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Posts Tagged ‘recession’



Looming Battle: ‘Extending’ vs. ‘Increasing’ Taxes

Monday, January 17th, 2011

As we suggested Friday, one of the reasons the Howard Jarvis fetishists, union bashers and gold standard crackpots are threatening to strangle any Republican legislator who helps Gov. Jerry Brown get an extension of income, sales and vehicle taxes onto the June ballot is likely their fear that California voters just might agree to extend those taxes rather than cut further into schools, parks, prisons, public safety and health care.

And it turns out they have good reason to be afraid: a survey done by pollster Jim Moore for the California Issues Forum has found that “to avoid 20-25% deeper state budget cuts” 58% of California voters – including nearly four in 10 Republicans – would indeed support extending those taxes. And that’s after they’re spelled out as a 1-cent increase in the state sales tax, a 1% increase in state income taxes, a 1% increase in the vehicle license fee.

According to Moore’s survey of 1,000 likely voters, 74% of Democrats, 57% of independents and 37% of Republicans would support the tax extensions. (The survey asked about a four-year extension, but it’s likely that asking about a five-year extension as Brown is seeking would have made little difference.)

Interestingly, only 36% of voters – 30% of Democrats, 47% of Republicans and 21% of independents – were even aware that $8 billion in temporary tax increases were enacted in 2009. Nearly two thirds of the voters – 64% — did not know that taxes had been raised.

Even after they were told about those increases, only 14% of voters said they’d been hurt by them a great deal, while 29% said they were hurt somewhat and 44% said they were hurt very little. Another 13% had no opinion.

The underlying problem for Brown, the Democrats and others who want to solve the state’s $28 billion budget deficit with a mix of taxes and cuts, however, is this: 65% of California voters do not trust state government to spend tax money wisely. That includes 82% of Republicans, 74% of independents and even 49% of the Democrats.

On average, voters think about half the money spent by state government – 48% — is wasted. And six in 10 voters – 72% of Republicans, 65% if independents and 51% of Democrats – think the state’s budget problems result from poor planning, while only 16% blame the national economic recession.

Unless voters are convinced that Sacramento has a plan to spend money more wisely, this fundamental concern is likely to kill any chance of extending those tax increases. Brown’s straight-forward, no-bullshit, tough-love talk about the budget — particularly his proposal to shift billions in tax money and programs from the state to local government — is exactly what voters need to hear if there’s any hope of getting them to go along with extending the 2009 tax increases.

Voters – despite what some liberal pie-in-the-sky dreamers imagine – oppose “increasing taxes to help balance the state budget” 59-37%. But they support “temporarily increasing taxes to help balance the budget” by 53-44%.  Which is why the battle over maintaining  the 2009 tax increases will be a fight about how the issue is framed: as a tax increase (as the Jarvis hardliners will argue) and as a temporary extension (as the Silver Fox et. al. will contend).

Mostly, this will be a battle for the center of the political spectrum – the Democratic and Republican swing voters and the independents – who do not always support the Democratic or Republican candidate or argument.

Moore, the only pollster we know who creates a demographic of swing voters, has found that the Democratic base comprises 38% of the voters while the Republican base accounts for 28%. That leaves 19% as Democratic swing voters and 15% as Republican swing voters.

How does this affect political messaging and outcomes? Consider this question Moore asked: “Republicans often criticize Democrats for being too willing to raise taxes and unwilling to cut spending for ineffective government programs. In your opinion, is this a valid criticism of Democrats?

Overall, 58% of likely votes said it’s a valid criticism and 37% said it was not. But how does that break down? Among Democratic base voters 62% said it is not a valid criticism versus 33% who agreed it is. But 54% of Democratic swing voters, 74% of Republican swing voters and 90% of the Republican base accepted that criticism of Democrats.

By the same token, Moore also asked: “Democrats often criticize Republicans for giving tax breaks to big business and being intolerant of others’ political views. In your opinion, is this a valid criticism of Republicans?”

By 64-33% voters agree with that critique, including 83% of the Democratic base, 83% of the Democratic swing voters, 50% of the Republican swing voters but just 29% of the Republican base voters.

Or consider that by 57-43%, voters say they’d prefer “less government and lower taxes” over “slightly higher taxes for better government services.”  That formula is a winner among 87% of the Republican base voters, 77% of the Republican swing voters and 51% of the Democratic swing voters. Only Democratic base voters would prefer higher taxes and better government services by 70-30%

But when the issue is framed as “less government and lower taxes” versus “better value for the taxes you currently pay,” voters prefer better value by 72-18% That includes 91% of the Democratic base, 78% of the Democratic swing voters and 52% of the Republican swing voters. Only Republican base voters prefer lower taxes and less government and only by 53-47%.

