This is the fifth part of a series of posts analyzing California’s propositions:

• Vote Yes on Proposition 30 – Jerry Brown’s Budget Plan

• Vote No on Proposition 31 – Changes to State Budgeting

• Vote No on Proposition 32 – Union-busting

• VOTE NO ON PROPOSITION 33 – CAR INSURANCE

• Vote Yes on Proposition 34- Death Penalty

• Vote No on Proposition 35 – Human Trafficking

• Vote No on Proposition 36 – Three Strikes Law

• Vote No on Proposition 37: Genetically Engineered Food

The Death Penalty

Proposition 34 is fairly simple: it repeals the death penalty.

More below.

This is one of those simple propositions. It’s easily understandable, and (unlike some propositions out there) nobody is trying to trick Californians. The average voter can easily understand what this proposition does.

It’s also why this blog is not going to spend a lot of time on this proposition. The death penalty is something that most people have already made their minds about. It’s either morally right or morally wrong. Nobody reading this is going to change their mind about the death penalty.

The Financial Implications

It’s with respect to the fiscal impact that there is something to be said about Proposition 34.

Let’s start with the bad news. Proposition 34 adds a total of one hundred million in grants to local law enforcement agencies. It does this mainly to attract votes.

This is the type of terrible policy which the proposition system is famous for. One hundred million in spending by Proposition 34, ten billion in spending by a proposition here, five billion in tax cuts by a proposition there – it’s no wonder California has trouble balancing its budget. Ballot-box budgeting like this is disgraceful.

But the good news is that Proposition 34 does save the state a lot of money, if approved. California requires decades of appeals before a person convicted of the death penalty is actually killed. The purpose of this is to make it so that the state actually never executes anybody. Unfortunately, this is expensive; all the appeals cost more than a hundred million per year. Proposition 34 will save that money. And with California’s current financial difficulties, that’s quite helpful.

Conclusions

So this blog endorses Proposition 34 because it saves the state money, despite the proposition’s thick-headed spending grant.

A side note: In making this recommendation, there is no ulterior motive here. With respect to whether the death penalty is morally correct or not, I really have no opinion and don’t know the answer. It’s not an issue that arouses my passion, although it’s understandable that many people are very passionate about this issue. This recommendation is made purely on the fiscal implications of Proposition 34.

–inoljt

Politicians like to talk in abstractions.

Come to think of it, they like to argue and obfuscate in abstractions, as well. They campaign in abstractions and make abstract pledges until those abstractions turn into something tangible, like a subprime lending crisis or a downgrade from a particular private rating agency.

We spend so much time wading through abstractions that we cannot get to the meat of the issues that face us today. Enough of that.

What really happens in a bad economy? And what is the public’s role during these tough times?

Americans feeling the pinch have less disposable income–their paychecks go in increasing amounts to paying the bills and saving to make ends meet.

This means there is less overall consumer spending. Sure, certain industries do better–oil & gas, for instance–because they are pseudo-required for transportation to and from work or school.

Less consumer spending means lower demand for durable goods (automobiles, clothes, household appliances, etc.). This lower demand results in lower prices for these goods (or even a forced lower supply).

Lower prices & lower supply means businesses bring in less money and potentially less profit. This means big-time layoffs and a plethora of pink sheets.

Fewer workers and fewer wage jobs further decreases consumer spending, even though prices have lowered. This drives that vicious circle even farther, resulting in even greater job loss.

All of this illustrates what we can call the “paradox of thrift:”

“By attempting to increase its rate of saving, society may create conditions under which the amount it can actually save is reduced. This phenomenon is called the paradox of thrift….[T]hrift, which has always been held in high esteem in our economy, now becomes something of a social vice.”

Pundits are fond of saying that “if a family operated its finances like the federal government, they would go bankrupt!” This is true, from the whole to the individual unit in society. But the revered Adam Smith wrote, “What is prudence in the conduct of every private family can scarce be folly in that of a great Kingdom.” The implication that spending in the federal government is wrong or evil is false; it’s a “fallacy of composition.”

What does that mean? “If a population saves more money…then total revenues for companies will decline. This decrease in economic growth means fewer salary increases and perhaps downsizing. Eventually the population’s total savings will have remained the same or even declined because of lower incomes and a weaker economy.”

So what is the role of the public–through their government–in these tough economic times?

