As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Wednesday, December 31, 2008

Arnold, Vacationing in Idaho, "Wants To Act Immediately"

The Schwarzenegger Administration unveiled a new budget plan today, calling for more tax hikes and increased borrowing. One notable omission from the plan was Arnold Schwarzenegger himself.

"We are facing a major crisis, probably the most challenging budget situation the state has ever faced," said Mike Genest, Schwarzenegger's finance director. "The governor believes in acting immediately."

Schwarzenegger is out of state and vacationing at the family residence in Sun Valley, Idaho.

That's some amusing juxtaposition from the Sacramento Bee.

On to the proposal, which is little more than just a warmed-over recapitulation of earlier proposals the Governor has made, with some new elements from right out of fantasyland.

That plan called for a temporary increase in the state sales tax, expanding the sales tax to cover some services, a nickel-a-drink alcohol tax, a new tax on oil production and a $12 hike on vehicle registration fees. It also called for $15.4 billion in spending cuts, including requiring state employees to take two-days-a-month unpaid furloughs through June 30, 2010 and give up two paid holidays each year.

The new elements include reducing the dependent care exemption on state income tax returns from the current $309 per dependent to $103; carrying over some of the deficit into the 2010-11 fiscal year; borrowing funds from voter-created programs that service the mentally ill and pre-kindergarten children's health services; changing the operating rules for the state lottery in an effort to make it more profitable, and borrowing $4.7 billion from the private sector.

If there's one thing the private sector is desperate to do right now, that's take it's carefully guarded cash and give it to the state with the worst bond rating in the country. They're really dying to get that done.

The real patterns we see here are familiar to all of Arnold's budget - a deep lack of concern for the most marginalized elements of society, and a hearty desire to break unions. Schwarzenegger's lowest point as a politician as maybe as a person was getting blown out in the 2005 special election. He still believes the ideas he put forward in that election were sound, and blames unions for his defeat. Thus you see Arnold going after union members' livelihoods, insisting on state employee furloughs and generally trying to roll back labor protections that this state has held for decades.

In addition, there's a recognition that this budget hole is impossible to fill without a magic angel. The proposal names that angel "private borrowing," but that's just not going to happen. The angel is going to have to be federal relief from a stimulus package. California reducing its public spending by $10-15 billion at a time when no other entity can pump money into the economy is counter-productive and deeply dangerous to any recovery. The feds are going to have to make up the gap.

Finally, a new proposal looking at the entire $40 billion dollar deficit suggests that the Governor isn't interested in going forward with the $18 billion dollar work-around budget which he has been negotiating with Democratic leaders. That would be a mistake, because of the exponential effect of continuing to do nothing in the immediate term. Then again, if he were interested in action, the Last Action Hero wouldn't be in Idaho right about now.

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