[mobile site, backup mobile]
[SoapBlox Help]
Menu & About Calitics

Make a New Account

Username:

Password:



Forget your username or password?

- About Calitics
- The Rules (Legal Stuff)
- Event Calendar
- Calitics' ActBlue Page
- Calitics RSS Feed
- Additional Advertisers


View All Calitics Tags Or Search with Google:
 
Web Calitics

Wire Services
Advertise Liberally Blue CA Ad Network

The Billion-Dollar Backstop

by: David Dayen

Thu May 14, 2009 at 15:55:33 PM PDT


You can browse the Calitics live feed of the Governor's May "this is not a revise" Revise, if you're a glutton for punishment.  Basically, Arnold used a taxpayer-funded press conference to scare the public into voting for his ballot measures, vowing to fill a $21 billion dollar budget gap with a mess of cuts, some borrowing, and no new revenues, in taxes or fees, suggesting that the majority-vote fee increase idea would get a veto.  He's including cuts that would spur the loss of stimulus funds, with the caveat that he would sweet-talk the Obama Administration to allow the funds to go through despite the cuts.  He's floating a raid of state and local governments.  Essentially he's lined up fully with the right wing of the Yacht Party to drown the state and make it impossible to climb out of this recession.  Calitics will have more coverage of this in the coming days.

So, with that, a bit of more promising news.  The state's Congressional delegation will fight for a federal backstop for California's bonds.  Well, at least the Democrats in the delegation.

"California faces a tremendous budget deficit and cash flow crisis, which requires immediate attention," said Democratic Rep. Doris Matsui of Sacramento. "There is no panacea for addressing California's budget issues at the federal level. However, it's time for the federal government to step in and temporarily guarantee bonds until the economy improves."

Matsui is working on a bill with Democratic Rep. Barney Frank of Massachusetts, the chairman of the House Financial Services Committee.

Proponents say they're not asking Washington for a bailout, merely trying to lower the state's borrowing costs by having the federal government back its loans.

Critics say it would be a drastic mistake that would jeopardize the federal government's AAA credit rating, noting that California ranks as the worst credit risk among the 50 states.

"That's never been dhttp://www.blogger.com/img/blank.gifone, and I think it's never been done for good reason," said Republican Rep. Dan Lungren of Gold River.

He said the federal government can't afford to back bonds for every state, adding: "If California does it, other states are going to be standing in line, with New York right behind them."

Does Dan Lungren have a functioning brain?  A federal backstop would cost the government $0.00 dollars.  The guarantee would lower borrowing rates.  The chances of the state defaulting on these loans is about 0.000001%.  California has never done so in its history, as much as the Yacht Party would like it to happen (then they'd get the REAL reform, is I believe how it goes).  Ultimately this would save the state $1 billion dollars in interest on these loans.  The federal government has spent $700 billion on the same financial firms trying to gouge the state on these bonds.  I think it's a fair trade.

Not that $1 billion is more than a drop in the bucket in the overall picture of things, but I figure you need a little sugar with your rainstorm...

David Dayen :: The Billion-Dollar Backstop
Tags: , , , , , (All Tags)
Print Friendly View Send As Email
It's Not a Scare Tactic, It's Reality (0.00 / 0)
It's unfortunate that those opposing the initiatives -- who have NO PLAN of their own to prevent these cuts -- seem not to understand the scope of the budget cuts that will have to be made if they don't pass.

This is very, very real.

And it's not just Arnold saying this. It's the top two progressive leaders of our state, Sen. Steinberg and Speaker Bass.

No majority vote budget -- if it passes any legal muster or gets the governor signature -- will make a dent in the massive cuts to our schools, health care systems, parks, etc. that Democrats will have to vote for (and thus, take ownership of in the 2010 elections).

And before I get the "this doesn't do anything for two years" comment, it, in fact does. The package of initiatives puts money in, and 1A sends a strong signal that we are righting the fiscal ship and will prevent the swings in funding for the programs progressives care the most about.

So how about that REALISTIC alternative plan if these fail? One that will pass the legislature with a 2/3 vote, get the governor's signature, and/or initiatives that can be on the ballot THIS November to help stop these cuts? It's been more than a month, and there's no sign of it.


Majority rule (4.50 / 2)
No majority vote budget -- if it passes any legal muster or gets the governor signature -- will make a dent in the massive cuts to our schools, health care systems, parks, etc. that Democrats will have to vote for (and thus, take ownership of in the 2010 elections).

