It’s a rather amazing piece of so-called journalism: today’s San Luis Obispo Tribune ran a budget story extremely biased toward the Yacht Party’s framing, making Sam Blakeslee and the Republicans that have been filibustering a budget deal for months now look like the good guys. The article repeats Blakeslee’s spin almost verbatim, and misleads its readers about who has compromised and who has not. By doing so the SLO Tribune is serving as the Yacht Party’s accomplices in their effort to destroy our state:

Assemblyman Sam Blakeslee, R-San Luis Obispo, said Friday that state budget negotiations have reached a crucial point, as some Republicans are more willing to discuss tax increases for the first time and more Democrats seem willing to discuss cuts in programs.

Both sides are apparently moving out from their ideological corners, but movement by Republicans is considered particularly significant because of their steadfast opposition to tax increases in the past.

This is an outright lie – Democrats have repeatedly proposed and voted for cuts. The Democrats’ majority vote budget deal included $8 billion in spending cuts. The Tribune does not mention this anywhere.

By omitting that crucial piece of information they play along with Blakeslee’s and the Yacht Party’s strategy – to use a media strategy to make themselves look willing to compromise, to make the Dems look bad, and to force the Dems to do the Yacht Party’s dirty work for them.

Commentators in Sacramento have joined Blakeslee in saying the tone in the negotiations recently changed dramatically. Blakeslee said he expects there to be progress toward a budget solution soon. “I believe there is a very good likelihood we will find an ultimate compromise in the next two to three weeks.” The tenor has become more respectful, he said, with less of the complaining in front of the news media about the other party after each meeting between the sides.

“They are approaching these negotiations differently,” he said of what is happening right now. “The Republicans will put forward what taxes they will swallow. The Democrats will put forward what cuts they will take.”

Nowhere in this quote, or in this article, does the reporter explain where the uncompromising tone came from – exclusively from what Peter Schrag called the Kamikaze Party, which has for months refused to vote for a budget deal, driving the state to the brink of bankruptcy.

Now Blakeslee and his GOP allies want to make themselves look good by proposing some taxes. That is designed to put the onus on Democrats to compromise – even though they have already done so. What the Yacht Party wants now are new “compromises” – including a hard spending cap that WILL destroy every public service in our state.

But the SLO Tribune doesn’t tell readers that either. Here’s how they describe the Yacht Party’s new ransom note:

Blakeslee said he wants a guarantee that government will not continue to grow at a faster rate than the private sector, something it has done in years of double-digit growth in the state budget.

Note that this is a distortion – government services have grown because we have a growing and aging population. Blakeslee wants fewer people to be educated and wants fewer seniors to get pensions and health care.

And he said Republicans will continue to argue that taxes should not harm businesses in the state. His party supports tax cuts that will attract more businesses to California, and keep those now here from leaving for other states.

Blakeslee said the issues to be addressed in the negotiations are taxes, cuts, structural budget reform that includes spending caps and planning for greater reserves, and an economic stimulus package to help California out of its current crisis.

The SLO Tribune doesn’t say that the spending cap would rachet downward in a recession, leaving government services unable to recover – the same problem that crippled Colorado when they adopted a hard cap.

Nor does the SLO Tribune explain what the Yacht Party’s economic stimulus would be: gutting environmental protections, including disallowing court review of CEQA decisions, making it easier for pesticides to be used, and destroying what remains of organized labor.

Speaking of, the SLO Tribune passes on without comment this closing remark by Blakeslee:

He likened Republicans capitulating on taxes to Democrats considering doing away with collective bargaining, a sacred issue for many of the unions that support Democratic legislators.

Of course, collective bargaining is a basic human right that courts have for decades upheld – not some perk that Dems give to union allies. But this Freudian slip by Blakeslee shows his party’s true goal – break labor, break services, break California.

And it’s a goal they are about to accomplish, with newspapers like the SLO Tribune serving as the house organ for the Yacht Party.

Yesterday’s news that the Yacht Party was looking at trading tax increases for a spending cap has been reverberating around the wingnutosphere. Treating the Grover Norquist pledge like a suicide pact, notorious right-wing talk show hosts John & Ken of KFI in SoCal went into full-on freakout mode over the SacBee report:

“Immediately head to your battle stations,” blared John and Ken on their hugely popular Southern California conservative radio show on Thursday…

Their targets were GOP Assemblymen Anthony Adams, Mike Duvall and Roger Niello. (And, later in the show, Sen. Abel Maldonado, who was quoted in a MediaNews story saying he could potentially vote for tax hikes to balance the budget.)

Pictures and phone numbers for all four lawmakers were posted on their Web site at various points.

“Then start calling these bastards. This is war. War!” John and Ken shouted.

The radio shock jocks promised a “huge tax revolt steamroller coming at them.”

If you have any doubt about the conservative pull on GOP lawmakers to never support taxes, Thursday’s program will set you straight.

“We’re going to get these heads on a stick!” John and Ken pledged at one point. “Heads on a stick!”

