Category Archives: Budget

Budget, Jerry Brown

Corporate Subsidies: Wherein I sort of agree with a FlashReport article

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NYT: Per Capita Subsidies photo PerCapitaSubsidies_zps70a56d6b.jpgCorporate subsidies ignite a race to the bottom

by Brian Leubitz

It is not often that I read something on the FlashReport that I can agree with in the general substance. But, while the article was intended to be a slap at Jerry Brown, the Reason Foundation’s (a right-wing libertarian group) Adrian Moore, PhD, takes on corporate subsidies.

Proponents argue that while cases such as Solyndra are unfortunate, they are a necessary evil that must be tolerated since the benefits of governmental “investing” in certain technologies or industries will, in their view, someday outweigh the costs. I’d point out that the government rarely knows what is both certainly beneficial and inadequately funded by the market, but even worse is a lousy investor, giving to well connected companies, not those with the best business plan, and not caring if the investments pay off or not, only the newsbite when the check is written.

The Reason/Howard Jarvis study looks at specific corporation tax and sales and use tax credits, deductions and exemptions in order to evaluate whether they serve their purpose. The argument offered in support of such tax breaks is that they will improve the lives or livelihoods of certain classes of individuals, businesses or industries. But their costs are frequently ignored. While they may encourage business activity in a certain sector of the economy, this comes at an unseen cost, which is the business activity that would otherwise have taken place in other sectors of the economy. (FR)

These all fairly reasonable points here. Perhaps California does spend too much on corporate subsidies to lure jobs. Perhaps we should be asking ourselves whether the government should be subsidizing corporations at all.

But this should be part of a larger conversation that we should be having at every level of government. The most visible examples of these subsidies come in the context of sports, where teams are lured with free land, tax credits, and sometimes a brand new stadium with a pretty bow on top. But it isn’t just sports where we see this. In a great series in the New York Times, Louise Story investigates the troubling growth in tax subsidies that are going to specific corporations, and how an entire cottage industry has grown up to game the system. (She also gave a very interesting interview to Terry Gross on NPR’s Fresh Air.)

The fact of the matter is that yes, California does spend a fair chunk of change on corporate subsidies. The Times quotes a figure of $4.17 billion, or $112 per Californian. But if you look to the right, you’ll see that our $112 per capita pails in comparison to other states. Especially some very heavily Republican states. Alaska spends nearly a thousand dollars per person! And Rick Perry has spurred the people of Texas to spend over $750 per person. This turns out to be real money:

The math on the new deal angers former Amazon workers, especially those who are still unemployed. For Texas to give up more than $250 million in tax revenues in exchange for 2,500 jobs amounts to about $100,000 per job. Most distribution workers are paid $20,000 to $30,000 a year. The rest benefits the company’s bottom line, which generally increases executive bonuses and shareholder returns.(NYT)

This is the new math of corporate subsidies and job creation. And, unfortunately, California carries a special burden in this area. Film subsidies have been some of the hottest growth areas, garnering a full story in the Times. States and cities find it attractive to get a movie shot in their area, and so spread the cash around. Michigan, Louisiana, and pretty much every other state have tried to lure Hollywood away from, well, Hollywood. (Canada has also been aggressive in this area as well.)

The article is on FlashReport, so of course, it is rather unnecessarily partisan. It calls out Gov. Brown, and name checks Solyndra, and the film tax credit. Solyndra, of course, being the big cause celebre of conservatives for collapsing under the weight of cheap solar panels being dumped on US shores after having received federal loan guarantees. And this being California, conservatives like Dr. Moore get to blame the evil liberals in the legislature for all these ills.

But Dr. Moore is probably right that we shouldn’t be spending so heavily providing cash to corporations. He and I clearly disagree about what should come of that money, lowering the corporate tax rate would fall significantly behind investing in education and other priorities, but that’s a topic for another time. Unfortunately, we live in a competitive world, and our governments are competitive as well. In many ways, it is something of a mutual self-injury pact. Local governments compete against one another, and the individual citizen gets lost in the shuffle.

