Arnold Schwarzenegger did a swing on the DC fun ride this weekend.  And, of course, he did his standard trip of the Sunday talk shows.  This week it was ABC’s this week to look on endearingly as Arnold spills a load of bull all over the ground.

Apparently when Arnold enters the Eastern time zone, he becomes all magically magnanimous towards Democrats. Apparently, if you talk trash about your own party, it’s big news in DC. There were a whole slew of stories about Arnold trashing the GOP. There’s Arnold on the stimulus:

“I find it interesting that you have a lot of the Republicans running around and pushing back on stimulus money and saying this doesn’t create any new jobs, and then they go out and do photo-ops and they’re posing with the big check and they say, ‘Isn’t this great! Look the kind of money I provide here for the state! And this is great money to create jobs, and this has created 10,000 new jobs, and this has created 20,000 new jobs,'” Schwarzenegger said on ABC’s “This Week.” “It doesn’t match up.” (The Hill)

And Arnold on Health Care and the President:

And he sided with Obama, saying it would be wrong to start all over in preparing health-care legislation for Congress to consider.

“I think any Republican that says you should start from scratch, I think that’s bogus talk, and that’s partisan talk,” the governor told reporters.

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“It was truly encouraging to see him being so interested in talking about job creation being his number-one priority,” Schwarzenegger said.(CapAlert)

Now, there’s two ways to read this. Either it’s just Arnold doing what Arnold does best, play showman, or it’s Arnold beginning to angle for some sort of position in the Administration.

Look, Arnold has always been something of a wild card, in terms of what he says, but when it comes to where the rubber hits the road in Sacramento, he’s the CalChamber’s go-to guy. He sides with corporations over people, and fights for corporate tax cuts while MediCal is slashed. Hardly the great bipartisan hope that some would like to depict.  

During this whole multi-year budget season, the Republicans have consistently been fighting to put the reduction of taxes as the top issue on the table. And Steve Poizner’s “10-10-10” Plan calls for a 10 percent cut in taxes as well as a 10 percent cut in spending. Of course, we’ve cut far more than 10 percent in each of the last few budget years, so his plan doesn’t carry much meaning, but the sentiment is still there.



But, like so many issues facing California, the Republicans are out of touch with the people they are supposed to be representing. In a poll by the Datamar firm (PDF), taxes as an issue didn’t even rate. It just got lumped in with “all other issues.”  Meanwhile, “budget cuts” rated as the second leading issue among all groups except Republican respondents. (They’re still hung up on the immigration issue, despite the fact that we are still in the middle of a slow, if not nil, immigration flow on our southern border.)

Of course, the economy is still front and center, as “jobs” and “economy” could conceivably be pushed together in terms of responses.  But, as voters are looking around the state, they see the effect budget cuts are having. Transit and roads programs are being slashed, you get charged for 911 calls, and the social safety net is falling apart. Workers across the state are falling into semi-permanent states of unemployment that just become harder and harder to break out of.

So, why then are we still arguing? Why not fix the budget? Well, the Republicans have played their hand well. It’s always easier to be a party of no, and as well as they’ve played that game in DC, they do it better in Sacramento.  Because despite the minority’s rejection of even the budgets proposed by their own governor, they are attributed a relatively small share of the blame.

SInce 1978, the Republicans have almost always been in the minority in the Legislature, but have wielded that minority as a club to make some serious and far reaching cuts to the system.  In addition to commanding the governor’s position most of that time, they have been able to bully Democrats into adopting budgets that would never be approved under any majority vote system. It has skewed the actual state of the government and

Yet by allowing just the stray vote or two to cross the lines, they keep their names out of the filth of the actual budget and can blame the Democrats for the perverse effects of a system gone astray. Thus, you get this graph to the left, where the Dems, despite there willingness to give and give to the Governor and the Legislative Republicans being seen as the source of problems. Despite all facts to the contrary, no matter how many ways you can show historically what the supermajority has done to the state, it doesn’t matter. You end up with this garbage.

