De-Mythologizing

Via OC Progressive, Assemblywoman Noreen Evans, Chair of the Budget Committee, spells out slowly for everyone the structural problems and false assertions about the California budget process. If you have non-political junkie friends who want to understand this in a quick and easy way, pass them this link.



This is a very good place to start. Evans puts the lie to three big myths about California:

1) The "runaway spending" assertion. Um, no. Population and inflation accounts for 68% of the increase. I LOVE how Evans cites the tough on crime sentencing laws as a key element of over-spending, in this case on prisons (20% of the inflation and population-adjusting spending increase). Ballot-box budgeting with no dedicated funding stream (separate from the initiatives voters stopped lawmakers from raiding yesterday, which have funding sources) also contributes to the problem. And there are the prior tax cuts like Prop. 13 and Arnold's VLF cut (which would have filled this ENTIRE current deficit). To cover for this we sell bonds and now have to pay out interest to service that debt. The problems beget more problems, and necessitate more cuts because the conservative veto resists taxes.

2) There's all these "waste" in the budget. Again, no. The Performance Review of 2004 found virtually nothing that would save the state any real money.

3) It's just all that messy partisanship from both sides. No. The Democrats have made $40 billion in cuts over the past several years. The Norquistian Yacht Party won't budget because they don't have to. Evans details the 2/3 requirement and the conservative veto, and cites Norquist himself!

Seriously, pass this to your friends. Facebook it and Twitter about it. If you internalize these concepts, the solutions are obvious - we need to restore democracy and give our elected officials a budget process and a Constitution they can actually navigate.

And while we're at it, let me debunk one other myth. The one that says all California has to do is sell San Quentin and all that surplus property and save the state. Well, the money raised from selling state property would not be able to be used to balance the budget.

Under the terms of Proposition 60A, approved by voters in November 2004, proceeds from the sale of any state surplus property can only be used to pay the interest on $15 billion in budget-balancing bonds sought by the GOP governor and approved by voters in March of the same year.

Once the bonds are paid off – the Legislative Analyst estimated at the time that cash from the sale of surplus property would speed retirement of the 30-year notes by a “few months” – sale proceeds would be deposited in the state’s reserve account for emergencies.

Oops.

FL-Sen: Crist Goes To Crazy Base Land

Charlie Crist grabbed the endorsement of the NRSC, and this incensed the insaneosphere on the right, with RedState calling for a boycott of the Senate Republican campaign arm. If the NRSC had any clout over the poltical establishment in Florida, it might be a serious endorsement. But clearly, Crist doesn't think their money and influence will be enough to help him win the primary, because he just went out and signed the Grover Norquist pledge.

In the latest development in the 2010 Florida Senate race, where moderate Republican Gov. Charlie Crist is facing a more conservative opponent in the GOP primary, former state House Speaker Marco Rubio, both candidates have signed the anti-tax pledge of Grover Norquist's Americans for Tax Reform.

In a possible move by Crist to appeal to right-wing voters and activists -- a demographic that might oppose him because of his support for the stimulus bill -- his campaign announced yesterday that he was the first candidate to sign the pledge. Rubio then signed up hours later.

He only needs to do this because Rubio would otherwise attack him hard from the right. But clearly, Crist's willingness to go as far right as possible to win the primary will only hurt him, in the same way that it hurt John McCain, in a general election in Florida. State lawmaker Dan Gelber is the progressive alternative here, and he has a primary of his own against Rep. Kendrick Meek. I'm sure both of them love watching Crist turn into a fundie neocon economic royalist right before their eyes.

Meanwhile, as Howie Klein notes, the NRSC didn't bother to offer the same support for Missouri's Roy Blunt, a member of the House leadership, declining to choose him over his primary opponents. Maybe that's because Robin Carnahan looks ready to beat all comers, and Blunt has enough corruption problems of his own to spook the national GOP.

Republicans Hate Freedom

Arlen Specter joins the obstructionist caucus on worker's rights.

Some big news emerged Tuesday in regards to the debate over the Employee Free Choice Act, with a prominent Republican strategist declaring that Sen. Arlen Specter will vote against cloture on and passage of the bill.

