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November 17, 2003

WELCOME TO SACRAMENTO....Back in the dog days of September, here was Arnold Schwarzenegger's proposal for solving California's fiscal crisis:

Here is my plan: audit everything, open the books, and then we end the crazy deficit spending.

Well, time passed, and ending our "crazy deficit spending" eventually receded into the background. In fact, Arnold's plan these days is to continue our crazy deficit spending by passing a gigantic $20 billion bond measure next March that will get us through the following year. It's sort of an Enron-style bid to put off the bad news just a little while longer in the desperate hope that somehow things will get better before the whole scheme completely unravels and people end up in jail — or, worse, recalled.

But it turns out there's a problem: things aren't going to get better, and Arnold's bond measure doesn't solve anything. As the chart on the right shows, California has an estimated $15 billion deficit in 2004-05, but it also has the same deficit in 05-06, 06-07, 07-08, and 08-09. A bond measure solves precisely nothing.

(For all the chart geeks out there, "VLF Backfill Restoration" is lege-speak for the car tax. Since Arnold has promised to reduce it, it adds about $4 billion to the deficit, which is the part shown in pink.)

This chart comes courtesy of California legislative analyst Elizabeth Hill, who is nonpartisan, widely respected — and, as nearly as I can tell, universally ignored. But the LAO's numbers are almost certainly correct, and they're based on a reasonably optimistic view of the state economy over the next few years.

So what's going to happen? I had dinner with retired blogger Ann Salisbury and Armed Liberal on Saturday, and my (tentative) prediction was that Arnold would end up resorting to the oldest trick in the book: after being elected, he would declare that his research had shown that the problem is even worse than he imagined — probably because Gray Davis was deliberately hiding it — so he has no choice but to raise taxes.

Indeed, he seems to be preparing the ground already. Here is incoming Finance Director Donna Arduin, who was in charge of the "audit":

"We knew that this was going to be bad, but in fact it's staggering," said Arduin, a budget expert brought in from Florida by Schwarzenegger.

....After he takes office Monday, Schwarzenegger is expected to call a special session of the Legislature....Republican consultant Dan Schnur said the session appeared to have been orchestrated to prepare the public for the potentially unpopular budget solutions that Schwarzenegger would be forced to present in the coming days.

"Think of it as shock therapy," Schnur said. "This is the way you set the stage for a difficult set of proposals. The first step is to make clear how dire the situation really is."

It's obvious that we can't keep borrowing for five years, and a variety of state, federal, and judicial mandates limit how much we can cut spending. We can make some cuts, but every analysis I've seen indicates that it's legally impossible to cut $15 billion.

So that leaves one choice: raise taxes. The only question is, how long will it be before Arnold fesses up?

Today is inauguration day and the clock starts ticking at noon. Welcome to Sacramento, Arnold.

Posted by Kevin Drum at November 17, 2003 11:36 AM | TrackBack


Comments

Once he raise staxes what, exactly, about Arnold's election will be good news for conservatives?

Posted by: GT at November 17, 2003 11:40 AM | PERMALINK

He can still raise a lot of money for them. That's good news.

Posted by: Kevin Drum at November 17, 2003 11:43 AM | PERMALINK

Interesting. If he does try to raise taxes, will the Republicans in the legislature continue their obstruction, or will they relent for Arnold where they wouldn't for Gray? If the latter, I guess the cloud has a silver lining. (Hey, we get the tax increase we needed -and- we get to blame it on the new guy!)

Posted by: neil at November 17, 2003 11:45 AM | PERMALINK

Ha ha. I thought Arnold would start borrowing like a mad man
once he got into office. After all he's a Bush Republican on
fiscal matters. I disagree with your view that Arnold's going
to try to raise taxes - at last major tax increases as opposed
to meager "user fees." What I believe will happen is there's
going to big brouhaha about what taxes will be raised/spending
will be cut. Arnold will lie and weasel out of taking any
unpopular positions, the courts will come in and mandate some
cuts/taxes, and Arnold will try to blame it all on the Democrats.

Posted by: Dan the Man at November 17, 2003 11:48 AM | PERMALINK

Obviously Gray Davis was the worst of the worst of Governors. Except that Gray Davis was a good Governor and will be missed for all the film stars in Sacramento.

Posted by: Emma at November 17, 2003 11:51 AM | PERMALINK

It's just like our post-war difficulties in Iraq - who could possibly have seen this coming?

