While the all-cuts deal seems destined to pass in the near-future, leaders of every stripe are spinning. But, as Progressives, we should be watching what our own leaders have to say most intently. I don't mean to pick
"The cuts to education have been devastating to my city and to other cities," said Assembly Speaker Karen Bass, D-Los Angeles. "Teachers have been laid off, class sizes have grown. What's happened to education has been terrible. The reason it's happened is because we've been in the worst recession since the Depression. We haven't exactly sealed the deal yet, but it seems as though we are reaching conclusion on how to make sure the schools are repaid." (SacBee 7/20/09, emphasis added)
Certainly the recession is a cause of the cuts to education. But THE reason? I think not. Bass knows from trying that the cuts to education were not the only option. Does anybody think that if we had a system of government that worked that we would be in this situation? If we had majority rule? If the Legislature had the authority to actually control spending priorities on the entirety of the budget? It is excruciatingly clear that our system is to blame for much of this mess.
And what if we didn't have the crazy recall system that brought us Schwarzenegger? What would the world look like right now with a Governor Phil Angelides, Westly, or umm...Bustamante? Sans Arnold and all of his flip-flopping negotiation strategies, do we build a way out of this without the IOUs? Heck, if Blakeslee can do it, it should have happened.
But, Democratic leaders cannot escape blame on their end either. Even in this broken system, they must take a share of the responsibility on their own backs. They have now agreed to what Democrats, almost universally, consider shocking, an all-cuts budget revision. They have agreed to steal $4 Billion from the local governments. Yes, they saved Cal-WORKS, of a fashion, but no Democrat should be proud of what will happen this week.
Being a Legislator these days is really crappy job. You get a series of impossible decisions and any legislation outside the budget gets ridiculed. There are some times when you just can't win, no matter how you vote. But being able to look yourself in a mirror, and still call yourself progressive after voting for this deal? Well, that will be a very tough job indeed.
Hopes for a deal on the California budget faded last night as the Big Five could not agree over the big issue of whether and how to suspend Prop. 98, the mandate for education funding.
The education money discussion is not new; much of it dates back to the February budget negotiations, which resulted in a ballot measure asking voters to offer blessings upon a supplemental payment. Voters rejected that measure, Proposition 1B.
And as with most education financing debates, this one lands squarely back at the maze of formulas and calculations that embody the 21-year old funding guarantee enshrined into the state constitution by voters, Proposition 98.
In a nutshell, the current debate focuses on whether schools are owed money in the future to make up for some of the recent spending reductions, and whether that obligation (the so-called "maintenance factor") should be codified in law as part of the current $26.3 billion deficit deal.
"The Prop 98 law is so confusing," said Senate President pro Tem Darrell Streinberg to a throng of reporters outside the governor's office, "that we want to make sure that there is clarity."
My belief is that education leaders will win this money in the courts, no matter how long Arnold and the gang put it off. The lawsuit has already been filed. The Democratic leadership want to just deal with the $11 billion dollars in essentially stolen money from schools inside the budget agreement by promising the money in the out years, while the Republicans and Arnold don't.
So if you wanted a 2010 campaign slogan, you have the source material.
It looks to me like Arnold is holding out simply so he can prove a point. His effort to insert privatizing social services eligibility at the last minute is flawed enough that even the Yacht Party might have trouble stomaching it. The proposed cuts in the deal are really intolerable but not what the Governor promised at the outset. It's unclear whether the Governor will get his anti-fraud provisions, also inserted late into the process. And it's completely unclear, given the deal likely to come out, why we had to wait two weeks for virtually the same deal.
Whatever budget deal ultimately is passed -- and in this economy it'll only be a temporary fix, at best -- virtually the same agreement could have been reached weeks ago [...]
Democrats produced a stop-gap plan supported by Assembly Republicans that would have staved off IOUs. They proposed $3.3 billion in cuts to education and other programs that would have kept the cash flowing, at least for a few weeks. It would give them time to negotiate more cuts. Schwarzenegger rejected the idea and persuaded Senate Republicans to follow.
That's where the governor began bobbling the ball, although his coaches figured he was playing to his fan base, what's left of it.
Issuing IOUs will cost the state roughly $26 million in interest for July, the state controller's office estimates. The IOUs also prompted Wall Street bond rating agencies to lower California's credit to near junk status. That potentially could cost the state $7.5 billion over 30 years, according to the treasurer's office.
Schwarzenegger, aides say, calculated that Democrats wouldn't negotiate seriously without facing a deadline, such as the latest: most banks refusing to accept IOUs. Negotiating piecemeal would get nowhere, the governor believed.
But he might have dodged IOUs completely. Guess it doesn't rankle much that the state he has governed for nearly six years must now pay bills with scrip.
Schwarzenegger's clumsy attempt at the Shock Doctrine, when the deal Democrats were willing to agree to was painful enough, was about as irresponsible as a chief executive could be.
...just one more thing on this that the LAT article makes clear. Schwarzenegger AGREES that education should be paid the money borrowed from them in the out years. But Democrats suspect that his fingers are crossed and they want it in writing. That's the argument now.
It's sad that one comment can mean more to a debate than years of attacking public employees and public works and months of attempting to destroy the California dream. That should be disqualifying enough. But Governor Hot Tubs and Stogies' "let them eat cake" comment in the New York Times has gained some traction. Apparently this was a target big enough for everyone in Sacramento to hit. The Assembly Democrats included it in a video showing the Governor's hypocrisy during recent budget talks.
And that's great. Narrative-setting can be powerful and important. That's what's behind the Governor's idiotic crusade to criticize legislators for legislating while he stamps his little feet. At least for today, I think the Democrats are getting the better of ol' Hot Tubs and Stogies.
Labor groups file initiative to repeal corporate tax breaks included in recent budget deals.
These are the massive corporate tax breaks, which could cost the state up to $2.5 billion dollars a year, agreed to in secret by the Governor and the Legislature during the February budget agreement. In a time of recession, the state's political leadership, hijacked by the 2/3 requirement, gave away billions of dollars to the largest corporations in America while crying poor about social services for the indigent and the needy. And those corporate tax breaks are the ONLY permanent tax changes made in the budget this year.
