Dave Johnson,  Speak Out California

In 2009 California is going to have to confront and settle a number of budget issues that we have been putting off for decades. We have been putting off so many necessary decisions — deferring maintenance of our infrastructure, pushing pain into the future by borrowing, setting aside the needs of our people by cutting school, police, fire and other budgets, and practicing almost every form of avoidance of reality that we could find.

Well, the karma is coming back on us, all the chickens have come home to roost, we are getting what we gave and we are going to pay for our sins.  (Please leave more cliches in the comments.)

The number one budget issues that has to be confronted is taxation.

So, let’s talk taxes, beginning with the basics.  I have found that many people don’t really understand how taxes work so I want to write a bit about that here.  One reason for the lack of understanding of taxes is that there has been quite a bit of deliberate misinformation.  By confusing people, the very wealthy and corporate interests have been able to trick people into letting them avoid paying their fair share.  Instead we either take on ourselves the bulk of the burden of paying for democracy, or just borrow and put that burden on our children.

One thing that I have found many people do not quite understand is the concept of tax brackets.

Tax brackets

A “progressive” tax is one where the tax rate increases as income increases.  A progressive tax structure consists of brackets.  You pay a certain tax rate on income up to the next bracket.  After that bracket is reached, a higher tax rate applies to income that is earned that is above that amount.  Let’s say that you pay 5% on income below $10,000 and 7% on income above $10,000.  So if you make exactly $10,000 of income the tax is $500.  At $10,100 the tax is still that $500 on the amount below $10,000 and $7 on the additional $100, for a total of $507.  The key point is that only the amount in the new bracket is taxed at the higher rate.

Many people believe that once you reach a higher bracket you pay the higher tax rate on all the income that falls below that bracket amount as well.  I have actually talked to people who think they need to “get their income into a lower bracket” to avoid paying a higher tax rate, because they think that a higher tax rate would apply to all of the income they earned.

Using the example of the earlier paragraph, many people believe that you would pay $707, not $507, on income of $10,100, assuming that the entire $10,100 is taxed at a 7% rate because the total income is above $10,000.  This incorrect belief is one result of anti-tax arguments.  It is also the basis of many tax-avoidance schemes.  

So, to repeat:  If you enter a higher tax bracket, you only pay the higher tax rate on the amount of income you earn that is in the new tax bracket, not on all of your income.

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Dave Johnson, Speak Out California

Sunday’s CBS show 60 Minutes featured our own Governor Schwarzenegger!  One of the things said on the show was the following,

“The governor proposed to close that budget deficit half with tax increases and half with budget cuts. Republicans and Democrats opposed him.”

This is why California does not have a budget.  

I don’t mean that we do not have a budget because “Republicans and Democrats” oppose the Governor, won’t compromise, won’t “meet half way,” etc. or that “Democrats won’t agree to cut spending” as most of the public is told.  I mean that we do not have a budget because the public is told that this is the reason. If the public understood the real reasons that we do not have a budget, representative government would work and the citizens would apply the necessary pressure to bring about the passage of a budget.

It is simply a fact that the reason we do not have a budget is that a small number of extremists are blocking the passage of a budget and are doing so because they can.  They have voted against every budget compromise offered. They have been able to get away with this because the public believes that both sides are refusing to compromise.  The Democrats have agreed to cuts and have moved more than half way.  The Republicans refuse to move at all.

Our news outlets are not meeting their responsibility to keep the public informed.  This failure is contributing to our state’s inability to govern itself.

And by the way, we at Speak Out California wish you a Happy Holiday Season!

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Dave Johnson, Speak Out California

Following the 2000 census the California Assembly, Senate and Governorship were all controlled by Democrats.  In line with tradition they used their majority power to create new electoral districts designed to maximize the Democratic majority.  They did this by drawing district lines that bunched Democrats and Republicans together in some very oddly shaped districts.

