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The Inevitable Tax Drop

by: David Dayen

Thu Jul 02, 2009 at 16:28:54 PM PDT


You can almost set your watch by it.  The state budget picture is a mess, Democrats ask for a balanced solution, Republicans hold their ground and say no, Democrats don't have the vote so they let it go.  It happens practically every single year, and it's happening again, according to CapAlert:

Gov. Arnold Schwarzenegger and Senate President Pro Tem Darrell Steinberg said separately Thursday that they are optimistic a budget deal can be struck within several days.

The tone of their comments marked a stark contrast to Capitol fighting over the last few weeks between Democrats and Republicans over bridging the state's $26.3 billion budget gap.

Steinberg also said Democrats had given up any attempt to increase taxes on tobacco or establish an oil severance tax [...]

The Senate president said that Democrats no longer are pushing for a 9.9 percent tax on oil extraction or for hiking the state's tobacco tax by $1.50 per pack.

"We would like to see an increase in the tobacco tax and the oil severance tax as a solution, but in this chapter that's not realistic and it's not what we're holding out for," Steinberg said.

It's never going to be realistic in ANY CHAPTER.  Republicans know exactly how to play this game.  Their votes are needed for tax increases, so if they hang together they cannot lose.  The Democrats haven't figured out how to shame the Yacht Party or make them pay for their votes, giving them no reason to do anything but hijack the process.  You'll notice that as a result of this horrific experiment in governance, California is operating worse than practically every other state in the union.  

We've seen this kind of "it's almost over" trial balloon on many occasions, so I wouldn't put on the party hats just yet.  But somehow at the end of this process, somebody will step up to a microphone and claim how reaching agreement is a sign of success.  No.  It's a sign of failure.  A failure to responsibly manage the state's finances, reflected by the worst economy in 70 years.  The only lesson that can be learned from this process is that it's fundamentally broken.

P.S. You'll be thrilled to know that Schwarzenegger still sleeps well at night.

Schwarzenegger and I then repaired to a tent that he had put up in a courtyard next to his office, which allows him to smoke cigars legally at work (no smoking is allowed inside the Capitol). The tent is about 15 square feet, carpeted with artificial turf and outfitted with stylish furniture, an iPod, a video-conferencing terminal, trays of almonds, a chess table, a refrigerator and a large photo of the governor. Schwarzenegger reclined deeply in his chair, lighted an eight-inch cigar and declared himself "perfectly fine," despite the fiscal debacle and personal heartsickness all around him. "Someone else might walk out of here every day depressed, but I don't walk out of here depressed," Schwarzenegger said. Whatever happens, "I will sit down in my Jacuzzi tonight," he said. "I'm going to lay back with a stogie."

This is the guy who dares to chide others for not doing their job.

David Dayen :: The Inevitable Tax Drop
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This is not Steinberg's call (8.00 / 1)
The governor is not negotiating in good faith, and it is not Steinberg's right or brief to sell out the people of the state.

The state Democrats need to do a news conference saying that they are doing what they can, but they cannot negotiate with terrorists do a deal without a good-faith effort by the governor.

And then, they should adjourn both houses and go home.


It's time: go on strike (4.00 / 1)
There's a lot of blame to go around right now, but our very, very mediocre Democratic leadership needs to take their share.

This is a fool's game.  The governor is not negotiating in good faith, and up until now, he has not paid a price for this. A dramatic break with past behavior is needed here, and it is needed now.

The Democratic leadership needs to raise the stakes, and do a bit of brinkmanship of their own.  This is not that different from a union negotiating with a company with deeply irresponsible, lawless management.  Past a certain point, you stop talking with the other side.  You go out on strike.

The leadership can, and should, deprive the legislature of a quorum, and do so as ostentatiously and loudly as possible.  And legislators should be sent home to do public events in their district explaining why there is no deal.

Right now, there is simply no pressure on the governor to settle.  We can't get the GOP to sign on, but with the governor, there's no excuse.