Posted by: Emma Anne at November 17, 2003 11:54 AM | PERMALINK

GT -- Once he raises taxes what, exactly, about Arnold's election will be good news for conservatives?

Are you kidding? His oh-so-Aryan looks, his money, his half-dozen deer-smackin' Humvees, his "admiration" for Hitler, his long history of drug use and sexual assault: he's the poster child for conservative America. They love him. He's exactly the kind of person they adore. He's like Rush Limbaugh with pecs. Or Charlton Heston with pecs. Or Ann Coulter with pecs.

If Orrin Hatch can patch that old rag of a Constitution to allow it, he'd be the perfect Conservative Aryan President (which is only sort of like Unfrozen Caveman Lawyer.) I can practically hear the theme song now.

Dunno, Ahnold might do just fine. I'm sure there's still some children or old people in this state we can screw over. Or maybe he'll just send out Pete Wilson to tell us that it's the fault of those damn immigants again -- them or those cheapskate Indians, whichever.

Posted by: Hunter at November 17, 2003 12:05 PM | PERMALINK

My, my, one wonders at the success of a Gray Davis (if he had survived recall) in presenting the same message to the Legislature -- a poisoned, bitter man no one likes talking to a poisoned, nasty Legislature.

Arnie might have to take the bitter medicine and get the legislature to do the same, but at a minimum he has a mandate to get something done and the gratitude of the Republican minority. And more than a few Democrats looking over their shoulders.

Since your state has made large parts of the budget untouchable (an idiocy in and of itself), there may be little recourse to some tax increase for the time being, until revenues pick up (2 -3 years). And then some restraint so that the state doesn't spend all the new revenues.

Oh, right: restraint, something neither Mr. Davis nor the Legislature practiced from 1999 to now. Even now there's no Democrat, and certainly not Kevin himself, suggesting how spending might be reined in temporarily. Having put Gov. Arnie into a box with but a single opening, the Democrats will flail him for using that opening.

Posted by: Steve White at November 17, 2003 12:06 PM | PERMALINK

By what theory of self government does it become legally impossible to cut spending 15 billion? Politically impossible or unwise, well, those may be perfectly good arguments, but to say it is legally impossible seems to say that the citizens of California do not govern themselves, which is one of the troubling aspects of unfunded mandates from Congress.

Posted by: Will Allen at November 17, 2003 12:07 PM | PERMALINK

Actually, Californians govern themselves with exuberant abandon. Part of the budget problem is the number of initiatives that were passed earmarking government funds.

Posted by: jonquil at November 17, 2003 12:10 PM | PERMALINK

Suddenly, Arnold agrees that there's just a "manageable outyear deficit," as Gray used to say . . .

Well, I guess if the libs want to start their re-recall, this might be the time. :-P

Posted by: J Mann at November 17, 2003 12:27 PM | PERMALINK

Is there some reason as to why there isn't a requirement for an independant audit before the election is called?

I mean other than the obvious fact that it would limit the promises they never intended to keep.

Posted by: Some guy named Paul at November 17, 2003 12:37 PM | PERMALINK

".. there may be little recourse to some tax increase for the time being, until revenues pick up (2 -3 years). And then some restraint so that the state doesn't spend all the new revenues."

This, of course, presupposes that there WILL be "new revenue" to spend - enough left over that is, to pay down the vast mountain of new debt that California will doubtless have to run up just to keep the present levels of spending in place.

Also: if this chart is correct, the State's current budget looks like it is set to run a SURPLUS for '03-04: or would do, except for the VLF non-revenue which puts it back in the hole again. A SURPLUS? Am I missing something?

Posted by: Jay C. at November 17, 2003 12:38 PM | PERMALINK

I will be the first person to praise Arnold if he does raise taxes. Liberals shouldn't come out and bash him saying "you promised not to raise taxes, and now look at you raising taxes, you're a bad governor." He'd be doing exactly what's needed and what we want. While it's not Davis's fault that he couldn't raise taxes, we shouldn't take out that anger on Arnold if he does come around and do the right thing.

Posted by: Backseat Blogger at November 17, 2003 12:50 PM | PERMALINK

This is funny. In Tennessee, we had a Republican governor that was drunk on money and power. He handed out billions to road builders, and allowed our TennCare program to balloon out of control on his watch, while letting schools deteriorate. He wanted an income tax, but could not justify that it was actually needed or that any serious effort had been made on spending controls. We were looking at a billion dollar deficit. His parting shot was to raise the sales tax to effectively 10% (9.75% most places with the "local option" sales tax).