Americans for Tax Reform president Grover Norquist broke the news during a speech at the Capital Research Center Labor Summit, saying that Specter's chief of staff had let it be known that he would oppose the legislation, which would make it easier for unions to organize. Norquist's remarks were subsequently reported on the Twitter account of Larry Farnsworth -- the former Speechwriter and Deputy Press Secretary to Speaker Dennis Hastert -- and seconded by Dave Weigel of the Washington Independent.

It's Norquist, so wait for confirmation, but apparently Specter will make a statement available today, so let's see if that happens.

If it does, I think the Labor Department and the Justice Department need to look at what regulatory authority they have to put employers who illegally fire and intimidate workers attempting to organize in jail.

I know what I extrapolate. Republicans (and a handful of Democrats, probably) do not want to give workers the free choice to peaceably and legally assemble in support of their own rights. That's the bottom line. The working conservative majority in the Senate remains. Lots of work still to do.

...Greg Sargent confirms that Specter said this on the floor of the Senate a couple minutes ago. He had no good option, so now labor will pummel him in the general election instead of Pat Toomey pummeling him in the primary. A pummeling either way.

The Torture Of Corporate Tax Rates

So Grover Norquist associates corporate tax rates to waterboarding, which seems perfectly apt, right?

NORQUIST: The other tax cut you could do is cutting the corporate rate. The U.S. corporate rate is 35 percent; the European rate is 25 percent. Obama is a more international guy, so we should be close to the European average. We’ll stop torturing people, we’ll stop torturing corporations, and that will make us more like Europe.

Of course, he's talking about the terrible burden of the corporate tax RATE. The only burden this actually puts on corporations is that they have to hire creative accountants to get them to avoid those taxes. And they do an incredibly good job.

Most of America's largest publicly traded corporations -- including several that are receiving billions of dollars from U.S. taxpayers to finance their recovery -- have set up offshore operations that could help them avoid paying U.S. taxes on their profits, a government study released yesterday found.

American International Group, Bank of America, Citigroup and Morgan Stanley are among the companies that are getting bailed out by U.S. taxpayers while having subsidiaries in locations where they can avoid paying U.S. taxes, according to the Government Accountability Office.

Of the 100 largest public companies, 83 do business in tax-haven hotspots like the Cayman Islands, Bermuda and the British Virgin Islands, where they can move their income into tax-free accounts.

It is all legal, but it could come to an end, given the dire condition of the U.S. economy and President-elect Barack Obama's campaign pledge to close this popular business tax loophole. The Treasury estimates that it loses $100 billion a year in tax revenue as a result of companies shipping their income off shore, and congressional leaders are vowing to introduce legislation forcing big companies to pay full freight.

I would be all too happy to lower the corporate tax rate if concurrently we ended every single loophole and tax credit and mandated exactly 25 of all income, or a lesser percentage of gross sales, to flow into the US Treasury. This actually would boost revenues, because as it stands now, most US firms paid no taxes in the 1990s and two-thirds paid none from 1998 to 2005. The statistics are astounding and they have led to the United States having the second-lowest effective tax rate in the world.

But I suspect ol' Grover wouldn't like that. Because he hates America.

"This is kind of like economic patriotism," (Sen. Byron) Dorgan said. "Americans were told you have to pony up some money to help these companies. And it's rather infuriating for them to find out now that those companies, when they were profitable, didn't want to pay taxes and found clever ways to hide their money overseas."

Yes, I questioned his patriotism.

Man The Life Rafts In California

When Republican zealots went to court today to stop the "illegal" work-around budget from passage, when it hadn't even left the Governor's desk yet, I intuitively knew that he would veto it. Sure enough...

Gov. Arnold Schwarzenegger this afternoon vetoed the Democratic plan to reduce the budget deficit by $18 billion and will urge lawmakers to use his January proposal as a template for implementing midyear cuts, according to Schwarzenegger communications director Matt David.