Clearly, we, as a nation, need to do a better job of monitoring this process. And we need to have a conversation about whether it is in our best interest for states and municipalities to compete in this manner. Dr. Moore (and the NYT’s Louise Story) do us a favor by raising this issue. It deserves serious consideration, perhaps with a touch less of the absurdly misplaced partisan rancor, about how we government goes about the task of “job creation.”  

Budget, Jerry Brown

PPIC Poll: Strong support for Brown and his budget

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PhotobucketJanuary PPIC poll shows majorities support current financial path

by Brian Leubitz

For years, we were told that the people wanted divided government. That we couldn’t mess with the 2/3 requirements because they were somehow sacrosanct.  But that little chart on the right tells us otherwise.  

To be honest, I’ve always felt that PPIC was a little soft on the Legislature. I mean, could you really find one in four people that really approved of the legislature a few years ago? But since we ditched the 2/3 budget requirement, and Democrats were forced to deal with the disaster themeselves, we’ve moved on.  The finger pointing had to stop, and for the most part it has. The Republicans, having lost on Prop 30, and lost even their marginal relevance by failing to garner a third of the legislative seats, are simply trying to get attention any way they can.

With everything that happened last year, Prop 30, and the grassroots field campaign around Prop 32, Brown is now in a better position than most thought he would be after inheriting Arnold Schwarzenegger’s mess.  Yet on the most toxic of issues, the budget, somehow he has built the consensus that many doubted he could create:

When read a brief description of the governor’s overall plan, 69 percent of adults say they favor it and 22 percent are opposed. Across parties, 79 percent of Democrats, 72 percent of independents, and a slim majority of Republicans-51 percent-are in favor. Brown’s 2013-14 budget, which projects a small surplus for the first time in many years, proposes increasing spending on K-12 schools, higher education, and health and human services, as well as paying down the state’s debt and creating a reserve. Support was far lower for Brown’s budget plan in January 2012 (50%).

Of course, with the budget, the devil is always in the details. And summaries, by definition, skimp on those. Yet, the fact remains that Jerry Brown, and his allies, have somehow charted a middle path that eluded Gov. Schwarzenegger.

On other issues, California support for gun control grew substantially after the tragedy in Newtown, CT. From March 2012 to this poll, the number of Californians supporting additional restrictions grew from 53% to 65%. There is a lot more data on gun control at the PPIC site, especially if you care to dig down into the cross-tabs.

While you’re there, you can also see that the President also maintained his popularity here, with a 65% approval rating overall, and a broad other swath of data. Go check it out.

Budget

Back in Black

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The structural revenue shortfall ends because Republicans have been thrown out of government

This week’s big news is the announcement from Governor Jerry Brown that the state budget is out of perennial deficit and looking at several years of surpluses. Over the weekend we’ll talk more about what those surpluses mean and how they ought to be used. But today it’s worth taking a moment to remember how we got here.

Since 2001 or so, California’s budget seems to have been in perpetual deficit, with less money coming in than was needed to fund existing public services. While the deficit pressure eased in 2005-06, that didn’t last, and by the summer of 2007 the deficits had returned as the housing bubble popped and the country slid into the worst recession in 60 years.

Republicans and many of their media enablers claimed this was due to Democrats “overspending” and that the only solution was massive austerity. Thanks to the rule requiring a 2/3 vote of the legislature to pass a budget, Republicans were able to force Democrats and the state to accept this argument, and from 2007 onward state budgets included brutal cuts to health care, education, transportation, local governments, the courts, and other things that are necessary to keep California functioning as a 21st century society.

But those right-wing claims were never true. In fact, they were little more than deflections from the truth – that the deficits were caused by Republicans themselves and their anti-tax ideologies.

The story began in 1978 with the passage of Prop 13, but this particular chapter’s true beginning came in 1996. During the 1980s state government had cobbled together an unwieldy but workable fix to the devastation to revenues and public services that Prop 13 had wrought, aided by that decade’s economic boom. The ’80s economic expansion was unsustainable, rooted in weapons, finance, and housing. By 1991 it had all come apart. Once again, the state government cobbled together solutions, as moderate Republicans and Governor Pete Wilson joined Democrats to pass a mixture of spending cuts and tax increases. By the middle of the 1990s the state budget had stabilized, and surpluses were projected for the first time in years.

