Tag Archives: Infrastructure

So Very Screwed

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.

Lockdown Ends With Gridlock

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.

Our Insane Parole Policy

A remarkable little report appeared over the weekend, one that should have been on the desks of every member in the Legislature come Monday morning, but one which I suspect wasn’t.  In fact, I don’t think it even made any of the papers, relegated to a sidebar on CapAlert.

California has more men and women locked up in prison than any other state, a new federal report finds, and unlike any other state, the vast majority of those placed behind bars are parole violators.

The report bolsters contentions by critics of the much-overcrowded prison system that state parole officers, who belong to the same union as prison guards, are extraordinarily willing to slap a parole inmate back behind bars, thereby exacerbating a prison overcrowding problem […]

On average, the nation’s state and federal prisons took in almost two new offenders for every parole violator, but in California, the reverse is true. In 2007, California prisons took in 139,608 inmates and 92,628 of them were parole violators, almost a 2-1 ratio. In only one other state, Washington, did parole violators outnumber those being jailed by the courts, and that was only by 126 inmates.

Here’s the report from the Department of Justice.

It is a financial and moral disaster that we are throwing men and women back in jail for parole violations at such an accelerated rate, far beyond any other state in the country.  This is clearly a factor of the state’s parole policy, which is too constrictive and too quick to return people to prison.  It surely leads to the high recidivism rate for those who commit crimes multiple times – if they feel they can’t escape the system once they’re in it, they simply have no incentive to rehabilitate themselves.

Yet instead of reforming parole policy and getting some much-needed sanity into our sentencing laws, the bipartisan Tough on Crime machine squashes an independent sentencing commission and allows the passage of Prop. 9, which would implement an even MORE restrictive parole system, so much so that it violates the state constitution.

A federal judge has blocked enforcement of portions of a ballot measure approved last month by California voters that modify the state’s parole revocation system.

The so-called Victims’ Bill of Rights of 2008, passed on Nov. 4 as Proposition 9, amends the Penal Code to restrict or eliminate rights gained in a 14-year-old class action lawsuit in Sacramento federal court, parolees’ attorneys argue.

Parolees and the state agreed in March 2004 to a permanent injunction issued by U.S. District Judge Lawrence K. Karlton mandating an overhaul of parole revocation procedures and guaranteeing due process for ex-convicts accused of parole violations.

Ten days after the election, attorneys for the parolees filed a motion seeking to enforce the 2004 injunction, saying Proposition 9 “purports to eliminate nearly all due process rights of parolees and directly conflicts with the protections put in place by the injunction and established constitutional law.”

We are diseased by the prison-industrial complex.  Prison construction is good for the CCPOA and supposedly good for the economy but it’s based on a flawed notion that all construction spending is valuable.  In fact, prison construction, especially of the type so needless that bringing parole policy in line with the other 49 states in the union would practically eliminate the overcrowding crisis and rendering the need for more beds moot, crowds out other, more valuable building projects that have a tangible value to people’s lives.  We are violating the human rights of inmates and the Constitutional provision against cruel and unusual punishment, as well as stifling innovative public investment, because the parole officers have a powerful lobby and the Tough on Crime dementia has infested the minds of practically every legislator in the state for 30 years.  

Fixing parole policy and putting up-front money into drug treatment and prevention programs would save the state billions.  It requires leadership.  That’s a limited resource right now in Sacramento.

Scared Crooked

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.

No Money, No Infrastructure, No Nothing

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.

The Green Way Out

Scott Gold at the LA Times reports today on a massive solar project that may alleviate some of the pain felt in the Antelope Valley:

The buzz in the Antelope Valley these days is about a company called eSolar, which is putting the finishing touches on a thermal solar energy facility here — 24,000 mirrors that glitter like diamonds when you approach on Avenue G. There are plans for several more facilities in the area, all larger, the company says.

