A no-new-cuts budget

EDITORIAL It’s time for Democrats in Sacramento to show some political courage. Gov. Arnold Schwarzenegger has thrown down the gauntlet, offering a budget plan that isn’t just brutal and wrong — it’s a train wreck, a catastrophe that would devastate public education, parks, and basic services in California for years to come. The Democrats need to publicly declare this dead on arrival and offer an alternative plan that closes most of the $14 billion deficit with new taxes.

The budget deficit is serious business: it represents more than 10 percent of the state budget, and, after a series of tough years that have left California in debt, it’s not going to be easy to eliminate. And we recognize that Schwarzenegger is serious about across-the-board cuts — he’s willing to eliminate 6,000 jobs from the bloated prison system and let 22,000 inmates out early. That’s long overdue, and those savings can be incorporated in any final plan.

But slicing the education budget by $4 billion is insane. We’re not just talking about government employees losing their jobs or reducing bureaucratic overhead — this is about threatening the future of a generation of California kids. Those kinds of cuts — which absolutely will translate into a loss of teachers, school closures, and the end of music, art, and science programs — aren’t just one-year measures that can be repaired later. These are deep reductions in the state’s commitment to educating children who can’t afford private schools — and those kids will suffer for years.

Closing parks, cutting social programs, and eviscerating aid to cities — which will mean another round of cuts at the local level — would do serious damage to California. And none of it is necessary.

The governor’s pledge not to raise taxes demonstrates that, for all his talk of bipartisanship, at heart he’s a George W. Bush Republican. Cutting state spending at this level as the nation heads into a recession is insane; all the governor’s plan would do is drive the economy further into the tank, destroy more jobs, and reduce tax revenue, making next year’s problem even worse.

Think about it for a second: just restoring the vehicle license fee, which is a modest tax on car ownership, would bring in more than $4 billion, enough to save public education.

The richest Californians have done very well under the Bush tax cuts. And the deficits that those tax cuts created are part of California’s budget problem. Even increasing state income taxes slightly on those very-high-wage earners would bring in as much as $3 billion, according to the California Tax Reform Association — and since the rich can deduct state taxes from their federal payments, this would ultimately be a way to transfer money from Washington DC back to California.

That state’s sales tax code is still stuck in another era, and all sorts of things defined as services don’t get taxed at all — even though, according to the CTRA, "many ‘services’ are actually the temporary use of tangible commodities, such as admission to sporting events, ski resorts, golf courses, amusement parks, gyms and concerts, and should be in the tax base." Fixing that problem would bring in another $4 billion.

In other words, a few modest changes in the tax laws that would affect only the rich and those with excess disposable income would solve the budget deficit without cutting any services at all (except prisons, which need to be cut anyway). And that’s without even addressing the regressive mess that is Proposition 13.

A revenue-based solution would also prevent a deep hit to the economy, because shifting money from the very rich (who don’t tend to spend their marginal dollars) to the poor (who tend to put every new dollar right into the economy) is always a source of economic stimulus.

The Democratic leadership knows this. Most of the rank-and-file Democrats in the State Legislature know this. It’s not rocket science. But politicians in California are terrified of raising taxes — but in 2008 they have to get over it. It’s the responsibility of the Democratic leadership to educate the public about the real choices here, the real economics, the real stakes — and the only humane, credible solutions. If they cower in fear and cave in to the governor now, it’s hard to imagine when they will ever be able to take a stand.