But California was also undergoing historic political change. In 1992 the state flipped from red to blue in the presidential election for the first time in many decades. Republicans in 1994 won a tenuous majority in the Assembly by stoking white resentment at the rising Latino population, but this was only a temporary win. They needed something else that could stem the rising Democratic tide.

Republicans figured the answer was to fan the flames of the tax revolt. The first step came in 1996 when Proposition 218 was placed on the November ballot. This measure required a 2/3 vote of the people to raise most local taxes, setting up widespread municipal financial woes in the coming years.

But their main thrust came in 1998. As the dot-com boom gathered pace, the state had huge budget surpluses. Rather than use the surplus to fund new programs or new capital investments, Republicans, worried about their fortunes in the 1998 statewide races, decided it was time for a huge tax cut. Democrats, eager to appease the tax revolt, went along.

The result was the creation of a structural revenue shortfall. Rather than a one-time tax rebate, tax rates were permanently lowered. The consequences became clear in 2001 when the country entered recession. As tax revenues declined, it became clear that the 1998 cuts had gone way too far, and Governor Gray Davis found himself short nearly $30 billion in revenue.

Republicans had engineered a crisis. Now they took advantage of it to reclaim power, pushing through the recall of Governor Davis in 2003 and replacing him with Arnold Schwarzenegger. There were many issues driving the 2003 recall, but in many ways this was the final triumph of the tax revolt. Schwarzenegger ran against the restoration of the vehicle license fee to the levels it had been at from the 1940s to 1998, and blamed the state’s budget woes on overspending.

Once in office, he refused to consider new tax increases even though economists suggested he do so, and instead borrowed money to cover the shortfall. He also pushed through, with Democratic support, a new cut of the VLF, creating a $6 billion hole in the state budget that was only filled last November by the passage of Prop 30.

The underlying structural revenue shortfall never went away. When the housing bubble burst and the nation slid into recession in 2007 (California got there a few months earlier) the revenue shortfall problem was again revealed. And again, Republicans demanded and won not just more spending cuts, but also more tax cuts. Even as billions were being cut from schools, Republicans leveraged the 2/3 rule for passing budgets to win new corporate tax loopholes. California became a laughingstock, a national poster child for supposed liberal fiscal excess.

By 2009 Democrats finally agreed with what we progressives had been saying for years: that the only way to fix the state’s financial woes was not to cut spending, but to take power away from Republicans. On New Year’s Day 2013 I described how this was done. In 2010 Prop 25 passed, ending the 2/3 rule and eliminating Republican power over state budgets (though not yet over tax increases). That same year, Democrats swept all statewide offices, including retaking the governor’s mansion. In 2012, Democrats went further, winning a 2/3 supermajority while also ending the structural revenue shortfall with Prop 30. They even managed to close the corporate tax loopholes created in 2008, with Prop 39 passing by a healthy margin.

Yesterday we saw that elections have consequences, as Governor Brown announced the end of deficits and the return of surplus. It is not a coincidence that this happened after Republicans were kicked out of state government and after the tax revolt was ended. California’s fiscal woes were a direct result of Republican policies, and now that the Republicans are gone, so too are the structural deficits.

That’s not to say all is rosy. California still has widespread unemployment. The safety net and public schools have been shredded by 30 years of low taxes, and in particular by the Republican-driven austerity of the late ’00s. California has a lot of spending needs in the coming decades in order to build a sustainable society and to address global warming, as well as to finally overcome a century and a half of inequality.

But it is possible to begin solving those problems now that the Republican Party has been destroyed and the state budget crisis has ended. California has a future again – if the supermajority decides to start building one.

Budget

What California Can Teach America About Stopping Extremist Obstruction

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If you read Calitics at any time between 2007 and 2010, you’d have seen a site focused on the same problem now facing the country as a whole: how to keep a government, an economy, and a society functioning in the face of Republican obstruction. The latest nonsense surrounding the so-called “fiscal cliff” shows that the House Republicans have learned well from their Sacramento counterparts. The method is the same: make Democrats do what they otherwise would not do by threatening to block passage of crucial legislation, then up the ante by rejecting initial deals and demanding even more once Democrats have shown they will make concessions to avoid the predicted disaster that comes with legislative inaction. The resulting deals were destructive to the state’s economy and safety net, worsening the already bad financial and social crisis.

