(FNS - Washington, New Germany, April 17, 1947) America's new Führer, Adolf Hitler, announced today that his official War History would in fact acknowledge that one of the biggest contributing factors to the defeat of the Allies was the insistence of the former United States of America on sticking to its Balanced Budget Amendment, which left them unable to fund the wartime conversion of the US economy for the benefit of the Alliance.
"All those ideas Mr. Roosevelt spoke of", said Hitler, "Lend-Lease, modular shipbuilding, War Bonds, secret weapons...in the end, all of them were just words, since the Americans' Congress was never willing to allow the country to fully fund its war effort."
State Superintendent for Public Instruction Jack O'Connell discusses the impact of the budget on education today, and it's predictably negative. After going through the particulars ($7.4 billion cut to Prop. 98 funding, additional flexibility for local control, a repayment measure on the ballot to return $9.8 billion to education under Prop. 98 in the future), he makes a strong announcement:
The painful budget process at our state and local school district level calls out for reform of California's dysfunctional budgeting process. It is time for a sincere and frank conversation about reform. Central to this conversation is the idea of throwing out the two-thirds vote requirement to pass a budget and simply using a majority vote. Nearly every state in the nation and Congress, as well as counties, and cities use majority votes to pass their budgets. California should follow suit.
I understand that the minority party may feel that this would make them irrelevant to the process but, if anything, it would hold their majority party colleagues even more accountable.
Most importantly, a simple majority vote would protect our schools and districts from the instability they are forced to endure anytime the Legislature cannot reach a budget compromise.
It is time to bring about substantive changes to the way we do business in Sacramento - we owe the people of California this much.
Good for him, and it's explained and framed well. And now we have to line up our lawmakers along the fault line of a majority vote restoring democracy versus an arbitrary shift like 55%.
Majority Vote John Burton, Jack O'Connell
55% John Garamendi, Gavin Newsom
Every leader in the Democratic Party should be able to articulate where they stand on this crucial issue, the most important one facing the state. Call your lawmakers and ask them what they prefer.
Paul Krugman has a good column today about how state balanced budget needs lead to perverse outcomes during an economic crisis that demands fiscal stimulus.
But even as Washington tries to rescue the economy, the nation will be reeling from the actions of 50 Herbert Hoovers - state governors who are slashing spending in a time of recession, often at the expense both of their most vulnerable constituents and of the nation's economic future.
These state-level cutbacks range from small acts of cruelty to giant acts of panic - from cuts in South Carolina's juvenile justice program, which will force young offenders out of group homes and into prison, to the decision by a committee that manages California state spending to halt all construction outlays for six months.
As Krugman notes, it's crazy to cut public spending at the same time that private spending is drying up. It's a recipe for a Hoover-esque depression with no investment or economic activity, and no way to increase consumer spending or create jobs.
Krugman acknowledges that balanced-budget rules are only a part of this problem in the states.
The answer, of course, is that state and local government revenues are plunging along with the economy - and unlike the federal government, lower-level governments can't borrow their way through the crisis. Partly that's because these governments, unlike the feds, are subject to balanced-budget rules. But even if they weren't, running temporary deficits would be difficult. Investors, driven by fear, are refusing to buy anything except federal debt, and those states that can borrow at all are being forced to pay punitive interest rates.
Are governors responsible for their own predicament? To some extent. Arnold Schwarzenegger, in particular, deserves some jeers. He became governor in the first place because voters were outraged over his predecessor's budget problems, but he did nothing to secure the state's fiscal future - and he now faces a projected budget deficit bigger than the one that did in Gray Davis.
That's absolutely true. And the suffocating 2/3 requirement is most of the problem here. But once we get out of this crisis, hopefully with some assistance from the federal government for Medicaid and public works, we need to think a little more creatively about how to reduce the risk of a state's fiscal trap on the greater economy. One idea is allowing state governments the ability to deficit spend, perhaps through the creation of some federal Stimulus fund that states facing certain deficits can tap. This is the framework behind the National Infrastructure Bank proposed by Sens. Dodd and Hagel last year, but I would broaden it out. There's also the option of federal guarantees for state bond markets to increase investor confidence, or allowing states in a fiscal emergency to borrow at lower federal rates in the short term. These are steps similar to those being used to bail out banks, with the Fed intervening in the commercial paper market, and they should be tools for the states as well.
With structures like this in place, just maybe we can phase out the balanced budget amendments that force these bad choices on the states. Ultimately, California can't ask for help until they help themselves. The bond market will simply not improve until investors are assured that the state can manage its own affairs. But after the failed Schwarzenegger Administration, the next governor should think seriously about giving the state flexibility in an economic downturn, rather than going along with the necessary steps to making things measurably worse.