We elected a Democratic governor, who pledged not to raise taxes or to implement an income tax during his first term. He promised to get control of the state budget and manage our finances. He went through the whole budget line by line with all the department heads, and demanded a 9% cut across the board.

Today, less than a year later, the state has a balanced budget and even a surplus and no new taxes. He's calling for more spending cuts in most departments. Hopefully in this next legislative session we will have a budget that is under control and manageable. Then we can look at prioritizing where we need to spend to fix some things that have been neglected, such as our education system.

So, we replace a tax and spend Republican with a fiscally conservative Democrat and our problems immediately turn around.

Maybe this would work on the national level too. And maybe we can compare and contrast California and Tennessee and talk about who the real tax and spend party is.

Posted by: skbubba at November 17, 2003 01:01 PM | PERMALINK

Steve: yes, it's the only choice, and yes, Arnold's in a box. We're not going to flail him for being in a box, we're going to flail him because he pretended the box didn't exist in order to get elected, even though he knew perfectly well that it did. And so did everyone else, Democrats and Republicans alike.

(By the way, Gray Davis *did* propose plenty of spending cuts, and Elizabeth Hill proposed about $4 billion more in her report. It's just not enough, that's all.)

Will: it's more complicated. Federal mandates are part of it, but state initiatives are another (most famously Prop 98). The initiatives could be overturned, of course, but only by another initiative, which is impossible in practical terms.

But there's more: states are not allowed to simply dissolve contracts that they've already agreed to. So, for example, if they've agree to pay prison guards a certain salary, they have to do it.

Put it all together, and upwards of 80-85% of the budget is untouchable on a year-to-year basis. There's only about $15-20 billion left, and you can't just get rid of it all.

Jay C.: we passed a huge bond issue this year to cover the deficit. However, tax revenues have turned out to be slightly better than forecast, so we'll end up with a slight surplus unless the car tax is reduced.

Posted by: Kevin Drum at November 17, 2003 01:02 PM | PERMALINK

While it's not Davis's fault that he couldn't raise taxes, we shouldn't take out that anger on Arnold if he does come around and do the right thing.

Sure we should, because he's a filthy liar. He (or at least, his team, which consists of Pete Wilson et al) knew damn well going in that merely "auditing" to discover "waste, fraud, and abuse" was going to discover exactly squat, because the budget is already open and audited (and of course, they couldn't be bothered to point out any of the specific aforementioned "waste, fraud, and abuse" during the campaign, even with the budget right in front of their faces.)

They knew damn well that they were going to have to either slash spending, or raise taxes, to politically untenable levels. So they lied through their teeth to get elected, and now -big surprise- they have to face exactly the same realities Davis had to.

Posted by: Hunter at November 17, 2003 01:11 PM | PERMALINK

If Arnold does either his bond maneuver or raises taxes, then the Democrats -- if they have any spine at all -- will immediately put together the signatures to put Arnold's removal from office on the ballot. He gets no honeymoon. The Republicans must be exposed for the craven ideological sociopaths that they are and it would be time to go all out to discipline them like they've never been disciplined before.

Posted by: cal at November 17, 2003 01:11 PM | PERMALINK

Arnie's swearing in has the red white and blue as the backdrop. Does anyone know if this is typical? I could swear we usually used the bear flag.

Posted by: Pacific John at November 17, 2003 01:42 PM | PERMALINK

I blame myself, actually.

Posted by: Kaus Hackula at November 17, 2003 01:45 PM | PERMALINK

When they submit the bond issue to the voters, I'm voting NO. I want Arnold eating the tax increase crow as fast as possible, not rolling over debt for a few years first.(*) Besides, we're a pay as you go state. The idea of bonds covering routine annual expenditures is a financial disgrace.

Side note: One possible good point is that Arnold as a Republican has more leeway in cutting our outrageous Corrections costs.

(*) As noted above-thread, so much of the state budget is earmarked, the gap can't be closed with even draconian spending cuts.

Posted by: Andrew Lazarus at November 17, 2003 02:08 PM | PERMALINK

Skbubba: the problem is that 10% just doesn't do it for us. We did cut spending last year by about 10% (if I remember the numbers right) and we still had $20 billion to go. Can we cut another 15%? Legally, I think the answer is no, and in practical terms the answer is almost certainly no as well.

Posted by: Kevin Drum at November 17, 2003 02:41 PM | PERMALINK

What California needs right now is for John Connor to come back here from the future and stop this madness.