Look at district 15, drawn here in brown.  It sends branches up toward Sacramento, an arm toward the East Bay, a stump to the south, etc.  This is what a safe district looks like.  Neighboring district 10 has an equally odd arrangement of offshoots to the east and south and a little hook over there on its left.

In 1990 this drawing of districts to create safe seats backfired.  With safe districts turnover of legislators became rare and lawmakers became less responsive to voters, which made voters angry enough to pass term limits to try to solve the problem.

But that didn’t stop the games.  The 2000 census created a new batch of safe districts, and I think this backfired again, only worse.  First, no one foresaw 2008’s electoral sweep.  This redistricting created safe Republican districts as well as Democratic districts because they increased the number of Democratic seats by bunching Republicans together into a few districts.  The 2008 sweep could have taken out several more Republicans than it did because of the concentration of Republicans in these districts.  In SD-19 Hannah-Beth Jackson lost her Senate race by less than 900 votes in that “safe” Republican district.  A fair redistricting would have turned Santa Barbara’s Senate district over to the Democrats because enough voters there were fed up with the increasingly extremist Republicans running for office.

But the very worst consequence of the 2001 redistricting was that it guaranteed just enough safe Republican seats to enable the remaining extremist minority to block budgets while avoiding the political consequences.  The way their districts are drawn they are going to get reelected no matter what, so they refuse to approve any budget that does not yield to all of the most absolutely extreme right-wing demands.

This November voters passed Proposition 11, which tries to set up a neutral process for drawing legislative districts.  I hope that this process works as intended, creating districts that fairly represent their constituents’ interests.  I also hope that this opens up the possibility of truly contested elections in which responsive politicians are asked to stay in office — and politicians who do not represent their constituents can be replaced.

I want to point out that if Proposition 11’s fair redistricting is successful this removes the justification for term limits.  Voters should be allowed to keep representatives as well as remove them.

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Dave Johnson, Speak Out California

California Republicans finally, finally submitted what they claim is a plan to attack the budget deficits, detailing specifics of the cuts they are demanding.  The plan they submitted only cuts the deficit in half, thereby admitting (but not admitting) the urgent need to raise taxes to cover the other half of the deficit.

The Republican plan guts public schools, community colleges, Medi-Cal, transit, mental health and many other programs.  And yet it still leaves half of the deficit in place.  So it isn’t really a “plan” at all.  It is just one more extremist demand that we gut public schools.

A phrase like “guts schools and programs” becomes abstract when it is heard often enough.  So what does this mean to the average Californian?  What kind of education will children receive as we push to 40 or more students per classroom?  Will they be safe if the district cannot afford crossing guards or buses?  Will any of us be safe after police and firefighters are cut back?  Do we go another decade without improving mass transit or even repairing roads and bridges?  Will epidemics spread as health care is cut back?  What about three-hour lines at the DMV?  And what happens to people’s ability to train for jobs when community colleges are cut way back?  

The Republicans demand that we sacrifice the education of an entire generation of school-aged Californians, so that a few wealthy people and corporations can become even wealthier!  Their benefactors are covered — with their kids are in $20,000-a-year private academies.  But what will this do to the economic future of the rest of this generation, and to the future of California?  They don’t care.

This process as it has unfolded over so many years has shown us that California is ungovernable until we remove the current 2/3-requirement system that allows a small group of extremists to hold the state hostage.

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Dave Johnson, Speak Out California

Tuesday I wrote that Republicans were demanding mass layoffs of public employees — during a recession.  And they are getting away with it because the state’s corporate-owned media outlets are not explaining to the public what is going on.

The history of how we got to this point of budget stalemate is that Republicans in the legislature have blocked every single budget and gone back on their own Governor and every negotiated compromise, demanding that all budget shortfalls be solved by laying off teachers, construction workers, DMV workers, firefighters, etc.  And through the whole process they have refused to offer any plan for the cuts they demand.  But this is explained to the voters as a problem caused by “both sides” or “the legislature” or “refusing to work together” or to “reach a compromise” or “pointing fingers.”  Some even manage to blame the Democrats for not completely caving in to every single demand!  The result is that effective public pressure does not develop to get this solved.