 This is ridiculous.  The gas tax raises what, 8 billion/year?  Replacing it with an oil severance tax ($1 billion/year), increases in incomes taxes on the top 5% ($4-5 billion/year, with graduated rates up to 14% for those making over $1 million/year), and corporate taxes (such as repealing the $2-3 billion/year passed out in the last few budget "deals") would equate that and futhermore, would be overwhelmingly popular.  This would make a tremendously bigger dent in the states funding, as this money would be available year after year.  Sacguy needs to realize that going with what the governor has proposed is simply giving in to the Republicans completely.  We can do that anytime.  Why don't we try fighting a little first?  It's traditional.

 As for Schwartz refusing to sign the majority-rule fee increase, there's a recall petition in the SOS office.  The deal to offer Schwartz is simple--sign the majority rule fee increase or be recalled.  Schwartz is down to 30% approval now--he'll be at 20% once this budget goes down.  
And if he refuses to sign, the wining candidate will be the one who says "I will sign the majority-rule fee increase.  Our public safety, our health, and our schools are more important than oil companies, corporations, and multi-millionaires."  My gut feeling is the Villaraigosa or Newsom will see the light and grab that and they will be our next governor, sign the majority rule fee increase, and it will be upheld.

 Suppose recalling doesn't work?  Then we are right back where we started from--caving into the Republicans.  We can do that anytime.  So let's try resistence for once--it's not necessarily futile and if it is?  THEN WE ARE BACK WHERE WE STARTED FROM--WE HAVEN"T LOST ANYTHING.  Got it?


[ Parent ]
the billion dollar backstop (5.00 / 2)
which is what this post was about, saves more money to the bottom line than Props. 1D and 1E combined.  And it requires no action from the legislature.

The majority vote fee thing, and if you think Arnold's hard "no" means anything you haven't been paying attention and simply don't want to do the hard work of jamming him, would certainly raise more than the $5 billion solution of 1C.

1A's "strong signal" and a nickel can buy you a cuppa soda.

Your solutions have been outpaced by the problem.  Your constant refrain of "what if they fail," always answered by the way, makes no sense in an environment where "success" is a $15 billion dollar deficit.  You seem to not understand the scope of the cuts regardless.  And so booga-booga just got softer and softer and softer.


[ Parent ]
Pinch yourself (0.00 / 0)
This "backstop" is yet another vague possibility, not a solution.

Apparently you've been under that rock again. Arnold vetoed the majority vote budgets. That was the "jamming," remember? Apparently not.

And even if he didn't, we'd still have to make billions in cuts.

Yes, the problem is worse. And doing absolutely nothing, which you are favoring along with Howard Jarvis & Co., makes matters that much worse.

I certainly understand the scope of the cuts. Your post was that they are a "scare tactic." Guess again. They are very, very real.


[ Parent ]
It's interesting how you refuse to consider the one strategy that would work (4.50 / 2)
From my previous post:

 As for Schwartz refusing to sign the majority-rule fee increase, there's a recall petition in the SOS office.  The deal to offer Schwartz is simple--sign the majority rule fee increase or be recalled.  Schwartz is down to 30% approval now--he'll be at 20% once this budget goes down.  
And if he refuses to sign, the wining candidate will be the one who says "I will sign the majority-rule fee increase.  Our public safety, our health, and our schools are more important than oil companies, corporations, and multi-millionaires."  My gut feeling is the Villaraigosa or Newsom will see the light and grab that and they will be our next governor, sign the majority rule fee increase, and it will be upheld.

Suppose recalling doesn't work?  Then we are right back where we started from--caving into the Republicans.  We can do that anytime.  So let's try resistence for once--it's not necessarily futile and if it is?  THEN WE ARE BACK WHERE WE STARTED FROM--WE HAVEN"T LOST ANYTHING.  Got it?

 I think the point should be clear but I will repeat, repeat and repeat it--we don't lose anything by fighting these budget cuts with a majority rule fee increase.  An all-cuts budget is a purely Republican budget--why go along with it?

 Now, as for how this scenario plays out, the Democrats propose the above taxes.  The Reps refuse.  Democrats gain a coalition of educators, health care providers, cities, prison workers, and counties.  They put continuing pressure on the governor.  The Democrats pass through the majority rule fee increase described in my previous post.  Schwartz vetos.  The coalition described above announces that they will support a recall with money.  Schwartz either caves or a recall is qualified.  The winning candidate will run on the platform of signing the majority-rule fee increase.

 Now, the recall probably won't take place until June of 2010 and an interim budget might have to be passed but the emphasis should be on the hurt of the budget (and there will be plenty--local governments might have to bankrupt).
BY June of 2010 the people will be looking to restore services, particularly since it does not cost them anything (only the top 1%).

