I urge anyone who cares about California to listen to yesterday’s Which Way, LA.  It’ll make your hair stand up.  The program was about the decision by the Pooled Money Investment Board (basically Treasurer Lockyer, Controller Chiang and Schwarzenegger’s Finance Secretary Mike Genest) to shut down almost 2,000 public works projects, from schools for the deaf in Riverside to highway improvements along the 405, from hospital construction to transit projects and fire prevention services in heavily forested areas, affecting the entire state and as many as 200,000 jobs over the next several months.

The problem is that California is out of money. But it’s bigger than that.  The state floats revenue anticipation bonds to cover these kind of public works projects, and indeed the voters approved all kinds of infrastructure bonds in 2006.  The issue is that investors simply won’t buy them.  They believe that California will default on their commitments at some point or another (though it’s never happened before) due to the instability of the budget process.  Coming up with a work-around to get the budget more balanced (at the expense of hard-won labor rights for public employees, it appears) will go some of the way to fixing that, but NOT all the way.  We’re at a point of extremely low investor confidence.  California has the worst bond rating in the country.  So it’s not at all clear that the shovels will be picked up again even if the legislature passes and the Governor signs a budget deal.  The systemic budget cycle of catastrophe is what’s keeping investors away.  And of course, if the work-around falls apart or the courts strike it down, the state will be out of money in February and vendors will start receiving IOUs.

What’s more, if the Obama Administration offers massive infrastructure spending as part of a recovery package early in his term, EVEN THAT won’t necessarily get these projects going.  As I understand it, federal grants of this nature often require up-front money from the states, and the opportunity for matching funds if the state kicks in the first 25%.  At this time we don’t have that money, so we wouldn’t be able to access the match.  I assume Speaker Pelosi knows this, but it will be difficult to alter the standard practice on this kind of federal spending.

We’re talking about 200,000 lost jobs and an infrastructure shutdown at precisely the moment when infrastructure spending is seen as the key to economic recovery, with multiple obstacles to getting them going again.  And the state could be liable for whatever rises as a result of the shutdown:

Lockyer and other members of the Pooled Money Investment Board predicted that unless the state balances its budget, the funding shut-off will further harm the economy and expose the state to lawsuits.

“The likelihood of contract breaches is probably 98 percent,” Lockyer said […]

Also at financial risk is a new levee on the lower Feather River in Yuba County and a planned bolstering of Folsom Dam for flood protection.

Assemblyman Dan Logue, R-Linda, said the suspension of state funding for the Feather River levee project, already under construction, would put 40,000 people at risk in an area that has flooded twice in the past 25 years […]

“This (could) put tens of thousands of people’s lives at risk, and I believe the state will be liable if there is any damage,” Logue said. “The state is responsible for those levees in the first place.”

This looks to me like an unending nightmare.  If I were Hilda Solis or any California politician, I would want to get the hell out of this state too.  It looks like it’ll fall into the ocean.  But hiding from the problem is a mistake.  This has the potential to take down whatever economic recovery we may see come January.  The federal government needs to provide direct relief, not grants, to the state, or at the very least guarantee the bond issues so that we can restart the issuance of revenue anticipation notes.  You can run, but you can’t hide from California.

Nobody could have predicted that the Yacht Party wouldn’t budge.

Democrats in the state Assembly on Tuesday countered the plan by Republican lawmakers for deep cuts to help bridge California’s gaping budget hole, putting up for a floor vote a new $19 billion plan through mid-2010 that would adopt Gov. Arnold Schwarzenegger’s tax ideas.

But the Democrats’ latest plan failed to garner the required two-thirds majority support as partisan bickering over tax increases continued and Republicans refused to approve taxes […]

Late Tuesday, Assembly Speaker Karen Bass, D-Baldwin Vista (Los Angeles County) ordered lawmakers to remain in the chambers until the Republican proposal could be written in bill form, with hopes to vote on it. But the night ended without a vote because the bill wasn’t ready, Bass said. She plans to bring the GOP proposal to the Assembly floor for a vote today […]

After more than two hours of debate, Assembly members initially voted 46-27, along party lines, on the Democrats’ tax bill, missing the two-thirds majority threshold by eight votes. A separate budget bill that contained spending cuts also failed to gain the required support, receiving a 48-27 party-line vote in early evening.

But rather than end the floor session, Bass announced that lawmakers were locked in, preventing them from leaving the Assembly floor and nearby meeting rooms.