For a long time, Sacramento Democrats argued they had no other choice. We heard from Speakers of the Assembly and Presidents of the Senate that unless concessions were made to obtain Republican votes, budgets would not be passed and people would suffer. Republicans made good on their threats and delayed budgets – the 2008-09 budget was three months late.  Now we’re watching a similar script play out in Congress.

Here in 2013, California is in a very different place – precisely because of the lessons learned from the era of Republican obstruction. Voters approved a tax increase to help schools. The state budget is headed toward surplus. Budgets are passed on time and without hostage tactics. State government is starting to become functional again.

That did not happen by accident. It happened because Democrats and progressives decided they had enough of Republican obstructionism and developed a plan to stop it for good. The plan included smarter legislative tactics, but the real keys were changes to the political process as well as an unprecedented organizing effort, all aimed at the same core goal: restoring political power to the people, not allowing it to remain concentrated in an extremist fringe.

The first step requires being honest about how politics now works. Another veteran of those California political wars, David Atkins, observed that expecting Republicans to act rationally is to misunderstand how the party operates:

The Republican electoral chips are stashed safely in gerrymandered hands, and any losses over fiscal cliffs or debt ceilings only hurt the President and the nation’s perception of government. There’s no downside for the GOP in bluffing every time in the hopes that the President will fold. Why not? When you’re playing with house money, it makes sense to go all in on every hand.

This realization led California Democrats and progressives away from focusing on the specifics of a deal and toward the kind of process and political changes that would end the obstructionism for good. Once it was realized the problems were deeper, people started working on the lasting solutions.

In 2009, after yet another bad budget deal, progressive organizations began meeting to plan the way out. Everyone agreed that the rule requiring a 2/3 vote of the legislature to pass a budget was a key part of the problem, as it gave Republicans leverage. Getting rid of that rule became a top priority for the 2010 ballot – with majority rule, Democrats would never again have to make deals with Republicans to pass a budget.

But it was also agreed that the electorate had to be expanded. Nobody knew what kind of electorate would show up in 2010, and Meg Whitman was already making it clear she would spent as much as it took to try and win the governor’s race. Public confidence in the Legislature was at an all-time low, creating conditions that Republicans could potentially have exploited to win more seats, particularly if the 2010 electorate was more conservative than the historic 2008 electorate.

So work began on mobilizing hundreds of thousands of new and infrequent voters among the progressive base. Many of these voters were people of color, and many were low income. Their values were progressive, but since Democrats and progressive organizations had generally failed to reach out to them, they were not a regular part of the electorate. The Democratic Party under its new chair John Burton and its new executive director Shawnda Westly pursued this on one track while the progressive coalition led by labor unions pursued the same goal on their own track – to be clear, this wasn’t coordinated, and no laws were violated in the process.

Progressive organizations, websites like Calitics, and an increasing number of Democratic elected officials also began adopting similar messaging. They pointed out that Republicans did not share California’s values, that they were willing to destroy the state to impose their extremist values on a population that did not want them, and that the only answer was to take away their power to do that. It was made clear to people that problem wasn’t bad legislators unwilling to “come together” but that a group of extremists had used loopholes to block good things from happening and to cause people harm.

The result was that in 2010 California bucked the red tide that hit nationally. Democrats won huge victories, sweeping all statewide offices and taking back the governor’s office by a 13-point margin. Prop 25 passed by an even larger margin, ending the annual Republican hostage tactics on the budget. This was the result of the voter mobilization efforts that had begun in 2009.

The coalition for change did not stop there. In 2012 the progressive groups continued their voter mobilization work, this time to beat back the anti-union Prop 32 and to pass the Prop 30 tax increase. That mobilization in turn helped elect a Democratic supermajority, leaving Republicans with no more political power of any kind in state government.

They were helped in their work by a late but pivotal voter registration innovation. In September 2012 the Secretary of State’s office announced online voter registration was available. Over 1 million people registered online, and many of them were the younger and diverse voters that are key to a progressive future.

