On July 20, the governor of California and five legislative representatives from the Democratic and Republican Parties announced a tentative budget agreement that will attempt to close a $26.3 billion budget gap. On July 24, state legislators passed multiple bills based on the agreement.
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Gov. Schwarzenegger and his corporate-owned legislative counterparts insisted there be “No new taxes” to solve the budget crisis. In reality, the governor and his partners lied to the public, as the state raised fees that are technically not taxes on a wide range of services but do “tax” the lives and budgets of working and poor people.
For workers who provide state services, the governor has imposed a 15 percent pay cut in the form of three furlough days a month. This reduction in all state services, with the exception of forest fire fighting and the Highway Patrol, also means working and poor people who rely on social services provided by the state will have to wait longer for much-needed services. A California Budget Project study shows at a time when state services are being reduced there is a growing need for and reliance on such services.
In a report entitled, “Proposed Budget Cuts Come at Time of Growing Need,” the CPB documents a 13.8 percent increase in the number of people on food stamps from 2007 to 2008, an increase four times that of the previous year; 132,000 more people enrolled in Medi-Cal, a 2 percent increase from June of 2007 to June 2008, a seven-fold increase from the previous year; and a 5.8 percent increase in enrollment in Healthy Families from September 2007 to September 2008. To save $767 million, the governor and his gang have also proposed to cut subsistence benefits to people on SSI/SSP for the third time this year from $907 to $830.
Students enrolled in a California State University college will pay $2,013 in state tuition fees each semester next year, compared to $1,386 a semester in 2008, a “no new taxes” increase of 45 percent.
The big lie: ‘There is no money’
Big-business politicians insist the budget deficit is due to shrinking revenues stemming from the length and depth of the current economic depression. They acknowledge the cuts are painful, but insist they are unavoidable and everyone must share in the pain.
The politicians are lying and they know they are lying. They pretend to represent “all the people,” but in reality they manage the state government to protect the interests of the rich and the super-rich. The politicians in Sacramento are capitalist politicians, whose real job is to ensure the primacy of making a profit and to look out for the banks and corporations.
Since the onset of the current economic downturn, the discussion about “solutions” is always framed as if the pie of resources is fixed or shrinking. The only solution, according to the politicians and the media, is for everyone who needs a slice of the pie to get a smaller slice. This is a lie on two levels. One, not everyone is getting a smaller piece. Two, the size of the “pie” can grow and it does not have to be at the expense of poor and working people.
Of the first lie, if the politicians wanted to share the pain evenly, why haven’t any of the Democrats or Republicans suggested a moratorium on paying the $5.7 billion in interest to those big banks and wealthy investors that bought state bonds? That would cut the deficit by 20 percent without closing a single public clinic or enlarging classroom sizes.
Why, because they do not want to highlight the fact that the state constitution mandates that after education, the next in line to be paid are not SSI recipients or retired firefighters but bondholders like Chase Manhattan Bank and investment houses that already have received $11 trillion in federal bailouts. While Gov. Schwarzenegger was issuing his highly touted IOUs to vendors and contractors, there was no mention that the state was still making debt service payments in real hard cash.
The second lie is that the size of the pie, the state budget, has shrunk and there is no way to enlarge it. What has been shrinking has been the percentage of the state budget that comes from taxing the rich and the corporations. According to the California Budget Project, the share of corporate income taxes paid has dropped by 50 percent since 1981. If the 1981 state tax rate were in affect in 2006, the state of California would have collected an additional $8.4 billion in state revenue.
In addition, the rich have been getting richer at a pace five to ten times faster than the poor and the poorest. According to the CBP, from 1995 to 2006 the bottom 80 percent of income earners saw their income increase by about 10 percent, not even keeping pace with inflation. The top 20 percent of income earners saw their income increase by about 50 percent, with the richest 1 percent amassing an incredible 108 percent increase in income.
Make big-business pay for the crisis their system created
The budget crisis would be relatively easy to solve under a different economic system—a system not run by profit hungry corporations and their politicians. But even under capitalism, these four straightforward demands would solve the state budget crisis:
1. Tax California corporations at the 1981 rate to raise an additional $8.4 billion.
2. Double the tax on corporate profits to raise another $10 billion.
3. Increase the income tax on the richest 1 percent by 10 percent to raise another $6.8 billion.
4. Impose a moratorium on the payment of debt-services to save another $5.7 billion.
These modest remedies would also have wide appeal to tens of millions of working-class, middle-class and poor families, who are suffering from the economic crisis—the loss of jobs, homes and health care and the rising cost of living—through no fault of their own. The super-rich, whose system created the crisis, would not really suffer at all.
The billionaires, profit-driven vultures whose enormous wealth comes from the legal theft of the value created by the labor of the workers, would only “suffer” from this program in the sense that it exposes their irrational system and would cut into their piles of undeserved monies.
