Posted on 01/23/2005 9:01:56 AM PST by SmithL
It's easy to critique Arnold Schwarzenegger's rookie year as California governor, and this space has contained its share of criticisms about errors of action and inaction.
If one were to generalize about those mistakes, it would be that he overpromised the voting public and specific interest groups, especially on fixing the deficit-saturated state budget.
It began on inauguration day 14 months ago, when his first act was to reinstate a very popular, $4 billion per year reduction in car taxes, while insisting that he could still fix the chronic budget gap. And it continued with promises to educators about school financing, and to voters about balancing the budget without deep spending cuts or tax increases.
In June, this column analyzed Schwarzenegger's problem this way:
"Despite his cigar-chomping, tough-guy image and his Terminator-like rhetoric, Schwarzenegger now comes across as someone who values popularity over effectiveness and never heard, or doesn't accept, Harry Truman's sage political advice: 'If you want a friend in Washington, get a dog.'
"Perhaps it's just that Hollywood and Sacramento are different cultures. In Hollywood, popularity is everything. If you can't get people to come to your movies, it doesn't matter how good an actor you may be. Conversely, you can be a very untalented actor, but if you can ring up box office receipts, Hollywood loves you. And Schwarzenegger loves to be loved.
(Excerpt) Read more at sacbee.com ...
I knew he was serious when I saw his administration float the proposal to reopen private prisons, and he started talking about merit pay for teachers. The teacher's and prison guard's unions are the most powerful and feared in the state, and taking them on is a sign that he's ready for a real fight. He may not be the best on the social issues, but he's starting to look like the kind of fiscal conservative we need. Time, of course, will tell.
I agree. If the Sacramento Bee is saying that Arnold is a terrific governor, watch out. A rabidly liberal paper like this would not be praising Arnold unless the fix was in and they had the full approval of the Democrats in the legislature.
So far, Arnold has been through one budget battle and did absolutely nothing to cut spending. He just took out more gigantic loans.
But he did support a plan to spend $3 billion to chop up babies for stem cells. And now they are putting the drug company profiteers on the state board.
He's a great talker. But watch what he does.
Apparently, a Republican running up the tab and borrowing to fill the gap is preferable to a Democrat doing it.
yea right...LOL
Like you said,
it's better to light a candle
than to curse the darkness.
State $6.5 Billion More In Red
Tom McClintock
Published in the Sacramento Bee - March 7, 2004
By conventional analysis, the stunning and overwhelming passage of Propositions 57 and 58 has placed California on the road to fiscal recovery.
The unprecedented $15 billion bond gives the Legislature and the administration the time they need to put the state's finances in order. The stern spending limits in Proposition 58 will give the governor added tools to restrain state spending. The stunning margin of victory greatly enhances the governor's political clout with the Legislature to win tough reforms. As those reforms take effect and the economy responds, state revenues will grow quickly to absorb the $1.5 billion in annual debt repayments that Proposition 57 will require.
On paper anyway, that's how California intends to borrow its way out of debt. But just beneath the surface festivities should lurk a high level of anxiety.
The first assumption is that the bond now gives the governor and the Legislature breathing room to make the tough and unpopular decisions necessary to straighten out their fiscal problems. But experience should warn us that tough and unpopular decisions are only made under intense political pressure produced by urgent necessity. Now that the prospect of impending insolvency has vanished and legislators' pockets are overflowing with an extra $15 billion of borrowed money - is the prospect of significant and painful reform (in an election year, no less) improved or diminished?
The second assumption is that Proposition 58 "tears up the credit cards" to assure the state never borrows to balance its budget again.
A little reminder!
The 13% Solution
Tom McClintock
As printed in the Wall Street Journal
"Have you ever had to make serious cuts – 15 percent or more – in your family budget because of an unexpected job-loss or unforeseen expense? It’s not pleasant, but it's not impossible. And it's also not permanent. As long as you’re willing to face your financial problems squarely, you can be sure that the hard times won't last forever and things will improve.
But if you're not willing to face those problems – if you paper over your debt by borrowing and continue to spend as if that debt didn’t exist -- those hard times will follow you far into the future.
State government is no different. And as the new administration decides which road it will take, it is important to understand the simple math of the state’s finances.
California’s current budget deficit is caused by two actions Davis took last year to paper over his mismanagement: he illegally tripled the car tax and he attempted to borrow $12.6 billion unconstitutionally.
Governor Schwarzenegger rescinded the illegal tax increase on his first day in office. It’s important to note the word "illegal." Not one of the conditions required to raise the car tax had been met, and it was only a matter of time before the courts ordered the money to be returned to taxpayers with interest. By acting now, he saved California from having a multi-billion dollar hole blown in a future budget by court order.
But repairing this problem requires that local governments be reimbursed for their losses. In addition, the courts have already invalidated $1.9 billion of Davis’ borrowing plan, further deepening the deficit.
According to the Legislative Analyst’s Office, these developments mean that the state will end up spending $76.9 billion this year, with only $74.2 billion in revenue.
It gets worse. The courts are also poised to strike down the additional $10.7 billion of borrowing in Davis' last budget. It is not a pleasant financial situation. But it is also not impossible.
If the current rate of state spending were reduced 13.4 percent on January 1st and frozen through Gov. Schwarzenegger's first budget, the state would be back in the black, free and clear of external debt, and able to start the Governor's second year in 2005 with a clean slate.
A 13.4 percent reduction would mean cutting $5.2 billion from this year’s budget before January 1 and setting next year's budget at $66.6 billion. That’s a big cut – and it means giving up billions of dollars of programmed spending increases next year. But it's still 15.2 percent more than California was spending when Gray Davis took office. And after 18 months of austerity, the Governor would be able to plan his second budget with $12 billion of breathing room in 2005 when revenues are projected to reach $78.6 billion.
Like a family that has faced its finances squarely and tightened its belt, California would be solidly back on its feet and looking toward a sunny future.
The alternative is to borrow the difference at heavy rates of interest over the next generation. Like a family that can’t bear to change its ways, it would end up dragging its financial difficulties into future years as it struggles to meet its current expenses and pay down a crushing credit card debt as well.
These are the two roads diverging in the budget woods and the choice that is made in coming weeks may well determine whether California has the fresh financial start it deserves, or whether the ghost of Davis' excesses stalks a generation to come."
Playoffs and McC 13% Bump
Spending still continues unabated....still in debt....the state should be bankrupt.
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