The supermajority victory was also enabled by a change that the Democratic and progressive groups had originally opposed. Redistricting reform passed at the 2008 election in the form of Prop 11, and was upheld by voters in 2010 when a repeal effort reached the ballot. I was one of many progressives who opposed this reform. But the work of the Citizens Redistricting Commission proved me wrong. It ended a 20-year Republican-friendly gerrymander, creating fair districts that reflected modern demographic realities. Republicans now had to defend turf that had previously been artificially safe, and as a result they lost four Congressional seats to Democrats, along with the Democratic supermajority in Sacramento.

In short, the steps to stopping Republican obstruction in California involved changing the rules and changing the electorate:

• Ending a supermajority procedural rule (Prop 25)

• Growing the electorate through massive organizing

• Making it easier to vote (online voter registration, easy access to vote-by-mail)

• Ending gerrymandering (Prop 11 redistricting commission)

• Naming the problem (calling out Republican obstruction)

To stop the extremists in the House GOP from destroying what remains of America’s safety net and obtaining their dream of drowning government in a bathtub, a similar path must be followed nationally. David Atkins, now chair of the Ventura County Democratic Party, laid out the rules that need to be changed to stop extremist obstruction. Notice the similarities to the list that worked in California:

The only thing that allows Republicans to take their hostages in the first place is a series of arcane rules that give the minority undue influence. Among those rules are:

• Gerrymandered Congressional districts

• Dysfunctional filibuster rules

• Disproportionate Senate representation

• Corrupt lobbying laws

• Campaign finance laws that give outsized political influence to a few billionaires

• Archaic electoral college rules

• Discriminatory workday elections

California’s problems are not solved, not by a longshot. There’s still a lot of work to do to repair the damage from 35 years of a right-wing tax revolt and the inequality it helped create. But the opportunity to fix those problems now exists. The nation as a whole will not be able to overcome extremist obstructionism and have a chance to solve deeper problems until these types of changes are pursued.

Progressives should continue to pay close attention to the details of any deal in Congress, and continue to organize around them. But it’s time to pursue the bigger changes that are needed to put an end to the obstruction, to fix the broken parts of the American system of government that the extremists have been exploiting.

Budget

Protesters Deliver Over 21K Signatures To Demanding Mayor Villaraigosa Resign From Fix the Debt

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by Marta Evry

In a sign that progressive push-back against Los Angeles Mayor Villariagosa’s membership in the right-wing “Fix The Debt” lobbying group isn’t abating, activists from MoveOn.org and the Progressive Change Campaign Committee delivered over 21,000 signatures to LA City Hall this afternoon demanding Villariagosa resign from the group’s steering committee.

“They call themselves bipartisan because they’re able to buy members of both parties,” said Richard Eskow, a blogger for the Campaign for America’s Future.

“The primary agenda for these folks is to lower taxes for millionaires, billionaires and corporations,” he said.

In a scathing Huffington Post article about the Campaign To Fix the Debt’s agenda, Eskow was even more blunt, “Let’s be clear: This crowd doesn’t really care about deficits. It never has. It’s an anti-tax group which pursues its goals by fighting to downsize government programs and “reform” the Internal Revenue code. Its natural allies are the Republican Party, the nation’s mega-corporations, and billionaires.”

Besides MoveOn.org and the PCCC, the Calfornia-based Courage Campaign has also called on Villaraigosa to resign from the group.

“The so-called ‘Campaign to Fix the Debt’ is nothing more than a front group to protect tax cuts for the wealthy while balancing the budget on the backs of the poor and elderly,” said founder Rick Jacobs.  “The fact that Mayor Villaragosa, or any other Democrat that claims to want to protect Medicare, Social Security and Medicaid, would join this effort is nothing short of shameful….Mayor Villaragosa should resign immediately.”

Last week, Villaraigosa defended his decision to join fix the debt. “I am a Democrat and a progressive, but you know what? The country is evenly divided.  They won too,” Villaraigosa told CNN, referring to Republican lawmakers.

Angela Garcia Combs, a native Angeleno and former volunteer for the Mayor who started the petition, said she decided to deliver the signatures today after staff from Villaraigosa’s office told her it would take at least three months to schedule an appointment.

