Tag Archives: budget

Our Businesses Thrive On The Infrastructure We Built

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The key to California’s successful business environment are education and infrastructure.  It is not an accident that our semiconductor and computer and Internet industries, and biotechnology and pharmaceutical and genetic engineering and our other world-class competitive industries
developed in California instead of in “low
tax” states like Mississippi and Alabama.  These industries thrived here because of our well-educated people and our modern, well-maintained infrastructure. 

There has been a dramatic wealth-building return on our investment in education and infrastructure.  Investors could count on California as a good place to start and grow a business, and it has paid off.

But how much would it cost if businesses had to pay fair market value for use of the infrastructure that We, the People
built?  What would it cost if companies had to pay the full education cost every time they hire someone who was educated
at a California public school or state college or university? 

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The State Of The State Is Ungovernable

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“People are asking if California is governable.”  Governor Schwarzenegger said in the State of the State address today that California faces insolvency within weeks.  He said there is more gridlock in Sacramento than on our roads, if that is possible.

The governor gave a very short speech, saying there is no sense talking about education or infrastructure or water or anything else as long as we have this huge $42 billion deficit.

But the fact remains that the state’s requirement that 2/3 budget-approval requirement means that the state is, in effect, ungovernable.   A few anti-government extremists are able to continue to block the budget, refusing to compromise or even negotiate, demanding that the state lay off tens of thousands of workers, slash medical help for the elderly, slash police protection and firefighting capability, slash funding for courts, raise class sizes to 40 or 50 students, stop repairing roads and levees and everything else the state government does.

David Greenwald writes at California Progress Report wrote, in State of the People is Grim: More Budget Cuts Are Exactly the Wrong Prescription,

“Budget cuts totaling $16 billion over the last three years have already
had severe consequences for the people of California. And the
Governor’s proposed 09-10 budget would further harm California families
and our economy with an additional $17 billion in cuts to schools,
health care, homecare, and state services.”

Leading up to the speech, David Dayen at Calitics wrote, in The State Of The State Is, Well, You Know, “Typically he has done this speech to coincide with the evening news.  This year he’s trying to hide it.”

We at Speak Out California want to invite readers to come up with some solutions for the budget mess.  We are working on some ideas for a prize for the best ideas.

The “Tax Freedom Day” Trick

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It takes a 2/3 vote to pass a budget in California. As we have seen this means any budget that does not completely meet the hard-core anti-tax, must-cut-government position of the Republicans in the legislature is voted down. Even though there is enormous public support for government – schools, roads, firefighters, etc. – they will not compromise at all. They demand that we gut the government, lay off tens of thousands of workers, or nothing. So California races toward economic ruin.
What do your taxes buy you? The average person benefits greatly from strong government. By gathering together into a community that is jointly managed (i.e. government) people can pool their resources and accomplish great things that cannot be accomplished by people who are on their own. Roads and bridges are examples of things that people cannot accomplish individually. Police, firefighters, public schools are other examples. Law and courts and a monetary system are still more. And then there are benefits like Social Security and the “safety net” of programs for people who lose jobs food programs for those of us without enough to eat.
The reason we have almost everything that we value as a society, our education and (until recently anyway) jobs, the internet, buildings that don’t easily burn down or blow away, drinkable water coming to our houses and sewage systems leaving them and (until fairly recently, anyway) a health care system that stops epidemics is our government. All of the businesses we see around us exist because of our government — a corporation cannot even exist without the government that establishes it and the legal system that maintains it.
But there are some who would personally benefit more in the absence of government than in its presence. History has taught that there are some who would organize themselves to take what others have worked to build rather than do that work themselves. One need only look at the walls built around cities in the past to understand this. There have also been organized gangs and other criminal enterprises that take rather than build, and more recently we have seen that organized predatory enterprises also find ways to victimize and prey on people. Fraud, confidence and ponzi schemes, consumer scams and all manner of trickery prey on people who are left unprotected by their community. Government is what has always protected regular people from such predators.
Government — the people banding together to guard and accomplish their interests — serves to protect people from those who would just take rather than work with the rest of us to build.
So why did Ronald Reagan famously say “government is the problem” in his first inaugural address and he loudly and repeatedly attack the idea of taxes? The foundation and strength of government is the taxes it collect. Taxes are what provide government with its strength to do all of the good things described above. This is why anti-government ideologues reason that the way to cut government (and thereby bring in its alternative) is to cut taxes. They say that if they can just cut out the foundation of government, it will fall. Or, more famously, that they can “drown it in a bathtub.”
One way that anti-government ideologues have worked to accomplish this is to turn people against their own government, tricking people into misunderstanding how taxes work and what government does for them. last week, in What Are Tax Brackets, I explained how one of these tricks works — that you only pay bracket rates taxes on income that falls in that bracket, not on all income earned up to that bracket.
Another way they turn people against taxation and government is to misrepresent how much is collected and how it is used. Exaggerated statements like, “We pay half our income in taxes” are commonly heard, along with under-representation and misrepresentation of the benefits we receive from government.
“Tax Freedom Day” is one example of this technique. Tax Freedom Day is a product of The Tax Foundation, which is funded by the very same collection of right-wing donors that fund the Heritage Foundation, Cato Institute and so many other components of the anti-government “conservative movement.”
Tax Freedom Day is widely publicized by corporate media, and usually described as being when “the average American” has earned enough income to pay their taxes. Tax Freedom Day for 2008 is April 23. To calculate Tax Freedom Day the The Tax Foundation adds up all the taxes paid to the government from all sources, but it only includes certain forms of income. It doesn’t include capital gains income, for example, yet includes capital gains taxes on the tax side of the calculation. These misleading calculations of course result in a much higher tax amount than “the average America” really pays. So while they say that 30.8% of “our” income went to pay taxes in 2008, anyone reading this who looks at their own tax bill can see that their taxes are substantially lower than this figure.
So the next time you hear about Tax Freedom Day, keep in mind who is making this claim, and why.