The move forces leaders to start over in their efforts to close a budget deficit estimated at $40 billion over the next 18 months. It jettisons -- for now -- what Democrats hailed as "the only game in town" -- because it included tax increases approved without Republican votes.

Senate President Pro Tem Darrell Steinberg tells the SacBee ed. board that the Governor got cold feet:

Between Sunday night and Monday, something else occurred unrelated to the specifics of the issues. It is cold feet, you know. He met with Republican leaders on Monday morning. I think he is back in that place where he believes he can get Republican votes for revenue and therefore doesn't have to do this unorthodox majority vote thing. We have been sort of going down that road for five or six years. It hasn't resulted in a single vote.

Arnold thinks he's so AWSOM that he can convince the same people who have stomped on his stomach for 5 years to come around. Or, more likely, he didn't want to make the anti-tax zealots cross and risk a court battle. There is no chance his budget can pass - it has even more tax increases in it than the work-around budget, and a substantial portion of it is, essentially, "hope for private investment." This leads us even further down a road to ruin. Don't expect any tax refunds, folks.

What's so frustrating about this is that the answers are so ridiculously simple. Loni Hancock, the new State Senator from the Berkeley area, put this out today, and the solutions are in nice bite-sized chewable portions.

1) The 2/3rds Vote

California requires a 2/3rds vote to pass a state budget. This is not how a democracy normally functions. California is one of only three states with this 2/3rds vote requirement. Forty-seven other states, the United States Congress, and every city, county and school district in California pass budgets with a simple majority vote.

The 2/3rds vote requirement has proved fatally dysfunctional for California, making it impossible in recent years to pass budgets on time or with transparency and accountability.

2) "The Pledge"

Every Republican Legislator, except one, has signed a pledge promising never, under any circumstances, to raise taxes for the things government provides - schools, roads, parks, clean air and water, fire and police protection. Their pledge is not to their constituents, but to Grover Norquist, the founder of the Washington, D.C. based conservative organization called Americans for Tax Reform.

Grover Norquist is the Republican lobbyist who is famous for saying, "I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub." It is ironic that even though right-wing policies to deregulate, privatize, and cut taxes have been discredited at the national level and repudiated by the American people, Grover Norquist is poised to achieve his goal in California.

The $18 Billion Solution

Both the Governor and the Legislature rejected the Republican proposal as posturing, while the Democratic majority presented the Governor with an ethical and rational solution to wipe out $18 billion of the $41 billion deficit. The Democratic package raises revenue by eliminating the gas tax, replacing it with other taxes that will not hurt the finances of the average working family in California (the State Constitution allows taxes to be raised by a simple majority if the result is 'revenue neutral') and puts in place a Highway Users Fee on gasoline that can be used only for transportation infrastructure.

It works. It keeps California solvent as we address the remaining $23 billion shortfall and negotiate a budget for next year. Our mid-year solution takes $2 billion from education, not the $10 billion in cuts proposed by the Republicans. The cuts made are devastating - but the school doors stay open and California lives to fight another day.

Where is the Governor?

Governor Schwarzenegger recognizes that taxes must be raised or the state will collapse. He has called for tax increases, many of which Democrats would support - including an oil production tax (of the 22 oil producing states in the United States, only California does not have a tax on oil production of any sort) and a sales tax expansion to cover some services. However, he has been unable to get a single vote from Republican legislators, and was denounced by the California Republican Party for recognizing the need for increased revenue if the state is to survive.

Now the Governor refuses to sign the $18 billion solution crafted by the Democrats. Instead he demands concessions on labor and environmental regulations and additional cuts in grants to the poorest people in California.

We Need 3 Changes in the Budget Process

California must adopt a simple majority to pass the state budget. Let the majority party negotiate a budget and be held accountable for that budget, like the U.S. Congress and all local governments.

California should adopt a two-year budget. The second year of the budget cycle should be devoted to program oversight and any needed adjustments.

Lastly, when the budget is adopted it should contain five and ten year projections of expenses and income, so advanced planning can be done realistically.

Republicans want to pull off a neat trick - they want to destroy state government without being RESPONSIBLE for it. And California, quite frankly, has let them. We'll be feeling the consequences now. What a disaster.

