Category Archives: The Budget

Sen. Feinstein Demands Social Security Cuts

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California Senator Dianne Feinstein has joined a group of Senators threatening to allow the nation to default on its debt unless a commission to “fast track” cuts to Social Security is created. 

Talking Points Memo describes what is going on,

Moderate and conservative Democrats want to empower an outside
entitlement commission to reshape major domestic spending programs like
Medicare and Social Security, and they’re threatening a truly nuclear
option to get their way. If Congress does not create this commission,
they say, they will vote against must-pass legislation to raise the
nation’s debt ceiling, which would trigger a default, and, perhaps,
economic calamity.

“I will not vote for raising the debt limit without a vehicle to
handle this,” Sen. Dianne Feinstein (D-CA) told McClatchy. “This is our
moment.”

About this commission,

As proposed, it would hand a significant amount of Congressional
authority over entitlement programs to an outside body. That body would
make recommendations that Congress would have to vote on, up or
down–no filibusters.
That’s a bridge way too far for liberals, who see the commission as a backdoor approach to gutting Social Security.

Here’s the problem.  Many people believe that there is a problem with Social Security – that it is “going broke.”  But the fact is that Social Security has a huge reserve in the bank.  Social Security runs a huge surplus, and that surplus has been added to this reserve every year for decades.  Social Security will continue running a surplus until at least 2017, and can then draw on that trust fund to make up any shortfalls for at least the next 30-40 years.

Ah, but where is that trust fund?  According to a recent Washington Post story, 

The Treasury Department has for decades borrowed money from the Social
Security trust fund to finance government operations. If it is no
longer able to do so, it could be forced to borrow an additional $700
billion over the next decade from China, Japan and other investors. And
at some point, perhaps as early as 2017, according to the CBO, the
Treasury would have to start repaying the billions it has borrowed from
the trust fund over the past 25 years, driving the nation further into
debt or forcing Congress to raise taxes.

So there is the problem in a nutshell. They spent it. They spent it on tax cuts for the rich, and now that people are retiring and want that money, Senator Feinstein and the others don’t want to raise taxes on the rich to pay back what was borrowed from the nation’s retirement account.

This is the same as the situation in California. They cut taxes and made up the shortfall with various gimmicks, until the gimmicks ran out.  So now that the bill is due the protectors of the wealthiest talk about “spending” – which is government coming through for the people – as the area to cut, instead of turning to the people who received all the benefits of the earlier actions.

Senator Feinstein, keep your hands off of my — and everyone else’s — retirement account.  You borrowed that money, now pay it back.  Don’t think you can solve this problem by asking me to accept less than what I was promised because you handed that money out to the wealthy.  The people who got it should be the ones paying it back, not the people it was taken from.  You already took money from the taxpayers to bail out the wealthiest, don’t do it again.

Working to Fix the Structural Mess Destroying California’s State Government

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This is a guest post by Senator Loni Hancock. 
Senator Hancock.jpg

Editor’s note:  Senator Loni Hancock, who represents the 9th State Senate District, has long been an advocate for good government and transparency. As chair of the Senate Committee on Elections, Reapportionment and Constitutional Amendments, she has worked tirelessly to bring accountability and governance reform to assure California meets the challenges of the 21st century.

She is passionate about campaign finance reform and getting corporate money out of the electoral process to ensure candidates and legislative leaders represent their constituents and not the big campaign contributors who buy far too much of their own self-interest at the expense of the public.

So it was a natural for Senator Hancock to be selected to serve on this newly established Assembly and Senate “Select Committee on Improving State Government” and she’s a natural to comment on her thoughts, priorities and observations about the need to fix and reform several critical aspects of how state government should be operating to meet the needs of the people of California:

These days, just about everyone agrees that change is needed
in Sacramento.

This year’s state budget set the record for being the
latest, and probably the worst, in California’s history.  It has created severe strains on local governments
and school districts, and threatens to cut the heart out of education and
undermine programs that help  those most
in need.  It’s time for change and that
change needs to happen now.

The good news is that we are finally seeing movement for
change in Sacramento.  Today, the
newly-created “Assembly and Senate Select Committee on Improving State Government,”
will hold the first in a series of open, public hearings throughout the state. The
Committee is charged with developing specific proposals to reform state
government.  It will investigate
obstacles that stand in the way of government that meets the needs of the
people of California, and recommend action to remove those obstacles.

