters aren’t flocking to him or his ideas because they simply do not share his ideas, no matter where on the Democratic spectrum from center to left said voter falls.

Much more over the flip.

Mickey Kaus shows how out of touch with reality – and the Democratic Party – he is in these quotes reported by Marinucci:

“It’s clear that the unions own the Democratic party – and it’s going to be a disaster unless that changes,” says Kaus, 58, a longtime blogger for online magazine Slate.com and author of “The End of Equality,” which urges a rethinking of liberalism.

Instead of “chasing after the Latino vote” and pushing for public “card check” elections intended to make it easier for workers to join labor unions, he said his party and Boxer – whom he calls an “old-style pol, through and through” – should deal with issues that affect the everyday lives of working Californians.

“Do the vast majority of Californians want to do away with the secret ballot in union elections? No,” he said. “And the huge number of voters here don’t want immediate amnesty for undocumented immigrants – until the border is secure.”

Where to begin? If unions “own” the Democratic Party – a debatable proposition given the languishing Employee Free Choice Act – then that ownership has paid rich rewards for Democrats, who currently control the federal government and most of the state government. Pelosi won Congress and Obama won the White House with strong support from unions.

They also won with strong support from Latinos. Kaus is well known for his anti-Latino sentiments, which are out of step not only with reality, but with Democratic electoral success. “Chasing after the Latino vote” has produced Democratic dominance of nearly every election in California, for state or federal office, since 1996. The only exception is Arnold Schwarzenegger, who has resisted his own party’s anti-Latino demands and in both 2003 and 2006 did well with Latino voters.

Kaus’s electoral prescription is one of permanent minority status for the Democratic Party. His political analysis is laughably inaccurate. So why does he continue to get attention?

Kaus claims to be a “lifelong Democrat” but he is attacking two groups – labor unions and immigrants – that have been at the core of the Democratic Party for nearly 200 years. It’s clear that his claims to being a Democrat are only made out of convenience, made only so that he can inhabit his niche as a right-wing Democratic concern troll.

That’s the role he’s playing here. Now it’s not Marinucci’s fault for simply repeating Kaus’s absurd, evidence-free claims. But she does err when she uses Kaus and others like him to argue Boxer is having problems with moderates:

Kaus’ campaign against Boxer, who has been called one of the Senate’s most liberal members, is a longshot in blue California. But his bid underscores challenges for California’s junior senator….

Patrick Dorinson, who writes the cowboylibertarian.com blog, said besting Boxer is near “Mission Impossible,” but such messages connect with moderate Democrats and the 1 in 5 state voters who declined to state a political party in their voter registration.

There are many flaws with this interpretation. The first and foremost is that people like Kaus and Dorinson are not at all representative of California Democratic voters. Instead they are right-leaning folks who want to undermine progressives and liberals in the Democratic Party, and have consistently failed to do so.

Polls show the reasons for their failure, and disprove the “Kaus represents Democratic dissatisfaction with Boxer” theory. A March 2010 USC/LA Times poll showed 67% of Democrats had favorable views of Boxer, with only 17% having unfavorable views and only 8% having “very unfavorable” views.

On immigration, 60% of Democrats said immigration had a positive impact on the country, and 50% said illegal immigration had a positive impact. Not exactly fertile ground for Kaus’s anti-immigrant message. Democrats strongly support a path to citizenship and border enforcement, both core elements of the current Democratic Congressional approach to the issue. Further, Democrats view immigrants from Latin America very positively in the same numbers as white Californians – between 60% and 70% of Dems and whites say such immigrants “work very hard” but reject claims they “end up on welfare” or “increase the crime rate.”

When it comes to decline to state voters, their views on immigration are similar to those of Democrats. The percentages of DTS voters supporting a path to citizenship and rejecting attacks on public benefits for immigrants are almost exactly the same as for Democrats. Here again, Kaus seems deeply out of touch with the mainstream of California.

