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Hullabaloo


Sunday, May 31, 2009

 
Sacramento Syndrome

by dday

If shuttering state parks was the only thing we in California had to worry about, it would be bad enough. But that really only scratches the surface. Among the measures Arnold Schwarzenegger has proposed, with little resistance from Democrats, include:

• Eliminating the entire welfare-to-work program, CalWorks
• Eliminating the entire Healthy Families program, which is California's version of SCHIP. So the whole program that the Congress expanded early this year would be dismantled. California would be the only state in the nation without an SCHIP program.
• Eliminating the entire higher education aid grants program, Cal Grants.
• A 5% reduction in salary on top of previous 10% reductions for every single state employee.
• Eliminating funding for prescription drug help for AIDS patients.
• Education cuts that will lead to canceling all summer school programs in Los Angeles County, for example.

And that's just a portion. As the California Budget Project explains, 1.9 million Californians could lose their health care coverage as a result of these cuts. Kudos to the LA Times, by the way, for allowing the great unmentionable to get printed on their pages - the decisions made in Sacramento will truly be the difference between life and death.

Schwarzenegger argues that the state's declining economy and plummeting tax revenues have boxed California into a corner, forcing deep and historic cuts in the health and welfare programs that form the state's social safety net. Without those tough measures, he says, California will cartwheel toward insolvency.

But a 10-person legislative budget panel, which is reviewing the governor's proposals, listened during a long day in a crowded hearing room to scores of people who said their survival depends on programs set to be hit by the budget ax.

They heard from mothers of children with autism, representatives of people on dialysis, poor parents whose children see dentists on the government's dime, former drug abusers set straight by a state rehab program.

And they heard from a woman named Lynnea Garbutt who has lived with AIDS all of her 24 years.

She has survived with the help of a state program that provides the expensive antiviral drugs she takes. Now, with that program facing elimination, she pleaded with lawmakers to save it -- and her life.

"If these cuts take place, you're not just cutting money from the program -- you're cutting my life," she told the panel, her voice shaking and tears falling. "I choose to live. Please don't make me die. My choice is life."


It goes without saying that the weakest, most vulnerable, most voiceless members of society will bear the brunt of the pain from a problem created over thirty years by everyone but them. We have come to expect statements like this from Republicans:

Nearly all of the billions of dollars in cuts the administration has proposed would affect programs for poor Californians, although prisons and schools would take hits, as well.

“Government doesn’t provide services to rich people,” Mike Genest, the state’s finance director, said on a conference call with reporters on Friday. “It doesn’t even really provide services to the middle class.” He added: “You have to cut where the money is.”


In a technical sense, this is of course true. Government doesn't provide services to the rich, only handouts. In the February budget deal in California, at a time when the deficit was increasing on a daily basis, the only permanent tax solution included was a massive, $1.5 billion/year tax cut to the largest corporations in America, who now get to CHOOSE how they are taxed in California, unlike in any other state in the nation.

At issue is the new "elective sales factor," a system for determining how much tax a company should pay in the state. Up to now, California's tax system taxed corporations using a formula based on employment, property and sales in the state, sometimes know as a "triple factor" system.

Many companies have long argued that this traditional way of calculating taxes punishes companies that invest in the state and create jobs, but critics disagree. Under the new elective system, set to go into place for the 2011 tax year, companies can choose to pay under either the triple factor formula or via the "single sales factor" system, based entirely on their sales in California [...]

The most vocal critic of these changes is Lenny Goldberg, executive director of the California Tax Reform Association. He said he is opposed to single sales in the first place-but that allowing companies to choose which system they use is even worse. He said companies will now be able to report more revenue to the state in good years and move losses into the state in bad ones.

"Tax policy should be consistently applied," Goldberg said. "But we've given this elective that provides for infinite manipulation."


By the way, such a tax evasion was pushed as much as anyone by Democrats in areas with high-tech sectors. They have been clamoring for this shift in corporate tax policy for a generation, and they slid this into the budget at the last minute. And... wait for it... reversing it will require a 2/3 vote.

In the same way, Democrats who are supposedly the only hope for the voiceless, the infirm, the sick, the elderly, the poor, and the downtrodden, have been either entirely silent or entirely unhelpful in the face of these cuts. Susan Kennedy, the Democratic Chief of Staff to both Schwarzenegger and former Governor Gray Davis, has decided that "our revenue stream is way too progressive." (Incidentally, lower-income Californians pay a far higher percentage of their income in taxes than those with a higher income, so when Kennedy claims the revenue stream is too progressive, she must mean not regressive enough.) That would be expected of someone in the executive branch, but enablers like Dianne Feinstein make assumptions that the results of the special election, when voters rejected a series of program cuts, borrowing and spending caps, with only one regressive revenue-raising proposal among the lot, prove that voters wanted these kinds of cuts. This has been echoed by the legislative leadership directly after the election. As I said then:

Where is the argument for DEMOCRACY in these statements? Since 1978 that democracy has crumbled and needs to be completely rebuilt. Everyone knows this but refuses to say it out loud. This is why the legislature and the Governor have historically low approval ratings. People are starved for actual leadership and see none. Only democracy will save us. This failed experiment with conservative Two Santa Claus Theories has now become deeply destructive. Because the democrats have provided no leadership and ceded the rhetorical ground, California public opinion holds the contradictory beliefs that the state should not raise taxes and also not cut spending. And if it persists without leadership and advocacy to the contrary, nothing will change.


Here's the problem, in a nutshell. In 1978 California passed Prop. 13, and Democrats have run for cover ever since. They should have put up a fight immediately. They should have outlined the consequences of mandating a 2/3 majority for tax increases but not for program cuts, the consequences of aligning commercial property tax caps along with residential, the consequences of the supermajorities making the state ungovernable and the Constitutional mandates pushed by special interests and written in by the voters making the state unfixable. But instead, Democrats cowered in fear of losing power, despite the demographic shifts in the state since the mid-1990s, so they lay low and never advocate for the necessary reforms, and buy completely into the myth that the 70's-era tax revolt remains alive and well, and they take public opinion polls on this as static and unchangeable through anything resembling leadership. Obviously Republicans are insane in this state, but they can barely manage 1/3 of the legislature (and if we had a half-decent campaign apparatus among California Democrats they'd lose that too) and shouldn't be feared in any respect. Yet our Democratic leadership exists in a post-1978 fog, a kind of "Sacramento Syndrome," where they've come to love their captors on the right, and have bought into their claims.

These severe program cuts are nothing more than a shock doctrine being placed on the citizens of California, with the burden anything but equally shared. Sadly, there is absolutely no one with any authority willing to stand up and say no. There are organizations outside the Capitol trying to lead and engage in systemic reform. But the Democrats in Sacramento are scared to death of it - that unknowable circumstance they cannot control. So the short term will deliver nothing but pain.


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