Damn right they should be repealed. They offend the conscience, cost the state needless cash, and do nothing to help the vast majority of businesses (80-90% of the proceeds of these tax breaks will go to just 200 corporations).
Bottom line: Budgets are about values, and they are about priorities. Before lawmakers take health coverage away from children whose parents are struggling to make ends meet, eliminate financial aid for students who understand that hard work and a college education provide the best promise of future success, or shutter state parks that protect California's natural environment and provide affordable recreational opportunities, they should reverse these permanent and massive giveaways that will compromise the state's long-term financial security.
With newfound spunk from Democrats, at least in the Assembly, and serious moves by progressive advocates to reverse the horrible decisions made in past budget years, I think the ground is being prepared for a legitimate reform of the broken structure that has brought us to this point.
Bloomberg reports that people are lining up for those souvenir Arnoldbucks.
Controller Chiang said the warrants can be transferred between individuals, setting up the possibility that a secondary market for the IOUs may develop. Already ads are appearing on Web sites such as Craigslist offering cash for the IOUs at below face value.
In such a transaction, the person who gets the IOU would get most of the cash they were due the state, while the person buying the IOU might then hold onto it until maturity and earn the face value plus the 3.75 percent interest.
At least one person offered to buy an IOU at more than face value as a keepsake.
"I am interested in purchasing a 'State of California IOU' as a souvenir," the ad reads. "I figure it would be an interesting thing to have around when my grandchildren are fighting over my stuff after I'm dead and gone. I will pay two times face value (up to $100, or $50 face value) for a warrant/IOU."
Of course, after July 10, the deadline that banks like BofA and Wells have given for exchanging these IOUs for cash, souvenirs may be the only value for these IOUs for a few months. Maybe Arnold will go to a baseball card convention and sign them himself!
Here's another FAQ about who receives IOUs and who does not. The unemployed, SSI/SSP recipients, state employees and retirees, IHSS and Medi-Cal providers will NOT receive IOUs. Welfare recipients, contractors with the state, local governments, and income tax refund recipients WILL get them. Felix Salmon made a handy chart that suggest the haves will keep getting paid and the have-nots won't, and that's somewhat true, but some have-nots who have the benefit of their services being partially provided by the Feds will get paid as well. In general, where you stand does depend on where you sit, in this crisis. This again makes clear that the idea of California debtholders, who get priority of payment in the state constitution over everything but education, getting stiffed by the state is a ridiculous one that pretty much cannot happen, and lowering bond ratings should be rightly seen as Wall Street gouging.
Small businesses, students, seniors, and taxpayers will all start receiving IOUS. This shameful day didn't have to arrive. In fact, Governor Schwarzenegger had several opportunities to prevent it.
On June 12 Governor Schwarzenegger unilaterally blocked the Controller's authority to secure short-term loans to avoid the cash crisis. He said, "let them have a taste of what it is like when the state comes to a shutdown -- grinding halt."
On June 25 after the governor called Senate Republicans to his office for private meetings, $4 billion in immediate cash solutions that had been passed on an overwhelming bipartisan majority in the Assembly were killed in the Senate.
Most recently, the governor vetoed a comprehensive package of budget solutions supported by majorities in both houses of the legislature that would have resolved the $19.5 billion deficit, left a $4.0 billion reserve, avoided the cash crisis and prevented IOUs [...]
We did offer, as a sign of good faith, to begin work immediately on reforms regarding restructuring Medi-Cal and eliminating fraud in the IHSS program. We also committed to working with the governor on other reform legislation for him to sign. But the governor wouldn't take "yes" for an answer. So California businesses, taxpayers and students will be receiving IOUs simply because Governor Schwarzenegger thought it was more important to immediately force last minute changes such as reducing future employee pensions, fingerprinting elderly and disabled Californians who receive services, and denying kids food stamps if their families can't access a computer to sign them up for the program.
The budget gap grows by $25 million a day and we have wasted billions of taxpayer dollars because the Governor wants to teach everyone a lesson. I hope that IOU secondary market is bigger than eBay, because those suffering with the consequences of dysfunction are going to need the help.
Speaker Karen Bass has been on the job for a little over a year now, and she probably has less than a year left in the job. She's termed out in 2010, so whatever she wants done will have to be done in the context of the budget fight. As Bass became leader she focused on fixing our budget system. Back on day one, she had three agenda items:
Balance the state budget.
Pass a ballot initiative for foster care.
Restructure the tax code
Bing, Bang, Bam. Should be about four days for that, huh? But seriously, it looks like job #1 will end up taking up most of her time on the job. As for #2? Well, that might have to wait for the time being, and really, kind of seems like the something that could be a good task for an ex-Speaker who wants to keep up a profile in the state.
As for #3, well, that task fell to Bush acolyte and Schwarzenegger crony, Gerald Parsky. Back in December, I questioned the pick, predicting that we might end up with some unwanted Bush-esque reform. I held out hope that it be some sort of Nixon going to China kind of thing, where Parsky could help bring a few votes over to make the system functional.
However, Prop 13 was never on the table, and property taxes were taboo. Thus, the only reality based method of stabilizing our tax system, the way that nearly every other state stabilizes their tax system, was instantly dismissed. Given those constraints, it really didn't matter all that much whether it was Parsky or Lenny Goldberg or Karl Marx who lead that commission. Nothing really workable was going to come up, and nothing workable is exactly what we got. Frankly, the proposed alternatives from the commission (PPT) should basically be summarily rejected by progressives as they increase taxes on the middle class in the name of reducing volatility.
Yet, Bass keeps on fighting. We haven't yet seen any comment on her opinion of the Parsky commission's proposals, but she's been out there since May 19. She continues to fight against the 2/3 proposals as she does in this clip. And really, there should be no limit on how many times these words are spoken. Every elected official needs to use every channel, every opportunity to decry the tyranny of the minority should be used to promote the eventual repeal of the 2/3 supermajority.