So there you have the battle lines: One side will argue that Brown’s plan isn’t a plan at all and that it will raise taxes to keep bloated government in Sacramento. The other side will argue that Brown and the Legislature have a plan and that they’re seeking a temporary extension of current taxes in order to streamline government in Sacramento.

It’s all about whose message is more compelling and believable, whose is better framed and delivered. But first, Brown and the Legislature must come to terms on budget cuts and a plan to extricate California from the mess left behind by former Govs. Gray Davis and Arnold Schwarzenegger. Unless they can do that, the only choice will be further budget cuts.

JMM Research surveyed 1,000 likely California voters by land line and cell phone Nov. 17-Dec. 4. The expected margin of error for the survey is +/- 2.9% at the 95% confidence level.

Feds Not the Problem; They’re Part of the Solution

Tuesday, January 19th, 2010

Jean-Ross-smallBy Jean Ross
Special to Calbuzz

There’s not a lot of good news about the economy these days, either here in California nor in the nation at large. What little there is, economists largely attribute to the impact of the federal economic recovery bill – the American Recovery and Reinvestment Act of 2009 (ARRA) – enacted last February.

The nonpartisan Congressional Budget Office estimates that the infusion of federal funds boosted economic growth by 1.2 percent to 3.2 percent in the third quarter of 2009 and kept some 600,000 to 1.6 million more Americans from losing their jobs.

Here in California, the ARRA provided $8.5 billion in direct aid to the 2009-10 state budget – keeping teachers in classrooms, students in college, and families and seniors receiving needed health services. Absent these funds, lawmakers would have been forced to cut deeper or raise taxes more.

Californians will receive an estimated $13.6 billion in tax credits, $606 million in added unemployment insurance benefits and $860 million of food stamp benefits — money aimed at boosting consumer spending while helping families make ends meet. Infusion of these dollars was arguably one of the few bright spots in a year of dismal economic news.truelies

That’s why Gov. Schwarzenegger’s recent statement that Washington is “part of our budget problem” was puzzling. Lawmakers have made the argument that California hasn’t received its “fair share” of federal funds for at least two decades.  But this argument hasn’t worked yet and there’s no indication that Congress will look more kindly on this approach in 2010.

There is a better approach that makes for good economic policy and, we believe, offers much better odds of success.

The nascent economic recovery remains fragile, both here and in the nation as a whole. A number of prominent economists believe that state and local government budget cuts could drag the economy back into recession or prolong what is likely to be an anemic recovery. As we’ve argued before, California is “too big to fail.” The magnitude of our budget crisis, and the measures needed to address it, are sufficient on their own to act as a dead weight on the national economy.

The level of spending reductions needed to balance the state’s budget in the absence of continued aid is almost unfathomable. Even a balanced approach that includes additional tax revenues would require deep reductions that would cost jobs, threatening the state’s ability to compete in the global economy for decades to come and shredding a safety net for families and children that is already in tatters.

So what’s the answer? Congress should act immediately — not to provide special treatment for California, but rather to head off the possibility that state and local budget cuts across the nation will drag down an already weak economy.

BangIn terms of “bang for the buck,” federal aid to the states far surpasses additional tax cuts and is exceeded mainly by extending unemployment insurance benefits and increasing food stamp benefits, measures we’d urge Congress to consider, as well.

Federal dollars won’t provide a permanent solution to California’s structural budget shortfalls – the gaps that exist even in good economic times – but can mitigate the impact of that portion of the state’s fiscal woes attributable to the broader economic malaise.

Jean Ross is the executive director of the California Budget Project, a Sacramento-based nonpartisan policy research group. You can visit the CBP on the web at www.cbp.org and www.californiabudgetbites.org.

Arnold’s Alliterative Aspirational Adieu Address

Thursday, January 7th, 2010

stateofstate2The best commentary on Governor Schwarzmuscle’s State of the State Address came in the form of Capitol Alert’s word cloud.

Thanks to them, we know that Arnold used at least 31 words beginning with “P,” more than any other letter. For those who missed the SOS – and why wouldn’t you? – here’s the Calbuzz  15-word recap:

Pigs & pony
Persevere & prosper.
Painful priorities,
Prudent policies,
Privatized prisons,
Pension problem.
Patriotism!

The pig & pony show: Except for his opening, an endless and near-incomprehensible tortured metaphor comparing the Legislature to his household pets, the governor’s final SOS was pretty much the same as every other such address ever delivered (OCD memo:  pig and pony intro accounted for 269 of speech’s 2,947 words, or 9.1 percent). Aspirational in tone and theme, it included three mandatory elements: elevated rhetoric about the California Dream, a big heap of self-congratulation and a laundry list of legislative proposals.