At nearly 11 p.m., Bass reopened the vote for the two bills, and all Democrats but one who voted “yes” earlier decided to abstain instead, making the final tally 0-26 for the budget bill and 1-27 for the tax bill.

One interesting sidelight – there are 29 Assembly Republicans, yet the “No” vote on the budget never got more than 27 votes.  So two cowards must have taken a walk.  I’d find the bill to note exactly which cowards took a walk, but LegInfo is labyrinthine (UPDATE: Randy Bayne helpfully informs that the culprits are Paul Cook, Cameron Smyth and Sam Blakeslee.  Cook and Smyth in particular were in somewhat tough re-election fights in November, so that’s interesting).  We do have abstentions on the budget and tax votes on the Democratic side as well, including all four of the new lawmakers (Huber, Block, Perez and Buchanan) and Charles Calderon on the tax plan.  Huber and Calderon abstained on the budget cuts, and Mariko Yamada voted against it because of specific agricultural cuts.  The bill was fated to fail, but I’d want to know more about the freshman abstentions.

What this means is that $5 billion in public works projects will likely be shut down, at precisely the time when fiscal spending is needed to jump-start the economy.  It will lead to thousands of layoffs (thanks, pro-growth Republicans!).  This is really not that hard.  State budgets with balanced budget amendments have very little maneuverability.  They can cut spending or raise taxes.  Counter-cyclical spending is CLEARLY preferable.

Almost every single economist agrees, the last thing we want to do in a recession is slash government spending. We want, in fact, to increase that spending so that it is a counter-cyclical force to a deteriorating economy. So the question, then, is how to most safely generate the revenue to maintain or increase that spending. By “most safely” I mean how to raise the revenue in a way that will minimize any negative economic impact. And the answer comes from Joseph Stiglitz:

“[T]ax increases on higher-income families are the least damaging mechanism for closing state fiscal deficits in the short run. Reductions in government spending on goods and services, or reductions in transfer payments to lower-income families, are likely to be more damaging to the economy in the short run than tax increases focused on higher-income families.”

So, first and foremost, you don’t want dramatic spending cuts (beyond the usual rooting out of waste/fraud) and you don’t want to raise taxes on middle- and lower-income citizens who both need the money for necessities, and are the demographics that will most quickly spend money in a stimulative way. That leaves taxes on the super-rich, and Stiglitz – unlike anti-tax ideologues – has actual data to make his case. We know Bill Clinton raised top marginal tax rates in a hobbled economy in 1993, and the economy then boomed. We also know the results of a recent Princeton University study, which looked at states that had raised taxes on the very wealthy during the post-9/11 recession. The analysis found that the tax increases were both the most reliable revenue generator and the safest in terms of minimizing any negative economic impact. Indeed, the states that pursued this course of action saw a net job growth, and almost no tax flight (ie. people fleeing the state because of the tax increase).

It’s a no-brainer.  It’s sad to say that David Paterson is making the wrong choice in New York State, and that most of the tax hokes in the Democratic package are regressive, and impact low- and middle-income citizens.  It’s far sadder that we’re now going to shut down infrastructure projects passed by voters at a time when we need nothing BUT infrastructure spending, and fling ourselves into something approaching bankruptcy, solely because of ideology.

There’s an interesting dynamic happening in California.  At the national level, the state’s power is growing.  Californians hold the Speaker of the House and four key committee chairs, including the powerful Energy and Commerce Committee.  The Senate Environment and Public Works Committee and now the Senate Select Committee on Intelligence have Californians at the helm.  Any energy and environmental policies will have to go through the committees of Californians, and they’ll have California allies inside the Administration, with the selection of Lawrence Berkeley National Laboratory’s Dr. Steven Chu as Energy Secretary and Los Angeles Deputy Mayor Nancy Sutley as head of the White House Council on Environmental Quality.  Other Californians are up for possible Administration jobs, like CA-31’s Xavier Becerra (US Trade Representative) and CA-36’s Jane Harman (CIA Director).  It’s a good time to be a California politician in Washington.