Now, rather than compromise and work with the Democrats and the Governor, they have come up with a new list of demands, on top of their previous demands.  And this list is really something:

“Democrats have to capitulate to GOP demands for the 8-hour work day, meal breaks, looser environmental regulations, permanent budget cuts and a stiff spending cap, among other things.

Then, and only then, will Republicans come to the table to discuss — but not necessarily agree to — new taxes”

Even if Democrats agree to all of the new demands, then the Republicans demand that we “sell state property!”  Note that the entire list of new demands involves more tax cuts for businesses, revoking labor laws, removing environmental protections, removing worker and consumer safety regulations, making a very few wealthy people richer through lower pay for working people, etc.  They even want to get rid of meal breaks and overtime pay for employees!  These demands have nothing to do with helping regular Californians get through the day, they are about making things harder and less safe for us, just to make a few people ever richer.  These stunning new demands have nothing to do with the budget.

This is an attempt to apply the 2/3 requirement to remove existing laws that have been in place for years, agreed to by majority votes of the Legislature, signed by the Governor, that are now established (and well-accepted) practices of the state.

In an interesting observation, David Dayen at Calitics asks if these demands possibly violate Section 86 of the California Penal Code.  Take a look at his argument.

One thing for sure, this is not the time for Democrats to cave in to extortion like this.  This extortion comes because Democrats have enabled the power to do this by trying to work with the other party to fairly govern the state and compromising in the face of these tactics in the past.  But these are not negotiations with an opposition that is interested in governing, so this time Democrats have to put their foot down and protect Californians and protect our form of government.  WE elected them and WE made them a majority for a reason.  WE want our government to function, not to be hijacked to serve only the interests of a wealthy few.

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Dave Johnson, Speak Out California

How do California’s Republicans think California should solve the state’s budget crisis, which results from people being laid off and losing their houses?  They are demanding nothing less than mass layoffs of state employees.

Every single budget compromise that has been negotiated has been rejected by the Republicans. They say there is one, and only one, budget solution they will vote for: mass layoffs of state employees and contractors.  They want the state’s teachers fired, construction employees fired, firefighters fired, DMV workers fired, medical workers fired and mass firings from the rest of the state’s departments.  And when they are done with that they demand cutbacks in medical care for the elderly, disabled, blind, and everyone else.

How are they getting away with this?  Why aren’t these few members of the legislature being recalled by enraged citizens?  Part of the problem is the way this is being presented to those citizens by the information sources.  The issue is presented as “the Legislature” and “politicians” who “won’t compromise” as if “both sides” are at fault.  They report on the people who are working hard to solve the state’s problems as if they are squabbling children and the public takes away the idea that government is a distant unsavory game that should be avoided.  Take this Merced Sun-Star headline, for instance: “Our View: Governor, Democrats and Republicans need to compromise.”   The editorial begins,

“As California’s financial troubles intensify daily, leading Democrats continue to blame Gov. Arnold Schwarzenegger for failing to win Republican votes for a budget solution.

. . . Democrats will have to offer concessions if they want their counterparts to compromise on tax hikes. So far, Democrats have failed to make even the most reasonable of concessions to save California from insolvency.”

The editorial just misinforms the public about what is going on!  Repeatedly the Democrats have compromised, giving up more and more, but the Republicans have refused to compromise in any way.  They just say, “No taxes” and that is that.  THIRTEEN paragraphs down, the second to last paragraph, begins,

“To be fair, Democrats in the last special session made some real concessions — agreeing to $8.1 billion in cuts to state programs — in their elusive search for a budget deal.”

Oh, really, to “be fair” they mention this, in spite of the headline and the rest of the editorial, any members of the public who are still reading can learn that the Democrats have offered BILLIONS in cuts to state programs to try to get the Republicans to move even an inch away from demanding mass layoffs.