Local officials are atwitter at the possibilities. Visitors and investors are expected from Saudi Arabia and Kuwait. A slew of jobs would be created; there were 225 people working last week on the Avenue G facility alone, most of them locals. Lancaster Mayor R. Rex Parris said the solar plants could be the catalyst to restoring the sort of “intellectual excitement” that existed when aerospace, still a vital industry here, was the only game in town — when “if it went up, it came out of here,” he said.

“Now, we’re going to go a long way toward saving this world,” the mayor said. “Right here in Lancaster.”

I think it’s important to classify projects like this as what they are – INFRASTRUCTURE projects.  Too often we confine ourselves to thinking about infrastructure as solely referring to fixing roads or building physical structures like bridges.  A 21st-century energy creation system is the most important infrastructure improvement we can make, one that will not only create jobs but save billions in public health and environmental degradation costs.  Any stimulus from the federal government that includes infrastructure improvements should help incentivize companies like eSolar, as well as laying down high-speed broadband lines throughout the country, building a transferable energy grid, etc.

In the recent past in California, the way a depressed city could revitalize their economy was to bring a prison into town.  Now, the potential of green jobs is being realized, making the future (pardon the pun) sunnier:

It’s heady talk, and people are listening. Lancaster and the surrounding valley are suffering, even by the standards of a community that long ago acclimated to a boom-and-bust cycle. Many here are living on the edge, and some beyond, with tens of thousands more expected to arrive in coming years.

There is a sense that development cannot come fast enough, not with shops closing, one in five people living in poverty, high unemployment and the highest mortality rate in Los Angeles County. Not with so many houses falling into foreclosure that the city of Lancaster has gone into real estate — buying and renovating empty homes to slow the decline of neighborhoods.

“It’s bad,” said William Turner, 21, who got a job installing eSolar mirrors through a temp agency. He is among those vying for one of the full-time positions the company will offer soon; competition will be fierce and many of those hired will be overqualified for their jobs, officials said.

“People around here are really hurting,” Turner said. “We need a change.”

The new energy economy is California’s way out of the economic crisis.  Whether it’s building solar and wind plants or transferable energy grids or carbon capture and sequestration retrofitting or green building add-ons or the next generation of green cars, the potential for bringing hope to downtrodden communities, creating millions of jobs and protecting the planet is great.

Stimulate The California Economy And Balance The Budget

By Dave Johnson, Speak Out California

California’s unemployment rate has soared to 8.2% — third highest in the United States!  We need to stimulate California’s economy.  We need a massive jobs and infrastructure investment program, rebuilding our roads and bridges and schools and making our buildings energy-efficient, and hiring more teachers and police and firefighters.  We can do this, while balancing the budget at the same time.

How can we do this?  We can raise taxes on big corporations and the wealthy and use the money to stimulate the economy and balance the budget and get things moving again.

Our economic system is not perfect, so over time income tends to concentrate at the top, which makes it harder for most people to get by.  People spend less and things slow down.  We are seeing this today — wealth has massively concentrated at the top, and the consumer is “tapped out.”  No one is buying cars and Christmas sales will be much lower. 

Taxes on the wealthy and corporations fix this by recirculating money that has bunched up at the top.  Taxes provide the resources that We, the People can then use to stimulate the economy and get it moving again.

The corporations will try to say that this tax increase will slow the economy.  But this isn’t what has happened when this has been done in the past.  Actually history shows that taxing the wealthiest and corporations helps our economy.  This is not surprising when you realize that more people with more jobs and money to spend is a good thing in a consumer-driven economy. 

There is a problem, though.  In California we have a rule that we cannot pass any tax with less than a two-thirds vote.  A little over half the people voted to impose this two-thirds requirement — and now 100% of us are hobbled for doing what we need to do to fix the economy.  Instead of stimulating the economy we have to lay off teachers and firefighters and road workers, further worsening the recession, because cutting budgets is the only option available.  Even if 55% or 60% of us would rather hire people and stimulate the economy, we still can’t.

So we need to change this rule.  We need to be able to pass taxes on the corporations and the rich, and get the economy moving again. 