The Exodus Of The Governors

With Bill Richardson and Janet Napolitano now ensconced in Barack Obama's cabinet, and with perhaps Kathleen Sebelius perhaps joining them as Secretary of Agriculture (I don't know if that will please the foodies who want a "sustainable choice"), the number of Democratic governors leaving in the middle of their second terms rises to three. That's 3 out of 28 Democratic governors, which seems to me to be a high number. From a party-building standpoint, this doesn't seem to be a great idea, particularly in Arizona, where a Republican Secretary of State will now replace Napolitano as Governor, and Kansas, where there's a conservative Republican legislature and Sebelius vetoed a lot of bad bills. However, as FMguru noted in the comments the other day, this is a bad time to be a governor. Revenues from state taxes and property taxes are way down, and budget gaps are growing. In fact, Arizona has the biggest budget deficit in the nation, at a whopping 24% of total spending. And balanced budget amendments demand that either taxes rise or services get cut. There's no way out of the mess (save for a more generous stimulus package to state and local governments than I expect) and the pain will be deeply felt. These governors are leaving at the right time for their credibility.

The question is whether the Republican governors, who are stuck at their posts, will make good choices or drown the government in the bathtub, which would have catastrophic consequences.

In the wake of a dreary election for Republicans, the quest to find their new leaders is on, and the party's governors think they can fill the void. The problem is their states are heading for budget difficulties that may compel the governors to swallow hard and either propose or accept tax increases.

And there is no better way to alienate the base of the Republican Party than to push for, or acquiesce to, tax increases.

"This is a tremendous opportunity to separate the sheep from the goats," said Grover Norquist, president of Americans for Tax Reform. "The guys who turn around and say 'I can't rein in spending, I must raise taxes'...are going to have a hard time."

It must be so easy to be a mewling child like Grover Norquist, playing to the selfish fears of his base, acting like a three year-old at the mall. This crisis will hopefully domesticate him, so that he might pee on the furniture a bit, but he won't be much of a problem anymore.

By the way, his Governors aren't listening to him anymore.

Among the states led by Republicans, Florida may have the biggest headache. Gov. Crist faces a $1.7 billion mid-fiscal-year shortfall, according to the Center on Budget and Policy Priorities. Meanwhile, tax revenue in the state, which doesn't have an income tax, plunged 8.2% in the quarter ended in September from a year earlier as sales took a hit, according to the Nelson A. Rockefeller Institute of Government. Seeking to balance the budget, Gov. Crist has said he would consider a cigarette-tax increase of 50 cents a pack.

A similar situation is playing out in Mississippi, where Gov. Haley Barbour, widely viewed as a star among Republicans, proposed a 24-cent-a-pack cigarette-tax increase and a host of other tobacco-related fees. The combined fees, if implemented, are projected to create $80 million in revenue for a state with a roughly $24 million midyear shortfall.

It's called reality, and it's hitting governors in the face. The real problem is all the balanced budget amendments, which paralyze states and force cuts at the worst possible time. But poor Grover probably was a cheerleader for them as well, so he's going to have to take the tax hikes like a good little boy.

Wherefore Republicans?

The most entertaining parlor game in the media is figuring out where Republicans go from here, because a new Administration facing major challenges at home and abroad just isn't sexy enough, I guess. And so you have some jockeying for power among the leading lights of conservatism. I was a little worried that some of them were catching on after reading this:

Rep. Eric Cantor of Virginia, poised to ascend to House Republicans' No. 2 leader this week, said the Republican Party in Washington is no longer "relevant" to voters and must stop simply espousing principles. Instead, it must craft real solutions to health care and the economy.

"Where we have really fallen down is, we have lacked the ability to be relevant to people's lives. Let's set aside the last eight years, and our falling down in living up to expectations of what we said we were going to do," Mr. Cantor told The Washington Times in his district office outside of Richmond. "It's the relevancy question."

That's pretty much right, and one could see a new Republican Party with legitimate, free-market solutions on things like health care and the environment. This is how the Tories under David Cameron, waving a green banner, are rising to prominence in England.

