Dave Johnson Speak Out California

dday, writing in Giving Away The Tax Argument at Digby’s Hullabaloo blog, asks why so many California newspapers have “tax increase calculators” but no calculators that show people how much the budget cuts affect them.

In my life, I have never seen a “spending cut calculator,” where someone could plug in, say, how many school-age children they have, or how many roads they take to work, or how many police officers and firefighters serve their community, or what social services they or their families rely on, and discover how much they stand to lose in THAT equation. Tax calculators show bias toward the gated community screamers on the right who see their money being “taken away” for nothing. A spending cut calculator would actually show the impact to a much larger cross-section of society, putting far more people at risk than a below 1% hit to their bottom line.

[. . . The media already highlights the tax side of the equation over spending, dramatically portraying tax increases while relegating spending cuts to paragraph 27. It feeds the tax revolt and distorts the debate. And it’s completely irresponsible.

In Why Are Public Assets Being Cut Right When We Need Them Most?  Jay Walljasper, of OnTheCommons.org wonders why public transit, libraries and other things the government does for us are all being cut at exactly the time people need them?  As the economy turns downward more people need to take the train or bus, or use the library.  Jay makes the connection,

Minnesota governor Tim Pawlenty, one of the leading contenders for the Republican presidential nomination in 2012, proposes closing the state’s budget gap by reducing corporate taxes and slashing state aid to local governments. This will mean painful cuts in public assets, such as transit and libraries.

. . . This loss of our public assets is an alarming threat to our society. The things we all own in common and depend upon–libraries, transit, parks, water systems, schools, public safety, infrastructure, cultural programs, social services–are being gradually but steadily undermined.

For many years I have been blogging at Seeing the Forest, often coming back to a question, “Who is our economy for?”  For some time now regular incomes have stagnated, while incomes at the very top just go up and up.  The GDP keeps rising, productivity keeps going up, but regular people see less and less of the benefit of this increase.  In fact, if you look at charts and data, the stagnation of incomes started almost exactly at the same time as President Reagan took office and started implementing the corporate agenda of anti-tax and anti-government policies.  So is this a coincidence?

Throughout human history we have seen one scheme after another wherein a few people seize power and devise a system to hold it and use it to enrich themselves at the expense of everyone else.  This is human nature and through history we have seen it happen over and over.

America formed in reaction to the British monarchy’s exploitation of its people.  We, the People formed our government to band together and protect each other from attempts by the powerful few to exploit us.  Our Constitution was supposed to be include a system of checks and balances to account for the nature of power.

It is time for the people to take back that power and use it to again benefit each other.  And it is time for California’s newspapers to do something for We, the People and include a “budget cuts calculator” as well as tax increase calculator.  It is just as important, maybe more so, that we all understand how we’re injuring and jeopardizing our future with the budget cuts the Republicans required in this year’s budget negotiations.

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Dave Johnson, Speak Out California

California finally passed a budget.  It is a bad budget, cutting essential services, borrowing a tremendous amount, selling our lottery revenues and giving a huge tax break to big out-of-state companies.  Each of these came from demands by the very, very few Republicans who agreed to vote for the budget at all will, of course, just get us through another year while making it ever more difficult to pass future budgets.

California’s 2/3 requirement means that a few corporate-funded extremists can hold the rest of us hostage.  So they had to make a terrible deal to get the three Republican votes required by the 2/3 rule, or else lay of tens of thousands and stop paying California’s bills.  We the People of California were all held hostage to that threat.  

The resulting deal was that if We, the People want schools, police, firefighters, roads & bridges, courts, all the things our government does for us, we had to agree to tax breaks for the big multinational corporations that kick in so much money to help elect the anti-government extremists. So the big companies – the kind that come in and crush local California businesses – get a big tax break while the rest of us have our taxes raised.  Oh, and the oil companies can continue to take our oil out of the ground for free and then sell it back to us.

Here are some reactions around the California netroots:

David Dayen at Calitics,

“The cuts are going to be really, really bad: 10% across the board for education, huge cuts for public transit operations, health care, etc.  The new revenues basically fill in the loss of revenue from massive unemployment.

[. . .] The “single sales factor apportionment,” which is the massive business tax cut, doesn’t kick in until FY2011, predictably and conveniently after Gov. Schwarzenegger is out of office and it will be someone else’s problem to make up the revenue!  It’s almost like somebody planned it that way!”