It’s a TERRIBLE time to be a California politician in California, as it dawns on everyone in Sacramento that the state is ungovernable and hurtling toward total chaos.  The two parties are miles apart from a budget deal, and even their biggest and boldest efforts would only fill about half the budget gap.  The peculiar mechanisms of state government, with its 2/3 rule for budget and tax provisions, and its artificial deadlines for bills to get through the legislature, which causes remarkable bottlenecks and “gut and amend” legislation changed wholesale in a matter of hours, and the failed experiment with direct democracy which has created unsustainable demands and mandates, make the state impossible to reform and even get working semi-coherently.  The state’s citizens hate their government and hate virtually everyone in it with almost equal fervor, yet find themselves helpless to actually change anything about it, and believe it or not, ACTUALLY THINK THEY’RE DOING A GOOD JOB setting policy through the initiative process, which is simply ignorant (though they paradoxically think that other voters aren’t doing a good job on initiatives).  The activist base does amazing grassroots work, very little of it in this state.  We have a political trade deficit where money and volunteerism leaves the state and nothing returns.  And the political media for a state of 38 million consists of a handful of reporters in Sacramento and a couple dudes with blogs.

Many of these problems have accumulated over a number of years and cannot be laid at the feet of anybody in particular.  But in general, the reason that we’ve gotten to this crisis point, the reason that California is a failed state, is because by and large the dominant political parties WANT IT THAT WAY.  I’m not saying that the state Democratic Party or its elected officials, for example, wants the state to be flung into the sea, metaphorically speaking, but there’s certainly a tendency toward the closed loops of insiders that prefer a predictable and stable status quo, that naturally restricts reform and leads to corruption, gridlock and crisis.  I’ll give you an example.  Last night I was on a conference call where Eric Bauman, Chair of the Los Angeles County Democratic Party, announced that he would drop out of the race for state party Chair and run for Vice-Chair, because when 78 year-old former State Senator John Burton entered the race, all his labor, organizational and elected support dried up.  Fitting that he didn’t mention his grassroots support, because it clearly doesn’t matter who they prefer.  

There is little doubt in my mind that John Burton will run the party, or rather delegate it to whatever lieutenant will run the party, in the exact same way it has been run for the last decade or so, characterized by missed opportunities to expand majorities, a lost recall election for Governor, cave-in after cave-in on key budget priorities and a failure to capitalize on the progressive wave of the last two electoral cycles.  These are not abstractions, and they have real-world effects, $41.8 billion of them at last count.  And honestly, the Special Assistant to Gray Davis didn’t represent all that much change, either.

We have an ossified party structure, and a phlegmatic legislative leadership that is unable to get its objectives met because the deck is essentially stacked against them.  The times call for a completely new vision, one that can energize a grassroots base and use citizen action to leverage the necessary unraveling of this dysfunctional government to make it work again.  The work on Prop. 8 since the election has been tremendous, but ultimately, if public schools are closing and unemployment is above 10% and the uninsured are rising and the pain felt in local communities is acute, then we have a much larger problem, one that requires a bigger movement allied with the civil rights movement to make change.

The key flashpoint is the 2010 Governor’s race.  There is currently no one in the field with the ability to break the lock that the status quo has on California and deliver a new majority empowered to bring the state back from the brink.  In an article published last month, Randy Shaw put it best.

None of the current field appears likely to galvanize a grassroots base, or to be willing to take on the “third rails” of California politics: massive prison spending, Prop 13 funding restrictions, or the need for major new education funding. Dianne Feinstein? She’ll be 77 years old on Election Day 2010, and she has long resisted, rather than supported, progressive change.

Jerry Brown just finished campaigning to defeat Proposition 5, which would have saved billions of unnecessary spending on the state’s prison industrial complex. This follows Brown’s television ads for the 2004 election, which helped narrowly defeat a reform of the draconian and extremely expensive “three strikes” law. Brown’s consistent coddling up to the prison guards union is the smoking gun showing that he is not a candidate for change.

Gavin Newsom came out against Prop 5 on the eve of the election, undermining his own “break from the past” image. He also spent another local election cycle opposing the very constituencies who an Obama-style grassroots campaign would need to attract.

With her Senate Intel. Committee post, it is unlikely that Feinstein will run.  He forgets John Garamendi, who supported Prop. 2 (!) because of his fealty to farming interests and who first ran for governor in 1982.