California will remain ungovernable and will slip further into economic distress as long as a small minority is able to block budgets, and as long as the public’s sources of information continue to mislead.

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By Dave Johnson, Speak Out California

In Santa Clara County they want to extend Bay Area Rapid Transit down to San Jose.  To fund this they put Measure B, a 1/8 cent sales tax, on the ballot.  In California all tax measures must pass by a 2/’3 margin and on Election Day the voters approved Measure B by a 2/3 margin.

That would be the end of it, except the vote was very close to exactly 2/3.  For several days it looked as though the measure would fail because it reached a few votes short of exactly 66.66% but when the last ballot was counted the result was 66.78% in favor.  So in the face of a 2/3 vote by the people, a group sued to block certification pending a recount.  Yes, with 2/3 of the public voting for this, a group sued to stop it!

My observation is that this demonstrates something important about the “anti-tax” forces in our state.  Their intent is to hobble our democracy and thwart the will of the people.  It is time for us to take back democracy and return majority vote to tax measures!  

It is nearly impossible to get 2/3 for anything, ever, in an election.  Clearly this 2/3 requirement is about hobbling democracy, not protecting rights.  The public wanted to bring BART to San Jose.  A remarkable 2/3 voted for this, yet a group sues based on the count being close to exactly 2/3.  And in our state legislature the budget process has completely broken down as a 1/3 minority blocks every budget, every compromise and every last attempt to pass sensible measures to run our state!  We are now in a “Fiscal Emergency,” cutting back our schools and laying people off during a recession.  This is exactly the opposite of what we should be doing and of what the public wants, but there is no choice because we are hobbled by rules that anti-government extremists managed to sneak past misinformed voters decades ago.

We must get rid of the 2/3 requirement.  It is time.  Democracy and good government are back in fashion so let’s get on with it!

(By the way, California’s Secretary of State ruled that the law says automatic recounts occur when the vote count is very close to 50/50.  Since the vote count was 2/3 the law does not apply even though the election was close. A judge ruled Tuesday that the attempt to block Measure B came too late.

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By Dave Johnson, Speak Out California

California’s unemployment rate has soared to 8.2% — third highest in the United States!  We need to stimulate California’s economy.  We need a massive jobs and infrastructure investment program, rebuilding our roads and bridges and schools and making our buildings energy-efficient, and hiring more teachers and police and firefighters.  We can do this, while balancing the budget at the same time.

How can we do this?  We can raise taxes on big corporations and the wealthy and use the money to stimulate the economy and balance the budget and get things moving again.

Our economic system is not perfect, so over time income tends to concentrate at the top, which makes it harder for most people to get by.  People spend less and things slow down.  We are seeing this today — wealth has massively concentrated at the top, and the consumer is “tapped out.”  No one is buying cars and Christmas sales will be much lower. 

Taxes on the wealthy and corporations fix this by recirculating money that has bunched up at the top.  Taxes provide the resources that We, the People can then use to stimulate the economy and get it moving again.

The corporations will try to say that this tax increase will slow the economy.  But this isn’t what has happened when this has been done in the past.  Actually history shows that taxing the wealthiest and corporations helps our economy.  This is not surprising when you realize that more people with more jobs and money to spend is a good thing in a consumer-driven economy. 

There is a problem, though.  In California we have a rule that we cannot pass any tax with less than a two-thirds vote.  A little over half the people voted to impose this two-thirds requirement — and now 100% of us are hobbled for doing what we need to do to fix the economy.  Instead of stimulating the economy we have to lay off teachers and firefighters and road workers, further worsening the recession, because cutting budgets is the only option available.  Even if 55% or 60% of us would rather hire people and stimulate the economy, we still can’t.

So we need to change this rule.  We need to be able to pass taxes on the corporations and the rich, and get the economy moving again. 

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