Click through to Speak Out California

Fighting Back Against the New Hoovers

Crossposted from the California High Speed Rail Blog

Not content with denying to Californians the numerous tangible benefits of high speed rail, Prop 1A opponents have retreated into a revival of Herbert Hoover’s economic policy in order to try and defeat the most important project Californians have considered in nearly 50 years. Their argument is that in an economic crisis, we should turn to austerity instead of following the tried and true path of deficit spending on infrastructure that provides short-term job relief and long-term economic value.

Today we have numerous articles and media outlets starting to push back against the New Hoovers. From newspaper editorial pages to leading economists there is a growing consensus that we must use deficit spending – in our case, bonds – to spur economic growth through infrastructure projects.

Speaker Karen Bass is calling for infrastructure projects to be part of a California economic stimulus that she hopes to offer later this year to deal with the worsening economic crisis.

Even conservative observers and federal deficit hawks are seeing the need for deficit spending, as the conservative Washington Times reports:

Conservative Financial Times columnist Samuel Brittan said the fears that short-term stimulus spending by governments will raise deficits miss the point. Even the $700 billion Wall Street rescue plan approved by the U.S. government – part of a more than $2 trillion international bailout of banks by governments around the world – does not change the equation.

“Maxims about debt that might be prudent for families can be the height of folly for government,” he wrote.

British economist John Maynard Keynes is credited with the basic insight, arguing that the Great Depression was prolonged because Western governments insisted on balancing budgets, raising taxes and cutting spending at a time when private economic activity had ground to a halt.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonpartisan research group, said both candidates must put together a credible long-term plan to deal with the exploding deficit, but that the government should be priming the pump in the short term.

These conservatives are joined by Nobel laureate Paul Krugman, who writes in today’s column:

And to provide that help, we’re going to have to put some prejudices aside. It’s politically fashionable to rant against government spending and demand fiscal responsibility. But right now, increased government spending is just what the doctor ordered, and concerns about the budget deficit should be put on hold….

All signs point to an economic slump that will be nasty, brutish – and long….

And this is also a good time to engage in some serious infrastructure spending, which the country badly needs in any case. The usual argument against public works as economic stimulus is that they take too long: by the time you get around to repairing that bridge and upgrading that rail line, the slump is over and the stimulus isn’t needed. Well, that argument has no force now, since the chances that this slump will be over anytime soon are virtually nil. So let’s get those projects rolling.

The growing unanimity of opinion on the need for deficit spending for infrastructure projects is striking. Krugman, MacGuineas and Brittan join leading economic figures like Nouriel Roubini and Lawrence Summers in calling for bold action to mitigate the deepening economic crisis.

They are joined today by the Fresno Bee editorial in favor of Prop 1A which clearly understands the need for infrastructure stimulus, and directly refutes some of the fiscal arguments against HSR:

Sadly, much opposition has come from people who say they like the idea of 220-mph trains zipping up and down the state, but don’t think we can afford it right now, in a time of budget disaster and economic crisis.

That sounds prudent, even reasonable, but it ignores an important fact of American history: Many of our most important public works projects have come in times of deep economic distress — and they have been crucial elements in our recovery in those times.

Recall the Great Depression, when voters in the Bay Area passed bonds to build the Golden Gate and Bay bridges — projects that lightened the impact of the Depression on that region and were critical to the postwar economic boom. Shasta Dam was built during the Depression, and remains a linchpin of the state’s water system.

The closing paragraph of the editorial is a powerful, stirring statement that deserves to be quoted in full:

The high-speed rail project is immense, and that can be daunting. The current economic situation is likely to get worse before it gets better. In the past, Californians have risen to such challenges with vision and determination. Voting “yes” on Proposition 1A is a declaration that we still possess those qualities, and have not surrendered them to a timid faith in a status quo that is no longer sustainable.

I’ve never seen it put so well. The Fresno Bee clearly understands that our state’s very future is at stake and that Californians should be able to meet that challenge just as we have done in the past.