The plot thickens. The Governor today threatened to veto the work of the bipartisan Budget Conference Committee and reject any bill that, essentially, doesn't hew to his desire to destroy the social safety net of the state. The Democratic leadership countered that they'll pass the bill anyway.
Democratic legislative leaders vowed today that the Legislature will pass a "share the pain" budget-balancing plan early next week - with or without tax increases -- that will close the state's spending deficit without completely shredding California's social services safety net.
The vows by Senate President Darrell Steinberg, D-Sacramento, and Assembly Speaker Karen Bass, D-Los Angeles, came about an hour after Gov. Arnold Schwarzenegger said he wouldn't sign a plan that was balanced with tax increases.
The rhetorical staking out of ground by the key figures in the current version of the state's ongoing fiscal melodrama came a day after the Legislature's joint budget conference committee, on a party-line vote, adopted a plan that included about $2 billion in new oil production and cigarette taxes to help bridge a $24 billion budget gap.
Let's take a brief look at what else the conference committee has done. They resisted some of the worst health care cuts, including the total elimination of Healthy Families (the SCHIP program). They reduced education spending significantly in both K-12 and higher ed. They reduced corrections spending by a fairly large amount. Despite the fact that state parks pay for themselves, Democrats agreed to cut state participation in park funding, replacing it with additional fees on park admissions. They agreed to increasing withholding by 10%, which amounts to an interest-free loans from citizens to the state. According to Karen Bass, they agreed to 45% of the Governor's proposals in full, and 93% in part.
So the idea that Democrats are not cutting spending is simply unreasonable and wrong. At the same time, they rejected additional cuts to state worker salaries. They rejected the end of Cal Works or Cal Grants or In-Home Support Services. And some of the Governor's proposals, like borrowing from local governments, were rejected unanimously.
I don't even much like what the Democrats came up with. But they did not agree to completely wipe out the social safety net, calling for moderate increases in revenue on constituencies who have been getting away with murder, pretty much literally, for decades, to pay for the externalities in health care costs that they impose on the public. As Noreen Evans explains:
Californians expect their schools to be good, a safety net to be available to the needy, a college education to be affordable for working families, their air and water to be clean, and their parks to be open and kept up. In order to meet their expectations, we must to pursue new revenues. Today, for the greater good, we approved two new tax proposals that won't impact most Californians.
Establishing a 9.9 percent tax on oil extracted from California would generate $830 million in FY 2009-2010 and $1.1 billion in future years. This precise proposal was part of the governor's budget proposals last year. Increasing the excise tax on cigarettes by $1.50 per pack generates $1 billion in FY 2009-2010.
Tax increases require a 2/3 vote. Absent the pursuit of new revenues, wider and deeper cuts will be required. Getting new revenues requires a mere 6 Republican votes: 2 in the Senate and 4 in the Assembly. It is undemocratic that the votes of 6 Republicans can veto the votes of 75 Democrats.
But Arnold wants to destroy the state of California like a good little neo-Hooverist, so he said no.
The Dem leadership appears to want to have this fight for the moment, so they ought to realize one thing: Arnold will ultimately be responsible - and reviled - in a government shutdown situation. No question about it. Not 1 in 10 Californians can even NAME a Democrat in the legislature. If the ship sinks, Arnold will be perceived as the skipper. And so, if and when Arnold vetoes the bill, the Democrats should send it back - with MORE tax fairness solutions, daring Arnold to prolong the agony. That resets the battle and draws clear lines between those who want the richest companies in America to sacrifice along with ordinary Californians, and those who want to protect the rich completely. Unfortunately, the Dems are tipping their hand that this will not be the case.
But Bass and Steinberg seemed to be reconciled to the likelihood that the tax hike proposals would fail next week. Steinberg said that if they did, the package they sent the governor would have a reserve $2 billion smaller than he had sought.
We have a couple days to change this dynamic. The progressive movement around the budget has stiffened spines a bit so far. Time to make the calls and emails.
This is funny:
Schwarzenegger added that he wants a budget plan that will bridge the entire projected deficit of $24 billion, not a stopgap measure to "kick the can down the alley."
The plan must consist of permanent solutions to the state's fiscal problems, not one-time revenue that sparks ongoing spending commitments, Schwarzenegger said.
When Schwarzenegger was reminded that his own budget plan contains some one-time revenue proposals, such as acceleration of income tax payments, he smiled.
"Very good point," he said. "We don't want to add to the problem."
The cyborg is not running on all cylinders. He has a single-minded purpose to kill the California dream and even these extremely moderate revenue enhancements.
Today, in addition to the California Democratic Party, Speaker Bass and Asm. Nancy Skinner (D-Berkeley) have begun pushing against the Governor's proposals for the budget.
For her part, Speaker Bass said that her commitment was to ensure that California didn't eliminate the social safety net and to fight back against the all-cuts budget. While it isn't completely clear if the Speaker and Sen. Steinberg are on exactly the same page, the Democratic Leadership seems like they won't go down without a struggle.
"Assembly Democrats will be fighting for families affected by the budget by pursuing a balanced approach that includes revenues and reforms as well as cuts," Bass said. "Our responsible budget solutions will be aimed at minimizing hardship and maximizing opportunity for California's economic recovery."
Interestingly, the Speaker brought out the specter of some sort of court or federally appointed special master that would force some sort of reforms down our gut, IMF-style reforms, as California seems to be heading for a position to fit in well with that third world nation model these days. However, given the Constitutional requirements, both state and federal, it is not at all clear that such a system would be permissible. The reason why there is no provision for a state bankruptcy is that an Article III (or not, as Bankruptcy Judges do not enjoy Article III status) Judges cannot simply force states to do anything. That federalism issue is central to how our nation works, and forsaking it would be a far bigger deal than one budget crisis.
For their part, the CDP is trying to (paraphrasing here) "show our Democratic legislators that there is support for basic Democratic principles to help the neediest in our society," Chairman John Burton said on a conference call today. "Right now our goal is to protect millions of Californians."
The plan from the CDP is to press on traditional grassroots methods and combine them with some of the fancy new tech friendly means used so well by the Obama campaign. More details on that as they become available.