I don’t fault Marinucci for wanting to write a story about Kaus that gives him a chance to air his views. But she should have refrained from implying that his views have any significant support among California Democratic or DTS voters, because the evidence is very clear that they don’t.

From that, it follows that although Boxer faces a close race for her re-election, she can count on strong support from California’s Democrats, and maintains an important lead among California’s DTS voters. Boxer’s problem isn’t that she’s losing the center, but is instead the same problem faced by Democrats across the country – a lack of enthusiasm from the Democratic base.

That lack of enthusiasm isn’t there because the Democrats are too liberal, but because they’re too slow to act and produce the changes voters expected in 2008. If Boxer can mobilize Democrats and independents to turn out in November in large numbers, she will have little problem winning re-election. Whether she can do so doesn’t depend on whether she’s seen as moderate, but whether she is seen as effective.

The same USC/LA Times poll showed strong support for health care reform, and combined with Boxer’s votes in support of the stimulus and her strong stand in support of good financial regulation, there is every reason to believe she’ll be able to show voters she has indeed been an effective agent of change in Washington DC. And that is what will fuel her re-election bid.

That suggests the deepest flaw with Marinucci’s article, then, isn’t just that she doesn’t see how marginal a figure Kaus actually is. It’s that she’s repeating the frame that to win this Senate election, one must capture the middle. Most indications are that Boxer’s already done that – the real task is to drive the base to the polls. That is the true story of the 2010 election.

Facing a growing revolt over his previous budget cuts, including the devastating cuts to public schools, Arnold Schwarzenegger’s May Revise 2010 takes a very different approach to insane and reckless spending cuts than was proposed back in 2009. Understanding this difference is key to defeating him.

In 2009, Arnold’s cuts hit everyone, and hit everyone hard. Well, everyone except the rich, who Arnold believes should be immune from being asked to contribute to solving the budget crisis. The middle-class saw services cut, particularly schools. State parks were slated for closure, and local government funds were stolen.

In response, a backlash has formed here in 2010 on all fronts. Proposals such as AB 656 (oil severance tax for higher ed) and the simply brilliant Stop the Cuts video starring Megan Fox and denouncing education cuts are just two pieces of a much broader public revolt against education cuts that’s brewing. Another overt cut to education would have turned that revolt into a major political force that would threaten the low-tax privileges of the wealthy.

And while schools are still getting hit – they need restored funds, and without federal stimulus aid Arnold’s 2010-11 budget is a de facto cut to schools below their 2009-10 allotment – Arnold isn’t cutting any deeper, realizing that a middle-class revolt against Republicans and against budget cuts would be very bad for the right-wing shock doctrine agenda.

Similarly, state parks are going to get full funding, after a year where mass closure was proposed. That mass closure fueled a state parks initiative, based on a John Laird proposal, that would increase the vehicle license fee to fund state parks AND let Californians go to the parks for free. Another cut to the state parks budget would have guaranteed that initiative’s success (it’s likely to pass anyway), just as another raid on local government funding would guarantee passage of a new initiative to permanently ban state raids on such local funds.

And all of this has begun to fuel widespread public support for rolling back the corporate tax breaks that were scandalously demanded and won by Arnold during the 2008 and 2009 budget deals. Worth noting, of course, that Meg Whitman wants to enact similar tax breaks should she become governor.

What this shows is that the way to counter a right-wing shock doctrine is to reject it, say “no” and organize people to fight back at the ballot box. Facing this revolt, Arnold has taken a very different approach to his 2010-11 budget: hurt the poor.

Now it must be said that it’s not just the poor who will suffer under this budget. But the budget cuts are quite obviously calculated to hit those Californians without a voice, who are seen as marginal, whose funding can be cut with the least public outcry. The elderly who will lose some or all of their IHSS benefits and the children who will lose health care services are not necessarily “poor”; those cuts will hit the middle-class as well.