Posted by: John Lotts Calculator at November 17, 2003 02:41 PM | PERMALINK

Greg Palast reports (scroll down) on Arnold's meeting (in 2001) with Enron's Ken lay. The question: will Arnold now obstruct the lawsuit, filed by Lt. Governor Bustamente, seeking billions of dollars in damages from Enron for the State of California?

Posted by: Ipecac at November 17, 2003 02:59 PM | PERMALINK

Yes, one of his advisors has already said, a couple weeks ago if I recall correctly, that Ahnold will be settling those energy lawsuits. For pennies on the dollar, of course.

Of course, if Bustamente has any guts -- and I think he does -- he could really raise a stink about it, and make Ahnold regret bringing it up.

Posted by: Hunter at November 17, 2003 03:39 PM | PERMALINK

Hmmm, say the Enron suit succeeds - great! Now enforce that judgment. Just how much does Enron have? Several billion sitting around, not being bled dry by cash collateral motions in Bankruptcy Court?

I hope Enron has Billions for Calif. to go after. If it does NOT, then isn't the lawsuit just a waste of money so a politician can crow about how "tough" he was? (just wondering).

Posted by: Californio at November 17, 2003 03:58 PM | PERMALINK

Most of this has been posted or is known to most Californians, but:

Prop 98 mandates a certain level of funding for K-14 education. Education, including higher education, is about 50% of the budget (41.4% + 7%). Health, welfare and social services is about 32%, and much of this is either federally mandated, or subject to a minimum level of funding or the state loses matching grants. Corrections is almost 7%, and has been swelled by the three strikes law and generous contracts with prison guards who, in turn, lobby for more prisons. The other 9.5% includes resource management and regulation, Caltrans (highways), housing etc. The contracts with state workers can be reopened only at the request of the workers, and they already have foregone raises (other than the prison guards). Another constitutional amendment limited the ability of the state to extract revenue from Indian gambling. The sad truth is that California is both the home of tax cutters and the home of service consumers. Californians have been sold a bill of goods for so long they just don't understand it all has to be paid for, and if we don't all help pay (for education, for instance, or clean air) we will simply not be able to attract and retain businesses. The California tax burden is not excessive, especially not for those who bought property 20-30 or more years ago. My feeling is you reap what you sow. I don't see why the democrats have to be the ones to agree to new taxes. Let the Republicans vote for it first. If Arnold can discredit the no-new-taxes formula more power to him, but borrowing from the future (which is what bonds do because of the hefty interest payments) is criminal.

Posted by: Mimikatz at November 17, 2003 03:58 PM | PERMALINK

CalP, I feel your pain. From my superficial understanding of what's going on out there, the state voted on some programs, then voted on propositions to limit the spending on them. Catch-22. If Arnold has the big cajones he portrays in his films, he will go back to the voters and tell them that he was wrong, there is a problem, and they have a choice. Either vote to increase taxes to pay for all that stuff, or vote to give authority back to their representative government to make the cuts in programs the voters aren't willing to pay for. Not a good position to be in either way, but as Tony Soprano says, "this is the life we've chosen."

Posted by: skbubba at November 17, 2003 04:08 PM | PERMALINK

I wish I could see a future for California as no longer having the highest WC rates, the highest UE rates and the worst credit rating out of fifty states, but while Arnold was pointing out that these frightening facts and calling for ALL *Californians* to fix these issues, regardless of political stripe (notice Arnolds Cabinet, by far the most diverse politically and every other way than ever before) the "CalPundit" was busily typing out a screed saying that Arnold might as well give up by his second day in office.
And of course the commenters, few of which are Californians I suspect and even fewer Native Californians chime in with invective and criticism
Sorry, folks, neither Democrats, Republicans or Independents are gonna fix this nightmare situation. It's just possible, that if we become what I still believe we are, the luckiest folks on Earth, Californians, we may just work our selves out of this fiasco by leaving politics out of it and resorting to good old commonsense.
You can't eat politics as someone once said, and as a truly starving state, politics is the last thing we need to put 'food' back into the treasury to squabble over later.

Kevin, with the power of being the CalPundit, has already started the political wars that if continued should make California about as desirable to live in as Lebanon.

But hey, why worry, I'm a Californian, dude, surfs up, gotta skate.

Posted by: DD at November 17, 2003 04:20 PM | PERMALINK
Kevin, with the power of being the CalPundit, has already started the political wars that if continued should make California about as desirable to live in as Lebanon.