Fortunately, far more conservatives are focused on taking the party back into the distant past.

Lee Edwards, a historian of the conservative movement at the Heritage Foundation, said that in meetings with conservative leaders since the election there was an emerging consensus that the Republicans had been hurt by drifting away from conservative principles and that religious conservatives, economic conservatives and strong-military conservatives had seemed to realize the need to unite to regain power.

“It isn’t a question of stressing economic issues or stressing social issues,” Mr. Edwards said. “What we have to do is to go back to what Ronald Reagan did and put together a coalition.” [...]

Grover Norquist, the president of Americans for Tax Reform, scoffed at calls for the Republicans to move left, which he said had followed Republican defeats in 1964, 1976 and 1992. And he suggested that some calls to update conservatism — by taking global warming more seriously, for instance — were essentially disguised calls to move the party to the left.

“They will be cheerfully ignored,” Mr. Norquist said.

Whew!

Then there are others who don't think they have much of a problem.

Older party hands pointed to John McCain’s lackluster campaign and the difficult terrain on which Republicans found themselves battling this year, and they eschewed any sky-is-falling rhetoric. The up-and-comers, meanwhile, sounded the alarm of impending permanent minority status unless the party changes.

“I have looked down at the grave of the Republican Party, and this ain’t it,” assured Mississippi Gov. Haley Barbour, who was RNC chairman in the 1990s. “I’ve seen it a lot worse."

Thank you Haley Barbour!

There's a certain justice to this. Republicans have spent the last decade tossing out apostates and using loyalty oaths and purity tests to make their party monochromatic and completely ideological. Now when they hit hard times, OF COURSE they can't figure out the way back, because they all have the same failed ideas and principles.

I think I'm going to tune out of this "debate" for the next several months and just go back to Matt Stoller's dead-on precis.

The GOP is going to do is futz around for awhile with the fake moderate versus conservative argument and then eventually find a way to tap into the newly emergent overt racism. It may happen in 2010, and it's impossible to predict whether the issues will be framed around 'law and order' as the millions of unemployed young people inevitably do what young people do when they are bored and disempowered in a recession, or some sort of stabbed in the back narrative around Iraq or Afghanistan, or some new set of issues focused on the fallout from this very scary financial crisis. Whatever happens the party will reorganize on the internet and that's going to seem really cool and innovative and counter-intuitive except that it will be perfectly normal for a political party to reorganize using a culture's mainstream medium for organizing, which is the internet. The right already did it once, with Drudge and the Free Republic in the 1990s.

The animus for the new Republicans, though, will not be fake conservative principles like low taxes, a strong military, and family values, because Republicans like taxes on non-rich people, they like hollowing out the military, and the GOP leadership is full of sexually tortured souls. It's going to be racism, as it always has been. There, soul-searching over. And this blog post only took you five minutes to read, which is probably a bit shorter than it will take for the Republicans to find and manufacture millions of new right-wing dog whistles.

YouTube Debate Lowlights

Booman offers the best roundup of the Republican YouTube debate that I've seen. I have only seen parts of it. But as far as I can gather, it was a lightning round of immigrant-bashing, historical revisionism (public opinion lost the Vietnam War), Jesus praise (apparently, there is a religious test for office on the Republican side), and anti-tax rhetoric. It was a Wednesday, the day of Grover Norquist's weekly conservative meeting, and so I guess that's why he got to ask a question even though he has unfettered access to Republicans. I already mentioned Rudy Giuliani's stumble through questions about his taxpayer-financed booty calls. You had Mitt Romney refuse to call waterboarding torture until he consulted with an executive for Blackwater. Mike Huckabee came armed with an excellent amount of one-liners that allowed him to sidestep substantive questions. Fred Thompson made it through the whole debate without sleeping, though there was one touch and go moment where someone had to hold a piece of glass up to his nose to ensure he was still breathing. And CNN didn't exactly cover themselves in glory by failing to disclose that one of their questioners is on a steering committee for Hillary Clinton.

All in all, I'm pleased with my decision to be somewhere else last night. Anyone else have any thoughts?