Posted on 05/24/2009 5:33:38 AM PDT by reaganaut1
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Like other states, California is suffering from a collapse in tax revenues brought on by the recession. Unlike other states, it suffers from severely dysfunctional politics, including gridlock-inducing budget procedures and a deeply anti-tax strain that plays itself out in endless voter referenda, dating back to the Proposition 13 property tax cap from the 1970s. As a result, Gov. Arnold Schwarzenegger declared recently that more tax increases are politically impossible. Yet, his proposed spending cuts are also unappealing, if not impossible, including slashing education and health care funds and releasing prison inmates early.
What the Obama administration should make clear is that a bias for spending cuts — and against tax increases — is the wrong approach for California and other states. Both spending cuts and tax increases are harmful in a downturn, because they reduce already weak consumer demand. But most states are required by law to balance their budgets, so when deficits emerge, they are forced to do one or the other, or both.
Contrary to conventional wisdom, raising taxes may be better than spending cuts because tax increases, especially if they are focused on wealthy taxpayers, have less of a negative impact on consumption. Spending cuts hit consumption hard, depriving the economy of money that would otherwise be spent quickly. They also have the disadvantage — so evident in the cuts proposed by Mr. Schwarzenegger — of falling heavily on the needy.
If California cannot or will not solve its problems and emergency federal aid is deemed necessary, the administration must attach strings — perhaps by limiting the ways the money can be spent. An onerous quid pro quo would send a message to other states that bailouts are not worth the hassle — that there are no pain-free ways out of this downturn.
(Excerpt) Read more at nytimes.com ...
Citizens must tell their senators and congressmen that they oppose a bailout of California, which would inevitably spread to other states, and which would be conditioned on states not cutting spending, as the NYT advocates.
taxing high income ppl have less on consumer demand? Rubbish
Lefties are under the illusion that high income people keep all the money locked up somewhere and not using it or investing it into the economy. Most ppl don’t have cash laying around. They’re either in stockmarket, assets or in bank where the bank use to invest in projects
AIG was ‘too big to fail’.
California has ‘too many democrat voters and contributors to fail’.
No bailout.... Make those legislative clowns in Sacramento step up to the plate and cut spending. Send that blow-hard Arnold packing.
The folks in Sacramento have already had enough money and they blew it on feel good, woosie-minded schemes.
Ah, caught between the rock and hard place of running out of the ability to spend other people’s money yet still being quite short of utopia. . .
If only those fool idiot voters understood that they were only a tax increase or two (or ten or twenty) away from paradise.
What’s a socialist to do?
Well, there you have it. Just tax the wealthy. I wonder why no political party has thought of that before now?
Trouble with that assumption is that CAs liberals don't care - only themselves....
....50% of California households are non-English speaking...these consume a tremendous amount of social services...California can not be saved.
The high income tax payers are leaving California by the droves. Pretty soon, the only people left will be people who pay no taxes.
Is anyone shocked that the NYT advocated spending more of the taxpayers money to bailout California? Spending and taxing are the pillars of the Democratic Socialist Party and liberalism in general. Bailouts for everyone!
They get it wrong the first line.
They are suffering from a collapse due to overspending.
Their whole basis for opinion is wrong from the start.
Both spending cuts and tax increases are harmful in a downturn, because they reduce already weak consumer demand.
Government spending does NOT stimulate the economy. Most of it goes for bureaucrats' salaries, bureaucrats who do nothing but SLOW the economy in their typical day's work. If government spending stimulates the economy (and by extending the same logic the opposite way, slows the economy), why don't we regulate economic growth with government spending instead of changing the Fed rate?
Contrary to conventional wisdom, raising taxes may be better than spending cuts because tax increases
At least the NYT, after almost 30 years, recognizes the Laffer curve.
especially if they are focused on wealthy taxpayers, have less of a negative impact on consumption.
Look how quickly they veered off into the mud and weeds. Wealthy taxpayers are the ones with the disposable income in hard times. Take more away from them, and you get less consumption during those same hard times. The NYT and all Marxists somehow think that the word "rich" exempts people from ordinary economic considerations, that they are completely and irrevocably exempt from the principle of scarcity. God what idiots.
Spending cuts hit consumption hard, depriving the economy of money that would otherwise be spent quickly.
For the eleventy hundredth time, discredited above. However, since they made it as a bald statement, I'll demand they tell me how. I plan to have it on my headstone "I'm still waiting for your explanation, NYT".
They also have the disadvantage — so evident in the cuts proposed by Mr. Schwarzenegger — of falling heavily on the needy.
NOT if you're just eliminating unneeded bureaucrats' positions. I'm sure there's probably only a handful of those in CA, but anything's got to help. YES, I'm being sarcastic. One of our fellow FReepers posted the list of CA agencies on this forum a few days ago. It was so long I almost got a headache reading through it. Many of them were redundant (surprise, surprise).
What? The voters have spoken. Obama can pound sand.
If the voters deny new taxes, then their elected reps must find a way to do so or resign.
Obama, contrary to the NYT wet dreams, is not Hitler - He cannot impose taxes.
Contrary to conventional wisdom, raising taxes may be better than spending cuts because tax increases, especially if they are focused on wealthy taxpayers, have less of a negative impact on consumption.
I was going to write outright delusional, but it occurs to me that this is actually an outright lie
The historical facts to the contrary are overwhelming. - this is simply part of their agenda for change
Bailout today. Tax and spend tomorrow. Bailout the next day. Tax and spend the day after. Soon the goose is dead. It’s called killing the goose that lays the golden eggs. Many people are unable to learn.
So being against tax increases counts as “severely dysfunctional politics”....who knew??
What is the emergency? That the imbeciles in the California Legislature can't balance the budget, and are addicted to living beyond their means? Why should I be concerned in the slightest?
This, to my mind, does not include a failure of one state to behave responsibly in its financial affairs. For the Federal government to penalize the other states for California's own serial irresponsibility would not only be unwise from a financial standpoint, but would violate the rights of their citizens. It would also establish a precedent likely in time to rend the bonds between the states, leading to disenfranchisement and much, much worse.
If the New York Times would like to bail out California, I would suggest it do so itself, rather than promoting increased taxation as a solution for profligacy. Ignoring for a moment that such taxation would prove ruinous to the state's prospects for future growth, the Times is itself nearly bankrupt, so perhaps they ought not be giving advice prior to getting their own house in order.
“tax increases, especially if they are focused on wealthy taxpayers, have less of a negative impact on consumption.”
and of course,wealthy people won’t simply change locations which they can afford to do much easier than others.Oh no,they must have piles of gold hidden in their basement that can’t be moved.
certainly nothing more or less than one expects from that rag.
of course the spending cuts they refer to are handouts. the real fear at the slimes is it may lead to reverse migration.
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