Started?!

Posted by: WillieStyle at November 17, 2003 04:29 PM | PERMALINK
I wish I could see a future for California as no longer having the highest WC rates, the highest UE rates and the worst credit rating out of fifty states,

What's a "WC" rate? I guess a "UE" rate is an "unemployment" rate, where California is right around the National Average, and the highest are in Oregon.

Posted by: cmdicely at November 17, 2003 04:35 PM | PERMALINK

A gentle reminder, but "Arnold" cannot raise taxes. Only the voters OR 2/3 of the legislature can do that.

What he will do--and Davis never would--is seek out the fat in Government...and you must admit there is *some*--and control future spending.

Sorry for the reality check.

Posted by: BoiFromTroy at November 17, 2003 04:38 PM | PERMALINK

Kevin,

Does the chart reflect the $9 billion lawsuit against the energy companies?

Posted by: wag_the_dog at November 17, 2003 04:42 PM | PERMALINK

I think the thing that needs to be pointed out to people like DD is that Kevin did no such thing as "start" this political mess, It's been going on for quite a while, and that your new governor ran on a campaign of not proposing taxes and that all things could be solved by cutting waste, little of which cna be done. It is time for reality to come to roost.

Posted by: mattH at November 17, 2003 04:42 PM | PERMALINK

wc = workers' compensation. He thinks you spend too much on medical care and income loss for workers injured or killed on the job

Posted by: rea at November 17, 2003 04:48 PM | PERMALINK

"Cal" wrote: The Republicans must be exposed for the craven ideological sociopaths that they are and it would be time to go all out to discipline them like they've never been disciplined before.

Forgive me for noting this Cal (and I ask the others here to glance away for just a moment whilst I play with the troll), but talk like this will get you interned in one of Mr. Ashcroft's corrective labor camps. Please be more careful.

Kevin wrote: We're not going to flail him for being in a box, we're going to flail him because he pretended the box didn't exist in order to get elected, even though he knew perfectly well that it did. And so did everyone else, Democrats and Republicans alike.

Other than the fearless folks at Calpundit, of course. If you'd like an object lesson in what happens to politicans who fearlessly propose tax increases before an election, please ask Walter Mondale.

SKbubba notes the record of the current Tennessee governor. It is impressive and my hat's off to him. That is part of what California needs -- a sharp pencil and a willingness to explain to CA voters what they're paying for with these initiatives. Certainly doing this would help inoculate Arnold against any untoward effects of proposing whatever tax increase necessary to balance the books.

As Kevin himself pointed out before the elections, from about 1999 to now revenues increased ~25%, and spending increased ~40%. There's your deficit right there. One can be muscle-bound and still figure out how to fix this problem: spending has to go down, while taxes have to come up modestly.

Kevin notes the problems of initiative-based spending mandates. I'd suggest that one initiative can beget another -- perhaps it's time for an initiative to end initiatives on spending mandates.

Posted by: Steve White at November 17, 2003 04:49 PM | PERMALINK
A gentle reminder, but "Arnold" cannot raise taxes. Only the voters OR 2/3 of the legislature can do that.

What he will do--and Davis never would--is seek out the fat in Government...and you must admit there is *some*--and control future spending.

Sorry for the reality check.

Has the ever been a politician who hasn't claimed they would trim the fat from government, regardless of party? I mean, politicians who claim to be pro-waste have to be as common as those that claim to be anti-family, and pro-kicking babies.

Posted by: cmdicely at November 17, 2003 04:55 PM | PERMALINK

Sorry,rea, not think, know that WC rates are climbing to the point where the backbone of any state, it's small businesses cannot exist.
A first hand example:
A small company employing 8 glaziers with no previous claims in over ten years had the monthly rate go from 800 dollars a month to 2400 a month causing the company to fire all the employees and have them rehired and "sublet" out to the glazing company. In effect the larger company, the temp service if you will, has a larger employee base to buy discounted rates of insurance for miscellaneous employees, not trade specific employees. Also the glazing company pays an additional 50% on top of what they actually pay their employees, thus an 16$ an hour tradesmen actually costs the employer 24$ an hour. The tradesmen as a result of being employed by a temp service has no medical, no dental, no vision and no pension and few very options to contend a firing by the initial employer.
Does this make the small businessman evil, no, he HAD to do this in order to survive and he would much rather give the employee all the benefits of the 24 dollars he is paying an outside contractor.
The owner of this business is me.