If Steinberg and Bass persist in dragging this out, somebody needs to deliver creme pies and rotten fruit, and pelt the both of them until they get the message.  They have a duty to the state to call this farce off and put the negotiations on a more realistic basis.

I for one don't think that Steinberg has standing to make any further deals with the governor or the GOP until he actually puts up a fight, for a change.


standoff (4.00 / 1)
  I can understand why Bass and Steinberg might cave--after all, the Reps are holding the weakest in this society hostage and threatening to kill them (and that is what it will reduce to--fortunately, Schwartz can go home to his jacuzzi and light a stogie).

 What is difficult to understand is why Democrats aren't constantly battling--ballot initiatives, legislative votes to set up campaign issues (for example, a vote on whether to fund schools through an oil severance tax--this makes a great issue--Assembly member X refused to fund schools by
taxing the same oil companies which are charging you $3/gallon).  We tried (once, in 2004) eliminating the 2/3rds and it lost.  Have we tried again?  No.  Whereas the Reps tried for 28 years on redistricting before succeeding (of course, they have no chance of getting much more than 1/3rd of the seats, so it didn't gain them much, but the point is they kept trying).

 This is what Democrats want to see.  Continual effort.  Instead, we get legislative leaders who take campaign money and use it for their personal purposes.


The weakest are getting screwed anyway (0.00 / 0)
What the governor is "offering" the majority is the opportunity to screw the weakest with the majority's approval.

Pushing the oil severance tax, dropping the 2/3 requirement, and so on is what should be front and center right now, as you rightly point out.  But we should cut the crap about there being "no choice".  There is a choice.  They can upset the table and refuse to continue with this farce until the governor, at least, agrees to negotiate.

The governor does not want reform.  He wants more goodies for his friends.  The Democratic majority can have no truck with that.


[ Parent ]
Branding (1.00 / 1)
Since when is failing to institute a tax hike a "tax drop"?  California already has the 4th highest per capita tax receipts.  It should be able to make due with what it has.

PS   Schwarzenegger is acting in good faith, he just isn't negotiating.


Where is this "Fourth highest tax receipt" coming from (0.00 / 0)
Yeah, I know that it's in your talking points.  But I'm going to force you to get more specific.

We don't compete with Mississippi for the bottom in educational funding by being near the top in taxes per capita.  Sorry, I'm going to have to give you an F for not properly citing your sources.

Now, go tell the class how that statistic got cobbled together.  It'll be entertaining, and it will show what happens to hapless fools who come around here spouting talking points from people who lie with statistics.

I know it's no longer considered the right way to train your dog anymore, but I'd as soon rub your nose in the mess you're making there.


[ Parent ]
arnold wouldn't know good faith if it hit him (0.00 / 0)
We may have large tax receipts but we also have the largest population.  Arnold isn't acting in good faith: if he was he would make it clear that what he is proposing is to shift the tax burden of the state downward and the services upward, weaken ecological standards, break unions ofr the sake of his republican supporters, and eliminate the safety net while privatizing government functions.  Instead he pretends that there are no options and that tax increases will kill the economy more than eliminating services for the poor.  He claims that the legislature are playing games since he will veto what they do--why don't the Dems point out that he is playing games since he wants something that they won't give him?  Oh, right.  It is because they have bought his framing of May 19th and will cave.

He Broke it, He can Fix it (4.00 / 1)
As Karen Bass said.

Arnold broke it, he can fix it.

I think the Dems desperately need to change their narrative to challenging the Republicans and Schwarzenegger to come up with a plan that gets the votes it needs to pass.

They need to come up with a plan that gets a some votes from the majority party. They blocked every plan that was approved by the majority of the legislature after public hearings. Where's their detailed plan?

At this point, what do we have to lose? Schwarzenegger's cuts are completely unacceptable. Might as well shut down the state.



OC Progressive is Gus Ayer, former Fountain Valley Council member.  


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