And what about the arguments that the financial crisis makes this a bad time to float bonds? The Sacramento Bee reports “unprecedented demand” for California’s short-term bonds:

California has secured commitments for nearly $4 billion in short-term loans thanks to unprecedented demand from individual investors Wednesday, averting a need for federal assistance and allaying fears of a cash shortage….

California secured orders for $3.92 billion in short-term bonds from individual investors Tuesday and Wednesday, 98 percent of its original $4 billion goal, according to state Treasurer Bill Lockyer….

This week’s bond sale reassured state officials that traditional lending markets would suffice.

Translation: capital markets WANT state bonds. If we float Prop 1A bonds they will be quickly gobbled up by a hungry market desperate for a safe investment.

All the HSR deniers have left is what was at the core of their belief all along – opposition to passenger rail:

“This is like losing your job and then using your credit card to put in a new swimming pool to help provide work for others,” said [Kris] Vosburgh [of the Howard Jarvis Association] of the jobs argument.

Have fun with that ridiculous “swimming pool” analogy in the comments…

California’s Conservatives Want To Get What They DON’T Pay For

Dave Johnson, Speak Out California

California’s elected Republicans continue to block any and all efforts to pass a budget, because any honest budget must ask the wealthy and big corporations to pay their fair share.  Even the Governor’s extremely modest one cent sales tax increase was too much for them.

So let’s talk about paying a fair share.  David Sirota has a good column today at the Campaign for America’s Future blog, The Aristocrats, Part II – Starring George Will.  In the column Sirota writes about wealthy Republicans who complain when regular people get decent pay for performing services that benefit … guess who … wealthy Republicans.  Sirota writes,

In a column about underfinanced municipal pension systems today, Will expresses deep anger that veteran police, firefighters and municipal workers eventually get paid well for their services. In one California town on San Francisco Bay, Will tells us that – gasp! – “after just five years, all police and firefighters are guaranteed lifetime health benefits.” The horror.

Such salaries and benefits, of course, are part of a bargain: Enticing people to turn down the high-paying private-sector job and instead run into burning buildings (firefighters), do the dangerous work of apprehending criminals (police), disposing of sewage (garbage collectors) and administrating all the other services that conservatives pretend aren’t necessary (municipal workers) requires, well, an enticement – namely, the promise that making such a public-minded choice will result in decent and stable pay and benefits.

When you accept a public sector job, that’s the bargain: In exchange for being willing to do a tough job and accepting that you won’t have the chance to make hundreds of millions dollars like a corporate CEO, you are rewarded with the chance – if you play by the rules – to make a pretty good living.

Yes, there is a BARGAIN at work here.  We, the People have built a system that has been working pretty darn well for the rich.  We built a system of roads, schools, courts, police departments and firefighters.  We built up a system of laws.  We work in the factories and offices.  

So we built the system and the rules, and we enforce the rules, and it works out pretty darn well to make a few people really rich.  But when we then ask for something BACK — pensions, health care, even worker safety laws — that is just too much.  Never mind the bargain, the social compact that was in place.  Asking for a penny sales tax increase or asking the wealthiest to pay the same sales taxes as the rest of us when they buy a yacht or jet, well NO that is just TOO much to ask!  So they block the budget.

Sirota continues,

That is, conservatives want to renege on the bargain – forgetting the old adage that you get what you pay for, and you don’t get what you don’t pay for.

The hypocrisy of this logic is obvious when you consider that the Right rarely – if ever – complains about, say, executives ripping off shareholders and harming companies’ fiscal health.

So there you have it.  California’s elected Republicans want it all, but don’t want us to ask the corporations and wealthy individuals who finance their campaigns to help PAY for it all.

P.S. Adding insult to injury, the column in which conservative George Will complains that firefighters don’t deserve health insurance and pensions was written to run on September 11.  Some of us remember the incredible bravery and sacrifice of New York’s firefighters and how it demonstrated the importance of the physical, legal and services infrastructure that We, the People built.