Of course, given our string of pr debacles, nobody should be surprised to see that nearly 70% of Republicans blame the Democrats, while only about 30% of Democrats blame the Republicans in the Legislature. We have simply failed to tell our story. And at this point, it’s not even clear if Californians are really wiling to do what is necessary to create a working and sustainable government.

That being said, it is imperative that we not only continue to fight for the majority of Californians who are more concerned with cuts than taxes, but we frame it as such. Every day, Democrats need to take the fight away from a frame as a fight with the Republicans and transform it into a populist crusade for the rights and values of the majority of Californians.

I’ll be on KOGO radio with San Diego U-T editor and blogger Chris Reed at 6:35 this evening. You can listen online or catch it on the radio in San Diego at 600 on your AM dial.

The internet, 15 years into its serious commercial life is still something of a wild west. In theory, sales tax (or its counterpart the use tax) is supposed to be paid on all purchases.  In practice, it’s only paid where the stores collect it.  While the state has begun making a push for Californians to pay use tax on products that they buy from online stores, few  people  actually do so.  I’ll admit that keeping track of my online purchases is a pain in the butt. I just end up guessing and paying on that guess. But, I’m just guessing here, but I bet I’m in a pretty small minority here.

New York has gone the additional step of requiring Amazon and other online companies collect and pay that tax.  Amazon, and fellow online retailers, aren’t so enthused. From Amazon’s website:

Effective June 1, 2008, Amazon.com LLC will begin collecting sales tax on items shipped to destinations within the State of New York as New York has enacted a new law requiring out-of-state sellers to collect and remit sales tax based on advertising. Amazon has filed a lawsuit challenging the constitutionality of this provision. However, as required by the law, we must still begin collecting New York sales tax beginning on that date.

Please note that if you place an order prior to June 1, 2008, your Order Total may not include an estimate of New York sales taxes, but those taxes may still be charged if your order is readied for shipment on or after that date.

But what does Amazon have against this practice? Is it too challenging for them to do the work of collecting taxes? Not really, at this point, payment processing systems can be programmed fairly easy to collect and submit sales taxes.  

No, at this point, it is completely about the online stores’ efforts to undermine local businesses.  They believe that their purchases should not be subject to taxes, while if you go down to the local bookstore, you have to pay up.

Perhaps the idea made sense when the Internet was a struggling venture.  Amazon.com is now the world’s largest book retailer.  More music is sold online than off.  The internet does not need any more boost through accounting trickery.  These stores should be collecting taxes.

While the loss to the states is relevant here to the budget, of equal, if not greater, concern is the loss to local companies. They have to collect the taxes, and then are left with seemingly higher taxes. It’s about time that we level the playing field. Let internet and brick and mortar retailers at least compete on a level playing field. Local businesses already contribute more to the local economy in jobs and recirculating money, why would we tie an arm behind their backs?

Meanwhile, Arnold Schwarzenegger continues to oppose small businesses right here in California, and says he plans to veto the measure if it gets to his desk.

Remember ArnoldBucks? Well, I hope you like them, because they are on their way back.

“Here we go again,” said state Controller John Chiang, warning lawmakers that the state will run low on cash this spring unless they make adjustments in the weeks ahead.

California is falling $6 billion short of the revenue it needs to fund basic programs in the current fiscal year and is projected to be short by another $14 billion in the fiscal year that starts July 1.(AP)

Of course, the response thus far has been talk of cuts-only deals and some budgetary gimmicks. Instead of real solutions that will allow the state to provide for the general welfare, we get more threats of increased withholding and other ways for the state to get some interest free loans from the people.

Last year, the ArnoldBucks IOUs ended up costing the state millions of dollars in additional interest, setup and processing, and hurt our credit rating as the world saw our dirty laundry. I can’t wait for this year’s excitement!

In the con-con vs initiative reform debate. California Forward is the heart of the initiative side of the argument. So, their proposals, which are likely to be followed up with some corporate cash, carry some importance.

