California's Democratic state treasurer Phil Angelides is laying the groundwork for a gubernatorial run in 2006 by articulating constructive alternatives to Schwarzenegger's proposals. This week he assembled a high-powered panel of economists to raise warning flags about fiscal recklessness.
Governor's economic plan disputed Sacramento Bee 01/08/04
While Schwarzenegger said higher taxes would represent "the final nail in California's financial coffin," economist James K. Galbraith of the University of Texas said just the opposite would be true.
Big spending cuts would harm schools, highways and other institutions vital to the business climate, said Galbraith, son of eminent economist John Kenneth Galbraith. That "represents a longer nail in the coffin of California," he said.
The cuts could send the wrong signal to the companies Schwarzenegger vowed to lure to California, said Edward Leamer, UCLA's lead economic forecaster. "You're asking people to come invest in a state that won't invest in itself; that's a funny message," said Leamer.
... Ken Rosen of the University of California, Berkeley, disputed the contention by conservatives and some other experts that high taxes drive Californians to low-tax states. ...
Angelides repeated his opposition to Schwarzenegger's proposed $15 billion "deficit bond," saying the state shouldn't borrow money to paper over the deficit. ...
In any event, the economists said California won't generate enough growth this year to put much of a dent in the deficit.
"We will not be able to grow our way out of the state budget deficit," said Stephen Levy of Palo Alto's Center for Continuing Study of the California Economy.
5 comments:
Who are y'all trying to compete with? Alabama?
I read a few of your entries and really enjoy your journal. I've got one too. It's called, It All Started At 21, by Tamiwami21. Please read.
Bruce, here's a 10/2/2003 article from the Palm Springs Desert Sun (http://www.thedesertsun.com/news/stories2003/state/20031002033250.shtml)that would appear to contradict what Galbraith, Learner and Rosen are saying. One of my sons lives in San Francisco and is seriously considering a move to Arizona or Colorado because of the high cost of living. You're a Californian, aren't you? What's your perspective? More taxes, or cuts?
In the short run, California will have both cuts in services and increases in revenues, whether through taxes or fees. In the long run, a state growing as fast as California has to have both more services and the revenue to pay for them. The state is seriously starting to hit the wall that we've built for ourselves through a series of initiatives that mandate services but make raising the revenue to pay for them almost impossible. - Bruce
And to FDTate's question, Alabama's situation is structurally pretty similar to California's. The legislature there has up to 90% of its spending decisions mandated, the voters want to avoid higher taxes and the result is that they're facing big cuts in services that could damage the business climate and the quality of life. Even conservatives want cops on the job when their car gets stolen and firefighters to arrive before the fire reaches their house. - Bruce
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