George Lakoff writes today that this could be a moment of freedom for California Democrats. Their compromised ballot measured having gone down in flames, they can now focus on the only solution to what ails the state: democracy. They can include in every public utterance until the moment the 2/3 rule is repealed the theme that California's democracy is broken, and that we must restore it with a majority vote for budget and revenue matters. The time for half-steps and non-fixes must be over.
Up to now, Democrats have been acting like sheep being herded by the Republican minority. They need to show courage and stand up for what they believe. That's what the voters are waiting for [...]
Get rid of the 55% proposals. People understand that majority rule means democracy. 55% means nothing.
Even if you don't address taxes and just address the budget process, the Republicans will still say you're going to raise taxes. You may as well go for real democracy.
And finally, get a unified message that can be supported by the grassroots. Do grassroots organizing for 2010, starting now. Organize spokespeople to get that message out. Organize bookers to book your spokespeople in the media. You Democrats are a majority. Act like it. The public will respect you for it.
Unfortunately, Darrell Steinberg and Karen Bass failed the first test, stuck in a mindset that will bring the state to ruin. First, Steinberg.
"The voters have spoken and they are telling us that government should do the best it can with the money it has. We will immediately and responsibly get to work to balance the budget and head off a cash crisis in July. Delay is not an option. The necessary decisions we must make will only get harder with time."
That is not what voters are telling you. As I said yesterday, you cannot reconcile the supposed anti-tax fervor with the passage of a transient occupancy tax in conservative Palmdale with 64% of the vote. California is a big state and no one message from a statewide election can predominate, but the mass boycott of the polls certainly suggests that we don't want to do your job anymore. I know it's been so long since Democrats exercised their Democratic muscles and principles in Sacramento, but this election called out the political leadership for failed governance. And everyone who has studied this for half a second understands that the failure will continue until the structural barriers are removed. And so making this absurd and vindictive statement about voter intentions both misses an opportunity to refocus the discussion and angers the grassroots further.
Here's Bass:
"There are many difficult choices and a lot of hard work ahead of us. We now have to responsibly fill the budget hole that has been caused by the national recession and deepened by the failure of today's ballot propositions. I hope the bipartisan cooperation between the Legislature and the Governor that went into this effort will continue as we move forward - the people of California clearly expect us to work together to get the job done. And we will.
The people of California could give a rat's ass who works together with who. They don't want to see this level of dysfunction anymore. Bipartisan cooperation was clearly rejected last night, because inevitably that gives leverage to the minority and provides unworkable non-solutions.
Where is the argument for DEMOCRACY in these statements? Since 1978 that democracy has crumbled and needs to be completely rebuilt. Everyone knows this but refuses to say it out loud. This is why the legislature and the Governor have historically low approval ratings. People are starved for actual leadership and see none. Only democracy will save us. This failed experiment with conservative Two Santa Claus Theories has now become deeply destructive. Because the democrats have provided no leadership and ceded the rhetorical ground, California public opinion holds the contradictory beliefs that the state should not raise taxes and also not cut spending. And if it persists without leadership and advocacy to the contrary, nothing will change.
David Dayen has said repeatedly that he thinks the importance of the next governor is overstated. If it is or it isn't, it certainly isn't really a position that I would like to take a step into. It is a position that is almost certainly a trap for any politician that has any designs on any other office, the chances of failure given the current climate in Sacramento are quite high. While that isn't likely to be a huge consideration for Jerry Brown, the other competitors for the job might have ambitions of using the gig as a stepping stone to something else. But I've told anybody who listens that it's a sucker's play, IMHO. Coming out of the pig sty without mud on your face just ain't that easy.
But consider the other big-name gigs in town. Assembly Speakers are a transitory bunch. On occasion you'll get somebody in there for the better part of four years, like Fabian Nunez, who can do something to really grab the position and make a name for himself. But typically, you have just two years to make your mark. That's a tall order. Karen Bass has talked about big change, but it's just not all that clear that she'll have the chance to implement any substantial portion of that.
But the Senate President Pro Tem typically gets a longer time to make his mark. Senators have usually served in the Assembly, so they are known quantities when they get to the Upper Chamber. The eyes were already upon Sen. Steinberg to replace Don Perata the moment he was sworn in. People knew he was both a good fundraiser, and a good legislator. And Steinberg clearly wanted the job.
It's about a citizen politician - one of us - who is now tagged by an angry public as "one of them." Steinberg preached transparency, but when it came to crafting a tortured state budget, he participated in a secret proceeding that everybody hated.
"There was no other way to make a $42 billion dent in the state budget," he said Friday. "I didn't like it, but that's a fact."
It's an honest response to a level of dishonesty. It's not burning down the village to save it, but it's in the same ballpark. Steinberg is the guy you see around the supermarket and think: How does a nice man get anything done in a snake pit like the Capitol? His ascendancy to the highest levels of state government hinted at a different way of governing.(SacBee)
I've had the chance to talk to Sen. Steinberg a number of times, although I doubt he remembers me. He really is just a nice guy who wants to keep the state running. In many ways, he's something of a softie. It's really not that tough to read him, and the Republicans saw that. Steinberg really wanted to get a deal done in February, and he did what it took. Whether you agree or disagree with what came out of that week, you can't say that he didn't work as hard as you see a politician work.
But the underlying facts are still at play for Steinberg, win or lose on May 19, he still has a massive mess in front of him. And there just aren't any easy answers for him, or any other legislative leader.
I'm a but surprised that they rejected everything on the ballot, but I think the bare fact of tax increases in the budget has colored their opinion on all the measures (which is fine with me, if they want to look a gift horse in the mouth).
SACRAMENTO - The California Republican Party on Saturday voted to oppose all six ballot proposals in next month's special election, saying voters must reject higher taxes.
The vote by the party's executive committee followed a lively, hour-long debate that focused on Proposition 1A. The measure would create a state spending cap and bolster California's rainy day fund, two concepts Republicans have long promoted.
But those provisions were overshadowed by triggers in the measure that would extend the sales and income taxes adopted by the state Legislature.
