SCROLL DOWN FOR UPDATES!
Dear Readers: Getting back to the horror that is the California economy, this Blue Dog Democrat is returning to the discussion involving my state. I wanted to coin a new term that I think sums up Jerry Brown, the Sequel: GREEN DOG DEMOCRAT.
Jerry Brown is an Oil Baron, ready to use the extremists in the California environmental bureaucracy to impose “green” rules that will ensure his family’s oil buddies profit handsomely. As we have learned from many environmentally-ruled states, “green economies” are economic failures. You can’t force technology to be cheap, effective, and preferred via rules and regulations.
Now: JERRY BROWN WANTS TO TAKE THE GREEN FROM CA CITIZENS! Shocking, but Brown’s new budget relies on tax increases that are to be voted on by Californians. The Southern California Tax Revolt Coalition plans to stay on top of any Brown tax-increasing proposal, so please check HERE regularly for updates.
W.C. Varones has an initial report: Jerry Brown wants to ask the voters to extend Schwarzenegger’s huge “temporary” tax increases for five years — while still ignoring the state’s biggest problem: out-of-control government employee pensions.
Californians may recall a similar set of tax-raising propositions were CRUSHED LIKE THE TERMINATOR in 2009. Are Californians going to be willing to vote for tax increases? Doubtful… but definitely not until the California government is serious about CUTTING SPENDING AND PENSION REFORM. Cal Watchdog has a standard that is useful to consider (and a great report detailing all the weaknesses in Brown’s proposed budget).
Moreover, a recent study by three economists found that, over the past 37 years, nations around the globe reduced debt burdens only when spending cuts were on average 85 percent of a budget solution, with tax cuts only 15 percent. Andrew Biggs, Kevin Hassett and Matt Jensen wrote:
On average, the typical unsuccessful consolidation consisted of 53% tax increases and 47% spending cuts.
By contrast, the typical successful fiscal consolidation consisted, on average, of 85% spending cuts. While tax increases play little role in successful efforts to balance budgets, there are some cases where governments reduced spending by more than was needed to lower the budget deficit, and then went on to cut taxes. Finland’s consolidation in the late 1990s consisted of 108% spending cuts, accompanied by modest tax cuts.
So, if the study is right and tax increases should be limited to about 15 percent of a deficit-reduction plan, then California’s tax increases should amount to no more than about $4 billion, with spending cuts at $22 billion.
Put another way, the 85 percent/15 percent ratio signals to investors and creditors that a government really is serious about getting its fiscal house in order, not just soaking taxpayers again for more profligate spending.
As to Brown’s actual budget, Esmael Adibi told me, “I am a little disappointed with this budget. There is nothing fundamental that was proposed.” Adibi is director of the A. Gary Anderson Center for Economic Research and Anderson Chair of Economic Analysis.
In other words: neither serious investors or informed citizens seem keen on allowing our politicians to keep getting away with business as usual.
UPDATE 1: HillBuzz had another awesomely awesome graphic today, which makes me long for a real Governor.