She promised today’s action wouldn’t be the end of it. “Any Politician that calls themselves a Democrat, Progressive, Centrist,Bipartisan, we are putting you on notice too. We are coming after you if you join this group,” said Combs.

“Joining the Steering committee of Fix the Debt is like saying I’m joining the steering committee of the Titanic to help all those poor people in the water.”

On Facebook, Villaraigosa again defended his membership in Fix the Debt, attempting to clarify his position on so-called ‘entitlement reform’.

“Let me be very clear: I oppose the privatization of Social Security. I oppose turning Medicare into voucher care,” said Villaraigosa. “I oppose dismantling Medicaid. I support letting the Bush tax cuts expire for the top 2%.”

However, a spokesman for the Mayor’s office told KPCC Villaraigosa was open to raising the retirement age for Social Security and other  federal benefits.

Budget, Jerry Brown

The Low Hanging Fruit? Reducing Tax Thresholds

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PPIC Poll shows support for some Prop 13 Reforms

by Brian Leubitz

There’s good news and bad news in yesterday’s PPIC poll. The bad news first, Prop 13, or at least that branding, is still popular. When asked if they felt whether Prop 13 has mostly been a good thing or a bad thing for California, a strong majority said “good thing.” 60% of Californians generally, and even 55% of Democrats say that Prop 13 has been good for the state.

Yet, that doesn’t really tell the whole story. When it comes to the particulars of our messed up taxation system, Californians are very amenable to change. Take the 2/3 vote that is required by voters on local special taxes. When asked whether they would support the threshold going back to 55%,  54% of Californians said they would support it.

Fortunately for us, we at least have a start on that.

So, this doesn’t even go so far as the PPIC poll tells us that voters are willing to go. It is a modest reform that would allow community colleges and K12 school districts put parcel taxes on the local ballot with only a 55% threshold. That would simply put taxes at parity with bonds, as voters already made that change in the early part of the last decade.  

With the pending supermajority, we will have the opportunity to put many measures on the ballot. Perhaps we should be thinking bigger, about totally overhauling our the taxation system. Surely we can’t be giving the voters measure after measure with tweaks.

But Prop 30 bought us a bit of time. We have five years to come up with a sustainable revenue system. A system that can see us through the booms and the busts. Whatever that may be, starting with a simple change in 2014 seems a good place to start.  And if we can’t pass Senator Leno’s measure, we have to question what use the supermajority is at all.  So, let’s get SCA 3 passed quickly and move on from there.

I close with a passage from Federalist 58 on the subject of thresholds:

As connected with the objection against the number of representatives, may properly be here noticed, that which has been suggested against the number made competent for legislative business. It has been said that more than a majority ought to have been required for a quorum; and in particular cases, if not in all, more than a majority of a quorum for a decision. That some advantages might have resulted from such a precaution, cannot be denied. It might have been an additional shield to some particular interests, and another obstacle generally to hasty and partial measures. But these considerations are outweighed by the inconveniences in the opposite scale. In all cases where justice or the general good might require new laws to be passed, or active measures to be pursued, the fundamental principle of free government would be reversed. It would be no longer the majority that would rule: the power would be transferred to the minority. Were the defensive privilege limited to particular cases, an interested minority might take advantage of it to screen themselves from equitable sacrifices to the general weal, or, in particular emergencies, to extort unreasonable indulgences. Lastly, it would facilitate and foster the baneful practice of secessions; a practice which has shown itself even in States where a majority only is required; a practice subversive of all the principles of order and regular government; a practice which leads more directly to public convulsions, and the ruin of popular governments, than any other which has yet been displayed among us.

Budget

Villariagosa Partners With Wall Street To Throw Californians Off The “Fiscal Cliff”

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The last time Los Angeles Mayor Antonio Villaraigosa made national headlines he looked like a deer caught in the headlights of an oncoming semi as the Democratic National Convention he chaired descended into chaos.