Posted by: DD at November 17, 2003 05:01 PM | PERMALINK

Although I voted to recall Davis, I did not vote for Arnold, finding McClintock more credible on the budget issues. I voted to recall Davis in large part because of his conduct during the energy crisis, the dirty politics during the last campaign, the public employee giveaways, and (last straw), the illegal alien drivers' licenses. I don't regret it. Davis made his own bed.

Arnold has already said he will attempt to recoup money from the feds for immigration costs (we pay an inordinate amount of money for federal policies); he has also indicated that he's going to open that can of worms regarding which states get their tax dollars (or more) back from the feds, and which don't. California is by far the biggest loser here. Good for Arnold. Time for somebody to ask why state X gets 130% of their "contribution" back, while state Y gets 80%. I don't like being in the 80% category, especially when, as has already been mentioned, we get into the area of unfunded federal mandates. To take that one step further, I think it's time for the states to take the fed on. I'd like California to do so. Give the Supreme Court a good old states' rights issue.

With regard to immigration, I suspect folks in the rest of the country may not realize the true impact here in the highest-cost state of all. In my county (Santa Clara), a family of four making less than $60K per annum (that's right $60K) qualifies for low-income housing subsidies. Guess who pays for that? If Arnold wants to start cutting the budget, he can start there. Maybe if the rest of us don't have subsidize it the way we do, the "benefits" of uncontrolled immigration can be spread a little more equitably, i.e., to our fellow Americans in lower-cost states. Want some serious pressure on the fed? This is one way to do it. As it is now, immigration is a minor issue in most states. Maybe California can help energize the entire body politic. If he plays it right, Arnold could turn out to be a hero.

Posted by: JT at November 17, 2003 05:03 PM | PERMALINK

I understand that Calif Workers Comp is indeed one big scandal.

What I don't see is how it affects the budget deficit, since the premiums levied should be covering the (often outrageous or even totally fraudulent) claims. So while I totally support cleaning the mess up, its effect on the budget deficit is pretty secondary (presumably, a small improvement in the economy based on the reduction is cost to businesses, minus the current contributions to the economy from recipients of improper awards and fees).

Posted by: Andrew Lazarus at November 17, 2003 05:23 PM | PERMALINK

"As Kevin himself pointed out before the elections, from about 1999 to now revenues increased ~25%, and spending increased ~40%."

And before 1999 revenue increase outran spending increases, so la-de-da.

Posted by: Jason McCullough at November 17, 2003 05:27 PM | PERMALINK

Get a grip. You're ready to blame him if he raises taxes, blame him if he cuts spending and blame him if he fails to balance the budget. Logic requires that any Governor would logically have to do one of these. One of the lessons of the recall was that partisan rants like this just convince California voters sick of 'puke politics' to stop listening.

Wait till he announces what he's going to do, it won't be long, and then you're really going to have something to talk about that you don't like. The things you won't like about it the most are that it might actually work and he may manage to make his solution popular.

Posted by: JK at November 17, 2003 05:48 PM | PERMALINK


And of course the commenters, few of which are Californians I suspect and even fewer Native Californians chime in with invective and criticism

I -am- a California native, and I found Kevin's analysis, as usual, right on the money.

During the campaign, Herr Groppenfuhrer came up with very few specifics, but he basically said that (a) he would repeal the car tax increase, (b) not raise other [e.g., property] taxes, (c) not cut education, and (d) lean on the gaming tribes to kick back some dough.

Even an elementary first pass through the arithmetic showed that this was fantasy of the first water. Not even if the tribes gave up half of their vig to Sacramento would this work. Not if they gave up ninety percent.

I voted for Tom McClintock, by the way. Not because I'm a fan of his social paleoconservatism (I am a libertarian) but because I thought his was the most fiscally honest of the rightwing candidacies. McClintock also was not prepared to let these out-of-state energy pirates off of the hook as easily as Ah-nuld appears to be ready to.

I was also put off by the flood of anecdotes about Schwarzenegger's past. I don't care what people do sexually, so long as it's consenting.

These women didn't consent, and found it both obnoxious and frightening, and in at least one case, the individual being groped *voiced* that to AS in strong terms, and he -kept on coming at her-. That's right there on the border of felony sexual assault.

Criminal definitions aside, I doubt I could take Schwarzenegger in a fair fight, although I have seen a lot of intimidating-looking big guys who turned out not to be able to either take or throw a punch.

But believe me, if my wife or daughter had told me a story like that, I would have been ready to invite the guy out past his screen of bodyguards. What an arrogant jerk.

