Note: this is a cross-post from my group blog, The Realignment Project. As California grapples with the Herculean task of trying to solve its budget crisis, there’s a sense of complete impasse on what to do – Republicans won’t vote for tax increases, there isn’t enough space in the budget to cut without eliminating some fo the basic functions of government, the governor won’t sign off on a majority budget. There’s been suggestions that the state could get some sort of financial backing from the Federal government, either in the form of a stimulative infusion to fill up the $24 billion gap, or in some form of a guarantee of California’s bonds so that the state can borrow money for routine cash needs without having to pay exorbitant interest rates, and hopefully so that the state can re-start its stalled public works projects (including the High Speed Rail line that was voted in back in 2008). Politicians, pundits, and the public from other states have reacted negatively to this trial balloon, arguing that California is responsible for its own fiscal crisis and that it would be wrong to help one state and not the other. In essence, the reaction is “this isn’t our problem, we shouldn’t have to pay to fix it.”

However, I’m going to argue that it actually is all of our problems, that we are all in the same boat, and that there’s a way to fix it.

To begin with, it’s important to recognize that California isn’t alone; other states are in a similar predicament. As Robert Cruickshank over at Calitics notes, most other states have experienced the same fiscal shock we’ve encountered. Personal income tax revenues are down in 37 states, corporate income tax revenues are also down in 37 states (although it’s not always the same 37 states), sales taxes are down in 29 states. This doesn’t even include property tax revenues, which have been badly battered by the collapse in housing prices. 29 states saw declines in all three areas. While California, by virtue of its size, is in the deepest hole in dollar terms – many other states are in similar trouble. New York’s income tax revenues have fallen by virtually 50% and has been dealing with a $17.7 billion deficit, and Alaska and Nevada are facing a 30% budget gap between revenues and budgetary requirements. This is not a state-level phenomena, it’s national – and if you look at it all together, it’s a $120 billion dollar deficit that we have to fill.

The larger problem is that we’re in a recession and state governments can’t print money to pay their bills, can’t deficit spend due to state laws (usually constitutions), and the bond markets aren’t really snapping up state debt and are charging an arm and a leg to do so. This means that while the Federal government is trying to push a stimulative policy and get the money pumping, the state governments are going to undercut recovery efforts – the Federal stimulus package is about $350 billion/year, and that $150 deficit will cut the effect nearly in half. This policy problem is being compounded by a political problem – bond rating agencies and the bonds markets are ideologically going after public credit ratings. As John Quiggan notes, agencies like Moody’s, Standard & Poor’s, and Fitch which were up to their necks in the current financial crisis, who looked the other way and stamped AAA ratings on garbage CDOs and asset-backed-securities and credit swaps and other financial snake-oils are now aggressively targeting the bond ratings of government entities. While Quiggan’s examples are mostly Australian, you can see the same thing happening in the U.S as states and even the Federal government (all of whom maintain the power of taxation as a guard against permanent insolvency) are being warned or downgraded for actions that are vitally necessary to save our economy. By itself, by shifting state spending away from stimulative spending towards financing higher interest rates and by forestalling the potential for Keynesian borrow-and-spend policies, these agencies are making the crisis worse. Moreover, by pushing the ideological line that balanced budgets are better than increasing spending, they are complicit in the shock doctrine proselytizing going on in state governments (such as in California, where Swartzenegger used the budget crisis to push for the elimination of the state’s SCHIP program, the Calgrants college aid program, and the Calworks welfare program).

So how do we, and by we I am referring to the national progressive movement and our political allies in government, prevent this crisis being used to gut government and exacerbate the recession? I think the solution is that the Federal government needs to either buy or guarantee economic recovery bonds, which would be specifically targeted at rehiring fired public workers and paying existing salaries, for maintaining/expanding funding levels for social services, and for public works. In a sense, this would be Stimulus 2.0, allowing President Obama and his team to accelerate recovery by turning the states from a pro- to counter-cyclical force. More importantly, by creating a new policy mechanism for preventing pro-cyclical spending cuts and tax increases, this would provide a policy tool for future generations, turning the states from a lead weight on the economy in recessions into local engines for Keynesian recovery.

A new proposal from Assembyman Joe Coto (D-San Jose) would require high school students to register to vote in order to receive their diplomas.  The Secretary of State says that roughly 30% of elgible voters in California aren’t registered, and the article relates speculation (without numbers, natch) that this gap is larger among younger voters.