But the biggest cut, the elimination of CalWORKS, is designed to wedge the middle-class and the working- and underclass apart from each other. It’s a replay of the “demonize the poor” tactic that worked so well for Reagan in the ’80s and Republicans in the ’90s. Arnold is implicitly telling the middle-class “either you screw these poor families or we’re cutting something you want” and counting on the middle-class to react the same way they did in the ’80s and ’90s – by saying “go ahead, we won’t stop you.”

CalWORKS is itself a shell of its former self. Cuts in 2008 and 2009 have already reduced the maximum grant to a lower number than a family could receive in 1989, despite the fact that the cost of living is much higher today – and despite the fact that we’re in a recession. The elimination of CalWORKS and Temporary Assistance to Needy Families is going to cause widespread suffering among many families, especially to children, and will make it more difficult for many Californians to find work, dragging down our state’s economic recovery and in turn worsening the budget deficit.

We can’t fall for Arnold’s wedge. Arnold is shifting tactics because he’s scared of us – scared of the public reaction against three years of austerity. Now is the time to ramp up the attack on that austerity, to move beyond tired old Reaganite claims that there’s some difference between the needs of the middle-class and the needs of the poor. Many middle-class families have benefited from the very safety net programs Arnold now proposes to cut or eliminate, and many more middle-class families benefit – at their jobs and businesses – from less fortunate families having at least some state assistance.

One of the scariest things to a Republican – especially a corporate Republican like Arnold Schwarzenegger – is an alliance of the middle-class, the working-class, and the poor against their policies that favor the rich. Austerity budgets are merely reinforcing the fact that those groups see they have common interests, especially as 30 years of neoliberal economics have begun to obliterate the old divides between the non-wealthy classes as everyone is watching their standards of living fall, watching their future evaporate before their eyes.

We’ve got Arnold on the run. Now is the time to come together to defeat him and his budget plans for good. Californians want prosperity, not austerity. Let’s give it to them.

At today’s press conference unveiling the May Revise of the 2010-11 budget, Arnold Schwarzenegger said “the budget should be a reflection of California’s values.” If that’s the case, then California’s values are protecting the wealthy and the large corporations from having to contribute anything to this society while making old people and children suffer. Arnold’s California is a place where if you aren’t wealthy, you don’t deserve to have health, food, or any other form of economic security.

Today’s May Revise should be seen then as the bill for protecting the rich and the large corporations. $19 billion in cuts, particularly to health care for the kids and the elderly, and to the CalWORKS program that helps reduce child poverty, would not be proposed if Arnold Schwarzenegger valued their lives and their economic security.

Perhaps we’re being too charitable. After all, Arnold has only a 23% approval rating, so the notion that he understands California values is almost as laughably absurd as his claim that “I know how many people are suffering out there,” which has to be an outright lie given the budget he just proposed.

But Arnold’s still the governor, and until Democrats win a 2/3rds majority or eliminate the 2/3rds rule, we still have to contend with him. So it was very encouraging to see Senate President Pro Tem Darrell Steinberg react strongly against this budget.

Steinberg and Senate Budget Chair Denise Moreno Ducheny said they “won’t pass a budget that eliminates CalWORKS” and argued that we need to look at closing corporate tax loopholes, including the oil severance tax and looking at extending the tax increases enacted last spring.

Those are all the right places to begin. California’s economic recovery will continue to be stunted if these budget cuts aren’t stopped.

Later today Arnold Schwarzenegger will release his “May Revise” of his proposed 2010-11 state budget. It is going to be an extremely cruel and destructive proposal. But it will be defended as a necessity given the economic times and the resulting collapse in tax receipts.

That is precisely the wrong kind of thinking to use at this time. This latest round of Hooverism will be an economic catastrophe for California, in addition to the human toll it will take. If California does not embrace new revenues to fund the services and jobs we need to produce economic recovery, then California faces a catastrophic slide into a prolonged depression.