Government spending bridges the gap–while the overall propensity of families across the nation may be to save, public investment slows the contraction of the economy due to that subsequent lower demand we talked about earlier. Government spending helps individual families do what is economically prudent according to their own circumstances, without unnecessarily dragging down the national economy.

In other words, when you and your family are focused on spending, you can’t help grow the economy through your usual spending and investment. That’s where public investment is pivotal–and has historically brought us through rough patches.



Of course, this argument presupposes that in good economic times, government–as a matter of course–spends less; this did not happen from 2001-2008. Unnecessary government spending on programs with no long-term benefit to the American public–the Bush-era tax cuts and spending on two major wars–drive up both deficits and explode the national debt. That is what has driven the current debt/deficit reality.

(And for those worried about raising taxes on families in tough times–I certainly am–let’s simply let the Bush tax cuts expire already. They cost the country a whopping $1.8 trillion, contributed to the housing bubble and did not achieve growth. They did the exact opposite of what a responsible government does when the economy is strong; instead of running a surplus and paying down the debt, they ran up needless deficits and exploded the national debt.)

(Cross-posted from The Journeying Progressive.)

Well, this is a smack to the back of the head for Arnold and his short-sighted “furlough them all” policy:

An Alameda County judge has ordered furloughed state employees in nearly 70 departments to return to a regular work schedule next month, but he spared the state from immediately paying hundreds of millions of dollars in back pay while Gov. Arnold Schwarzenegger appeals the ruling.

Service Employees International Union Local 1000, the state’s largest civil service union, figures Roesch’s decision affects about 53,000 of its 95,000 members.

Judge Frank Roesch’s decision this morning underscored his Dec. 31 ruling that Schwarzenegger should not have furloughed workers in 69 “special fund” departments. Those departments get a significant portion of their budgets from sources outside the state’s general fund, which is the shrinking pot of money at the center of the government’s serial budget crises. The judge later ordered back pay for the furloughed workers. Schwarzenegger asked Roesch to postpone implementation of the ruling pending his appeal.

Ruling this morning, Roesch said furloughs should end now.(SacBee)

The way the budget generally works is that most of the big ticket items come from the general fund, K12 and higher ed, much of our debt service, most social programs, etc.  However, these special funds support a plethora of other programs where either voters (usually) or the Legislature has provided for a specific funding source. Most of these funds are doing ok. So ok that Arnold wants to raid those funds to cover for the general fund. Why not just have 3 headaches when you have one gaping axe wound from the head now, right?

Well, anyway, most of these funds are semi-sacrosanct. So, they aren’t so easily tapped, at least without a vote of the people. And that’s what much of this has to do with legally.  At the very least, it’s a slap on the nose.  

It seems that’s the only way you get Arnold Schwarzenegger to do a damn thing these days. You want to change education? Add some tax credits. You want to cut spending? Add some more tax loopholes, and we’ll talk.

And, now, the Legislature has decided to just talk.  So, they’re throwing in a homebuyer’s tax credit (putting realtors over our children) and a sales tax exemption for environmental technology companies (putting another business sector ahead of our children). Yay!

Responding to a demand by Gov. Arnold Schwarzenegger, state lawmakers Monday sent him bills establishing another homebuyer tax credit  and a sales tax exemption for environmental technology firms, satisfying him enough to win his signature on a transportation funding bill.

Schwarzenegger last week threatened to veto a Democratic gas-tax maneuver that would save the state $1.1 billion as it tries to close a nearly $20 billion deficit. The proposal was similar to a gas-tax swap Schwarzenegger first proposed in January, but the Democratic version provided ongoing funding for transit programs.

The Republican governor, in a letter, vowed to veto the gas-tax proposal in part because he said lawmakers had not sent him the job creation bills he wanted. (SacBee)

This, my friends, is called hostage taking in the vein of Lucy and Charlie Brown.  Arnold proposes a law, gets Dems to buy-in, and then pulls the old veto card out of his hat. Football yanked! Ha-Ha.

Get used to this Democrats. If Meg Whitman successfully implements her “Buy It Now” program for the governor’s gig, this is what every negotiation will look like. If you don’t do what she says, she’s going to veto everything. Or so she says. But if she’s going to go that route, she’d do well to learn from the master. After all, look where all this hard work has brought him. It takes real work to get to be the worst governor ever.

