Schwarzenegger's fiscal strategy: Where's Plan B?

Sac Bee ^ | 1/14/04 | Peter Schrag - Opinion

[NormsRevenge]

The big debate about Gov. Arnold Schwarzenegger's budget cuts may become nothing but a footnote if, as seems increasingly possible, voters in March reject his monster deficit borrowing.

Given the uncertainties of the economy, the current political climate and the other big ticket and policy items on the ballot, past experience suggests that the most likely voter response is to say "no" to everything. That would be a hosing of ice water like none that California has ever confronted.

[NormsRevenge]

California.. Home of No Fault Gubamint?

Can't go bankrupt tho' its legislators policies are obviously taking the state into bankruptcy.

[forester]

Beyond that low-key campaign, however, there's that broader message about the national culture of irresponsibility -- the relentless attacks on regulation and taxes "that have no respect for the legitimate role of public investment." Those attacks are "such a powerful force. ... It has to be repelled."

When the cost of a building permit exceeds the cost of the lumber required to build the house...when the cost of getting a timber harvest permit exceeds the value of the trees to be harvested, then yes, I have no respect for the so-called "legitimate role of public investment". This State has regulated things to the point that the private sector can barely function, let alone pay for the bloated gov't bureacracy.

The only way this will change is to vote no across the board and force the issue when the State runs out of money in June. IMHO, six months or a year of un-regulated economic activity would generate enough revenue to retire the accumalated debt of former guvner Doofus...that's my plan B.

[SteveH]

I asked for Plan B here on FR and was told to shut up and support Arnold... so now what? What happens if Plan B is higher taxes?

[RebelBanker]

From what I read in other threads, Plan B seems to be Bankruptcy. Hardly an attractive option, but may well be the bitter medicine it takes to prompt fixing the real structural problems.

[SteveH]

Angelides said he'd told Schwarzenegger from the beginning that "he needs a Plan B" that includes "a reasonable revenue package" to retire the debt. Angelides, now the clearest -- and often the only -- major voice among California's leaders in challenging the governor's fiscal stratagems, ...

Sounds as if the SacBee is jumping on the Angelides 2006 bandwagon before it has even started to roll...

And a "reasonable revenue package" -- this sounds to me as if it is the latest liberal code term for a tax hike(?!)

[forester]

And a "reasonable revenue package" -- this sounds to me as if it is the latest liberal code term for a tax hike(?!)

Davis expanded the budgets of the Resource agencies (CDF, DFG, SPR, WQ etc) by over 30% during his first term. From what I understand, other branches of the State gov't were also expanded by a similiar amount. This massive expansion of the State's regulatory apparutus is what caused the so-called structural deficit we have today. That leaves two choices, either scale back the agency budgets to pre-Davis funding levels, or raise taxes.

I would add that the expansion of the State regulatory bureaucracy is also resulting in less economic activity, and thus, lower tax revenues.

[calcowgirl]

The defeat of the deficit bond would obviously throw all of the governor's budget proposals, already laced with rollovers, borrowing and other Sacramento business-as-usual gimmicks, into a cocked hat. But given the long-term debt the bond would impose on the state and the monster interest costs that come with it, its defeat might not be the unmitigated disaster that Schwarzenegger is warning us about.

Or, to put it another way, passing the bond could be a much bigger disaster than its defeat.

He's singin' my tune!

[Digger]

There's a third way. Resign Arnold & let McClintock handle the problem correctly.

[calcowgirl]

How about a one month shut-down of all state agencies?
The federal government did it a few years back when appropriations weren't passed in time (1995?). Put all state employees on furlow... and shut the doors. Somehow, I don't think anyone would even notice, and we'd save a TON of money!

[Zack Nguyen]

The complete bankruptcy of the California government may be all that can save it, long term. And it would make the other states sit up and take notice.

[calcowgirl]

Sounds as if the SacBee is jumping on the Angelides 2006 bandwagon before it has even started to roll...

Angelides took his opposition to the bonds 'on the road' in December and got limited media attention.

Angelides is right about the bonds... they are fiscally irresponsible and will weigh down the state and taxpayers for years.

Unfortunately, he is absolutely wrong that the solution is more taxes.

[cogitator]

But he's not leaving any doubts that he thinks the governor is on the wrong track -- that Schwarzenegger has proposed an "appalling budget" and that he intends to remind Californians that the disinvestment in education, infrastructure and other public assets is a huge mistake. As treasurer, he says, he'll fight for a budget "that's truly balanced," not one papering over a $14 billion structural deficit with another $8 billion in borrowing, rollovers and raids on other funds.

Sounds very similar to what Governor Warner in Virginia is saying.

[cogitator]

The federal government did it a few years back when appropriations weren't passed in time (1995?). Put all state employees on furlow... and shut the doors. Somehow, I don't think anyone would even notice, and we'd save a TON of money!

Wrong. That shutdown was cosmetic; the government has so many functions defined as "essential" that the estimate was that only about 10% of the government was eligible. And this attracted the most attention: closing national parks and museums like the Smithsonian, shutting off "help" lines for tax forms, things like that. It didn't save money, and Slick Willie made the Republicans suffer in the media for what was actually closed. (I actually drove all the way into DC to see a Vermeer exhibit that was the only thing that stayed open in the Smithsonian, as it was considered such a one-time event that they couldn't close it down and turn back all the people who had already bought entrance passes).

[calcowgirl]

Wrong. That shutdown was cosmetic; the government has so many functions defined as "essential" that the estimate was that only about 10% of the government was eligible.

I am not aware of what the percentages were, but I know many DoD civilians that I had business with were furlowed, and administrative departments literally shut down. Regardless, a shutdown of state agencies for some period of time could help to reduce the deficit caused by past spending.

[Godzilla]

"As treasurer, he says, he'll fight for a budget "that's truly balanced," not one papering over a $14 billion structural deficit with another $8 billion in borrowing, rollovers and raids on other funds."

Where was this joker when grayout was doing this for the previous six years?????

[hosepipe]

Californians LOVE taxes.. I say tax them into the poor house now.. and get it over with... then the the real conversation can start... death by a thousand cuts is whats killing Caiif... might cost your gov't job but the point would be made... Communism or Capitalism...

What do you want ?.. because its oil and water mixing them

[lewislynn]

Where's Plan B?

If you expose plan B, plan A is DOA.

[SteveH]

Agreed on both counts. (Now to stop the lemmings from jumping off the cliffs... ;-)

[goldstategop]

I believe we need budget cuts and a permanent downsizing of California state government. To make it happen, I'm planning to vote "NO" on the bonds. The State Legislature isn't serious about having government here living within its means. Its time to send the politicians in Sacramento the message the party's over.