I believe there are three major reforms needed to get
California back on track:

(1) We must remove the 2/3rds requirement to pass a state
budget. California is one of only three states with a 2/3 budget rule
requirement.  This has allowed a few legislators
to hold the entire state budget hostage. 
The U.S. Congress and 47 states require a simple majority to pass a
budget.  We need to give the majority
party, Republican or Democratic, the ability to do its job and then hold them
accountable.  That’s what democracy is
all about.

(2) We need to reform term limits. Legislators with a lack of experience or institutional
memory are dealing with increasingly complex challenges and a dysfunctional
governance system.  More than one-third
of the Assembly is brand-new every two years,

(3)  We need to
reduce the influence of money in politics. 
Public financing of campaigns in California would change the playing
field considerably.  Candidates would no
longer have to raise campaign funds from special interests with legislation
pending before the Legislature; they would owe their election only to
the people they represent.

The Joint Committee on Improving State Government will hold
four hearings throughout the state.  In
addition to today’s hearing in Sacramento, the Committee will hold open, pubic
hearings in the Bay Area on November 12th; in Los Angeles on
December 3rd; and in the Central Valley on December 15th.  Specific details of time and location are
still being worked out.

I highly encourage you to attend one of these hearings – your
voices and your concerns must be part of the process if we are to truly restore
democracy and ensure a brighter future for our state.

Tax Reform For Billionaires — Guest Post from Assemblymember Noreen Evans

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One need go no further than Assembly Budget Chair Noreen
Evans comments on the Parsky report. She likens this to a Leona Helmsley coup.
For those who remember this delightful billionaire, she was America’s version of
Marie Antoinette who say famously stated that those who couldn’t afford to eat
bread should simply “eat cake”. – HBJ

 
Here are Assemblymember Evans
comments:

Tax Reform For Billionaires

The Commission on the 21st Century Economy, tasked with crafting
proposals to modernize California’s tax policy and ease the volatility
of its revenues, released its final report today. Leona Helmsley would be proud.

Helmsley
– a billionaire New York City hotel operator and real estate developer
sentenced to prison for tax evasion – famously said, “Only the little
people pay taxes.” With all the tax cuts being proposed by the
Commission for big business and the wealthy, her observation will be
true in California.

If adopted, the report’s recommendations – available here
– would dramatically reshape tax policy in California and place the
burden squarely on our already over-burdened, underpaid, and
under-employed working families. These recommendations include:
•
Reducing the number of tax brackets from six to two. The new tax rate
would be 2.75 percent for taxable income up to $56,000 for joint filers
($28,000 for single) and 6.5 percent for taxable income above that
amount;
• Eliminating the 8.84 percent corporate tax and the $800 minimum franchise tax;
•
Eliminating the current 5 percent state sales tax, with the exception
of the sales tax on gas and diesel fuels which would continue to be
dedicated to transportation;
• Establishing a new tax, not to exceed
4 percent, applied to the net receipts of businesses. Small businesses
with less than $500,000 in gross annual receipts would be exempt from
this tax;
• Creating an independent tax dispute forum – This forum
would provide taxpayers with a forum for resolving disputes with the
state; and
• Increasing the state’s Rainy Day Reserve Fund from 5
percent of revenues to 12.5 percent and restricting the government’s
ability to use the reserves.

By flattening
our tax policy, these recommendations coddle CEOs and billionaires
while kicking California families to the curb. No wonder the Commission
shut the public out of the process to complete its work in secret.

It
is equally important to note what is not recommended by the report, but
would have contributed to increasing and stabilizing the state’s tax
base: a new carbon tax, an oil severance tax, extending the sales tax
to certain services, and requiring corporate-owned real estate to be
reassessed at market value on a regular basis.

California
families are struggling to make ends meet. This recession has produced
record unemployment, fueled massive wage reductions, and resulted in
huge sales declines. Increasing the tax burden on hard-working families
cannot fairly and reliably fill the huge revenue gap created by
reducing income taxes on the wealthy and eliminating corporate taxes.

Tax
reform decisions are too important for experimental guesswork. But this
is exactly what the Commission’s report is urging. While the Commission
asserts that its proposals will create a tax structure that will more
reliably support state services, that assertion is unsupported by the
available evidence. In fact, the Commission has thus far refused to
make available to the public studies and information that form the
basis of its proposals. Adopting the Commission’s proposals would be
playing Russian roulette with California’s future.

Originally posted at Assemblymember Noreen Evans’ Budget Blog

So What’s Left Of The State?