Shaw mentions that the state is ready for a Latina governor, and mentions the Sanchez sisters.  He’s right in part, but has the wrong individual in mind.  I am more convinced than ever that the only person with the strength, talent, grassroots appeal and forward-thinking progressive mindset to fundamentally change the electorate and work toward reform is Congresswoman Hilda Solis.  She authored the green jobs bill that Barack Obama is using as a national model.  She is a national leader on the issue of environmental justice and has the connections to working Californians that can inspire a new set of voters.  She beat an 18-year Democratic incumbent, Matthew Martinez, by 38 points to win her first Congressional primary.  She has worked tirelessly for progressive candidates across the state and the country.  In a state whose demographics are rapidly changing, she could be a powerful symbol of progress that could grab a mandate to finally overhaul this rot at the heart of California’s politial system once and for all.  This is not about one woman as a magic bullet that can change the system; this is about a woman at the heart of a movement.  A movement for justice and equality and dignity and respect.  A movement for boldness and progressive principles and inclusiveness and openness.  A movement that can spark across the state.

I know that Solis is interested in the Vice Chair of the Democratic caucus if Becerra takes the job in the Obama Administration.  Congresswoman, your state needs you desperately.  Please consider running for Governor and leaving a legacy of progress in California.

Open Left’s Paul Rosenberg summarized our site over the past week by musing that California is a failed state.  It’s hard to argue with that.  We have a political system governed in exactly the opposite direction of the will of the people.  Despite 63% majorities in the Assembly and the Senate, in Sacramento the Yacht Party rules.

California is bleeding Republican red as the state’s minority party tries to squeeze a spending cap and pro-business policies from fiscal chaos.

Badly outnumbered and often ignored by the Democratic-dominated Legislature, the GOP is not getting sand kicked in its face these days.

California is hurtling toward a financial abyss, projecting a $40 billion shortfall by July 2010, and no deal can be struck without at least three Republican votes in both the Assembly and Senate.

GOP officials clutch that trump card with relish as the state braces to pull the plug on $5 billion in public works projects and warns it won’t be able to pay all its bills by February or March.

Kind of amusing that the Treasurer thought he was making a threat to Yacht Party regulars when he vowed to shut down infrastructure projects without a budget deal.  To the GOP, that’s a GOAL.  All the posturing and tut-tutting at the lack of compromise, along with the horror stories spun out as a consequence of doing nothing, simply bolster the Yacht Party argument.  If you haven’t been paying attention, they want to do nothing.  They want to end government.  In a way they are the ultimate anarchists.

There’s supposed to be some kind of “cuts only” package released by Republican leaders today, by the way:

The GOP is scheduled to unveil its own proposal Monday, with no tax hike. The plan is expected to identify about $11 billion in budget cuts and, among other things, propose asking voters to redirect money designated for mental health programs and preschool programs and services.

State Treasurer Bill Lockyer, a Democrat, characterized the high-stakes showdown between legislative Democrats and Republicans as political “chicken,” with each party expecting the other to blink.

“I think they’re going to run off a cliff,” Lockyer said.

Incidentally, Bass and Steinberg are willing to come together on good government reforms, which we shouldn’t oppose in a knee-jerk fashion.  Liberals support reforming government and making it effective because they believe in it.  Republicans, under the guise of “reform,” mean to destroy government.  I don’t think there’s anything wrong with a performance review that looks at duplication or ineffective programs and seeks to mend them.  That’s what oversight is all about, and it’s a core function of the legislature.  What I do take issue with is the idea that reform is a “magic bullet” that will end all budgetary worries without anyone having to feel the pain.  That’s irrational and ridiculous, especially in this moment of crisis.

The Secretary of State has formally released the final numbers on the 2008 General Election.  You can see the Presidential vote by county here.  The Congressional vote is here.  The State Senate races are here.  The State Assembly races are here.  The ballot measures are here.  A couple thoughts.

• We had 79.42% turnout among registered voters, which is pretty fabulous.  Among all eligible voters including those who haven’t registered, turnout was 59.22%, so there’s a lot of room for improvement and to change the elctorate there.  The best turnout was in Sonoma County, with 93.43% of all registered voters.  The worst was Merced County with 66.57%, one of only two under 70% (Imperial County had 68.48%).

• 13,743,177 voted this year.  13,561,900 people cast a vote in the Presidential election.  That’s over 200,000 undervotes at the top of the ticket.  As a point of reference, Prop. 3 received 12,638,905 votes, an undervote of 1.1 million (one out of every 13 or so voters, in other words, stopped at the top).  Most of the propositions are the same, except for Prop. 8 which received 13,402,566 votes and lost by over 560,000.

• Hannah-Beth Jackson lost by 857 votes.  Thanks, Don Perata.