What Are Tax Brackets?

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In 2009 California is going to have to confront and settle a number of budget issues that we have been putting off for decades. We have been putting off so many necessary decisions — deferring maintenance of our infrastructure, pushing pain into the future by borrowing, setting aside the needs of our people by cutting school, police, fire and other budgets, and practicing almost every form of avoidance of reality that we could find. 

Well, the karma is coming back on us, all the chickens have come home to roost, we are getting what we gave and we are going to pay for our sins.  (Please leave more cliches in the comments.)

The number one budget issues that has to be confronted is taxation.

So, let’s talk taxes, beginning with the basics.  I have found that many people don’t really understand how taxes work so I want to write a bit about that here.  One reason for the lack of understanding of taxes is that there has been quite a bit of deliberate misinformation.  By confusing people, the very wealthy and corporate interests have been able to trick people into letting them avoid paying their fair share.  Instead we either take on ourselves the bulk of the burden of paying for democracy, or just borrow and put that burden on our children.

One thing that I have found many people do not quite understand is the concept of tax brackets.

Tax brackets

A “progressive” tax is one where the tax rate increases as income increases.  A progressive tax structure consists of brackets.  You pay a certain tax rate on income up to the next bracket.  After that bracket is reached, a higher tax rate applies to income that is earned that is above that amount.  Let’s say that you pay 5% on income below $10,000 and 7% on income above $10,000.  So if you make exactly $10,000 of income the tax is $500.  At $10,100 the tax is still that $500 on the amount below $10,000 and $7 on the additional $100, for a total of $507.  The key point is that only the amount in the new bracket is taxed at the higher rate.

Many people believe that once you reach a higher bracket you pay the higher tax rate on all the income that falls below that bracket amount as well.  I have actually talked to people who think they need to “get their
income into a lower bracket” to avoid paying a higher tax rate, because
they think that a higher tax rate would apply to all of the income they
earned.

Using the example of the earlier paragraph, many people believe that you would pay $707, not $507, on income of $10,100, assuming that the entire $10,100 is taxed at a 7% rate because the total income is above $10,000.  This incorrect belief is one result of anti-tax arguments.  It is also the basis of many tax-avoidance schemes.  

So, to repeat:  If you enter a higher tax bracket, you only pay the higher tax rate on the amount of income you earn that is in the new tax bracket, not on all of your income.

A California Carol

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From the Courage Campaign:

When Arnold Schwarzenegger vetoed the Democratic budget solution last week he gave a lump of coal to every Californian. His veto places the state in danger of bankruptcy as Arnold demands spending cuts and rollbacks of laws protecting workers and the environment. Arnold has become California’s own Ebenezer Scrooge.
So we thought you might enjoy this special video we put together about Arnold’s nightmare before Christmas. What do the ghosts of California past, present, and future have to say to the Governor after a year of failure? Watch the video and see!

 

Why California Can’t Pass A Budget

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Sunday’s CBS show 60 Minutes featured our own Governor Schwarzenegger!  One of the things said on the show was the following,

“The governor proposed to close that budget deficit half with tax
increases and half with budget cuts. Republicans and Democrats opposed
him.”

This is why California does not have a budget.  I don’t mean that we do not have a budget because “Republicans and Democrats” oppose the Governor, won’t compromise, won’t “meet half way,” etc. or that “Democrats won’t agree to cut spending” as most of the public is told.  I mean that we do not have a budget because the public is told that this is the reason. If the public understood the real reasons that we do not have a budget, representative government would work and the citizens would apply the necessary pressure to bring about the passage of a budget.

It is simply a fact that the reason we do not have a budget is that a small number of extremists are blocking the passage of a budget and are doing so because they can.  They have voted against every budget compromise offered. They have been able to get away with this because the public believes that both sides are refusing to compromise.  The Democrats have agreed to cuts and have moved more than half way.  The Republicans refuse to move at all.

Our news outlets are not meeting their responsibility to keep the public informed.  This failure is contributing to our state’s inability to govern itself.

And by the way, we here at Speak Out California wish you a Happy Holiday Season!

Republicans Admit Taxes Needed – Still Refuse To Allow Them

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California Republicans finally, finally submitted what they claim is a plan to attack the budget deficits, detailing specifics of the cuts they are demanding.  The plan they submitted only cuts the deficit in half, thereby admitting (but not admitting) the urgent need to raise taxes to cover the other half of the deficit.  