The ironic thing about this is that it’s a fight within the death cult. The Yacht Party is composed of elected officials who get their politics directly from talk radio hosts like Sean Hannity and John & Ken.

And yet the ground beneath their feet continues to shift against them. John & Ken aren’t raging against Republican electeds but against their own fading relevance. As David Sirota writes, “the terms of the tax debate continue to tectonically shift”. Pelosi is pushing for immediate repeal of Bush’s tax cuts for the wealthy. In New York, which faces a serious budget crisis, considerable pressure is building to raise the income tax on the wealthiest residents.

All of this is unfolding as predicted – facing destructive service cuts, including school closures and mass teacher layoffs, Californians are becoming unmoored from the anti-tax politics of the last 30 years. Suddenly tax increases don’t look so bad in the face of  Depression-inducing cuts. Even California businesses recognize the need to embrace change, hence the pressure on the Yacht Party.

What is happening is that the Yacht Party is now looking to shift their focus away from taxes and toward an attack on government, using labor unions as the villains. The Flash Report has already started down this path and Arnold Schwarzenegger seems determined to follow. The Yacht Party’s offer to trade new taxes for a hard spending cap is also in line with this new approach.

But it’s doubtful this will work practically or politically. Californians want to protect services – they understand that public services and jobs are essential to economic recovery, which is why they’re willing to raise taxes to protect it. And as John & Ken indicate, the wingnut base isn’t going to be satisfied with an abandonment of the anti-tax rhetoric that gave them power and prime radio spots in the first place.

None of this would matter if it weren’t for the 2/3rds requirement, which forces all of California to suffer so the death cult can be satisfied. Without the 2/3 rule this would be a sideshow – but with that rule, the wingnut wars are now the most important political issue in the state, with our economy riding on the result.

If anyone in this state truly wants reform, they MUST begin by eliminating the 2/3 rule. It is the key that opens every other door. It is the obstacle to every reform idea. It’s time for Californians to unite for majority rule and against the Republican filibuster of our future.

I will be on KRXA 540 AM at 8 to discuss this and other issues in California politics

As the economic crisis deepens, Moody’s has issued a warning that California’s credit rating is about to be cut:

Moody’s on Wednesday placed the state’s ratings for various bonds on its watch list, warning the state that it could suffer a downgrade if it does not enact real solutions for its budget problem. Such a move would increase borrowing costs for California.

The credit ratings service said it will be “acutely focused on liquidity” in the next few weeks as the Legislature attempts to find a solution before the state runs out of cash. Moody’s said in a release that it anticipates its review of California’s bond rating to finish by the middle of April…

“Although the legislative and executive branch continue to debate fiscal and cash measures, and the Legislature is required to come up with solutions by February 3, we do not yet know whether solutions will actually be passed, or whether they will be workable, reasonable, and of a sufficient magnitude to achieve a degree of credit stabilization consistent with the current rating level,” Moody’s said in its release.

As the LA Times notes California’s bond rating has always been low. However, that was masked by the easy credit and generally lax attitude toward risk of the last 30 years. No longer. In a tight credit market risk managers are now paying very close attention to things like bond ratings, and many money managers are avoiding California issuances altogether.

Which is all the more reason why a new PPIC study is so well-timed. Pointing out that the need for infrastructure investment “far exceeds” our ability to pay for it with debt, and that we must innovate 21st century methods – from eliminating the 2/3 rule (this is becoming a common theme!) to raising the gas tax to greater use of public-private partnerships. While I’m skeptical on the value of the latter point, their first two recommendations are spot on.

This isn’t to say bond debt is bad – but we cannot rely on it alone to meet our infrastructure and stimulus needs. New taxes are necessary to make up the difference.

Meanwhile, Jon Coupal of the Howard Jarvis Association makes the absurd claim “there is no budget crisis”, that it’s just being conjured up by a bunch of big bad Sacramento politicians who are trying to scare Californians into paying more taxes. Coupal assumes that most Californians will do just fine if the government goes broke – that massive public worker layoffs and reduction of pensions will balance the budget with no cost to the state economy.

But such layoffs and impoverishment of the elderly – which is what pension cuts are, there’s no way around it – will actually reduce economic activity in California, which reduces tax income, which creates another budget crisis. It is likely Moody’s considered that in their warning, even if Coupal did not.

Of course, we should ask why anyone would listen to Coupal. His organization has had the run of the state for the last 30 years. They won the Prop 13 battle and have won numerous subsequent battles to cut taxes and spending. We got the California they wanted. And it’s broke. If it’s Coupal’s ideas that are merely bankrupt, so be it, but he should not drag the state down with him.