-

Posted by: marquer at November 17, 2003 06:43 PM | PERMALINK

Why do I STILL feel like one of the very few native Californians that already KNEW the budget was a HUGE crisis? I'm talking.."knew it last year"???? Does NO ONE in this state READ THE DAMN PAPERS?!

"Oh, its worse than we thought.." NO...its exactly as bad as its BEEN since SUMMER 2002!!! Which you would have KNOWN..had you paid attention to what was going on in Sacramento in Summer of 2002 rather than licking the heels of GW and his freakin march to freakin war!!!!

GEEZE!

oh, god. I feel so much better.

Posted by: misty at November 17, 2003 06:47 PM | PERMALINK

Question: How much would the sales tax have to be reaised to cover the defcit? Assuming a constant sales base.
My guess is that if taxes are raised it will be the sales tax.

Posted by: Dilbert Dogbert at November 17, 2003 07:04 PM | PERMALINK

Jason intelligently points out, And before 1999 revenue increase outran spending increases, so la-de-da.

The point, Jason, is that since 1999 the increase in state spending substantially exceeded the increase in state revenues. That's how California got its deficit. Now some of that increased spending is mandated by inflation (pretty low in this time seeing as we were sliding into a recession from 2000 on). Some of the spending is required to meet whatever new, unfunded federal mandates came along.

But a good chunk of it was due to 1) voter approved initiatives to fund this or that and 2) Gov. Davis sponsored and legislature approved increases in various programs -- e.g., increased pay for prison guards. So now California gets to pay the piper -- you either decide that all these things that got approved are worth it and thus vote higher taxes, or decide that (in balance) some things can afford to take a cut.

My own thought is a simple one: there isn't a budget around that couldn't get cut 7% and survive with its vital missions intact. Cut the state budget by 7%, line by line, point by point -- wherever you refuse to make a cut, you have to make it up elsewhere. When you're done see what the deficit is and figure out which taxes to raise. And if you did that honestly, you might find voters willing to go along.

Kevin, et al., seem to see Arnold not only as wrong, or mistaken, but evil because he didn't specify before the election what taxes he's raise. For all the accolades offered to Tom McClintock, remember how many votes he got. And it isn't like Cruz Bustamente had a sterling plan.

Sorry to break it to you grasshoppers, but very few politicans can proclaim, prior to an election, that a tax increase is vital, and then win the election. Remember Walter Mondale. As of today Arnold starts at ground zero and should be judged on that basis.

Posted by: Steve White at November 17, 2003 09:09 PM | PERMALINK

No, but they could, jeebus forbid, not blatantly lie about an action, i.e. "Raising Taxes" and tell us how it's all going to be okay, I'll just open the books and, mach schnell, it's fixed.

Now for some logic. Revenues and Spending don't come from quite the same pot. They have different sources, and thus, don't compare straight across. Revenues come from taxes, fees, bond investors, interest, federal funds. Spending goes for salaries, social services like Medi-Cal, EDD, WIC, Unemployment checks, education-which includes books, buildings, lights, janitors, whatever-roads, prisons, paper, land aquisitions, paper clips, debt and bond service, etc. Never mind defining what you mean by Revenues, the State Budget isn't a big check book.

Now, the big question. Why did spending increase so much in the past 3 years? Anyone? Okay, you, Timmy, squirming in the back row. Any thoughts?

No, didn't think so. Was all that spending on a bunch of shiny new roads? New schools? Expanded Medi-Cal benefits because more people are unable to pay for their health care? More unemployment benefits because more people are out of work? Billions of dollars to bail out the energy companies, and the rate payers because of the rigged energy market of Arnold Schwarzenegger's friend Ken Lay? Increased costs associated with "Homeland Security" because California has borders, seaports, and airports? Lost sales tax revenue from all the men and women in the Navy and Marine Corps and Coast Guard suddenly sent overseas, not to mention the National Guard men and women ripped from their productive and tax paying and sales gnerating civilian lives and sent overseas? Could it be all those unfunded mandates George Bush has been dumping on the states like "No Child Left Behind?"

Maybe its all the prisoners with their three strikes sentences, prisoners with nothing to lose since they're already "out," and those evil prison guards having to deal with those 3 strike felons?

Could that be why revenues are up 25% and spending is up 40%, because there are more things we have to spend money on?

Posted by: Duckman GR at November 17, 2003 10:32 PM | PERMALINK

Hey Steve,

Arnold is a lying piece of crap. Don't expect me to like him, believe him, or support him. You know why?