Join the discussion at Dave Johnson, Speak Out California

Government Works: The Non-Event That Was Yesterday’s Earthquake

Sara Robinson, one of my favorite bloggers, had a really fantastic post at the CAF blog about why we have responsible government to thank for the relative lack of damage to the 5.4 earthquake that hit Southern California yesterday.

The fact that Los Angeles returned to normal (as if anything in Los Angeles can ever be considered normal) within just a few hours is one of those invisible but important lessons in the collective power of a functioning government — the kind of non-controvertible, essential fact that conservatives tend to gloss right over when they talk about shrinking government until they can drown it in a bathtub.

California’s seismic codes are serious, strict, and effective. The state has been working on them for 80 years now, refining them through the years after every major quake to incorporate new knowledge and engineering practices. (A major revision this year has recently sent all the state’s architects, engineers, and contractors back to school yet again.) To see the results of this ongoing effort, consider the 1931 Long Beach quake, a 6.4 shaker that damn near flattened Long Beach, killed 120 people, and caused over $40 million (in 1931 dollars) in property damage. And then reflect on the fact that in 1989, it took a quake eleven times bigger — the 7.1 Loma Prieta quake — to create a comparable amount of damage.

That’s how effective the improvements have been. These days, most new structures are hardened to the point that you’d need at least a 7.0 (well over 10 times the size of today’s quake) before things seriously started shaking apart. In many parts of the planet, a 5.8 quake would be enough to level towns, collapse bridges, and take out decades’ worth of infrastructure. In LA and SF, all that happens is a few people lose their phones and power for a few hours.

It really is remarkable what serious attention to building codes has done.  Not too long ago yesterday’s earthquake would have been a disaster – today it’s a blip.  California has recognized the problem, taken steps to constantly improve and innovate, and made sure that the regulations stayed stringent, so that developers would just have to find other means to reduce costs.  The fact that the epicenter was around Chino Hills and Diamond Bar, relatively new areas with new buildings that were constructed according to the strictest building codes, was only a further testament to that.  The after-action reports from the 1989 San Francisco quake and the 1994 Northridge quake were taken seriously and applied in this case.

Diane at Cab Drollery has more:

Now, when the “big one” hits Southern California (the prediction is one with a magnitude 7.8 occurring along the San Andreas fault), we won’t be so lucky, especially with respect to damage. Knowing that, local authorities hold regular emergency drills so that the human devastation can be minimized. One such drill is scheduled for this November and involves a consortium of cities and services.

All of this shows why Grover Norquist was wrong, deadly wrong, with his ideal of shrinking government until it fits in a bathtub and then drowning it. When government does what it is supposed to do, real security for citizens is enhanced.

We have a group of Norquist followers here in this state called the California Republican Party.  And we have to be vigilant that they don’t roll back government in response to budget shortfalls in ways that make the state far less safe.  For instance, in Dan Weintraub’s think piece today trying to envision what he considers an imminent budget, this part is worrying:

• It is going to include some borrowing. That’s not exactly going out on a limb, given the recent history of this governor and these legislators […]

Lawmakers, for instance, might find a way to tap into local government funds, despite a voter-approved initiative that makes that option more difficult than before. Also, the governor’s proposal to borrow against future state lottery earnings, an idea he calls “a gift from the future,” is still very much alive. I would not be surprised if a scaled-down version of the governor’s plan emerged as part of this package.

Local governments are already cash-strapped and have no margin for error if their funding is raided.  And some of that money goes to infrastructure improvements.  Just yesterday, Pennsylvania governor Ed Rendell claimed that 150,000 bridges nationwide are in need of repair or replacement.  You can add municipal buildings, roads, and a host of other issues.  If California doesn’t address this structural revenue deficit, despite the strict building codes there will arise a time when the earth moves on top of buildings that should have been replaced, or creaking infrastructure that should have been repaired.  Yesterday was a triumph – but that could be reversed.