The devil, to coin a phrase, is in the details, of course, so the real opening bell of this election-year session won’t come until Friday, when Arnold’s Department of Finance minions release their $20 billion deficit budget, and he runs like hell out of town.

“Every year, in spite of whatever challenges are before us,” he said in the meantime, “I stand up here and tell you how much I believe in California’s future.”

Exactly. In fact, he could have given the same speech back in 2004. Oh wait, he did.

Schwarzenegger 2010Let’s do lunch: The gov made sure to give lawmakers a little love, applauding their approval of education reform (of the small caliber variety), and of water legislation that calls for $11 billion in new bond spending (boosting the state’s annual interest payment obligation, the fastest growing item in the budget). Having invited them all to lunch at the Sutter Club, he tried not to spoil their appetites by dwelling on the unpleasant fact that they’ll once again be taking the deficit out of the hides of California’s least fortunate citizens.

“Which child do we cut? The poor one? The sick one? The uneducated one? The one with special needs?”

How about all of the above, governor?

Now there’s a thought: As for what he wants to accomplish this year, The Terminator’s best ideas were to “protect education,” whatever that means, and to put a higher priority on the UC/CSU/Community College systems than on prisons:

Thirty years ago 10 percent of the general fund went to higher education and 3 percent went to prisons. Today almost 11 percent goes to prisons and 7.5 percent goes to higher education. Spending 45 percent more on prisons than universities is no way to proceed into the future. What does it say about a state that focuses more on prison uniforms than caps and gowns? It simply is not healthy.

No duh.

Two problems with Arnold’s big, blinding insight: 1) His notion for a constitutional amendment to require this policy keeps California locked in the same old ballot box budgeting box that helped get the state in the mess it’s in; 2) why didn’t he think of this earlier?

Most of his other big ideas were based variously on lies, damn lies and statistics:

“The worst is over for the California economy.” Really?

Even if you accept the argument that the recession is technically over, the lack of real economic growth in the form of new jobs, or a decline in the state’s 12.3 percent rate of unemployment, makes the case an empty, statistical claim, as everything from retail sales to real estate is forecast to sag at least until the fourth quarter in California.

“We cannot have a robust recovery while banks are not lending,” said Bill Watkins, our favorite, hard-headed economist. “So, fixing our banks should be our first priority. Unless we do that, we’re just going to muddle along.”

The feds will pay for it. Really?

Schwarzenegger is right to bitch that the state doesn’t get our fair share of federal tax money:

When President Clinton was in office, California got back 94 cents on the dollar from the federal government. Today we get only 78 cents back…This should be more fair and equitable.

Then again, if life was fair, Calbuzz would have big biceps and six-pack abs, too.

Even if the Obama Administration decides to back a too-big-to-fail  sweetheart deal for California, the odds of Congress falling in line in an election year, particularly given growing public concern about the deficit, plus the Anybody But California attitude on Capitol Hill, are slim. Arnold surely didn’t help his case with the White House by launching a surprise attack Wednesday on Democratic health care plans as “a trough of bribes, deals and loopholes.”

The Parsky plan will save us all. Really?conan

The one true outrage in Schwarzenegger’s speech was his demand that the Legislature pass the Parsky Commission proposal for tax reform — some nasty, secretive hide-the-pig-and-pony flapdoodle to which Calbuzz devoted a fair amount of attention.

I sent you the Tax Reform Commission’s plan in late September, but it seems to have disappeared somewhere under this dome. Where is it? Maybe the pig and the pony have taken it.

Or maybe it’s a dog-ass, half-baked, secretly-concocted, serve-the-rich scheme that’s been rightly denounced from every point on the political spectrum, Conan.

Views from the grandstand: Having utterly failed to end deficits or ease gridlock, the two big promises that swept him into office, Arnold is fast running out of time to try to repair his battered image, and it’s not going to help that every candidate for governor will rightfully campaign this year by pointing to him as a fine example of what not to do.

As political scientist Sherry Bebitch Jeffe put it, in a masterpiece of tongue-biting, understated, academic self-restraint:

The best word is ‘disappointing,’ and that’s being very kind. As governor, he’s accomplished little of what he said he wanted to do.

Not so diplomatic was California League of Conservation Voters CEO Warner Chabot., whose comments suggest that environmental issues, including Arnold’s own AB32 plan to reduce greenhouse gas emissions, could prove signficant in the 2010 campaign.

