The following is based on a presentation at a meeting of the Party for Socialism and Liberation in San Francisco, July 10. On July 20, it was reported that California state politicians had reached an agreement on a budget compromise. When more details are available about the agreement, PSLWeb.org will respond to the California budget.
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Why are we facing this situation? Is it really because there are no resources to pay for these basic needs? No! It is because trillions of dollars are being used not to help our communities and the people most in need but to save and reward the richest banks, insurance companies and corporations that have created the worst economic crisis since the Great Depression.
Finance capitalists compounded the crisis by their wild gambling and speculation on Wall Street, but we are paying for it.
The capitalist system drives those who own the means of production, the capitalists, to hunt down greater and greater profits, and not just profits, but an ever-increasing rate of profit. This causes periodic crises, like the one we are currently experiencing. It is a crisis that threatens the profits of the capitalists, large and small. For the working class, the crisis is deeper and more dangerous, threatening jobs and the very means for survival.
As a woman who spoke on behalf of keeping the homeless shelters open in San Francisco stated at a budget-cuts community hearing June 22: “You guys [San Francisco supervisors] are hurting the health of many people. My question for you is, how are you being hurt by the budget cuts?” The answer: They are not being hurt, not really.
We should expand this question to encompass the real criminals—the members of the U.S. ruling class. If we asked the CEOs of all the major banks and corporations, or the ruling class representatives in Sacramento, the White House and Congress, “How are you personally being hurt by budget cuts, by the crisis?” An honest answer would be: not much. In fact, many are benefiting.
American International Group—the biggest insurance company in the world—has already received $182 billion from the federal government, much of which they turned over to Goldman-Sachs, Bank of America, JP Morgan Chase and other big banks that had already received hundreds of billions in federal bailouts.
The fact that the government can produce such massive amounts of bail-out monies completely dispels the claim that there is no money available for the people.
If even a small part of the money spent to rescue the rich had been used to bail out the people, the budget crisis hitting cities and states across the country could have been solved.
For example, in late June Gov. Schwarzenegger estimated that the California budget was running a $19.5 billion deficit. If only 11 percent of the $182 billion provided to AIG were given to California, the state’s budget crisis would be solved.
The real budget crisis: tax cuts for the rich
Prior to the economic crisis, the state of California covered its expenses from property taxes that soared during the housing boom, the retail sales tax, payroll taxes and personal income taxes.
The state budget was drafted with the assumption that these revenues would continue to rise. Once the housing crisis hit, the bottom fell out of the state’s fiscal planning.
To make matters worse, during the economic boom, members of the legislature voted huge tax breaks for their friends in big business. If the big businesses were paying taxes at the same rate they did 20 years ago, there would be no state budget crisis at all!
For instance, Schwarzenegger’s budget proposals for 2008-2009 and 2009-2010 include three changes to California’s corporate income tax laws that make it easier for corporations to evade income tax. Corporations already enjoy huge tax breaks on property and on income. With these additional tax breaks, the state of California will lose as much as $2.5 billion dollars in revenue.
In addition, the February 2009 budget agreement included two temporary tax cuts for motion picture production activities and for businesses that increase employment.
These measures were not put up to a vote; the hearings for these measures were not made public.
Many developers and big owners are evading property taxes. The June 16 SF Examiner has a front-page article stating that delinquent property taxes in the city now amount to $55 million, with the biggest corporations owing between $200,000 and $600,000 each.
The profits of these corporations are generated entirely by the workers employed by them. The CEOs and executives do nothing more than manage the theft of the wealth workers produce. The taxes left unpaid by the corporations, and not funneled into meeting the needs of working and poor people, are really a form of support for this theft.
Fight Back: Stop Budget Cuts!
While giving his cronies handouts, what is Gov. Schwarzenegger’s proposed “solution” to the deficit? Major cuts in education, health programs and social services!
Proposed education cuts include reducing spending for K-12 education, reducing the school year by 7.5 days and slashing K-12 home-to-school-transportation by 65 percent.
For community colleges and higher education, Schwarzenegger is eliminating Cal Grants—approximately 300,000 Californians would lose student aid that enables them to enroll in higher education. The University of California and California State University systems would see an approximate $717.5 million funding cut. As a result, fees and tuition for students will go up as colleges try to make up the difference in lost state funding.
Major cuts in health programs include the elimination of the Healthy Families Program, ending health coverage for more than 940,000 children. Schwarzenegger cuts would also include: limiting Medi-Cal benefits and eliminating certain state-only Medi-Cal programs, Medi-Cal Adult Day Health Care benefits, state funding for various community clinic programs, funding for HIV education and prevention and much more.
Major cuts in social services include the elimination of the CalWORKs Program, ending cash assistance and childcare to more than 1.1 million of the state’s most vulnerable children. The cuts include reducing grants for Supplemental Security Income and cutting the Cash Assistance Program for Immigrants, and the California Food Assistance Program. The budget cuts would also reduce funding for Child Welfare Services and funding for the Domestic Violence Program.
Here in San Francisco, we are facing the same fate as cities and counties around California. Mayor Gavin Newsom and other supervisors held a meeting June 22 to decide on budget cuts. Rather than hearing a few people from the communities supporting one or the other budget cuts, the community came out to decry all cuts and reductions in funding. The supervisors could not make a decision that night due to the huge community outcry.
Having constructed the myth that there just is no money, ruling-class propaganda pits one community against another. They would rather have us fighting each other over which social services are “saved.”
Whether it’s San Francisco, Los Angeles, Chicago, New York or any city small or large across the nation, we should join together to fight the real enemy, the ruling rich, and demand “No Cutbacks!” A united struggle of working people of all nationalities, employed and unemployed, able-bodied and disabled, young and old—can stop the cuts and win what we need.