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Well, the Republicans got their way. The state’s budget (read: services provided to the state’s people) has been cut and cut again.  Services to the disabled are cut again.  State workers suffer a huge pay cut through furloughs.  The state’s universities and colleges are cut dramatically.

Corporations got a big tax cut. 

All of this, of course, is for today.  In a few weeks we will get another reduced estimate of revenue and the process starts again.  And because so many things were just kicked into next year – including interest owed in borrowing – it will be even worse.  Citizens will see a 10% increase in withholding, which will all come back, but which reduces their ability to pay mortgages, etc.

All so that oil companies won’t be asked to pay for the oil they take and sell back to us.  All so people making $600,000 will not be asked to pay $38.42 more per week in taxes (which can then be deducted from federal taxes).  All so businesses will not be asked to pay property taxes at current rates.

The LA Times on Sunday, Pat Brown’s California takes a beating in Sacramento,

The visionary governor swept into office in 1959, and by the time he
was swept out eight years later, he had created the 16-dam,
multiple-aqueduct state water project, devised the three-tier college
and university system, constructed nine major campuses and built more
than 1,000 miles of freeways to connect regions of his burgeoning
state. To this day, much of what gets us where we are going —
literally and figuratively — stems from what he did in his two terms.

[. . .] In Brown’s California, there was a broad consensus that government was
a competent force for good. Now, among Californians of all political
ideologies, there is the opposite: a repudiation of government and,
even more, of any confidence in the governor and the Legislature to act
competently. On that matter, at least, California as a whole has
shifted to the right.

[. . .] “The whole spectrum has shifted so far to the right that today’s
Democrats are yesterday’s Republicans. Yes, the state is more
Democratic, but it is by no means liberal.”

I’m not sure I agree that the people of the state are behind this at all.  The Republicans depended on that infrastructure that was built up in the years of good government, before the conservatives tore government down.  Now the public will start to see what it means to not have the government there for them.

Make The Republicans Own This Budget Deal

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So they reached a budget deal.  The gap was closed entirely with cuts to essential service, schools, health care, etc.  Democrats had to cave out of fear that elderly people literally would not have oxygen tanks.

And to add insult to injury, instead of paying for the oil they take from the state the oil companies receive waivers to allow them to drill offshore!  In the last deficit-fix deal big corporations got a huge tax cut and now oil companies get more of our oil for free.  And we will suffer more pollution of our coasts.  (It’s pretty clear from deals like these who is in control of the Republican caucus.  The citizens get services taken away, the big corporations get perks that increase the deficits.)

This is a Republican budget deal, entirely on their terms.  Make them own it.

Here is how you make them own it: Make them vote for it.

Before any Democrat votes for this deal, every single Republican has to vote
yes.  When the voting start, just sit there.  Wait.  And then when the Republicans have all voted, ONLY THEN should Democrats start voting, but not before. 

If we are going to have
to live with a budget forced on us by Republicans and oil companies,
then the Republicans have to show up and vote for it.

Lost: One Moral Compass

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During my first term in the California Legislature back in 1998, I was reminded regularly that the state budget is a moral document, setting forth the priorities and values of its people. If what we are seeing today is such a set of priorities, we have clearly lost our moral compass.

Passing out pink slips to our teachers while giving tax-breaks to multi-national corporations sets a sad standard in the annals of decency and short-sightedness. What is more important than our children and their future? Apparently to the right-wing Republicans who have taken a pledge against balancing the budget thoughtfully and fairly and who forced yet another such  boondoggle before agreeing to the February, 2009 budget,it is seeing to it that their big corporate donors (the real special interests in our state) get even more from California while giving nothing in return.

At the same time our governor boasts that he’s so cool with what’s happening that he is spending his evenings in his jacuzzi with his 8 inch stogie while people in wheel chairs are being arrested outside his office because they’re asking  for simply enough to maintain a level of human dignity while they fight to survive each day.  Yet, this apparently doesn’t offend enough that the media has barely mentioned the Governor’s directive to arrest these folks while he embarasses us all with his cigars and indulgences. It is shameful. Our lack of indignation is shameful, too. Where is our moral compass?

While in Washington D.C. recently, I went to the wonderful FDR Memorial, located within a stone’s throw of the Jefferson Memorial. Franklin Delano Roosevelt was a man who set this country on a path of compassion and greatness with his effort to give every American the opportunity to live with dignity. One is reminded of this throughout his Memorial.

