The Budget: January 2009 Archives

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? 

Over at SEIUVoice.org there is a petition to Governor Schwarzenegger asking him not to balance the budget using cuts that hurt homecare workers.  The Governor is proposing to cut state funding for In-Home Supportive Services, which helps provide crucial assistance to thousands of elderly and disabled people in California.  The proposal would reduce state funding for homecare workers to minimum wage and eliminate care.  This would cause thousands of workers to lose their health benefits.

here's the thing: it would also force many current homecare patients into nursing homes.  So in future years this would be a far greater cost to the state.

Here is the wording from the petition page:

Dear Governor Schwarzenegger-

Balancing the budget shouldn't be done on the backs of homecare workers whose hard work allows hundreds of thousands of Californians to live safely and with dignity in their own homes.  Cutting California's homecare workers to the minimum wage with drastic cuts in benefits is unacceptable.

I stand in solidarity with the homecare workers who are gathering on Saturday, January 24th in Sacramento, San Francisco and Fresno to stop the cuts.

Go to the page and sign the petition.

Society is only as strong as its weakest link, and it is the responsibility of the people and our government to protect those who are genuinely unable to care for themselves.  We are morally and duty bound to do whatever we can to assure every human being a level of basic dignity. That is what these workers provide for those whom they serve.  We are talking here about cutting this kind of care rather than, for example, asking oil companies to pay something when they take our oil out of the ground to sell back to us.  How have we gotten to this point?

"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.

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.