Republicans, in their kneejerk, disenfranchising way, have already begun to blast the proposal, claiming that it’s politically motivated since young people tend to vote for Democrats.  They’ve also put forth the lame objection that just getting people registered doesn’t mean they’ll actually vote, so why bother, fretting that “Voting is a right, not a requirement” (Anthony Adams, R-Monrovia).

Anyone who’s ever gotten me wound up about voter registration and participation (oddly, not that many. weird…) knows that I’m a hardass about registering people.  If you can sign them up for a draft that doesn’t exist, you can sign them up to vote if they feel like it.  The whole idea that this in any slight way is a problem for the people being registered is absurd, and it’s the saddest level of transparency for Republicans to object to this obligatory invitation into the civic process.

And while we’re on the subject, how about a little bit more contradiction from the Right on this one? On the one hand, this doesn’t actually get anyone to vote, so why bother.  On the other hand, this will work to turn out new Democrats, so it’s a partisan power grab.  In other words, “Hey, you wanna hang out this weekend? No? Well I never liked you anyways. Jerk.”

This was covered briefly on NPR earlier, though I can’t find a link, and that report cited voter registration experts who said young voters often are discouraged from registering by missed deadlines and a complex process.  They also suggested that as major push towards registering young people would expand Latino participation by leaps and bounds.

A recent Gallup poll of the continental United States found that only 7 states had more Republicans than Democrats by self identification. SEVEN. It isn’t even a matter of convincing people we’re right at this point (maybe it will be again soon, but whatever, that’s another bridge), cause we’ve done that.  It’s a matter of convincing them that they can and should show up.

So I know, there are no whores, no sex scandals, no evil corporate Blue Dogs.  But while Republicans across the country continue to make it more and more difficult for people to vote, California has an opportunity to lead the way in removing a major roadblock.  Nobody has to vote, but shouldn’t we make sure everyone can?

Assemblyman Jim Beall is trying to get pre-paid tuition rolling in California, joining nearly 20 other states who have some sort of program to lock in tuition costs years before a child actually attends college.

Beall has packaged this as tuition relief, and with costs increasing nearly 400% in 20 years, it’s a pretty good way to package it.  It also is nicely timed with Governor Schwarzenegger raising statewide tuition levels in his new budget.

Here’s how AB 152 would work:

Each year of UC tuition would be broken up into 100 pieces, or “units,” which would be priced based on existing tuition plus an additional amount for fund administration and stability.

In Washington, each unit currently costs $70 — $11 more than if it were based solely on tuition.

Parents or grandparents would be the likeliest adults to register a child — of any age — for the California program by buying one unit. Subsequent contributions of any amount could be made by anyone.

Participants would be required to hold their units for at least two years, after which they could be used if the student were accepted into a public or private college in California or outside the state.

Students attending a campus charging less than UC could use any surplus funds for other college-related expenses, while students attending the nation’s highest-priced campuses must bankroll any difference.

Donors would not receive a tax write-off, but money invested could appreciate, and gains would not be subject to state or federal income taxes if used for college attendance.

Tuition invested for one sibling could be transferred to another, but units could not be bartered or sold as property.

Families opting to close their child’s account prematurely would be subject to tax and program penalties — unless the student had died, become disabled or earned a scholarship.

I’ve had a bit of experience with this in Virginia, where my parents prepaid my brother’s tuition.  Sure, he promptly attended a private school and then went out of state, making it kindof a moot point, but it was pretty clear talking with my parents over the years that it was a huge load off of their minds to have it taken care of to such a degree.

Granted, there are important details to sort through- whether you have to be a resident, whether there’s a time limit to redeem it, and so forth.  There’s the question of how the state will invest the money brought in, both from moral and financial perspectives.

But ultimately, I’d imagine, the biggest concern is undermining either the education system or the state’s budget at some point down the line.  There was a guest spot on NPR the other day in defense of college costs, essentially saying that you get more for your money than if you sent your kid to stay at an Embassy Suites for 9 months, which I suppose is technically accurate if not much else.  Beall insists that, if instituted properly, this is self-sustaining financially, and it certainly seems like it could be.  But fit it into the larger picture.  If the government offers (but doesn’t force upon anyone) programs for education through a BA and health insurance, and if a living wage can be hammered through, and if we can take a stand against Super WalMarts and myriad other things we’re after, all of a sudden we’ve got a generation that’s pretty well taken care of by the time they’re 22 and hitting the world.  And that ain’t so bad.

p.s. I have a silly little blog of my own now, and it’s cross-posted.