During a time not too different from today, he gave us hope and challenged us not to succumb to fear.His was a vision of possibility, dignity and kindness combined with the greatness to see that vision become a reality. His moral compass should have set the tone not just for several generations of Americans,  but for all generations when he said,

                            The test of our progress is not whether we add more to the

                            abundance of those who have much; it is whether we provide

                            enough for those who have too little

 

Today, all we hear about is how we are taxed too much; that we have to do without; that we have to give big corporations more so they create jobs (a totally false premise since so much of their profit goes to greedy executives or to create jobs in other countries); that we should cut education, healthcare, close our parks, reduce services that protect our natural resources and protect our environment and public health, etc. The list goes on and on, but for those who have either forgotten the admonition of Franklin Roosevelt or the role of government to provide for the common good, it’s simply and ONLY about the money and shrinking government so it can no longer function.

While there is certainly a good argument that government cannot be all things to all people and that it must respond to the economic circumstances of the times, the Governor and the anti-government right-wing that has far too much influence in California (because of the 2/3 vote requirement for a budget) have taken this too far. To be OK with giving to those who have the most at the expense of those who have the least and even to the middle-class struggling to stay afloat means we have forgotten who we are as a people.

It is time to start talking about investing in our people and our future and regain our moral compass. And it should start with the Governor getting out of his jacuzzi and listening to those in steel chairs who are asking for simple dignity. Or better yet, he should remember the words of the man who governed from a steel-chair and did so with great compassion and success. That’s real leadership.

Does the Public Think Politicians Are Crying Wolf (Again)?

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A recent large headline in the San Jose Mercury News got me thinking.  The headline was, “A dire warning from the Governor”. (Online headline is different from the morning’s print headline.)   From the story, “Schwarzenegger said … his threat … is necessary to prod lawmakers into swift action.”

I have to admit that even I rolled my eyes when I saw that — even though I understand how serious the problem is. And this led me to think that maybe there is a “crying wolf” factor at work here.  This has been going on now or a long time. 

A few months ago the crisis was reaching a breaking point, dire warnings were issued, and most importantly the public was starting to pay attention.  This triggered the leadership in Sacramento to do what I think was the worst possible thing: they came up with the fluffy budget compromise that “solved” the crisis and resulted in the failed May 19 Special Election.  I believe the compromise was a mistake that broke the tension and led people to believe that the “crisis” was over, so they tuned back out. 

I think the “chicken little” aspect of the whole affair kept people away from the polls in droves.

I am not faulting the Governor and other state leaders for headlines like thos and other warnings because the crisis is real.  Our leaders all need to do whatever it takes to get people to pay attention, to realize this budget crisis is real and that everything that can be cut has been cut, that they really are going to have to let people out of prisons and close parks and still will run out of money anyway.  Bankruptcy and all of its consequences looms.  For real.  The public has to get involved and do their job in this democracy.

But I can understand why most Californians have tuned out.  I think part of this budget problem is that it has become the norm to use drama and fear to prod others into action.  And not just with the budget.  There are so many terrible problems hitting us from so many directions.  The economy really did collapse, and we may be on the edge of another Great Depression.  For real.  This has been a headline swarm for months.  Swine flu is real, but is not as lethal as it first appeared it could be.  This was the headline swarm a few weeks ago.  And of course Global Warming is real, and serious.  It has been a headline swarm for years.  

Those are real and serious problems.  But at the same time there are so many manipulative, well-funded and sophisticated PR campaigns, usually from corporate interests, that use fear and/or other manipulation.  Remember the headlines warning aobut possible terrorist smallpox attacks?  Remember being told that Iraq was on the verge of hitting us with nuclear weapons?   Remember duct tape? 

So people just do not know who to trust and necessarily are becoming immune to drama.

California’s big media outlets could do a better job of explaining the real problems facing the state, beginning by dispelling the idea that the state is just wasting taxpayer money and everything can be solved with a few painless budget cuts.  They need to do this in a serious, respectful way, with comprehensive investigative reporting.  If print media won’t do that, they should close their doors — they aren’t doing their jobs and aren’t helping anyone anymore so they should let their advertisers support a medium that helps democracy rather than hinders it.  If broadcast media can’t do that, they should relinquish their broadcast licenses to others who will.

The poor, elderly and disabled have already suffered the cuts.  They understand that this is for real.  So maybe we need the crisis to hit home so (middle class) people can also understand that it is for real – this time.  

Citizens Ask For Responsible Budget

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I came across two letters-to-the-editor in today’s San Jose Mercury news, asking California’s leaders to be responsible and include revenues instead of just cutting services to the people of the state.  Here is what they wrote:

State leaders must find more money

Our California Legislature
really needs some budget advice from California’s moms and dads. If my
family was in a deep financial crisis that meant I couldn’t provide my
kids with the essentials they need, I would turn over every cushion
looking for spare change, get a weekend job, or sell things in a yard
sale. I would try almost anything to bring in more money.