Party chairman Ron Nehring said the vote symbolized his members' dissatisfaction with the entire budget deal struck by the governor and lawmakers in February to close the state's budget deficit, then projected to be nearly $42 billion.
There's a serious divide and a lack of trust between the electeds and the grassroots on both sides of the aisle. And the urgent pleas to pass the initiatives just makes things worse, in my opinion, because defending them inevitably sends you down some blind alleys. Check out Speaker Bass' attempt, which includes one glaring dichotomy.
"If we don't pass these measures, when we begin to negotiate next year's budget, we will have a $14 billion hole instead of an $8 billion hole," Bass said.
People have become confused, she said, over critics' statements that measures 1D and 1E will take money from children and mental health programs funded through Props. 10 and 63. Bass said the new measures will tap into the prior propositions' reserve funds and divert the money into very same programs that the propositions were intended to serve: core children and mental health programs.
"If these measure fail, we will have to cut children and mental health programs," Bass said. "We are not using all the reserves but some of that money, which will otherwise just sit in the reserves."
Really, Madame Speaker? Wouldn't Prop. 1A divert billions to "just sit in the reserves"? Are you not in favor of that now, because I get confused. How can you coherently argue against the value of cash reserves in programs with stable revenue sources and for the value of cash reserves in the unstable revenue-sourced overall budget? The more the leadership talks about these ballot measures, the more they trip themselves up.
I've obtained a copy of the email sent to every California Democratic Party member from the Assembly Speaker and the Senate President Pro Tem, trying to scare the membership into supporting the special election ballot measures. It's really unconscionable for them to stretch the truth this much. They conflate apples and oranges to make it seem like an immediate $31 billion dollar deficit is forthcoming if the measures fail, which is simply untrue. They mostly discuss what failure would mean rather than what success would mean. And they neglect the permanent damage that would be caused by the ballot measures in favor of the temporary tax increases. I'll put the whole thing on the flip, but here is the excerpt that kills me.
There seems to be a great deal of misinformation about Proposition 1A, the spending reform measure. This is NOT a spending cap, but rather a mechanism to force savings in good years to protect funding for services when our economy sours. If California had a rainy-day fund like most other states, $9 billion in cuts could have been avoided this year. In the long-run, Proposition 1A will stabilize state spending for critical services.
Um, actually, folks, that's what a spending cap IS. It caps spending and puts money into a rainy day fund. Of course, the way this cap is structured, the rainy day fund would have to take money even in DOWN budget years, due to its stringent, restrictive nature. The line about how $9 billion in cuts could have been avoided this year with rainy day fund money is offered without the knowledge that the money would have had to come FROM somewhere, and would have meant $9 billion in cuts in years prior. Not to mention the fact that it would have had to be replenished almost immediately. With this spending cap - yes, Madame Speaker and Mr. President pro Tem, sorry to burst your bubble but that's what it is - spending will be forced $16 billion dollars below the Governor's baseline budget next years. That's the ENTIRE gain of the $16 billion in temporary tax increases in just one year. And the cap goes on and on and on.
Pathetic. About the only good thing here is the shout-out to eliminating 2/3 for budgets and taxes. I appreciate that, but would appreciate some honesty about the spending cap even more.
UPDATE: Funny, Steinberg and Bass' pal Mike Villines, who has been going around the state with them promoting 1A, has some different thoughts about what the measure would do:
Proposition 1A represents a significant victory for taxpayers at a time when our state needs it most. Proposition 1A ties the hands of legislative liberals, and it forces our budget into a fixed formula and a hard spending cap. That means, for the first time in decades, that liberals will have to make tough spending choices and cut their pet projects.
It also means the taxpayers will no longer be treated like a giant ATM machine. Consider this fact: if we had Prop 1A in place today, our state would not be $31 billion in the red. Instead, our state would have a much more manageable $5.4 billion budget gap. That means that during the worst economic recession since the Great Depression, Proposition 1A would have ensured that our budget gap was manageable. That's the proof that Proposition 1A protects taxpayers.
Villines is wrong about this being a good idea, but he happens to be right on the numbers. With a spending cap, approximately $27 billion MORE would have had to been cut in the years leading up to the current budget. That's more than half of the entire education budget.
Did you guys think we wouldn't notice the diametrically opposed arguments, depending on the constituency?
Gov. Schwarzenegger is giving a speech right now at the Commonwealth Club in San Francisco, the kickoff of his campaign for the state budget items in the May 19 special election. In some remarks released earlier, it's clear Arnold is highlighting - and is most concerned about - the spending cap.
"Our state capital is a town that feeds on dysfunction. The special interests, left and right, need the process to be dysfunctional. That is how they control Sacramento. That is how they prevent change."
[snip]
"But now we have an agreement, passed by two-thirds of the legislature, that puts on the ballot serious budget reform, including a spending limit and a rainy day fund.
"And the very interests, the far left and the far right, that prefer dysfunction over change have already launched a campaign to confuse people and defeat the reform. But this time they are not going to succeed."
Arnold probably sees this as a selling point, that if Democrats are against his plan, and Republicans are against his plan, then it must be just right. But this Goldilocks centrism masks the extremism of the spending cap plan, which would ratchet down revenues and cut vital services permanently. It also represents a serious miscalculation on the part of the Governor, who apparently still thinks his post-partisan message actually works in this state. That's the same political genius that has Schwarzenegger polling worse than Carly Fiorina in potential 2010 Senate matchups against Barbara Boxer. And even Schwarzenegger's own strategists seem to know that he cannot be the public face of the special election, lest he doom it to failure.
Opponents of the measures say their private polling has shown linking the initiatives to the governor drives down support of the measures. That has been echoed by some supporters of the ballot measures, who have also started testing potential campaign messages.
But (campaign strategist) Adam Mendelsohn said Schwarzenegger's star power and his ability to get news coverage is still a great asset for the campaign.
"There is no elected official in this state capable of dominating coverage like Arnold Schwarzenegger. The chattering class loves to look at his approval numbers and then cast dispersions, but communicating in a campaign is a lot more complex than just looking at approval numbers."
