I believe that most of those who comment on the budget crisis are missing the real issues.

• Yes, the Republicans gleefully chant their No New Taxes mantra while our government loses its ability to function.
• Yes, the media fetish for balance results in a Rodney King answer to a reality that they don’t want to face.
• Yes, the Democratic leadership of the legislature has not been willing to make the structural adjustments to the budget that are required.
• Yes, it seems that everyone is putting out their own self-serving press releases which sound like the Gov’s SoS… everyone needs to change but me.  AFSCME’s Make America Happen vid begins with FDR’s salient point about a generation of which much will be expected. I did  not hear what AFSCME is willing to contribute.

However, two additional considerations are not being talked about very much.

1. The State of California has significant financial obligations based on contractual obligations to bond holders, contractors and employees that are all fixed.  They are locked in and no one wants to see their own segment cut.  The pressure here is to continue a all of the spending with no cuts.  The easiest cuts would be to education since the employee obligation is mostly held by local school districts.  Prop 98 has a built in assumption of continued growth: of General Fund revenues and of personal income.  None of these are true for the present time. Yet, with approx. 50% of State spending going for education it is impossible to deal with the overall fiscal problem if education is off the table. California Young Democrats call for holding to the Master Plan for Higher Education.  The solution is not whether cuts will be made, but what is being cut.  Do we use a sledge hammer or a scalpel?  
2. The likelihood that the Obama stimulus package will bring about positive economic change is pretty low.  While the media calls this a massive Keynsian infusion of spending, the current plan leaves out one of the primary elements of a true Keynsian prescription, a rebalancing of income.  The discussion at the blog of UCLA Environmental Economist Matthew Kahn, in particular the comments of Steve Loebs, makes this very clear.

The California Budget’s Economic Assumptions are probably far too optimistic.  

Personal income is projected to grow 2 percent in 2009, 2.1 percent in 2010, and 4.6 percent in 2011, as compared to 3.7 percent in 2008. Nonfarm payroll employment is forecast to fall by 1.6 percent in 2009 and 0.5 percent in 2010, and grow 1.4 percent in 2011, as compared to a 0.6?percent decline in 2008. Source: Budget Economic Outlook

One implication for California is that the Republican stance regarding no new taxes must be shown for the fraud that it is.  California’s current tax system is becoming more regressive with each knee jerk attempt to solve immediate budget shortfall.

Democrats have shown a distaste for bringing this issue to the fore.  During the Gray Davis Recall election, Peter Camejo of the Green Party showed rather conclusively that there would be no budget problem if the upper 10% of the citizens of this state paid the same percentage of their income in taxes as the lowest 10%.  I think it has only gotten worse since then. That is what “getting along” brings you.

This is not a generation to which much more will be given but it is definitely one of which much more will be asked.