While
our state leaders have said these budget cuts are agonizing for them,
they haven’t yet considered every option to avoid or lessen them. Cuts
to programs serving children, families, and the elderly could be
avoided if legislators closed corporate tax loopholes, and raised taxes
on items like tobacco and alcohol in order to raise revenue. According
to recent public opinion polls, these revenue options are overwhelmingly popular while drastic cuts to social programs are not.

I urge our leadership to step up and do right by California’s kids and families.

—–

To be responsible, state must raise cash

Our
California legislative leaders keep repeating that “all options are
being considered” in an effort to balance our state’s budget. Yet
Sacramento has said very little about options to increase revenue.
California families need our lawmakers to do better than just slash
essential programs that we all need. To be responsible, we also need to
raise revenue.

Truthfully: An 83 cent increase on tobacco taxes
is far more responsible than cutting up to a million kids off health
care coverage. And raising revenue on items such as tobacco and alcohol
is popular, while making drastic cuts to social programs is not.

Before we start slashing billions of dollars from health care and education, let us truly examine all the options.

People want their government to serve them, not just the big corporations.  Cutting services to people in order to keep taxes low on big tobacco and oil companies is a terrible way to run a state.

Did You Know About The Huge Corporate Tax CUT?

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Most Californians don’t know that there was a huge corporate tax CUT in the recent budget deal.  With this huge budget problem requiring tax increases and service cuts for the people of California, they passed a huge tax cut for large corporations.

The Working Families e-activist network sent out an email that included the following:

While Governor Schwarzenegger claims the only way to balance the budget is by slashing funding for education, health care, public safety and other vital services, a handful of large corporations are poised to receive significant tax giveaways which will wind up costing the state nearly $10 billion over the next five years.

. . . Fairness dictates that everyone shares in the pain, and that should include some of the world’s wealthiest corporations. The decision to keep tax loopholes open and make cuts instead is a conscious choice, and it’s one that legislators should be held accountable for making. Before considering additional cuts to programs Californians care so deeply about, the California Legislature needs to act now to shut down these unfair, unnecessary corporate tax giveaways. 

Send a Letter to Your Legislators to Shut Down Unfair Corporate Tax Giveaways!

Click the link and add your voice to this effort.

Schwarzenegger’s Talk Was Cheap

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Governor Schwarzenegger has talked about the need to act responsibly and pass a budget. 

So the legislature is trying to do just that.  According to the Sacramento Bee, “… 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.”

So what is the Governor’s response to a balanced approach to fixing the budget?

“Gov. Arnold Schwarzenegger said he wouldn’t sign a plan that was balanced with tax increases.”

He will shut down the state, close the schools, lay off thousands of workers, because the legislature balances the cuts with small tax increases on tobacco and oil companies.

This is known as “dancing with the ones who brung ya.”  The Republicans get elected with millions of dollars from big corporations, and that is who they answer to.  They will close schools, lay off police and firefighters, and keep elderly people from getting needed medical care or oxygen tanks delivered, just to protect the cash that is flowing to a few very large corporations.  From the referenced post,

If you look at the independent expenditure reports
for the 2008 California election you’ll see a massive amount of
last-minute money. …
you learn that this money came from corporations like Arkansas’
Wal-Mart, Blue Cross of Ohio (Ohio?), Reliant Energy, major real estate
companies, and from other PACs.

… huge amounts of money coming
from large corporations like Philip Morris, ATT, Chevron, Safeway,
Sempra Energy, Verizon, big insurance companies, big pharmaceutical
companies, big real estate companies … and other conduits like the Chamber of Commerce.

But think about this: it isn’t “corporations” who are doing this.  Corporations are just abstract concepts, really nothing more than a bundle of legal contracts and enabling laws. It is people — a few specific people.  When you hear that a corporations did something, it wasn’t Bob in Sales or Alice in Accounts Receivable who made decisions that affect your life like this, it was really a few people at the top who have control of the resources of that corporation.  The things they do are intended to benefit them personally, not to benefit the company.  This is why so many companies are destroyed while the executives get rich and then leave a mess behind.  Corporations are not the problem, it is the use of corporate resources to influence government that is the problem.

And this time, while we try to solve a budget problem that looks like it could shut down the state, it is a really big problem.