The good news is that we have a budget. The bad news is that it is a budget that no one is happy with. The worst news is that it is a complete and total fraud.
All it does is push tough decisions into the future. It papers over most of the $19 billion deficit with clever accounting. It assumes billions from the federal government that will never materialize. And it relies on loans and numerous bookkeeping maneuvers to defer payments to schools.
But let us just drop this charade. Drop this nonsense and get to the point.
In a little less than a month we will elect a new governor. At this point, it almost, almost, does not make a darn bit of difference who wins. Okay, the partisans in this crowd will drop all-caps, profanity-filled tirades on me, questioning my liberal credentials.
I remain an unabashed liberal, but we have to be a little honest here. The problem in California is twofold – a structural blockade with the budget process that requires two-thirds of the legislature to agree on something during a time of hyperpartisanship.
How hyper is that partisanship? We have nine propositions on the ballot, the Democrats and Republican agree on not a single item. Not one.
The solution to the problems of California Government is very simple. Get rid of the two-thirds vote requirement to pass a budget and, yes, to increase taxes.
We need to let our elected officials govern – even if that means they will govern badly. Even if that means for Republicans that we raise taxes. Even if that means for Democrats that we cut funding to schools or gut environmental laws.
Guess what, we are raising taxes anyway. And we are cutting funding to schools and gutting environment laws anyway.
Hear me out, conservatives. This will sound crazy, but it is the only way.
If we eliminate the two-thirds vote requirement for the budget and taxes, we will raise taxes. I guarantee it. It will happen. It should happen. We need to raise taxes.
But here’s the other half of that. If you bite the bullet for two years, you will control the state legislature. You will win the Governorship. And then you will be able to lower taxes and cut spending, however you see fit.
By removing the two-thirds requirement, the Democrats will have to be taught a lesson that they won’t soon forget, that they can’t just raise taxes to solve the state’s budget.
Now, the voters may well teach you a lesson too, but at least we will be learning lessons and yes, governing.
We also need to get rid of term limits. They don’t work. We still end up with career politicians. We just end up pushing them into positions for which they are not qualified. We do not have experienced hands guiding the legislation, which means that staffers and lobbyists run the show in Sacramento.
And finally, we need to have non-partisan redistricting. Having safe seats for politicians is not a good thing. It means that there is little chance that Californians will punish the legislators for their failure to produce a budget.
This is a radical plan that will require one thing that is in hugely short supply – faith. Faith in the voters. Faith that electoral incentives and not structural laws will control the behavior of elected officials.
Will it work? I don’t know. What I do know, however, is that the current system is not working and will not work.
—David M. Greenwald reporting
We also need to get rid of term limits. They don’t work.
Yep. Increase terms to 6 years in the Senate, 4 in the Assembly, three-term limit. Last time they went to the ballot the remedy was too middling and timid.
[quote]The solution to the problems of California Government is very simple. Get rid of the two-thirds vote requirement to pass a budget and, yes, to increase taxes.
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David: I agree that any solution to California’s problems must begin with ending the 2/3 requirement, but even if we do so, California has many problems. We have one of the highest unemployment rates in the country. We have a central valley that is in a depression, with a veritable dust bowl near Fresno–water is a key issue that needs resolution.
As you know our biggest long term problem is unfunded pension liabilities (and health care).
In addition to a structural budget deficit, our next governor will face many, many city bankruptcies. Vallejo is already in the process and many others will follow. Jerry Brown was mayor of Oakland for a number of years and he may find, ironically, that his experience as Mayor will be more useful that his experience as governor (or AG).
Greece is starting to own up to some of its long term issues. Maybe California will as well.
dmg: “By removing the two-thirds requirement, the Democrats will have to be taught a lesson that they won’t soon forget, that they can’t just raise taxes to solve the state’s budget.”
I’m NOT SURE I agree with your method to get there (change 2/3 majority to 50%), but I absolutely agree we cannot raise taxes to solve our way out of the state’s budget crisis. And certainly kicking the can down the road is not the solution either. But I commend you as a liberal for recognizing that increasing taxes will not fix anything; and that the taxpayers’ collective pockets are tapped out. And another thing, if someone lost their job, they simply cannot pay taxes. I have always thought moderate Democrats and Republicans are not that far off on local issues.
I’d like to also point out something here, which has more to do with the federal level. Obamacare and all the new federal regulation of business has frightened businesses into hoarding their cash rather than hiring new employees. Businesses figure bc of Obamacare and the new business regs, it will cost them more, so are saving the money for that eventuality. Obama has done just about everything to ensure the economy does NOT recover. Now he is floundering desperately by putting out reports that the recession is over as if the electorate is stuck on stupid, while the stats come out that the economy lost 95,000 jobs in the month of Sept., the worst job loss statistic since the 1930’s. And worse is to come, as CA’s budget trickles down to the local level, and more people have to be laid off. And this sort of thing is happening in other states all over the country. We are in for some grim times ahead I’m afraid…
dmg: “We also need to get rid of term limits. They don’t work. We still end up with career politicians. We just end up pushing them into positions for which they are not qualified. We do not have experienced hands guiding the legislation, which means that staffers and lobbyists run the show in Sacramento.”
I did not vote for term limits, for the very reasons you have stated. Again I commend you for “seeing the light” (or maybe you did not like term limits from the beginning either?).
dmg: “And finally, we need to have non-partisan redistricting. Having safe seats for politicians is not a good thing. It means that there is little chance that Californians will punish the legislators for their failure to produce a budget.”