• In CA-03, Dan Lungren would up with just 49.5% of the vote and the center-left coalition (Bill Durston and the Peace and Freedom Party candidate) got 48.2%.  This is clearly the top priority among House races in 2010.  The final spread in CA-04 was 1,800 votes.  In CA-44, Bill Hedrick wound up 6,047 votes shy of Ken Calvert, and if he runs again, that will be a race to watch.  The center-left coalition in CA-46 (Debbie Cook and the Green candidate) received 45.9% of the vote, a good achievement in that district.  Nick Leibham would up with 45.2% in CA-50, which seems to be the ceiling, as Francine Busby topped out around there as well.

• Lots of interesting numbers in the Assembly.  Alyson Huber’s final margin of victory was 474 votes.  John Eisenhut was only 4,680 votes shy in AD-26, Fran Florez lost by 1,310 votes in AD-30 (with pathetic participation), Linda Jones came up 4,761 shy in AD-36, and Ferial Masry lost by 8,230 votes in AD-37.  There’s a path to 2/3 here, considering that we’re three seats away.  AD-65 and AD-68 are marginally promising as well.

When Josh Richman, the fine reporter for the Oakland Tribune, called me for comment yesterday on the breaking news that Don Perata transferred $1.5 million dollars the day after the election from an IE account intended to elect Democrats to the State Senate and wage initiative campaigns into his personal legal defense fund, my initial reaction was “I’m not surprised.”  My slightly longer reaction is captured in the article:

David Dayen, an elected Democratic State Central Committee member from Santa Monica, blogged angrily this summer about his party’s contribution to Perata’s legal defense fund, contending the money would’ve been better spent on legislative races. The same goes for Leadership California’s money, he said Wednesday; despite a Democratic presidential candidate carrying California by the largest margin since 1936, Democrats netted only three more Assembly seats and none in the state Senate.

“Every time I asked the California Democratic Party about getting more active and involved in local elections, they said the state Senate and the Assembly control those races “… and we don’t have a lot of flexibility. So Perata, at that time, and Nunez or Bass had the authority to run those elections,” Dayen said. “Now we see what happens when you vest power in these closed loops – suddenly self-interest becomes more important than the good of the party.”

He believes this is why Perata didn’t step aside as Pro Tem earlier, as Assembly Speaker Fabian Nunez relinquished his post to Karen Bass in May: “Darrell Steinberg was sitting there ready to go “… and we were all like, ‘What the hell is going on?’

“We speculated it had to be that he still needed the leverage to make the calls to raise money for himself.”

I want to expand on that.  The behavior of Don Perata can be directly tied to the continuance of a status quo that has failed and is failing California families.  At no time is the way elections are run – without transparency, without accountability, without meaningful checks on the potential for corruption – questioned by the powers that be.  It is enabled through a shrug of the shoulders and the words “that’s the way things are.”  What Perata did was perfectly legal, although that is subject to change, as the state Fair Political Practices Commission votes today on making such transfers illegal.  But as Michael Kinsley famously said,  “The scandal isn’t what’s illegal; it’s what’s legal.”  The bigger scandal is that there’s no desire or even interest at the top to see that change.  And why not – it suits them just fine.

California has 63% majorities in both chambers of the legislature, has just seen a 61% share of the vote for a Democratic Presidential candidate – and yet this state is completely, inescapably and hopelessly beholden to right-wing interests, as a function of a backwards set of governing rules that have climbed the budget hole over $40 billion dollars, without any reasonable hope of getting out of it.  It’s been beyond clear for several years now that the ultimate solution will come at the ballot box, and yet the state party has entrusted the most crucial elections, the ones that could net a working 2/3 majority in the Senate, to someone more concerned with saving his political hide.  And so Hannah-Beth Jackson, who came within 1,200 votes of flipping a Republican seat, reads a story like this in shock and anger.  And the citizens in SD-12, promised a recall of Jeff Denham; and those in SD-15, expecting a candidate in their majority-Democratic district to take on Abel Maldonado; they are similarly angry.  Money they had every right to expect would go to help them now goes to help one man.

(By the way, the alibi from the defenders of Perata on this doesn’t scan at all.  First of all, nobody begrudges him from raising money in his own defense – the problem lies in taking that money from an account intended for campaign work.  And second, if this is a “political witch hunt,” as they say, why would he need this lump sum of money 75 days from the time when a Democratic Administration with no inclination to prosecute Democrats on allegedly bogus charges is about to be installed?  It’s either a witch hunt about to end or a going concern.  The alibi is pathetic.)