This time he’s making national headlines for joining the steering committee of “Fix the Debt”, a high-profile lobbying group whose “core principles” include keeping tax rates low for the wealthy while slashing Social Security and Medicare. Founded by deficit hawks Erskine Bowles and Alan Simpson (co-chairs of Erksine/Bowles 2010 deficit-reduction commission) the Campaign to Fix the Debt claims to be a “bipartisan” interest group, and is trying to influence ongoing fiscal cliff budget negotiations taking place in Washington D.C.right now.

“If we’re serious about long-term economic growth, we need a balanced approach for reducing the federal debt,” said Villaraigosa in a press release. “That approach should include spending cuts, raising revenue and reforms that put our entitlement programs on a sustainable footing. The Campaign to Fix the Debt is dedicated to reminding all Americans that we can’t reduce the debt and create the conditions for long-term job creation without working across party lines to find practical solutions.”

If you want to know what some of those “practical solutions” Villaraigosa will be lobbying for might look like, follow the money. Fix The Debt’s $42 million war-chest is funded almost exclusively by Big Business CEO’s notorious for underfunding their employee’s pension plans, Wall Street executives who support privatizing Social Security, and virulent anti-tax lobbyists.

“These CEOs paint a stark picture of hypocrisy,” said Scott Klinger of the Institute for Policy Studies, who co-authored a report which called Fix the Debt a ‘Trojan Horse for massive corporate tax breaks’.

“They’re simply taking advantage of the so-called ‘fiscal cliff’ to push the same old agenda of more corporate tax breaks while shifting costs onto the poor and elderly.”

Klinger’s report paints a stark picture of what Villaraigosa has signed up to defend:

  • Make permanent the Bush tax cuts for the top 2%.
  • Cut corporate tax rates and shifting to a “territorial tax system” that would permanently exempt from U.S. taxes all offshore income earned by U.S. corporations.
  • “Reforming” earned-benefit programs by raising the retirement age and means-testing Medicaid, Medicare, and Social Security benefits.

The politically ambitious Villaraigosa is termed out of office in 2013, and is no doubt fishing around for his next gig.  With limited options in California, perhaps he thinks The Campaign to Fix the Debt will burnish his national profile and launch him into a cabinet position with the Obama administration.

Perhaps. But by signing on as a progressive “beard” for corporate interests, he’ll be on the wrong side of this fight in the eyes of the coalition of working Angelenos, public sector unions, and progressive organizations fighting for economic justice who’ve traditionally backed Villaraigosa.

“Fix the Debt is a creature of Goldman Sachs, Morgan Stanley and the Wall Street Engineers of the the economic crisis we elected Barack Obama to get us out of, ” said Rick Jacobs,  founder of the California Courage Campaign. “I hope the President will pay attention to the voters and not those who put us into this mess.”

Budget, California, education, Jerry Brown

Vote Yes on Proposition 30: Jerry Brown’™s Budget Plan

This is the first part of a series of posts analyzing California’™s propositions.

California’s Budget Problems

Proposition 30 is the most important proposition on the ballot this year.

More below.

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California, as is well known, has a big budget problem. This problem started with the onset of the economic recession and was worsened by a number of factors, ranging from extreme constraints on the legislature’™s power to Arnold Schwarzenegger’™s incompetence.

Things have gotten better lately. Schwarzenegger has been replaced with a governor who knows what he’s doing. The two-thirds supermajority requirement to pass a budget, which was responsible for much of the deadlock, no longer exists.

There are still big problems, however. California has implemented massive spending cuts to balance the budget. Program after program has been cut to the bone. Worse still, the state seems poised to cut far more if this proposition fails to pass.

Take the University of California system:

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Since 2008, budget cuts have forced these universities to raise fees by more than 40%, compared with a national average of 15%. If Proposition 30 fails to pass, fees will be raised by 20% more still.

Why is this happening? It’s because the legislature has its hands tied. There are two ways to balance the budget: increase revenue and cut spending. California requires a two-thirds supermajority to do the former, and Republicans have consistently blocked revenue increases. So California has been left to cut, and cut, and cut.

Now, in general you should focus on cutting spending rather than increasing revenue to balance the budget. But California has taken it way too far. We have basically done nothing but cut and cut for nearly half a decade, without any revenue increases. There’™s basically nothing left to cut at this point. But if Proposition 30 doesn’™t pass the state will be looking once again for billions more to cut ($5.951 billion more, to be exact).