Richard Holober at Consumer Federation of California,

“The deal reported today does not call on all California taxpayers to share in the sacrifice. Working Californians will face billions in higher sales tax and income tax rates. But businesses win about one billion dollars in new tax breaks.  $700 million in corporate tax cuts result from a recalculation of how California taxes the profits of big multinational corporations.   According to the Senate Analysis, the windfall to multinational corporations, and the revenue loss to California will eventually grow to $1.5 billion.”

Robert Cruickshank at the Courage Campaign blog,

“The only way out, and the first reform that we must undertake – the tree blocking the tracks, the door that opens the path to all other reforms – is eliminating the 2/3 rule that gives conservatives veto power over the state and turns the majority Democrats into a minority party on fiscal matters. It’s been talked about frequently on Calitics and in what remains of the media’s coverage of state politics. So it seemed time for an in-depth discussion of the issue and the prospects for restoring majority rule to California.”

David M. Greenwald at California Progress Report,

“Many Democrats and political observers fear that Maldonado strong-arming the legislature may set a bad precedent for future attempts at getting a budget on time.”

So here we are.  Our structural problems have enabled extremists to increase … our structural problems.  We are one more step down the road to intentional ungovernability.

Over the next several months, we who love this state must act to fix this.  We must get rid of this 2/3 budget-vote requirement that allows extremists to hold us hostage.  An initiative changing the 2/3 vote requirement is long-overdue but we’ll need the support of every forward-thinking voter to make it happen.  Let’s work together to ensure that it does.

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Dave Johnson, Speak Out California

Today’s San Jose Mercury News front page story is about California’s budget problem: that they are still one vote short.  But Californians reading the story are not told why one more vote is required, not are they told who it is required from — until the 10th paragraph.  The 10th paragraph reads,

The votes were there in the Assembly. But in the Senate, only two Republican senators were prepared to buck party orthodoxy and vote to raise taxes. Three were needed.

Even in this 10th paragraph readers are not informed that every Democrat is voting for the budget.  

Before this paragraph, readers are told that “lawmakers” cannot agree and that “the deal still was held hostage by the thinnest of margins.” But there is nothing telling them who or why.

The reason this is such a problem is that the people of California need this information, to help them play their part in the functioning of our state government.  The voters need to know who to hold accountable or they will not make their wishes known through calls to their Assemblymember’s or Senator’s office.  And they can’t make informed decisions at election time.

This is typical of stories about the budget impasse — across the state the major newspapers, radio and TV stations are not giving the voters the information they need in order to participate in their government.  The result is that the state is becoming ungovernable — and going broke.

So let’s be clear about what is happening here.  California’s elected Republicans have all signed a “no-new-taxes” pledge with Grover Norquist’s organization.  (He’s the guy who says the plan is to make government small enough to “drown in a bathtub.”)  So now they see the budget crisis as an opportunity to force mass layoffs of state employees and reductions in support for people who need things like state-supplied oxygen tanks.  They call that “reducing government.”  And even with all the budget cuts that the Democrats have all voted for, they still will not vote to pass a budget.  They want more, and then more, and then they want the state government to go away.

This is ideology. They repeat an ideological mantra that will ruin the state.  And they say this is their goal — to get rid of government.  They say government is bad.  They say government spending is bad.  They say taxes are bad.  They say corporations are good.  Ideology.

California can not continue to fund our schools, universities, roads, public safety, firefighters, health services, services to the poor, blind and elderly, provide funding for local government, etc. without additional revenues.  Do the Mat (George Skelton, LA Times):

It’s Republican dogma in the Capitol that to vote for a tax increase is “career-ending.” Even if true — and there’s evidence both ways — so what?

These are folks, after all, who sermonize against making politics a career, publicly pretend to worship term limits and preach the virtues of private enterprise. You’d think they’d be eager to return to the private sector. Yet, they’re afraid to risk losing out on their next political job.

Another item not reported is that the Republicans demanded a huge tax cut for large corporations — the very kind that are killing off California’s smaller independent, job-creating businesses.

And they still won’t vote for the budget.  And the public still doesn’t have a chance to learn what is going on here.

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Dave Johnson, Speak Out California

There is some good news on the prospects of getting a budget in California.  Eleven California newspapers including Sunday’s San Jose Mercury News carried a near-unprecedented front-page editorial titled, Outrageous budget fiasco has shamed California, calling out the Republicans for not participating in the budget process, saying,

“… [M]ost of the blame for the immediate crisis falls on Republicans in the Legislature, who this past summer — to a person — signed a pledge to not raise taxes.  …  Democrats and the Republican governor have offered significant compromise, but GOP lawmakers cling to ideological purity — schools, health care and other essential responsibilities be damned.”