With dueling letters flying back and forth (here’s Sen. Steinberg’s), it is clear that there is a lot of work left to be done on the budget.  In fact, Steinberg is saying that they are at a “mini-impasse” now:

Senate President Pro Tem Darrell Steinberg, D-Sacramento, suggested Tuesday that Gov. Arnold Schwarzenegger bears blame for budget inaction after the governor rejected the most significant parts of a budget package Democrats have sent him in recent weeks.

The Republican governor on Monday told legislative leaders that he would veto a gas-tax swap that would have cut about $1 billion from the state’s $19.9 billion deficit through June 2011, saying that he wanted a bill that would have cut gas taxes by 5 cents per gallon.

*** *** *** ***

The Democratic Senate leader declared the situation a “mini impasse,” though he was confident that lawmakers and the governor would be able to resolve their budget disagreements. In particular, Steinberg said, lawmakers would seek to send Schwarzenegger another bill that helps “short sale” home sellers, perhaps without the corporate penalty provisions if need be. (SacBee)

I recommend you read the full Steinberg letter for additional context, but long story short, they’re trying to do a swap of gas taxes for fees.  Trouble is, that when other states tried doing a similar move, they ended up losing revenue and the oil companies ended up taking the additional money.

There are a few points of agreement that should be able to get some budget “solutions,” but there is still a long way to go to chisel down that $20B deficit.

For the duration of the furlough craziness, I’ve had a particular definition of “Stupid.”  (Capitalized, that is.) Specifically, the furloughing of workers paid entirely by federal dollars that ends up losing the state money.

Here’s how it works in one example.  State worker A reviews disability claims. Worker A is a state employee, but his or her salary is paid by the federal government. Arnold, concerned as he is for simplicity over touchy issues like “facts” furloughs Worker A despite the fact that the state saves no money.  Further, the work that Worker A would have done would have pulled down federal dollars into the state, but instead they go unspent.  See…Stupid.

Now, Speaker Pelosi weighs in on all that Stupid:

While California must make tough choices as it works to close its budget deficit, furloughing workers whose salaries are fully-funded through the federal government results in the loss of millions of dollars for our state while harming our neediest citizens.

The Social Security Administration’s Inspector General has found that furloughs of Disability Determination Services workers would cost our state $30.6 million in lost federal funds while delaying $98.5 million per year in disability payments to disabled Californians. California is also dead last among all 50 states when it comes to paying unemployment insurance claims within 21 days, according to the Department of Labor.

The California Congressional Delegation and I met earlier this year with Governor Schwarzenegger and state legislative leaders to ensure that California will continue to receive the federal funds it needs. Enacting this bill, which passed the Legislature with large, bipartisan majorities, is one simple way to strengthen California. I hope the Governor will sign this bill and end all furloughs for workers funded by the federal government.

So, to summarize…state saves $0 Dollars. State loses $30.6 million.  How is this helping the state?  Now, the Legislature has approved a bill to end these furloughs.  Of course, if Arnold had just not pushed for them in the first place, we wouldn’t be in this position. Nonetheless, here we are. Arnold, sign the damn bill, and at least eliminate this one, small bit of Stupid.

Robert mentioned the looming teacher layoffs, but there will be some layoffs that will be coming down the pike right away.

In low-key votes, lawmakers slashed nearly $1 billion from the state’s prison system, chiefly from inmates’ medical care, and approved a $540 million reduction in state workers’ paychecks. The state Senate had approved those measures last week, and on Monday the Assembly passed them on party-line votes. (SJ Merc)

In this series of votes, the Assembly didn’t look at the Amazon.com tax nor the plan to change the way the gas tax works.

What it did do, slashing prison health care funding, is perhaps without controversy in the Legislature, but the federal courts might look at this slightly differently. Further cuts to the salaries of state workers, who have already seen cuts due to the furloughs, will increase the strain of many workers who are just struggling to keep their heads above water.

Given that Sen. Steinberg has already said that he wouldn’t seek broad tax increases, it appears that cuts are going to be the name of the game.  And Arnold doesn’t even want to look at simple majority tax/fee exchanges. While the stimulus from DC appears to be doing some good, the biggest of the 50 Little Hoovers is right here in Sacramento.

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.

*** *** *** ***

“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.