What Proposition 30 Does

Proposition 30 comes four years too late, but it’™s still very necessary today.

Yes, Proposition 30 is a temporary tax increase. It falls mainly on families making over $500,000 -“ but the sales tax will increase as well. The sales tax increase lasts for four years; the income tax increase for seven.

But the truth is that in a budget crisis, eventually somebody will get hurt. If it’™s not families making over $500,000 it’™ll be students and teachers and policemen and firefighters. For almost half a decade, budget cuts have again and again shafted these people. If Proposition 30 fails, they’™ll be hit once again. If Proposition 30 passes, the pain will shift to families making over $500,000.

I endorse this proposition knowing that I will sacrifice a bit. Many Californians (perhaps the majority) will vote against this proposition because of this fact. But it’s not as if they’re dodging the pain by voting against Proposition 30. They’™re just shifting it to their children.

–inoljt

Budget, Jerry Brown

Gov. Brown on CNN: On Obama, the budget, and Gov. Christie

Gov makes case for Prop. 30 and Obama

by Brian Leubitz

Governor Brown was kind of busy last week. You know, with the whole budget thing. So today he spoke with Candy Crowley on CNN, who apparently hasn’t taken the time to figure out what is going on with the budget.

First on Obama, Brown said that the “contrast and the difference is reasonably clear. Romney almostreminds me of Thomas Dewey … who symbolizes the moneyed East. … Obama represents the common man.”

With taxes such an issue, especially for the wealthiest Americans, Brown makes a valuable point. Romney has argued for more and more tax cuts on the rich, despite the fact that the wealthiest in America have doubled their share of income. And Brown has a history with jobs, and recognizes that Obama’s plan for jobs is more substantive to “build the stuff that makes America.”

He also said that the “Republicans should get out of the way and let the stimulus work.”

Meanwhile, when the subject drifted to the budget, Crowley seemed completely at sea. She knew these facts: 1) Brown is asking for tax hikes and 2) California is in debt.

Brown responded to the first question (why is California, a relatively high tax state asking for more money) by noting some of California’s successes in venture capital and job creation and the vast cuts he has made. Crowley responded to that by asking the “then why are you in debt?” with a seemingly gotcha look.

Had she done a bit of research, she might have figured out that the previous governor rode into office on tax cuts and then never bothered to pay for them. Brown noted that fact, but Crowley was soon off following another dramatic story. That would be Brown’s challenge of Gov. Christie. I’ll let you watch the video for that.  The whole video is pretty short and definitely worth the few minutes.

As an aside, what he didn’t mention and what is frequently ignored, especially by national commentary, is the two Californias. Coastal California is a wealthy area with relatively low unemployment. On the other hand, once you head east a bit, especially into the Central Valley, you find a very different community. Like the nation, the Coast subsidizes these poorer areas, tax money generally flows inland. And ironically enough, many of these areas vote heavily in favor of the devotees of Norquist. But we still have a lot to do to repair the economy of the agricultural heart of the state.

That being said, how much longer our schools can continue to absorb these cuts before they completely collapse is anybody’s guess. Per pupil spending is among the lowest in the nation while our prison spending continues to rise. But always the call is for more cuts…

Budget, California

Tax-Dodger CEOS Race to Cheat Californians–Watch It Now!

Consumer Watchdog has been growling for a while about global corporations that use a tax loophole to pay less in California corporate taxes than in-state companies. Four major companies–Kimberly Clark (Kleenex, Scott toilet paper), General Motors, Chrysler and International Paper–have even launched a major lobbying campaign in the state to save their selfish loophole. They are happy, obviously, cheating the state of a billion or more dollars a year that could keep teachers in jobs, the disabled out of nursing homes and parks open.

Now there’s a ballot initiative, Prop 39, that’s aimed at closing the tax loophole, and one of its first public blasts is this funny video, “The Tax Dodger Olympic Dash”–track and field for billionaires.

Along with the video is a text tidbit, revealing that the same companies fighting to keep their loophole in California fought just as hard to keep such tax loopholes out of their home states. There’s nothing like a heaping helping of corporate hypocrisy to start the day!

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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.