The governor has proposed an outrageous plan to gut California’s landmark environmental protection law with the false hope of job creation. Under his plan, dozens of communities throughout California will lose their constitutional right to question the health and environmental impact of major development projects in their backyard. The notion that we can stimulate our economy by making it easier to pollute the air that we breathe and the water that we drink is just plain false.

Senior Senator Dianne Feinstein joined in, bitch-slapping Schwarzenegger for blaming the feds for California’s problems:

It sounds like the Governor is looking for someone else to blame for California’s budget. California’s budget crisis was created in Sacramento, not Washington. These problems are not going away until there is wholesale reform of the state’s budget process.

Even the enigmatic, not-yet-announced Democratic candidate for governor,  Attorney General Jerry Brown, took a sideways whack at Arnold’s idea to save money by privatizing prisons.

I view with suspicion efforts to take a traditional public sector responsibility, whether it’s in schools or in prisons or maybe even in community health, and turn it over to a profit-making appropriation, particularly when it involves the coercive power of the state.

As a political matter, Schwarzmuscle on Wednesday was speaking, in his Landon Parvin-penned, final State of the State address, to an audience outside the Capitol, not in it.

But with three of four Californians turning thumbs down on his performance, it’s pretty clear they’ve already stopped listening.

A Calbuzz Look Beyond the Obvious: PPIC’s Poll on the Loser Props

Friday, May 8th, 2009

Growling BearThe Public Policy Institute of California is out with a new poll and – we trust you’re sitting down, Maude – all the May 19 budget props (1A-1E) are losing. Even 1F (which blocks pay increases for state electeds in deficit years) has lost ground (though it’s still a likely winner).

Prop 1A, Governor Arnold’s Big Dog, deficit-limiting/tax-hiking/rainy-day-fund-building kitchen sink measure, is losing 52-35% among likely voters, and runs even lamer among those following the election most closely: 65% No Way Dude vs 29% Sounds Like a Great Idea.

As PPIC pollster and big kahuna Marc Baldassare put it: “The voters who are really tuned in are really turned off.”

Here’s the PPIC Prop rundown among likely voters and corresponding Field Poll results:
• Prop. 1A (Rainy Day Budget Stabilization Fund)
52% N, 35% Y, 13% DK. Field Poll: 49-40-11.
• Prop. 1B (Education Funding)
47% N, 40% Y, 13% DK. Field: 49-40-11.
• Prop. 1C (Lottery Modernization)
58% N, 32% Y, 10% DK. Field: 59-32-9.
• Prop. 1D (Children’s Services Funding)
45% N, 43% Y, 12% DK. Field: 49-40-11.
• Prop. 1E (Mental Health Funding)
48% N, 41% Y, 11% DK. Field: 51-40-9.
• Prop. 1F (Elected Officials Salaries)
73% Y, 24% N, 3% DK. Field: 71-24-5.

What you gotta’ love about PPIC is that the late Bill Hewlett’s gonzo endowment, plus lotsa cash money from the James Irvine Foundation, lets these guys poll huge samples – in this case 2,005 respondents (+/- 2%), among whom they identify 1,080 likely voters (+/- 3%). Of course, size doesn’t always matter, since there’s not much real props news here beyond the lean, mean Field Poll published April 29.

Other numbers from PPIC, however, offer some important insight into the political landscape in California: voters are in an incredibly cranky and pessimistic state of mind. Check it:

– 91% say the state is in a recession
– 76% say the state’s headed in the wrong direction.
– 75% expect bad times financially for California in the next year.
– 51% have already lost a job or are concerned that they or a family member will lose a job.

More political gloom and doom:

– 80% disapprove of the Legislature.
– 76% say the state is run by a few big interests.
– 71% say people in government waste tax money.
– 56% disapprove of the governor.
– 16% say they trust state government to do what’s right all or most of the time.

Key nuance: While state pols are basically dead to likely voters (think Al Pacino kissing Fredo in Godfather II) and only 39% approve of the “job” Congress is doing – a staggering 66% of likelies, and 72% of all adults, approve of Barack Obama’s performance as president. Hmmm . . .

The underlying message: Those leading California today are, not to put too fine a point on it, UTTERLY TONE DEAF!

Cogito, ergo sum: When 47% of adults – and 57% of Californians making less than $40K – say they’re somewhat or very concerned they may lose their job in the next year, you have to be out of your bloody mind to propose anything that even smells like a tax increase for working people.

Will some candidate for governor tap into the voters’ fear and loathing? Will 2010 be the year of soak-the-rich populism? Will class warfare be the call of the wily? Stay tuned to Calbuzz. Plenty of free parking.