The problem we face is that few in Sacramento or in the media have adapted their thinking to this new crisis. They’re still locked in the outdated thinking of the last 30 years, which says that if we just cut back on spending, somehow economic recovery will magically appear, and that the spending cuts have no relationship to said recovery.

But it is extremely difficult to see how there can be any economic recovery if we’ve laid off 30,000 teachers and raised tuition at public colleges and universities to unaffordable levels, destroying the education of an entire generation. The same goes for taking away health care from children and the elderly – someone has to pay those costs, and if it’s coming out of family budgets, that reduces their ability to spend money and therefore acts as a drag on the economy.

Austerity budgets like this are inherently deflationary. They make it harder, not easier, to produce economic recovery. They make it harder, not easier, to deal with California’s debt problems, small as they are.

And they will merely worsen future budgets. It’s no accident that this is the fourth summer in a row where budget cuts are being seriously proposed. The cuts begun in 2007 have produced a downward spiral, where the economy worsens due to lack of state support, causing deeper declines in tax revenues and therefore exacerbating the budget shortfall.

In a situation like this, someone has to pay to close the gap. Arnold Schwarzenegger believes it must be the poor, the sick, the young and the old who must pay. Why? In order to prevent the wealthy and the large corporations from paying.

By closing corporate tax loopholes and raising other taxes on those with high incomes, California can just about close the entire $20 billion deficit expected to be announced today. We can close it without making any further cuts to schools and health care services. We can close it without causing long-term damage to our economy.

The usual argument, of course, is that such tax increases will cause large employers to not hire workers. I’m skeptical that would be the case, and the evidence suggests it won’t be the case. In 1991 California pushed through billions in tax increases. It didn’t prevent economic recovery from taking hold soon thereafter, and didn’t prevent the 1990s boom from taking place. In April 2009, taxes went up in California, and it did not worsen the recession, nor has it prevented a slow and halting recovery from beginning.

But there’s a more fundamental issue that needs to be dealt with regarding the question of taxes and jobs. The current budget process, where taxes on large corporations are kept at all-time lows and forcing devastating cuts to services, favors the big businesses over the small ones. It’s those small businesses that need our support. Those are the businesses that create jobs, that keep money in the community and in the state, and that ultimately will provide the basis of a 21st century economy in California.

California isn’t Greece. We don’t need to follow this road to ruin. Instead, by rejecting the concept of spending cuts as well as the specific cuts that will be proposed today, we can begin to provide economic recovery to California and position ourselves to lead the 21st century economy while providing prosperity for everyone.

In what is becoming a particularly stupid trend, right-wingers are increasingly comparing California to foreign countries that best exemplify whatever it is they dislike. We’ve shown how the “California is Greece” claim is baseless. Now comes another similar claim about California’s impending doom, with Chief Executive magazine comparing us this time to Venezuela:

“The leadership of California has done everything in its power to kill manufacturing jobs in this state,” observed another CEO. “As I stated at our annual meeting, if we could grow our crops in Reno, we’d move our plants tomorrow.”

How is it that the nation’s most populous state at 37 million, one that is the world’s eighth-largest economy and the country’s richest and most diverse agricultural producer, a state that had the fastest growth rate in the 1950s and 1960s during the tenures of Democratic Governor Pat Brown and Republican Governors Earl Warren and Ronald Reagan, should become the Venezuela of North America?

Californians pay among the highest income and sales taxes in the nation, the former exceeding 10 percent in the top brackets. Unemployment statewide is over 12.2 percent, higher than the national average. State politics seems consumed with how to divide a shrinking pie rather than how to expand it. Against national trend, union density is climbing from 16.1 percent of workers in 1998 to 17.8 percent in 2002. Organized labor has more political influence in California than in most other states. In addition, unfunded pension and health care liabilities for state workers top $500 billion and the annual pension contribution has climbed from $320 million to $7.3 billion in less than a decade. When state employees reach critical mass, they tend to become a permanent lobby for continual growth in government.