Now, many of these proposals are things you have heard before.  And the target of today’s news is a measure that would adjust some of the supermajority requirements. Sounds good, right? Well, maybe not, as CalBuzz’s birdogging of the measures uncovered a teensy-weensy issue: the original measure required basically all fees to get a 2/3 vote. In other words, they wanted to subsume the Sinclair Paints decision. Sure, progressives would get a majority vote budget in exchange, but that’s kinda like getting a lump of coal in your stocking. Sure, you can use it to heat the room for a while, but it’s really lame and you end up depositing a bunch of chemicals in the air.

Now that they got some negative attention from the left, CA Forward is trying to do what they try to do best. Get some more squishy love from the squishy middle. They’ve changed the proposal’s language. You be the judge as to how much difference this change makes:

Option 1) Their proposal still cuts into the Legislature’s ability to use raise fees by majority vote – which will still infuriate  progressives – but only when fee revenues would “replace funding for specific programs, services or activities previously funded by a tax that is repealed or reduced in the same or the prior fiscal year.”

Option 2) The proposal said a two-thirds vote was needed for “any bill that imposes a fee that replaces revenue that in the same or the prior fiscal year was generated by a tax.

Option 2 is the old language, with option 1 being the replacement language.  Now, this clearly makes a big difference.  A majority could still pass a new fee to bring revenue into a specific program that was receiving general fund revenue. However, the tax couldn’t have been otherwise reduced.

So, why is this a problem you ask? Why would we want to reduce the taxes? Ah, that brings us into the “Majority vote revenue package” that was placed up for discussion last year, and that Arnold said no way to. Essentially, that plan repealed one part of the gas tax to replace it with a majority vote gas fee as well as a tax to go directly to the general fund. That would be a revenue neutral tax increase, but end up bringing additional revenue to the table.

Under California Forward’s current plan, that is still killed. So, pretty much any substantive revenues will have to go through the supermajority. Whether you think the majority vote budget is worth that trade-off is a value decision. Given the painful budgets we’ll be seeing over the next few years, I’m a bit skeptical.

       California needs a knight in shining armor to deliver it from the forces of budget shortfalls, program cuts, and sub-15% legislative approval ratings.

       At first, I thought our hope was Gavin Newsom, but his departure from the Governor’s race leaves a handful of candidates on both sides that seem inherently opposed to doing the one thing that could save this state: raising revenue.

      So, who is going to carry the baton? Where is our saving grace, and when will he/she hurry their butt up and save us from sinking further and further into debt and depression?

     One person who could posthumanly save the State of California is Saul Alinsky. Deemed by many as the “father of community organizing”, Alinsky helped organize the Back of the Yards area of Chicago introduced to the national stage by Sinclair’s “The Jungle”.

      Alinsky passed away in 1972 (in Carmel-By-The-Sea), but his revolutionary tactics for mobilizing the masses have time and time again generated the true catalyst for change: Friction. Given the current economic situation in this state, Lord knows we need something.

       

       According to PPIC, the average income for a family of four in the lowest 10% bracket dropped 24% to just above $11,000 between 1967 and 1994, while the income for a family of four in the top 10% rose 35% to over $110,000. This was the situation in 1994. I don’t have numbers for more recently, but one can only imagine.  

       In times like this, when the gap between rich and poor is widening at an increasingly alarming rate, it is imperative that we create some friction. We are now beyond the point of using words like “if” and “should”. Rather, we need to use democracy to our advantage to get rid of the anti-tax BS that, to use a strong but justified word, oppresses working Californians and limits their access to life, liberty, and slows their pursuit of happiness.

       The goal, then, needs to be to educate Californians that revenue supports the programs that provide and create more diffusible social classes, and hence, that make the California Dream a reality.

       We’re not asking for a miracle, we’re only asking that people who are hurt by program cuts recognize this and mobilize to protect their interests!

This is the struggle that encompasses almost all Californians. The middle class suburban family in the Bay Area relies on K-12 education just as much as the immigrant family from the Imperial Valley does. The elderly couple that lost their eligibility for Medicare is hurt just as badly as the state worker who is furloughed four days a month and on top of that has to pay 32% more to send their kid to a UC, CSU, or Community College. Why are these people given the bill while Chevron pays $0.00/year to drill oil from the earth and Bank of America is able to raise interest rates at their own whim? More importantly, why are Californians letting this happen when it so obviously against their best interests?