But the larger point is that the status quo, the closed systems at the top of the Democratic leadership, the lack of transparency and accountability, create the crises we see in our state, or at least disable anyone from reacting to them.  And this is not likely to change.  John Burton is going to be the next state CDP Chair.  He’s been in politics for 205 years, and he’s basically muscled out the competition for the job.  Does anyone think that a lifelong pol, with a long history of backroom deals, the guy who was Arnold Schwarzenegger’s cigar-smoking buddy (that seems like a good profile for the opposition party chair), gives a damn about urgently needed reform?  He’s making sweet little noises about turning red areas blue, but there’s absolutely no hope that he will provide any change from the insular, chummy, mutual backscratching society that exists in Sacramento.  Grassroots activists should be furious that, in the wake of seeing countless opportunities wasted and crises lengthened, we’re boldly taking off into the future with a Party Chair who was first elected in 1965.

The future of California is a mystery right now, because there is a crisis of leadership and an unwillingness to reform.  At the very least, activists should look to electing Hillary Crosby as State Party Controller so that someone in the room will have a reform message that can spark a modicum of change.  But until the fundamentals are altered, we will lurch from one disaster to the next.

I want to publicly thank Jordan Rau and Patrick McGreevey for ripping off my “Scared Straight” moniker to describe yesterday’s joint legislative session.  This is par for the course with the traditional media creatively borrowing the work of bloggers without attribution.  Hey, at least our site didn’t send us into bankruptcy.

UPDATE: Mr. Rau, in a somewhat snippy but professional email, tells me he doesn’t read the site and the “Scared Straight” idea was independently his.  Fair enough.

As for the effectiveness of the “Scared Straight” session, which posited that all state infrastructure projects would be shuttered by the end of the year without a new budget, and that the state would be essentially out of money by February or March, and that doing nothing will make the problem substantially worse… well, let’s just say it could have gone better.

The Republicans, who attended reluctantly, refused to accept tax increases, instead emphasizing the importance of limiting state spending and ferreting out waste and bloat in existing programs.

“I didn’t see a lot of productive work there today,” said Senate minority leader Dave Cogdill (R-Modesto). “I think it was more about trying to heighten the intensity around this thing and push people to a place that they have been trying to push us to for a long time, and I don’t think it’s going to work.”

Sen. Dave Cox (R-Fair Oaks) held aloft two weighty yellow tomes produced by the last effort to trim state government — Schwarzenegger’s 2004 California Performance Review, which suggested 279 ways to save money by reorganizing the state bureaucracy. Almost none were adopted.

Look!  The answer is just holding up the performance review and shuffling around the bureaucracy!!!  Ahem…

In his comments, Mac Taylor, the Legislature’s nonpartisan fiscal analyst, described the folly of trying to close the gap either by taxes or through spending cuts alone. A tax-only solution would require increasing the sales tax by 2 cents, adding a 15% surcharge to the personal income tax and hiking corporate taxes by 2% — making all of those taxes the highest in the nation, he said.

Taylor said erasing the budget gap by cuts would require lawmakers to end all funding for the University of California and state universities, welfare grants, developmental health services, mental health and in-home supportive services.

It’s of course a red herring that Democrats are seeking a “tax-only” solution, one that Karen Bass sadly saw fit to perpetuate yesterday by stating “I think some of my colleagues on both sides of the aisle are living in denial, frankly.”  Um, every Democrat in the Legislature voted for a shared responsibility budget that raised revenue and implemented painful cuts.  If Bass doesn’t want to make the fight at all, she ought to let everyone know.  It’s not helpful to try and spread the blame equally.  We have a Yacht Party that has no intention of lifting a finger in the face of crisis.  In fact, they see it as their opportunity to drown government in the bathtub and eliminate the social safety net permanently.

This is why the state GOP is bordering on irrelevancy throughout the state (BTW, if you want to laugh, read Ron Nehring’s prescription for Republicans.  Clueless and pathetic).  Californians have thoroughly repudiated the Yacht Party vision.  However, this is true everywhere but in the legislative chamber in Sacramento, where the 2/3 budget and tax rule allows them to hijack the legislature.  In the long term, there is nothing to do but to capture a 2/3 majority and finish the irrelevancy project.  In the interim, California’s Democratic lawmakers are better off flying to Washington, DC, where at least they’ll have a chance of getting money for state and local governments in the new stimulus package, then staying in Sacramento, where they have no shot at breaking the stalemate.  That’s just reality.