Because he does not have the interests of California in mind. He has Arnold's interests in mind.

What was one of the big complaints, from Arnold's camp, about Gray Davis? He lied about the size of the deficit. Guess what? Arnold has too, on his first freakin day in office! Pretty damn impressive, don't you think?

Didn't he say he wasn't going to raise taxes? Didn't he? A lot? Hmmnm, already making noise that direction.

Oh yeah, didn't he say something about not borrowing our way out of this mess? Oops, wrong again.

Perhaps, other than his being a tool of karl rove's, the thing I dispise about him the most is how dishonest his campaign was. No special interest money for me, he loudly proclaimed. Damn, there goes another one, or rather $12 million ones. No debate, no policy, no explanation til the very end when he was trying to deflect criticism about being a sexual harasser/predator, about what he would do to resolve the one and only issue that the recall was about, our State economy. "I'll open the books." Bullshit, they're already open. And a political hack from brother Jeb's state doesn't make it better.

Maybe I'm wrong. I've been wrong before, you know. But the fact of the matter is that Arnold is a republican, and this is as much about republican politics practiced by RoveCo, as it is about California. And because of that, and because Arnold is a lying sack and a pig to boot, I don't believe word one from him. Prove me wrong, help California, and don't help Bush, then Arnold will be, oh who am I kidding, he's a self serving, self promoting, multi-millionaire. And a republican. Screw him.

Posted by: Duckman GR at November 17, 2003 10:56 PM | PERMALINK

Kevin

Come on now, the Gray Davis 10 billion dollar bond issue is illegal as hell since the public didn't get to vote on it. "Deficit spending" in the sense that SOME kind of bond issue, whether it is 10 billion or 20 billion will have to go up on the next ballot to gain breathing room in the immediate crisis.

This fact is no surprise, since anyone who bother's to read the California Insider blog has known about this for weeks now.

I don't see why Schwarzenegger must jump immediately to some tax increase. He has the line item veto power he can cut state spending with, and enough republicans left in the legislature to sustain any veto.

Posted by: Brad at November 17, 2003 11:56 PM | PERMALINK

If Arnold raises taxes he is just trying to get in the good graces of the tax and spend Democrats who think that there is not a tax on anything that shouldn't be immediately raised.

Seriously, in reality during the campaign Walsh said this:

But earlier in the day on Thursday, Walsh told Fox News that the state's credit rating — which is barely above junk bond status now — is more important than preserving a "no new taxes" approach to governing. Walsh emphasized the campaign is "in no way, shape or form" considering tax hikes now, but was preserving its options if the state's fiscal crisis worsens.

He said Schwarzenegger's first goal is to reduce taxes on businesses to generate job growth, but that he may raise them elsewhere to balance the budget.

To say that he said categorically during the campaign that he would not raise taxes is a lie. Spin that however you want but it is not true. If he does you tax and spend liberals should be wetting your pants in joy.

And Davis was planning set up the $11 billion bond to finance the state’s accumulated deficit. The bonds were Davis's idea. Arnold is probably faced with using the plan, if it is legal, at this point in the game. Another lie.


Posted by: Dennis Slater at November 18, 2003 12:13 AM | PERMALINK

Baloney, Dennis

Still More Baloney

Even More Baloney:

"I campaigned that I will not raise taxes," said the governor-elect at his first news conference, "and I will say it again: I will not raise taxes." He has also promised to repeal California's unpopular car tax that was invented to balance the budget.

Posted by: Jadegold at November 18, 2003 05:34 AM | PERMALINK

Didn't Arnie repeal the increased car license fees? Didn't that dig the hole deeper?

Posted by: Tripp at November 18, 2003 08:25 AM | PERMALINK

A couple of questions:

1) Which party, exactly championed deregulation of Worker's Comp insurance, Deregulation of Utilities, then moved to do away with property taxes?

2) Who campaigned heavily to lock in a large chunk of the state budget for education?

It seems to me that those people have dug a very very very deep hole and Arnold jumped right into it. I pity the man, just not that much.

Posted by: Samantha at November 18, 2003 04:58 PM | PERMALINK

Baloney, Dennis

Still More Baloney

Even More Baloney:

Pass the ketchup please - I hate plain crow. I should have read more sources. Dumb and lazy of me to blindly accept only what one of them said.

Posted by: Dennis Slater at November 19, 2003 10:45 AM | PERMALINK

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