Total agreement here as well. There are actually competing Propositions on the ballot about redistricting. Pay close attention to each of them, and make sure you know what you are voting for…
Excellent article DGM…
You’re right. Getting rid of the two-thirds requirement would be the best thing to happen to the Republican party since Abraham Lincoln. The Democrats would raise taxes, increase welfare spending, kiss the feet of the public employee unions, and the Republicans would take over the state government in the following election. Eventually things would stabilize, as in most states, with one party having a very slim majority that would shift from election to election. But it won’t happen in California–neither party is capable of looking beyond the immediate election. So it goes.
“Obamacare and all the new federal regulation of business has frightened businesses into hoarding their cash rather than hiring new employees.”
Businesses aren’t hiring or ordering or manufacturing stuff because there is no demand. When there is demand, they will hire, order, and manufacture stuff. The health care bill and “federal regulation of business” (whatever it is you mean by that) has nothing to do with it. We make business decisions based on our revenues and orders.
ERM: “Obamacare and all the new federal regulation of business has frightened businesses into hoarding their cash rather than hiring new employees.”
Don Shor: “Businesses aren’t hiring or ordering or manufacturing stuff because there is no demand. When there is demand, they will hire, order, and manufacture stuff. The health care bill and “federal regulation of business” (whatever it is you mean by that) has nothing to do with it. We make business decisions based on our revenues and orders.”
I said what I said based on several articles I read on the internet. I respect your business acumen, so don’t doubt what you say as another reason. But I did do some research, and found there is a wide disparity in thought as to whether there is even any “hoarding” at all, and if so what the reason is (see below). It is getting to the point you just can’t believe anything you read…
seeking alpha.com: “It is my bet that the companies that are building up their cash hoards are just waiting for the opportunity to sweep in and acquire firm after extremely weak firm. It is my guess that these companies are waiting for the right time to pick up their exposed brothers and sisters for a song.”
washingtonpost.com: “Over the past couple of weeks, a lot of people have been talking about how corporations are sitting on $1.8 trillion in cash reserves and that if we could just get them to feel more confident, we could unleash a massive private-sector stimulus. The question, of course, was how to do that. But Barry Ritholtz presents some compelling evidence that today’s reserves aren’t anything out of the ordinary. Rather, they’re the continuation of a long-term trend toward businesses hoarding money.”
Chris Matthews: “You think business can sit on those billions and trillions of dollars for two more years after they screw Obama this time? Are they going to keep sitting on their money so they don’t invest and help the economy for two long years to get Mr. Excitement Mitt Romney elected president? Will they do that to the country?”
NYTimes: “The Fed’s quarterly Flow of Funds report, released today with data for the second quarter of 2010, found that total credit grew for the first time in over a year, mainly because the federal government increased its borrowing. Consumers, however, continue to deleverage: Net household sector borrowing has fallen for eight consecutive quarters.
Perhaps because of the uncertain economic climate, companies are especially reluctant to spend money.
Mother Jones: “Fareed Zakaria, after noting that America’s 500 biggest nonfinancial companies are sitting on $1.8 trillion of cash, wonders why they aren’t spending it on new plants or expansion into new product lines:
I put this question to a series of business leaders, all of whom were expansive on the topic yet did not want to be quoted by name, for fear of offending people in Washington.
Economic uncertainty was the primary cause of their caution. “We’ve just been through a tsunami and that produces caution,” one told me. But in addition to economics, they kept talking about politics, about the uncertainty surrounding regulations and taxes. Some have even begun to speak out publicly. Jeffrey Immelt, chief executive of General Electric, complained Friday that government was not in sync with entrepreneurs. The Business Roundtable, which had supported the Obama administration, has begun to complain about the myriad laws and regulations being cooked up in Washington.”
marketwatch.com: “There are several reasons for this phenomenon.
The first is that many firms don’t have to invest as much as they used to. They have outsourced bigger and bigger chunks of their output of goods and services to companies based overseas, leaving it to subcontractors in India and China, for example, to lay out the cash necessary to expand.
The second is that, with corporate chieftains having a shorter and shorter tenure at the top, there is little point in doing anything that will not produce immediate benefits. And investments in new facilities or technologies can sometimes take years to bear fruit – even if there was a new killer app out there, which there isn’t.
In this regard, Sarbanes-Oxley has made many a CEO extremely cautious, so keeping lots of cash around is seen as a form of insurance against being kicked out or worse. And using some of these funds to buy back stock tends to make shareholders even happier, since earnings per share will rise, thus increasing the chances that share prices will rise as well.”
Very keen observations. Term limits just keep any politicians that actually know what they are doing from sticking around to do any good. Yes there are the “bad ones” that would use unlimited terms to do what shady politicians do, but overall the ignorance (literally) in Sacramento is costing more than a few corrupt politicians, because all the new ones get played anyway.
Reducing the budget requirement is on the ballot, and I hope everyone who wants a better CA votes yes on it, because just like Observer mentions, the Democrats would have their way with the budget, and get punished by the voters. As a registered Democrat, I cannot say I would be sorry to see this happen, in the hopes for an end to the hyper-partisanship.
Redistricting needs to be outside the hands of the politicians. Period.
Of course the deficit is partially caused by politics but probably more than most realize. Billions could be cut from the bloated prison system budget if the politicans in both parties didn’t fear the powerful correctional employee unions. Just moving parole to the counties would save over $400 million in annual prison operating costs and $2.8 billion in prison construction costs. Moving technical parole violators and “wobblers” (offenders who can serve their short sentences either in prison or jail) to contract facilities would save about $580 million in annual operating costs and billions in construction costs. It is not complicated. Anyone with a computer and 15 minutes to spare can easily verify these facts by reviewing the Department of Corrections and Rehabilitation annual budget and population reports and Bureau of Justice Statistics annual prison and parole bulletins.