Uh, yeah, Mr. Mendelsohn, that's the PROBLEM. He's extremely unpopular with everyone but the Dan Weintraubs of the world. And there aren't 17 million Dan Weintraubs living here.
The spending cap, with something for everyone to hate, is particularly vulnerable in the special election. Republicans have been calling for a hard cap for years, if not decades, but they've become so blinded by the Heads on a Stick faction of their party that they cannot look past the short-term of two years of tax increases and realize what they would be getting. But the Yacht Party infantry clearly doesn't care: heck, they're trying to recall Roy Ashburn, who's termed out in 2010 anyway. So their entire side, or at least everyone who wants to be elected in a primary, is lining up against 1A. Meg Whitman has come out against it.
Republican gubernatorial candidate Meg Whitman has already announced her opposition to Proposition 1A, and Whitman spokesman Mitch Zak did not rule out the possibility that Whitman would spend money against the measure.
"She's been very outspoken in her opposition to 1A," Zak said. "We've not made a decision how that opposition manifests at this point. We're keeping our options open."
The Flash Report is claiming that Steve Poizner will oppose the measure as well, and he is hinting at contributing funding.
After a long, closed-door meeting Tuesday, Assembly Democrats remain divided over the budget-balancing ballot measure at the heart of the May 19 special election, Proposition 1A, which would impose a cap and raise taxes.
"Our caucus had a very long discussion on this," Assembly Speaker Karen Bass told Capitol Weekly. "There are a number of members who are supportive of 1A, there are several members who are opposed to 1A, and there are many others who are trying to decide. We are working through this and we will have another caucus next week," she said Tuesday evening.
Looks like Bass will have a lot more colleagues to boot out of committee assignments. You'll remember that she punished the three Democrats who actually voted against the spending cap on the floor back in February. Now a good bit of the caucus is revolting.
The caucus did vote to support 1B through 1F, and that's probably because they know that there's going to be more cuts coming down the road, and voters opposing the revenue-enhancing items on the ballot will make their job harder.
But, she added, "I'm hearing that we are going to have a $4 billion dollar (revenue) hole, so if the ballot measures don't pass, then it becomes $9 billion or $10 billion hole."
As I said, the crisis continues.
So I'm seeing the anti-tax groups, progressive advocates, the big money in the GOP, half the Assembly Democratic caucus, all against 1A. On the pro side, Arnold, George Skelton, and Steve Westly, who says 1A will "instill much needed fiscal discipline". Yeah, poor people and the blind, get some fiscal discipline, you scumbags!
The wildcard remains the unions, who with even a little bit of financial backing could tip the scales on 1A. SEIU and AFSCME have delayed formal positions until later this month. But the Administration is trying to intimidate them into going along with it.
Here's why it matters to state workers: Last week, the Association of California State Supervisors asked administration officials if the governor would still lay off employees, or if he would abandon the plan since lawmakers have passed a budget.
(Remember, state workers' twice-monthly furlough is just part of how the governor wants to cut costs. Layoff warnings went to 20,000 of the state's least senior employees last month. Half could lose their jobs, officials have said.)
The administration's answer, from notes taken by an association representative: "We hope the five budget-related propositions pass ... . If the propositions do not pass, we will be in a worse situation, with more furloughs and layoffs."
This is despite the fact that 1A would have NO IMPACT whatsoever on the immediate bottom line; in fact, passing it would hurt the budget for state workers more than defeating it. "Vote like your job depends on it... because it does." That must be the working motto.
The question is, will the intimidation work? Obviously, the fact that the tax increase extensions in 1A are practically hidden on the ballot is going to arouse anger amongst the Heads on a Stick crowd. And progressive advocates are sticking to principle that an artificial spending cap has failed wherever it's been tried and is wrong for the state. In the mythical middle you have the vain Mr. Schwarzenegger, desperately trying to stay relevant. Ultimately, this is a referendum on him.
UPDATE: And here we go. The League of Women Voters just announced they're opposing 1A, along with 1C, 1D, and 1E (selling the lottery and moving money from voter-approved funds for children's programs and mental health). This is big if it's a harbinger of how other groups will line up.
As Becks mentioned in an eloquent diary on the Rec list, Karen Bass has made a baffling, counter-productive move to punish Sandre Swanson, Warren Furutani, and Tony Mendoza, lawmakers who did the right thing for their districts and their state by opposing the spending cap part of the budget. The LA Times has a good story on this.
Like a military commander busting down insubordinate troops, Assembly Speaker Karen Bass (D-Los Angeles) has stripped committee chairmanships from a trio of wayward lawmakers after they refused to join fellow Democrats in support of a key budget provision.
The three assemblymen -- Sandre Swanson of Alameda, Warren Furutani of Gardena and Tony Mendoza of Artesia -- voted last month against a measure to cap state spending, which will appear on a special statewide ballot this spring [...]
By removing the three lawmakers from their posts, Bass takes away key staff assistance, clout on policy issues and potential fundraising power.
She's hurting those lawmakers, but as the above sentence makes clear, she's hurting their constituents as well. All because they couldn't go along with a plan that will make it impossible to deliver basic services to Californians, even in good economic times. And the spokeswoman for Bass trying to sidestep the rationale for this is pathetic.
"Having now had a couple months to see this class in action," the speaker felt changes were needed "to ensure the Assembly can continue to do the best job for the people of California," said spokeswoman Shannon Murphy.
She declined to elaborate, calling the changes "an internal caucus matter."
You'll notice that Darrell Steinberg did not mete out this punishment to, for example, Loni Hancock, who voted against the spending cap in the Senate.
I understand the desire for leadership to have control of their caucus, but unless we're concluding that Karen Bass really really wanted to cap state spending, there is no good reason to enforce party discipline on a terrible vote. When the spending cap goes down because of the arrogant way that Bass and the legislature hid the true costs, both on the spending side and on the taxation side, these three members who were right all along will appear to be the only ones who suffer.
I think it's worth writing or calling the Speaker and asking her why she wants to punish progressives for voting to protect services for Californians. And you might ask her, politely, to reinstate the Spending Cap Three.
