Kevin Drum has been doing some sensible and accessible analysis of Proposition 57, Schwarzengger's $15 billion bond proposal. In this post, he gives a good summary of what happens if the bond doesn't pass:
But if the bond measure doesn't pass (and if the legislature's bonds get overturned in court), what can we do? Answer: we can issue more short term debt.
Now, there are indeed problems with this. The short term debt would be issued at a higher interest rate, it would put a pretty tight straitjacket on state spending, and it would have to be paid back fairly quickly.
However, it wouldn't be fiscal Armageddon. What it would be is a firm order to the legislature to raise taxes and cut spending in order to pay off the short term debt. This is what should have happened years ago, and painful as it may be, it's now obvious to me that this is still an option.
Arnold wants to have it both ways: he wants to have a tax cut and he wants a bond measure to help finance it. This is almost Kafka-esque irresponsibility and I think it's time to cut the crap. The only way to get ourselves out of the mess we're in is via both spending cuts and tax increases.
Another of his comments is also on point. Referring to a Los Angeles Times editorial that mentions as part of its argument for Prop 57 that the budget problem it addresses was obvious a year ago, he says:
But what makes them think this is going to change? Prop 57 simply provides ex post facto approval — funded by bonds! — of Arnold's tax decrease immediately upon taking office; it provides enough cushion that Democrats can once again put off thinking seriously about budget cuts for another year; and it allows Republicans to continue their insane opposition to even moderate and temporary tax increases.
2 comments:
Sounds like there are some parallels with the national budget. By the time we get a politician who's willing to put his career on the line and make some hard choices, it's going to be too late and the cuts and tax increases are going to be drastic.
Yes, there are definite parallels. In both cases, there is a heavy emphasis on delivering short-term tax cuts and protecting the most affluent from tax increases, while trying to avoid the most obviously politically damaging spending cuts in the short term. Reality catches up eventually. But both Bush and Schwarzenegger are in effect counting on it being someone else down the line that it actually catches up to. - Bruce
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