It’s bad enough that for the last few years the Kamikaze Party has been using the 2/3 rule to frustrate the will of the majority and filibuster a budget deal. Now via Fox and Hounds comes a conservative call for bankruptcy under Chapter 9 as the solution to California’s fiscal problems:

Just think: if California could seek the protection of the Bankruptcy Court, let’s assume that states can actually do this for a moment, a Bankruptcy Judge could then oversee the knawing, energy-sapping, Gordian Knot of a $42Billion deficit, crushing contractual and pension obligations, and the imminent lack of financing opportunities facing this state as our credit rating plummets. What could a Bankruptcy Judge do that our Legislature and Governor cannot?…

The Bankruptcy Judge would appoint a Trustee for the Debtor’s Estate – literally, all of California’s financial mess…

The Trustee would then be endowed by the Bankruptcy Code with the power to reject or accept or restructure existing contracts. This means that California, with the stroke of a Bankruptcy Judge’s pen, would be no longer bound by its pension, union, and other contractual obligations, leaving open lots of room for negotiation and giving this state back some serious leverage for bargaining its way out of the current financial disaster. It also means that our state Legislators and Governor would no longer have to agree on a budget because the Bankruptcy Judge will order the budget, and will keep doing so for many decades to come – a humbling comeuppance for those in Sacramento who have stopped being rational about the impending financial Trainwreck that California is speeding toward.

There have been persistent rumors that Arnold Schwarzenegger is planning for, and maybe hoping for, this outcome. One rumor even had him angling to get appointed as the Trustee, although that isn’t likely to be permissible even if the rumor was accurate.

But there’s nothing rumored about the conservative approach here. It’s the Bob Corker strategy from the December debate over the auto bailout – use a financial crisis to achieve a long-desired destruction of organized labor. Corker wanted to force the UAW to accept poverty wages as the price of stabilizing the Big 3; now conservatives like Davis S. White, author of this piece, want to force California unions to accept poverty wages and sacrifice pensions and health benefits as the price of stabilizing California.

This is insane for two reasons. The first is economic. As the US economy enters a prolonged slump the #1 task is to protect and create jobs and grow wages. Cutting jobs, cutting wages, and cutting benefits is the last thing you want to be doing, as it will accelerate the slide into Depression. There’s a reason FDR put wage growth – and support of organized labor to accomplish it – at the center of his New Deal.

The second reason is political. The notion that a bankruptcy trustee, not the people of this state or their representatives, should determine our most fundamental priorities is deeply undemocratic. Conservatives have already demonstrated their antipathy to democracy by their allegiance to the 2/3 rule, put into place to prevent the majority from ruling and to prevent the state from being governed well. To hand the core power of a state – to raise and spend money – to an unelected trustee would ensure that Californians lose some of the most important powers any democratic population possesses.

To the conservative movement, including the Kamikaze Party, this isn’t about economic stimulus or saving California, but about rolling back the New Deal and settling old scores, no matter the cost.

As it becomes clear even to the state’s corporatists that the blanket anti-tax stance is untenable, they are moving to ensure that any new taxes affect someone else, but leave them escaping their obligations to help protect economic and social stability as well as provide for California’s future:

California Chamber of Commerce President and CEO Allan Zaremberg said this week that his group is “not opposed to all taxes” in the current budget environment.

“There’s going to have to be a combination of revenues and real spending reductions,” Zaremberg said. “But there are certain taxes that are going to hurt the economy worse than others, and those are targeted taxes that impact one industry disproportionately.”

Zaremberg said the state chamber, which represents 16,000 businesses, opposes a proposed 9.9 percent tax on each barrel of oil extracted in California. It also opposes extending the sales tax to a number of services that the state currently does not charge, such as veterinary care, car repair and amusement parks.

The article from the Sac Bee also showed that the Cal Chamber has been relying on the Kamikaze Party to do their dirty work for them:

During the holiday break, business lobbyists were particularly concerned that Schwarzenegger negotiated alone with Democrats on a $18 billion majority-vote budget plan that used a controversial legal maneuver.

Schwarzenegger ultimately vetoed their plan. But the fact that he entertained their idea made businesses nervous about the possibility of enacting tax hikes on a Democratic majority vote rather than the two-thirds vote required in the state constitution. Businesses felt it would set bad precedent that Democrats might rely upon in subsequent negotiations.

Republican leaders boycotted those talks because they said the deal was unconstitutional. But that also meant Republicans had no say in which taxes the governor and Democrats were negotiating, which left business interests vulnerable. For instance, both Schwarzenegger and Democrats support the tax on oil extraction.

It is worth asking why anyone takes the Cal Chamber seriously (outside the governor’s office, which is full of Cal Chamber acolytes). Their anti-tax, anti-regulatory policies have been dominant in California for at least the last five years and have had successes before that as well – yet they did not avoid dragging California into economic crisis. The Cal Chamber and the Kamikaze Party are two peas in the conservative pod, united by their shared attachment to that core conservative dogma – being right-wing means never having to say you were wrong.

The article goes on to note that Republicans are hinting that they might be open to taxes, but only if there is a hard spending cap (read: destroy what remains of government over time instead of all at once) and only if environmental and labor protections are gutted. That should suggest the Kamikaze Party isn’t serious about a deal to avert the looming IOU crisis.