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I was deeply upset last night when I heard that Assembly Speaker Karen Bass had stripped Oakland’s Assemblymember, Sandre Swanson, of his committee chairmainship. Swanson wasn’t alone in receiving this punishment:
Three Assembly Democrats who broke with their caucus by voting against a state spending cap and other budget trailer bills have been stripped of committee chairmanships. Meanwhile, Democratic lawmakers who supported the party majority have gotten promotions.
Those losing out are Assembly members Sandré Swanson of Alameda, Tony Mendoza of Artesia and Warren Furutani of Gardena. All three voted against a key budget compromise to put a state spending cap before voters. Now, following a flurry of new assignments by Bass, all three are former chairs of Assembly committees.
Now of course Bass is keeping quiet about this, refusing to say whether these members were stripped of their positions because of their votes on the spending cap, but it’s clear that this is the reason why she did it. I happen to agree with Swanson’s position on this vote and have great respect for him, since he voted this way even though he knew he would likely be punished by party leadership. But regardless of opinions on which way he should have voted, this is just messed up and it happens all too often in the legislature, on both sides of the aisle.
The intended effect of actions like this is to put party members into place, to remind them that they are only as powerful as they are because party leadership allows them to be, and that if they cross the party, they will be punished. This has a stifling effect on speech and forces legislators to respond first to party leadership, instead of representing their constituents.
The weekly Democratic radio address (which ought to be a YouTube address, come on guys) called for an end to the 2/3 requirement for budget and tax increases. This is the first time in my memory that so many lawmakers are openly talking about revising 2/3. It's not a new problem - 28 of the last 32 budgets have been late due to legislative squabbling, with the fights becoming more protracted than ever over the past decade. And every economic downturn, no matter how slight, sets off a crisis. Assemblyman John Perez made it clear:
The budget would not have taken so long and would have not included non-budget related issues like an open primary if California did not have the unusual requirement of a two thirds vote for budget approval.
Reforming this two-thirds requirement should be a priority for all Californians.
Perez did not reference whether the new requirement should be the arbitrary 55% number, which is what the current initiative being circulated states, or a simple democratic majority. We've learned where a number of Democrats stand this weekend:
• Darrell Steinberg decided not to mention 2/3 hardly at all in his op-ed in the Sacramento Bee. That's a lack of leadership. No elected official should be speaking in public and pass up the opportunity to advocate for majority vote. He instead opted for a Broderist call for working together and the awkward tag line "Smarter going forward."
In comments to David Greenwald, Steinberg did call for repeal, but failed to pick a side.
"The answer in my view is to take this two-thirds supermajority requirement. We are one of three states in the country that allows a small minority of members to hold up the progress.... It doesn't really work for California; it worked this time barely because of the magnitude of the crisis... We need to take the question this two-thirds supermajority to the ballot. I feel even stronger now than I did when I started on December 1."
Assembly Speaker Karen Bass, D-Los Angeles, has proposed one that would allow lawmakers to approve budgets with 55 percent majorities if they do it by June 15. After that, it would take two-thirds votes.
It's not necessarily that this kind of measure would definitely not pass because all the thrust of majority democratic rule is lost, but that's certainly a factor.
• In that same article, Loni Hancock calls for a simple majority:
Hancock has introduced a constitutional amendment that would require only simple majorities to approve budgets.
"California needs to have a normal democracy like every other state in the nation except Rhode Island and Arkansas," she said.
That's a talking point. 55% is mush.
The point is that we have the Democratic leadership finally talking about the main impediment to the perpetual budget crisis. Without two-thirds, you can fix a tax system that is too closely tied to boom-and-bust economic cycles. Without two-thirds, you can end the virtual bribery of Yacht Party and moderate lawmakers. Without two-thirds, you can end the Big Five process that facilitates official secrecy and backroom deals and use a deliberative process involving the committee structure and relying on the input of the entire caucus. And without 2/3, you won't have to hear from high Broderist windbags tinkering on the margins with proposals that make them feel good but will do absolutely nothing to solve the problem. It's kind of hilarious that the LAST proposal in George "Can't We All Get Along" Skelton's long list in today's column is this:
* A simple majority vote for budget passage; 55% at most. Scrap the two-thirds vote requirement.
Gov. Arnold Schwarzenegger gave Democrats the cold shoulder as he grew convinced he can somehow win Republican support for a midyear budget deal that includes tax hikes, Senate President Pro Tem Darrell Steinberg said Wednesday [...]
"He believes that he can convince the Republicans to vote for revenue increases given that we're now pretty much at the brink," Steinberg told The Bee's Capitol Bureau. "And if that's the case, great. Then we'll resume a different kind of negotiation. If it's not true, then I expect we'll be right back to our $17 billion-plus proposal and try to close that out."
Steinberg said he thinks lawmakers can still avert a cash shortage if they pass midyear changes by February. While the changes alone may not be swift enough to provide California with enough cash to pay its bills, he suggested that passage of a credible budget solution would enable the state to take out sufficient loans.
It's important to remember how stunningly ineffective Schwarzenegger has been at governing for five years. He hasn't brought one Republican along on ANYTHING he has sought. All of the policies he'll be talking about as part of his "legacy" were passed without any Republican votes. He has no chance whatsoever to attract anyone from his own party, and he never has. That is the epitome of failure as a leader.
Of course, you have to question whether he really wants to solve the problem at this point. It's probably more about political posturing at this point. Democrats wouldn't privatize the state, so Arnold will fall back on the same tired tactic of demonization while California goes up in flames.
"We all know how this movie goes," Steinberg said. "The governor will be out again in some community in California attacking the Legislature and elected representatives for failing to act. It's frankly a tired, old movie."
In the end, the Democrats couldn't -- or wouldn't -- meet Schwarzenegger's demands (more cuts, additional public-private partnerships and easing of environmental regulations for at least 10 projects) for him to sign the budget.