The reason this is good news is that this is a sign that California’s media may be beginning to explain to the public that there is indeed a bad actor in this fight.  Until now the public has been hearing from the media a simplistic “they’re fighting like children in Sacramento” or “both sides refuse to compromise.”  Nothing could be further from the truth.

The fact is that the Democrats have voted for cut after cut, and have tried and tried to reach a compromise.  They are trying to govern the state.  But every single elected Republican signed a pledge with a Washington, DC anti-government organization — the one that said they want to “drown the government in a bathtub” — promising to vote against any budget that increases state revenues in any way.  They took what they call “the pledge” and have refused to budge and refused to compromise in any way.

California’s major media is finally, finally starting to bring these facts to the public, which means that the public will begin to apply the pressure that is needed in a democracy to move the Republicans and get them to participate in the budget and governing process.

And in the longer term, this information means the public will be able to decide whether they really do want to elect people who hate government — and who take vows to defund government — into positions of responsibility for managing the government.

If we cannot get an increase in revenues California’s economy will be in real trouble.  On a national level Rush Limbaugh says he “wants Obama to fail” and in California the far right is driving failure as well.  We need responsible information sources to reach California’s voters with honest information.

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Dave Johnson, Speak Out California

The key to California’s successful business environment are education and infrastructure.  It is not an accident that our semiconductor and computer and Internet industries, and biotechnology and pharmaceutical and genetic engineering and our other world-class competitive industries developed in California instead of in “low tax” states like Mississippi and Alabama.  These industries thrived here because of our well-educated people and our modern, well-maintained infrastructure.

There has been a dramatic wealth-building return on our investment in education and infrastructure.  Investors could count on California as a good place to start and grow a business, and it has paid off.

But how much would it cost if businesses had to pay fair market value for use of the infrastructure that We, the People built?  What would it cost if companies had to pay the full education cost every time they hire someone who was educated at a California public school or state college or university?

What would it cost if companies had to pay to be provided with police and fire protection?  Should companies pay a fee to have the police investigate, catch the perpetrators, and then put them through the criminal justice system?

What would it cost if companies had to pay fair value to use our roads and air- and seaports.

What would it cost if companies had to pay for access to the legal system that We, the People set up.  We passed the laws and paid for the courts.  We set up the entire legal structure.  

We, the People pay to regulate (and apparently bail out) the banking and financial system.  What would it cost if businesses had to pay us for setting up this system that (used to) keeps our money sound?

This is what government and taxes are for.  We, the People built up California’s comprehensive physical, legal, cultural, education and societal infrastructure.  Businesses rely on that infrastructure, and we want them to thrive.  This benefits us all.  Many, many people became wealthy by betting on California as a great place to do business, and we are proud of that.  Now it is tome to give something back.

Building and maintaining that infrastructure does cost money, and that is where taxes come in.  For several years California has been cutting taxes and cutting back on our investment in education and infrastructure.  Businesses cannot continue to thrive as they have if we continue along this path.  We have reached a point where the tax-cutting has brought our state’s education spending to the second-lowest per-pupil of all the states!  We have been and are deferring maintenance on roads and other infrastructure.  We are cutting back on all essential services and we still have a $40 billion budget shortfall!  

Our companies are getting a good deal.  If we charged fees that were based on the actual value of the service that the infrastructure provides businesses would have to pay much, much more than any level of increased taxes companies and wealthy individuals might be asked to pay to help California meet the budget shortfall.  The businesses and individuals who thrived because of the infrastructure we built need to contribute to the future by agreeing to pay taxes to help invest in rebuilding that infrastructure.

The payoff is clear.  As I wrote above, there is a reason that Silicon Valley and genetic engineering and other wealth-creating industries developed in states like California and Massachusetts instead of “low tax” states like Mississippi and Alabama.

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Dave Johnson, Speak Out California

“People are asking if California is governable.”  Governor Schwarzenegger said in the State of the State address today that California faces insolvency within weeks.  He said there is more gridlock in Sacramento than on our roads, if that is possible.

The governor gave a very short speech, saying there is no sense talking about education or infrastructure or water or anything else as long as we have this huge $42 billion deficit.

But the fact remains that the state’s requirement that 2/3 budget-approval requirement means that the state is, in effect, ungovernable.   A few anti-government extremists are able to continue to block the budget, refusing to compromise or even negotiate, demanding that the state lay off tens of thousands of workers, slash medical help for the elderly, slash police protection and firefighting capability, slash funding for courts, raise class sizes to 40 or 50 students, stop repairing roads and levees and everything else the state government does.