 Hey, Sacguy.  Start planning ahead for more than 3 months for once in your life.


[ Parent ]
vague (0.00 / 0)
hilarious.  Your own member of Congress is drafting the bill, it is explained here in detail and in your own home paper, your own state Treasurer has been stressing the need for it for months.  If policy iz hard to you and that is considered vague, get out of politics.

[ Parent ]
Uh ... (0.00 / 0)
How many years have you worked in Congress? How many years have you worked in the Legislature?

I really do not need any career advice from someone whose answer is ZERO to both questions, who has never managed a campaign, and has never gotten elected to office or managed the campaign of someone who has.

Perhaps that's why my thoughts are rooted in reality rather than the land of make-believe.

As for this particular idea, there's not even a bill yet to look at, nevermind it passing into law. It's a little difficult to analyze "policy" that's not even down on paper, don't you think?


[ Parent ]
Historical opportunity (0.00 / 0)
  Sacguy has been in the trenches too long.  Obama saw an opportunity and took it--Democrats in California need to run pro-Obama and seize the moment.  Majority-rule fee increase.  Recall of Schwartz if he vetos.  The winning candidate in the (possible) recall will run on support for the fee increase.  Fee increase (gas tax for fee, taxes replacing) must only include taxes on top 5% and corporations.  Obama shows that this is a winning platform.

[ Parent ]
and your vast experience (0.00 / 0)
has certainly brought California to the land of milk and honey, hasn't it?  Your sage guidance has led to that historically popular legislature and incomparably rosy budget outlook.

You know, when people fall back on "experience" as a reason for the virtue of their ideas, typically that experience is not verifiably horrendous.  It, er, softens the argument.

I guess that experience doesn't extend to "the Google," either, because here's the draft legislation from the House Financial Services Committee on guaranteeing municipal bonds.

http://www.house.gov/apps/list...

FAIL.


[ Parent ]
Perhaps (0.00 / 0)
if you were serious about making a difference, you'd actually get out from behind your keyboard and serve in government. or run from something.

i guess it's easier just to attack everyone else for not being as brilliant as you.


[ Parent ]
Sacramento is a make-believe land (4.00 / 1)
The Legislature and Governors Office are populated largely by careerists and small thinking munchkins. Your vaunted experience does not impress. Real change and new ideas are going to come from outside of Sacramento.

Sacguy- take a trip around the state. Talk to real people, not just people who make six-figure salaries. Go look at the potholes, the dirty beaches, the dilapidated schools the over-crowded clinics and emergency rooms and square that with the spending cap you support. Hell, take a drive down business 99 and look at what marvelous economic shape Sockton, Modesto, Merced, Fresno and the other Central California towns are in. Drive down the 101 from the Bay Area to LA and go the business route and you will see what small mindedness has brought to Salinas, and King City and San Luis Obispo and Santa Maria and Oxnard and LA. This is your reality. We need a new one.


[ Parent ]
Re: rooted in reality (0.00 / 0)
"Would you say the state government is pretty much run by a few big interests looking out for themselves, or that it is run for the benefit of all of the people?"  -- A Few Big Interests, 68% (69% of Democrats).  Benefit of All the People, 23% (22% of Democrats).  PPIC, 5/09.

"Overall, do you approve or disapprove of the way that the California Legislature is handling its job?" -- Approve, 21%.  Disapprove, 65%.  Don't Know, 14%. PPIC, 5/09.


[ Parent ]
Threatening to release 38,000 prisoners (4.50 / 2)
unless voters do as commanded isn't a scare tactic?  Please.

The props have failed, and their proponents have only themselves to blame, because of the dishonesty and intimidation that marked the effort from the very beginning.  Muddled message, muddled messenger.

I like Steinberg and Bass well enough, but as for whether they are the "top two progressive leaders of our state" -- well, now we're going to find out.  If they simply surrender to Arnold's budget nightmare, then they aren't.  If they stand up against socially destuctive cuts, and quarterback the overthrow of the 2/3 rules, then perhaps they are.



[ Parent ]
Calitics in the Media
Archives & Bookings
The Calitics Radio Show
Calitics Premium Ads


Support Calitics:

Get discounted bestsellers at Barnes & Noble.com!

Advertisers


-->
California Friends
Shared Communities
Resources
California News
Progressive Organizations
The Big BlogRoll

Referrals
Technorati
Google Blogsearch

Daily Email Summary


Powered by: SoapBlox