Subject: [SocialistWorker.org] California budget deal punishes the poor
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http://socialistworker.org/2009/07/28/california-budget-punishes-poor
Analysis: Jerald Reodica
======== CALIFORNIA BUDGET DEAL PUNISHES THE POOR ============================
Jerald Reodica examines the injustices of the California budget agreement
worked out between Arnold Schwarzenegger and Democratic lawmakers.
July 28, 2009 | Issue 702
"PEOPLE ARE going to die." Those were the words of Michelle Rousey, chair of
the Public Authority Advisory Board for In-Home Support Services (IHSS) in
California--as the cruel details of a budget deal worked out between
Republican Gov. Arnold Schwarzenegger and the Democratic-dominated State
Assembly emerged.
California's state political leaders approved cuts totaling a staggering
$15.5 billion. From conservatives to liberals, lawmakers chose to steal
resources from programs meant to help students, infants and children, the
elderly, the disabled, the poor and the working poor--instead of raising
taxes on the state's rich and California corporations to cover the budget
shortfall.
The politicians ignored those who will bear the terrible brunt of these cuts.
For her part, Rousey was speaking for those who can't get out of their homes
and beds. With the aid of her electric wheelchair, she attended a recent
protest against budget cuts in San Francisco, where she described for the
crowd the real effects of the budget deal: Poor and working people's futures
are literally on the line.
But it was a different story in the California capitol building in
Sacramento, where there were bipartisan hugs and handshakes all around after
lawmakers gave their approval to the deal after a "grueling" 20-hour session.
"We don't know whether or not we will be back at this," said Democratic state
Senate President Pro Tem Darrell Steinberg. "We probably will, but I must
tell you, we can...find common ground more often than not."
But finding "common ground" has meant caving into Schwarzenegger's demands
for deeper spending cuts, while not raising corporate taxes and taxes on the
wealthy.
The scale of the reductions in state programs is stunning. Major cuts
include: $6.1 billion in K-14 education funds (including $700 million from
community colleges); $2.8 billion in higher education funding from the
University of California and California State University systems; $1.3
billion taken from workers' paychecks through a forced furlough program for
the next year; $1.2 billion from the corrections system; a $1.3 billion cut
in Medi-Cal, the state's version of Medicaid; $528 million from the state's
welfare program CalWORKS; $226 million from the In-Home Supportive Services
Program; and $124 million from the Healthy Families Program.
Besides cutting budgets for critical programs, the state also will grab tax
money previously slated to go to local authorities, which will lead to
further painful reductions. "If Sacramento goes forward with a proposal to
nab $1.7 billion in community redevelopment funds, Los Angeles would lose an
additional $70 million to develop projects in blighted neighborhoods," a /Los
Angeles Times/ blog noted.
And there's worse to come. About one-third of budget gap is being covered
with accounting tricks and dubious revenue-raising schemes--for example,
saving $1.2 billion in a one-time deferment of state workers' paychecks to
the next fiscal year. The effect of these schemes will be to kick the problem
down the road--and set the stage for more cuts in the future.
Plus, Schwarzenegger said he would pull out his "blue pencil" and enact
additional line-item spending cuts before signing the final legislation.
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MISSING FROM the mainstream discussion of the budget crisis is the fact that
some of the world's most profitable corporations--including Apple, Genentech,
Intel, Paramount Pictures, Walt Disney and Warner Brothers Entertainment--are
getting away scot-free. They'll be able to continue avoiding their full share
of corporate taxes by using deductions, credits and other preferential tax
treatment.
According to a California Budget Project report titled "To Have and Have
Not," both the September 2008 and February 2009 California budget agreements
created tens of millions of dollars worth of tax breaks for state
corporations. In addition, corporations can choose to be taxed solely on the
share of their sales that occur in California--some forecasts suggest this
will cost the state up to $1.5 billion a year in lost revenues.
Beyond the recent budget agreements, the crisis in California is in large
part a product of the passage of Proposition 13 in 1978, which put a cap on
property tax rates. The cap primarily benefited corporations and the rich,
because property taxes on their mansions and office parks are locked in at
the rate of 30 years ago.
In addition to lowering property taxes, the initiative requires a two-thirds
majority in both houses of the state assembly for future increases in all
state tax rates, including income tax rates. This requirement has allowed a
Republican minority in the legislature to hold the budget process
hostage--and the people of California with it.
So when it came to closing the deficit, the discussion in Sacramento was
limited to how deep to cut spending. As left-wing author Mike Davis put it in
a speech at Socialism 2009 in San Francisco:
>Here you have the governor and his gang of Republicans, and they're holding
>the people captive and threatening to shoot them one by one unless their
>demands for budget cuts and a new stage of Republican fiscal revolution
>occurs. And on the other hand, you have the leadership of the Democratic
>Party in Sacramento, [Assembly Speaker] Karen Bass and Darrell Steinberg,
>saying, "Oh no, don't shoot all the passengers, just shoot half the
>passengers."
>
Thus, in the name of bipartisanship--and saving California's credit rating
from junk bond status--legislators passed a package of laws that leave the
passengers behind.
Controller John Chiang will now be able approach Wall Street to obtain the
state's annual short-term loans with the promise that the state will stop
paying creditors with the IOUs they have been issuing since July 2. One
factor driving the budget negotiations was the ultimatum from a group of the
country's largest banks--including Bank of America, Citigroup, Wells Fargo
and JPMorgan Chase--that they would stop accepting state IOUs.
But despite the budget's passage, the state's financial woes aren't over.
According to the /Wall Street Journal/, some economists predict the budget
shortfall will swell by an additional $5 billion to $10 billion during the
fiscal year.
Now is the time to organize an opposition that not only challenges the
politicians and bureaucrats implementing these cuts, but encourages more
people to mobilize against the skewed priorities in Sacramento. A long-term
struggle can begin with organizing the newly unemployed to demand job
creation and job training programs from the state government.
A resistance that unites workers, students, seniors, the disabled and all the
victims of the budget ax can begin to put forward an alternative to the
lawmakers' negotiations over how much to cut--beginning with a very simple
demand: Tax the rich.
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