Unsurprisingly, my Republican State Senator, Dave Cox, e-mailed his constituents, saying reducing spending, not increasing taxes, is the answer to California’s $16 billion budget shortfall.
He notes that the Legislative Analyst’s Office’s (LAO) proposed alternative budget would raise some additional revenues, and but responds saying “revenues are not the problem. ...LAO anticipate[s] that General Fund revenues will grow by 2.5% in 2008-09.” But does revenue grow because of inflation or because of a larger population now paying taxes (that would require more public services)? Cox doesn’t say.
Cox adds that any rise in education spending (also 2.5%) is not legitimate because school enrollment declined roughly 1% over the last five years. But don’t teachers have to pay more for gas even if they are only teaching 99/100ths of their previous class load? And don’t they have no alternatives to driving because the state builds highways but inadequately funds transit?
To understand why taxes are taboo to “conservatives” (what do they conserve?) like Cox, one has only to remember that those of us wealthy enough to be investors would be thrilled to find one producing a 10% after-tax return, but a 10% tax reduction amounts to the same thing, and tax reductions have been all the rage recently. Tax subsidies are even more lucrative; President Bush “earned” three-quarters of his net worth because taxpayer’s agreed to finance a stadium for his baseball team.
When Senator Cox says taxes are counterproductive he does not mention that a significant part of the state’s current shortfall came not from spending, but as fallout from the state’s energy “deregulation.” We might even remind Senator Cox that he solicited $50,000 for the Republican party from Enron.
Gray Davis (who also got Enron money) famously spent too much to ensure California had enough electricity (“$43 billion for power over the next 20 years” [Wikipedia]), while the state’s utilities struggled to survive, and energy wholesalers like Enron looted the system. The Federal Energy Regulatory Commission (FERC) concluded this “deregulation” resulted in market manipulation, but, loyal to its Republican administration’s patrons, FERC “did not take serious action against Enron, Reliant, or any other privateers.” (Wikipedia.)
But didn’t California recover the money? “Enron eventually went bankrupt, and signed a $1.52 billion settlement with a group of California agencies and private utilities on July 16, 2005. However, due to its other bankruptcy obligations, only $202 million of this was expected to be paid.” (Wikipedia)
So framing the debate about California’s finances as “taxes v. spending” ignores far too much about this kind of theft to foster anything resembling an honest discussion. Even the shortfall in federal revenue sharing to states -- originating with those “conservative” tax cuts -- does not equal the development and stadium deals, and other favors from federal, state and local governments to special interests -- all of which diminish common wealth.
So state, local and federal governments have been giving away the store to Enron and other parasites. In the meantime, just as third world kleptocracies have to tax their populations to pay for the debts run up by the likes of Ferdinand Marcos, and “Papa Doc” Duvalier (pictured, left), Californians, and the rest of the American public may find themselves with a heavy debt burden because of the shenanigans of “conservative” politicians who want to lower taxes and “deregulate” our economy so private profit can suck it dry, diminishing what used to be considerable common wealth. Why we’re spending more than $2 trillion just to “liberate” Iraq!
So welcome to Northern Haiti.
-- Mark Dempsey