       So, what do you think, Saul Alinsky?

       Sacramento has made it apparent that it isn’t going to make any real attempt at reforming itself. That said, we live in a democracy, and if we can make the point that change isn’t an option, it is a necessity, then maybe we’ll see some action from our electeds.

       So, it’s not Saul Alinsky we’re waiting for; we’re waiting for the People of California to wake up and take their state back. I’m ready.

The AP has a story about the fact that Arnold’s Prop 49 is breaking a hole in the budget.  Arnold, for his part, is pretty adamant that he won’t gut it. Because, you know, it’s part of his legacy. I guess it’s only okay to mess up Darrell Steinberg’s legacy by repealing the mental health measure.

The problem here is still one of framing.  Solutions now seem to be completely limited to cuts, those who support additional revenue appear to have completely lost:

With California facing another mammoth budget deficit, the state’s nonpartisan legislative analyst says voters should reconsider some of the billions of dollars tied up in ballot measures they have approved in recent years.

Among the suggestions from Legislative Analyst Mac Taylor is an after-school measure that costs $550 million a year and helped launch Gov. Arnold Schwarzenegger’s political career. It is one of many programs contributing to the “autopilot spending” that the Republican governor and fiscal watchdogs often complain about because the plans were approved by voters without specific funding sources. (AP 11/20/09

The seriously messed up part of this: nobody can envision the world both Steinberg’s Prop 63, the millionaire’s tax for mental health, and Schwarzenegger’s Prop 49 could a) both live in harmony and b) have stable revenue sources.

Both mental health and after school programs are important, but so is K12 and higher education, so is IHSS, and so is infrastructure.  We must always balance one interest against another, but it has gotten to the point that we are starving our primary goals. We are cannibalizing programs that should exist to feed other programs that should exist.

We are only punishing ourselves. We must find new sources of revenue.

In a rather disheartening statement about the status of California’s debt, the state was forced to pay a shockingly high 4% (tax-free) for about $1.9 Billion in bonds sold this week:

Borrowing $1.9 billion on Tuesday via bonds that mature in June 2013, the state was forced to pay a 4% annualized tax-free yield to lure investors. As recently as Friday the brokerages underwriting the deal, led by Goldman Sachs, had estimated that the bonds could be sold at a yield of 3%.

The boost in the yield demanded by investors reflects the “saturation” of the market with California debt over the last seven weeks, said George Strickland, a bond fund manager at Thornburg Investment Management in Santa Fe, N.M. Since Sept. 23 the state has sold more than $21 billion in short- and long-term debt for budget-related reasons and to fund infrastructure projects. (LA Times 11/11/09)

Unfortunately, with the state looking at about $14 Billion of budget deficits over this fiscal year and the next, there’s no indication that we will be able to take it easy on the borrowing.  And this bond itself is to repay $2 Billion that the state took from local governments to cover the gaps they opened up in the budget “solutions.”

Furthermore, with the signing of the water package, the state is looking at taking another $11 Billion of general fund bond indebtedness.  Treasurer Lockyer points out that with these bonds, our debt service as a percentage of budget looks like a rather ugly figure, possibly rising as high as 10%.  If we continue to heap on debt, basic services will continue to suffer.

But the decision on water still must pass a vote, and the decisions that face the voters of California are some very difficult ones. The question of whether the winners in this deal, primarily the wealthy farmowners of the Western Central Valley, are able to keep the anti-debt forces at bay is still an open question.  Or as Peter Schrag puts it in the California Progress Report:  

Water is a fixed – and probably declining – resource. The only way it can be stretched is by conservation, recycling of waste water and by more efficient use. This deal takes the first baby steps in that direction, but only by promising more goodies to agriculture and by taking most of the money to pay for it not from the beneficiaries but from schools, universities, the old and the sick, and from the taxpayers, present and future. Next November, when they get to vote on the bonds, they’ll have the last word on that.