Scared Straight didn’t work.  On to DC.

UPDATE: This is better from Karen Bass.  I’ll put the whole release on the flip, but she is, as she has been doing repeatedly throughout the crisis, calling for specific aid from DC.  A taste:

Meeting with California Congressional leaders and President-elect Obama’s transition staff, Assembly Speaker Karen Bass today outlined specific steps the federal government can take to boost California’s economy and ensure that the state can actually benefit from stimulus packages currently under discussion.

“Infrastructure investment is critical to getting the national and state economies back on track,” Bass said. “But the major spending cuts and tax increases that California and other states will need to balance our budgets could undermine the success of any infrastructure stimulus efforts. Today, I shared with Representative Barbara Lee from the Appropriations Committee and President-elect Obama’s transition office California’s  firm belief that direct federal assistance has to be part of an economic stimulus plan.”

more…

Bass was accompanied by Assemblymember Noreen Evans (D-Santa Rosa), Chair of the Assembly Budget Committee, who noted that California’s budget problems are directly linked to the revenue meltdown that followed the national recession and crises in the mortgage, credit and automotive sectors.

“We need federal aid because our troubled finances are the result of our nation’s economic downturn,” said Evans.  “$25 billion of our $28 billion deficit comes from a revenue drop after the October stock market crash.”

In their meetings Bass and Evans emphasized several specific avenues for potential federal aid:

Maximize California’s Federal Medicaid Assistance Percentage (FMAP). Although California has a large number of low-income and disabled individuals eligible for the program, we receive only the minimum 50% sharing ratio from the federal government.

Reauthorize the State Children’s Health Insurance Program (SCHIP). Most states, including California, are overspending their SCHIP allocation and have exhausted their prior year unspent allocations. Reauthorization by March 2009 is critical.

Increase Food Stamp Funding. In California, roughly 1.7 million people receive food stamp benefits. Increased funding means more food purchasing power for children, adults and senior citizens.

Further Extend Unemployment Insurance Benefits. With an 8.2% unemployment rate California would benefit from a further UI extension, improved UI coverage and increased administrative funding for states to deal with the increasing number of applicants.

Increase State Criminal Alien Assistance Program Funding. California spends approximately $1 billion per year to incarcerate an estimated 18,000 undocumented felons. However, for the fiscal year 2008-2009, the state will only receive $111 million in reimbursement from the federal government.

Increase Pell Grant Funding. The credit crisis has made it much more difficult for families to qualify for student loans, especially private loans. For FY 09, the estimated overall Pell Grant shortfall is $3.5 billion. Pell Grant funding should be increased to ensure that adequate funds are available for all eligible students.

Bass and Evans also stressed the need for infrastructure investments as part of federal stimulus packages, including investment in transportation, housing, flood control and green technologies:

Transportation:  Funding for California’s highways, transit systems, passenger rail and goods movements projects.

Housing: Housing construction related activities, foreclosure prevention and mitigation and housing market improvement policies.

Clean and Green Economic Sector: The economic stimulus infrastructure program should provide funding to help California achieve our renewal portfolio standard (RPS) goals through the siting, planning, and building of transmission lines, as well as funding for green job training programs for displaced workers, at-risk youth and veterans.

Flood Control Projects: California is eligible to receive $15M for flood control feasibility studies and over $112M for flood control projects. Federal funding should be provided for these important public safety projects.

“California stakeholders, including the legislature, the governor, city and county governments and other interested parties, are coming together to develop a list of projects and priorities for immediate federal infrastructure stimulus,” Bass said. “It is in the state’s best interest to speak with a united voice wherever possible in this process, so it’s important to have the stakeholders develop and vet such a list before making the case for individual projects.”

Bass added that the Assembly also intends to work closely with its Congressional partners as reauthorization of the Transportation Act approaches. Because reauthorization has such a potential impact on California and its economy, Speaker Bass will appoint a special Assembly Working Group in 2009 to help advance California’s interests throughout the reauthorization process.

Dan Walters and Jon Ortiz from the Sacramento Bee are going to liveblog the joint session of the legislature helmed by Treasurer Lockyer and Controller Chiang today, coming up at around 3:00 PT.  Today we got a sense of what will be said in that session.