Bill Dormandy, CEO of San Francisco medical device maker ITC, summed it up: “California has a good living environment but is unfavorable to business and the state taxes are not survivable. Nevada and Virginia are encouraging business to move to their states with lower tax rates and less regulatory demands.”

There are so many flaws here that I literally do not know where to begin. But let’s start with the claim that California government is “killing” manufacturing jobs. The NUMMI plant in Fremont survived 30 years of auto industry retrenchment and cost cutting. Its closure came when the Detroit auto industry hit the wall, and when Toyota felt the need to cut back on capacity in the midst of the worst recession in 60 years.

Meanwhile, other manufacturing businesses are thriving. For over 25 years Siemens has been building light rail vehicles for the entire Western Hemisphere at its Sacramento plant, is very happy in California, and not only has no desire to move, but is already expanding its operations. Another international rail car manufacturer, Alstom, has set up shop at Mare Island. China has been looking at reopening NUMMI to build high speed rail cars. None of them were deterred by California’s regulations or taxes.

Speaking of taxes, the implication that taxes in California are somehow higher now than they were in the past is also bullshit. California’s corporate tax rate is 5 points lower today than it was 30 years ago. The same link shows that corporate taxes paid as a percentage of income are actually lower today than at any time during the 1960s. Chief Executive magazine is simply wrong on the facts here.

The rest of the quoted section is the usual anti-union nonsense, an overstated pensions bill (it’s closer to $100 billion, and that gets paid out over decades), and more right-wing framing.

There’s no actual evidentiary comparison to Venezuela – the CEOs apparently picked that country at random as an example of a left-wing bogeyman since the Soviet Union has been dead for 20 years and everyone has apparently forgotten about Cuba.

More importantly, California remains a global economic leader that has shown it can still create jobs and innovate. True, the state is facing one of the worst recessions in 60 years – but that’s not due to high taxes or regulations.

Instead it’s due to the institutional sclerosis that leaves California trapped in dependence on 20th century sectors of the economy and unable to embrace 21st century centers of job creation. High speed rail, expanded educational opportunities, universal health care, and greater urban density are all the building blocks of a 21st century economy and job growth, enabling smaller businesses and independent entrepreneurs to create new jobs.

If the right-wingers at Chief Executive magazine were to focus their criticisms on the 2/3rds rule and term limits, then we might be getting somewhere. But instead they chose to peddle discredited right-wing ideological frames.

I could think of a few countries that reminds me of, but I’ll be consistent and not go down that silly path. I have to say, I’m waiting for someone to say California is like France – I think that would be the ultimate compliment.

There’s no better illustration of the priorities of Arnold Schwarzenegger than this report from Shane Goldmacher and Evan Halper in the LA Times, explaining that this Friday’s May Revise is likely to include a proposal to eliminate health care services for children and the elderly:

Administration officials declined to reveal which specific programs the governor would eliminate. But officials involved in the budget process, who spoke on condition of anonymity because they are not authorized to speak publicly, said they would probably include home healthcare for the elderly and disabled, a nearly $2-billion program that serves 440,000 Californians. Cuts that lawmakers and the governor made to the program in an effort to balance the budget have been blocked by legal rulings over the last year.

The article included a lot of whining from the governor’s office, including Susan Kennedy, about the fact that there is such a thing called “the law” and that these pesky, obnoxious people called “judges” are using “the law” to prevent the governor from destroying the lives of California’s elderly and children by denying them health care.

But the key takeaway here is about the cuts themselves, and not about the legal fight over those cuts.

Arnold Schwarzenegger is proposing to eliminate health care for the elderly and for kids – risking the health and, ultimately, risking the lives of these people. And for what purpose? So that he can avoid raising taxes on the rich.

He believes that it is more important to keep taxes low on the wealthy than to ensure that old folks and children have the health care they need.

Such a proposal is beyond outrageous, it is inhuman. Sacramento Democrats should reject it outright. Californians do not agree with taking health care away from people who need it just to give the wealthy another tax break.