David Greenwald writes at California Progress Report wrote, in State of the People is Grim: More Budget Cuts Are Exactly the Wrong Prescription,

“Budget cuts totaling $16 billion over the last three years have already had severe consequences for the people of California. And the Governor’s proposed 09-10 budget would further harm California families and our economy with an additional $17 billion in cuts to schools, health care, homecare, and state services.”

Leading up to the speech, David Dayen at Calitics wrote, in The State Of The State Is, Well, You Know, “Typically he has done this speech to coincide with the evening news.  This year he’s trying to hide it.”

We at Speak Out California want to invite readers to come up with some solutions for the budget mess.  We are working on some ideas for a prize for the best ideas.

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Dave Johnson, Speak Out California

It takes a 2/3 vote to pass a budget in California.  As we have seen this means any budget that does not completely meet the hard-core anti-tax, must-cut-government position of the Republicans in the legislature is voted down.  Even though there is enormous public support for government – schools, roads, firefighters, etc. – they will not compromise at all.  They demand that we gut the government, lay off tens of thousands of workers, or nothing.  So California races toward economic ruin.  

What do your taxes buy you?  The average person benefits greatly from strong government.  By gathering together into a community that is jointly managed (i.e. government) people can pool their resources and accomplish great things that cannot be accomplished by people who are on their own.  Roads and bridges are examples of things that people cannot accomplish individually.  Police, firefighters, public schools are other examples.  Law and courts and a monetary system are still more.  And then there are benefits like Social Security and the “safety net” of programs for people who lose jobs to food programs for those of us without enough to eat.

The reason we have almost everything that we value as a society, our education and (until recently anyway) jobs, the internet, buildings that don’t easily burn down or blow away, drinkable water coming to our houses and sewage systems leaving them and (until fairly recently, anyway) a health care system that stops epidemics is our government.  All of the businesses we see around us exist because of our government — a corporation cannot even exist without the government that establishes it and the legal system that maintains it.

But there are some who would personally benefit more in the absence of government than in its presence.  History has taught that there are some who would organize themselves to take what others have worked to build rather than do that work themselves.  One need only look at the walls built around cities in the past to understand this.   There have also been organized gangs and other criminal enterprises that take rather than build, and more recently we have seen that organized predatory enterprises also find ways to victimize and prey on people.  Fraud, confidence and ponzi schemes, consumer scams and all manner of trickery prey on people who are left unprotected by their community.  Government is what has always protected regular people from such predators.

Government — the people banding together to guard and accomplish their interests — serves to protect people from those who would just take rather than work with the rest of us to build.  

So why did Ronald Reagan famously say “government is the problem” in his first inaugural address and he loudly and repeatedly attack the idea of taxes?  The foundation and strength of government is the taxes it collect.  Taxes are what provide government with its strength to do all of the good things described above.  This is why anti-government ideologues reason that the way to cut government (and thereby bring in its alternative) is to cut taxes.  They say that if they can just cut out the foundation of government, it will fall.  Or, more famously, that they can “drown it in a bathtub.”

One way that anti-government ideologues have worked to accomplish this is to turn people against their own government, tricking people into misunderstanding how taxes work and what government does for them.  last week, in What Are Tax Brackets, I explained how one of these tricks works — that you only pay bracket rates taxes on income that falls in that bracket, not on all income earned up to that bracket.

Another way they turn people against taxation and government is to misrepresent how much is collected and how it is used.  Exaggerated statements like, “We pay half our income in taxes” are commonly heard, along with under-representation and misrepresentation of the benefits we receive from government.

“Tax Freedom Day” is one example of this technique.  Tax Freedom Day is a product of The Tax Foundation, which is funded by the very same collection of right-wing donors that fund the Heritage Foundation, Cato Institute and so many other components of the anti-government “conservative movement.”    

Tax Freedom Day is widely publicized by corporate media, and usually described as being when “the average American” has earned enough income to pay their taxes.  Tax Freedom Day for 2008 is April 23.  To calculate Tax Freedom Day the The Tax Foundation adds up all the taxes paid to the government from all sources, but it only includes certain forms of income.  It doesn’t include capital gains income, for example, yet includes capital gains taxes on the tax side of the calculation.  These misleading calculations of course result in a much higher tax amount than “the average America” really pays.  So while they say that 30.8% of “our” income went to pay taxes in 2008, anyone reading this who looks at their own tax bill can see that their taxes are substantially lower than this figure.

So the next time you hear about Tax Freedom Day, keep in mind who is making this claim, and why.

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