Treasurer Bill Lockyer, for instance, will tell lawmakers that unless a budget is adopted the state will stop financing construction projects for roads and other infrastructure. That’s not just bond sales for future projects — those will stop, too. It means projects that are underway will no longer be able to draw down cash from the treasurer’s pooled account as the state’s general fund moves toward insolvency. Thousands of jobs could be lost.

“No budget, no state financing,” said Lockyer spokesman Tom Dresslar. “The spigot is completely off. We’re talking about a complete shut-off of state infrastructure financing unless we get a budget fast.”

This is the exact opposite of what we should be doing, of course, and the exact opposite of what the President-elect wants to use as a means to kick-start the economy – massive spending on shovel-ready infrastructure projects.  But California does not, in the current context, have the money to support it.  In fact, we could be out of cash by February:

California is on track to run out of cash in February or March and faces a $15 billion cash shortage by the end of its fiscal year in June unless officials plug an $11.2 billion budget gap, according to the state’s budget director.

Additionally, if Gov. Arnold Schwarzenegger and lawmakers fail to close the current fiscal year’s budget shortfall soon, California, the most populous U.S. state, may in March delay payments to its vendors or hand them notes promising payment, according to a Dec. 1 letter to top lawmakers from the director of the Department of Finance, Michael Genest.

A copy of the letter was obtained on Friday by Reuters.

“Specifically, it now appears certain that available cash reserves from all sources will fall below the cash cushion target of $2.5 billion in February and that the state will begin delaying payments or paying in registered warrants in March,” Genest said in his letter.

That would be IOUs.  From the 8th-largest economy in the world.

Like I said last Friday, this should be a “Scared Straight” kind of presentation, only I don’t see how the Yacht Party members would be scared.  What’s being offered, a government shutdown, is basically their greatest dream realized.  And it’s not like there’s leadership at the top of their party to force any compliance – Arnold Schwarzenegger is too busy pretending he’s the world’s go-to source on global warming and trying to buddy up to Darrell Steinberg instead of making any effort to get members of his own party to stop hijacking the state.

If you’re a masochist, check out the liveblog at 3.

On the first day of the legislative session there was an irrational burst of optimism that the roadblocks put forward by the Yacht Party on the budget and taxation would somehow be hurdled.  It’s true that Democrats have three more seats in the Assembly (though currently one less in the Senate, pending the filling of Mark Ridley-Thomas’ vacant seat), lowering the amount of Yacht Party members they’d have to bring aboard for any solution.  But the idea that these new Republicans represent any kind of fresh thinking or newfound moderation is a fantasy.

Though Democrats picked up an aggregate of three seats in the Assembly, Niello said, they still need at least three Republicans to cross over and vote for any legislation that requires a two-thirds vote, such as a state budget.

Because the GOP caucus is united around opposition to any new taxes and wanting to see reforms such as a state spending cap and improving the state’s regulatory environment on businesses, Niello said, Democrats will have to give to get any of those crossover votes.

“We’re still solid, still firm on the things that are priorities,” Niello said.

Newly sworn-in Assemblyman Dan Logue (R-Linda) sounded a similar note.

“We’ve got to create wealth, and we’ve got to grow our way out of trouble, not tax our way out of trouble,” Logue said. “Raising taxes will drive more jobs to Nevada.”

Some of this could be bravado, and there are a couple legislators who were in close races – Steve Knight in AD-36, Bill Berryhill in AD-36, Tony Strickland in SD-19 – who would, in theory, do well to part ways with ideology and compromise to enhance their chances in the next election.  But this would contradict the Iron Law of Institutions – “the people who control institutions care first and foremost about their power within the institution rather than the power of the institution itself.”  Republicans who give in on the budget will be primaried and feel far more fear from that internal challenge than from the opposition.

The only way to counteract this is to make the challenge from without more vital than the challenge from within, and to make the power inside the institution line up with the power of the institution.  It means getting 2/3 and making anyone who rejects the will of the people pay.  SEIU has the right idea with their new ad campaign about the budget, playing off of Obama’s popularity in the state, and John Burton’s curt response to Yacht Party efforts to roll back labor and environmental regulations as payment for a budget solution – “The Republicans are full of crap” – ought to be said a bit more often, maybe in less colorful language, to make clear who is causing this crisis.  

I’m not sure any of it will be enough, though.  The Yacht Party is still the Yacht Party.