The Republican plan guts public schools, community colleges, Medi-Cal, transit, mental health and many other programs.  And yet it still leaves half of the deficit in place.  So it isn’t really a “plan” at all.  It is just one more extremist demand that we gut public schools.

A phrase like “guts schools and programs” becomes abstract when it is heard often enough.  So what does this mean to the average Californian?  What kind of education will children receive as we push to 40 or more students per classroom?  Will they be safe if the district cannot afford crossing guards or buses?  Will any of us be safe after police and firefighters are cut back?  Do we go another decade without improving mass transit or even repairing roads and bridges?  Will epidemics spread as health care is cut back?  What about three-hour lines at the DMV?  And what happens to people’s ability to train for jobs when community colleges are cut way back?   

The Republicans demand that we sacrifice the education of an entire generation of school-aged Californians, so that a few wealthy people and corporations can become even wealthier!  Their benefactors are covered — their kids are in $20,000-a-year private academies.  But what will this do to the economic future of the rest of this generation, and to the future of California?  They don’t care.

This process as it has unfolded over so many years has shown us that California is ungovernable until we remove the current 2/3-requirement system that allows a small group of extremists to hold the state hostage.

Stunning New Budget Demands From Republicans

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Tuesday I wrote that Republicans were demanding mass layoffs of public employees — during a recession.  And they are getting away with it because the state’s corporate-owned media outlets are not explaining to the public what is going on. 

The history of how we got to this point of budget stalemate is that Republicans in the legislature have blocked every single budget and gone back on their own Governor and every negotiated compromise, demanding that all budget shortfalls be solved by laying off teachers, construction workers, DMV workers, firefighters, etc.  And through the whole process they have refused to offer any plan for the cuts they demand.  But this is explained to the voters as a problem caused by “both sides” or “the legislature” or “refusing to work together” or to “reach a compromise” or “pointing fingers.”  Some even manage to blame the Democrats for not completely caving in to every single demand!  The result is that effective public pressure does not develop to get this solved.

Now, rather than compromise and work with the Democrats and the Governor, they have come up with a new list of demands, on top of their previous demands.  And this list is really something:

“Democrats have to capitulate to GOP demands for the 8-hour work day,
meal breaks, looser environmental regulations, permanent budget cuts
and a stiff spending cap, among other things.

Then, and only then, will Republicans come to the table to discuss — but not necessarily agree to — new taxes”

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California Republicans Demand Mass Layoffs

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How do California’s Republicans think California should solve the state’s budget crisis, which results from people being laid off and losing their houses?  They are demanding nothing less than mass layoffs of state employees. 

Every single budget compromise that has been negotiated has been rejected by the Republicans. They say there is one, and only one, budget solution they will vote for: mass layoffs of state employees and contractors.  They want the state’s teachers fired, construction employees fired, firefighters fired, DMV workers fired, medical workers fired and mass firings from the rest of the state’s departments.  And when they are done with that they demand cutbacks in medical care for the elderly, disabled, blind, and everyone else.

How are they getting away with this? 

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California’s 2/3 Requirement Hobbles Democracy

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In Santa Clara County they want to extend Bay Area Rapid Transit down to San Jose.  To fund this they put Measure B, a 1/8 cent sales tax, on the ballot.  In California all tax measures must pass by a 2/’3 margin and on Election Day the voters approved Measure B by a 2/3 margin.

That would be the end of it, except the vote was very close to exactly 2/3.  For several days it looked as though the measure would fail because it reached a few votes short of exactly 66.66% but when the last ballot was counted the result was 66.78% in favor.  So in the face of a 2/3 vote by the people, a group sued to block certification pending a recount.  Yes, with 2/3 of the public voting for this, a group sued to stop it!

My observation is that this demonstrates something important about the “anti-tax” forces in our state.  Their intent is to hobble our democracy and thwart the will of the people.  It is time for us to take back democracy and return majority vote to tax measures!   

It is nearly impossible to get 2/3 for anything, ever, in an election.  Clearly this 2/3 requirement is about hobbling democracy, not protecting rights.  The public wanted to bring BART to San Jose.  A remarkable 2/3 voted for this, yet a group sues based on the count being close to exactly 2/3.  And in our state legislature the budget process has completely broken down as a 1/3 minority blocks every budget, every compromise and every last attempt to pass sensible measures to run our state!  We are now in a “Fiscal Emergency,” cutting back our schools and laying people off during a recession.  This is exactly the opposite of what we should be doing and of what the public wants, but there is no choice because we are hobbled by rules that anti-government extremists managed to sneak past misinformed voters decades ago.

We must get rid of the 2/3 requirement.  It is time.  Democracy and good government are back in fashion so let’s get on with it!

(By the way, California’s Secretary of State ruled that the law says automatic recounts
occur when the vote count is very close to 50/50.  Since the vote count
was 2/3 the law does not apply even though the election was close. A
judge ruled Tuesday that the attempt to block Measure B came too late.