"The Legislature has been more than willing to meet the Governor halfway on his proposals, but we cannot in good conscience back an 'anything goes' approach to California's environment and a privatization scheme that would make George W. Bush blush," the Democratic leaders write in an op-ed in today's Bee.
Arnold was never interested in "creating jobs," he was interested in breaking his old nemesis, the unions. And when it didn't happen, he used the ridiculous excuse that now, when the Republican project to bankrupt government is almost realized, NOW they'll see the light. And in the end, even his "comprehensive" budget solution would only solve the problem until he could leave office, sticking his successor with another crisis.
Fail, fail, FAIL.
UPDATE by Brian: The Republican Senate Caucus just sent out a quite humourous email. I'll summarize: You try to kick the ball Charlie Brown, we'll definitely leave it there. A snip:
We should start by immediately enacting the $6 billion in budget solutions that have already been agreed upon by both Republicans and Democrats. This would be a responsible first step to avert the looming cash crisis and put Californians back to work."
"Republicans continue to stand ready to work with the Governor and Democrats. Too much time has been wasted on schemes to make an end-run around Prop. 13 and the will of the voters. It's time to adopt a fiscally responsible budget plan, which is what voters rightfully expect from their elected leaders."
Just so we're clear here, well over 60% of the California voters agrees that we need to increase taxes, according to recent polling data. In some polls, that even exceeds the 2/3 figure. The will of the voters is to have a viable K-12 system, higher education, decent transportation options and human services.
Apparently, the Democrats should compromise on the parts they are willing to give, but the Republicans don't have to give anything. That's not compromise, that's unconditional surrender. Surrender to a theory of market economics that is crumbling around us as we speak, yet that's where the GOP leads us. Compromise indeed.
Dan Smith reports that we're nearing a deal on the work-around budget which would cover half of the state's projected deficit between now and mid-2010.
"The areas of negotiations have significantly narrowed, and on those issues we're very close," said Senate President Pro Tem Darrell Steinberg, D-Sacramento.
Steinberg and Assembly Speaker Karen Bass, D-Los Angeles, talked via videophone to Schwarzenegger, who is vacationing in Idaho. Talks will continue over the weekend, with leaders hoping lawmakers can be called back to Sacramento by the end of next week to approve a final deal.
Schwarzenegger spokesman Aaron McLear said Democrats are "moving closer" to the governor's demands for deeper spending cuts and an economic stimulus package. "But we don't have any agreements," McLear said.
We know that the main sticking point issues were: 1) eliminating CEQA for certain infrastructure projects, 2) privatizing a lot of those public works contracts and 3) cutting state worker holidays and overtime. So the fact that Democrats are "moving closer" to those positions isn't exactly heartening, although it's contradicted somewhat later in the piece.
Bass said Democrats are trying to meet the governor's desire to stimulate private investment in public projects without hurting public employees by shifting their jobs to contractors.
The Democrats believe changes to state employee pay must be hashed out at the bargaining table between unions and the administration. "There's no question that state workers know that they're going to be part of the solution as well, but we also think it's very important to respect their ability to have a say in how that is done," Steinberg said.
Privatization is simply not the answer, it has no relevance on budget savings (cost overruns exist in the private world, too) and is just a way for Arnold to reward his Chamber of Commerce pals.
But what's notable here is that these are meetings between the Governor and the Democratic leadership, and the Republicans have been completely frozen out due to their inability to play nice with others. The byzantine plan for a majority vote on fee increases and tax shifts is still operative, and if it survives the subsequent legal challenge, suddenly the Yacht Party would be powerless. The Very Serious pundits have already turned against Yacht Party rhetoric on spending as the source of the problem, and even the most casual observer understands that the 2/3 rule is destroying the state. There ought to be a formal voting down of 2/3 (even this work-around will be insufficient to approve a new budget in June, which requires a 2/3 vote) but this is a creative solution to a crisis largely created by the rulemaking structure of the body and Republican intransigence (not to mention Arnold's vehicle license fee slash, the dumbest first act by a Governor in many a year).
Arnold got to talking about vetoing the Legislature's budget plan, and it immediately becomes clear what is going on here: The Shock Doctrine. The Republicans, including Governor Schwarzenegger, are using the budget disaster to destroy labor and environmental gains. At this point they don't even try to hide it: they are going after CEQA, going after labor contracts, and going after the generations old experience of public investment in infrastructure.
First, from the Governor:
Well, read through it. You see, that it is one thing, when you say economic recovery package. But then read through it. It actually doesn't do anything and it makes it more difficult, actually, to do certain projects. And we will give you a briefing on the details -- Will Kempton can take you through the infrastructure package and all of those kind of things. They have not at all addressed the CEQA. They have not at all addressed the public-private partnerships. They have not addressed at all that we can go and -- as a matter of fact, they made it tough, that we can lay off people. They even said that we have to ask labor if we can have the furloughs that we recommended.
This is why I called it yesterday "Legislating Under Duress", the Governor and the Republicans have a gun to the Democrats' head in the budget disaster. The thing is that not only does the GOP think that the Democrats will eventually blink, but going over the brink wouldn't be that big of a deal. They get to slash and burn through labor and forget about the government. It is good to be the Green Governor isn't it?
Speaker Bass calls this what it is, Russian roulette with our future. After all the gun isn't really on the politicians of California. Sure, they'll get some political blowback, but the gun is pointing squarely at the people of California. The Governor claims to negotiate, then takes his marbles home with him. From the Speaker:
I am frankly surprised how willing Governor Schwarzenegger is to push California over a cliff when he clearly is not fully aware of what the bills we passed today do. The governor said we didn't do economic stimulus. We did $3 billion worth of bond acceleration to get job-creating infrastructure projects moving for transportation, drought relief, park restoration and green technologies. He said we didn't address CEQA-- we expedited CEQA for transportation projects and surplus property and we eased restrictions for hospital construction. All these actions will also help create jobs. He said we didn't address public private partnerships. We expanded public private partnerships - despite opposition from labor.
This is a stick-up, an attempt to drive us back into the third world of economic inequity, class warfare, and a grim future. Say goodbye to Pat Brown's California, say hello to Kurt Russell's.
