Recently in Government Budget Battles Category

The California Budget Project's Jean Ross offers this outstanding list of resolutions. Her fourth resolution responds to a budget-related idiocy which drives me particularly crazy.

Don't promise to cut taxes and balance the budget. I have the cover of an old New Yorker magazine on the wall of my office. It is a take-off of Dante's Inferno. At the center ring of hell? Politicians that promise to cut taxes and balance the budget. It's a good reminder that the impossible is, well, impossible.

You can see the New Yorker cover here. It's an Edward Sorel illustration from the April 21, 1997 issue. I lost my copy years ago, much to my chagrin.

The Center for Budget and Policy Priorities has an excellent new report explaining the causes of the federal budget deficit.

If you guessed, as some of our Tea Bag friends appear to argue, that the deficits began only on January 20, 2009, you're wrong!

The Center for Budget and Policy Priorities rightly explains how President Obama inherited the vast majority of the deficit from his predecessor:

The events and policies that have pushed deficits to astronomical levels in the near term, however, were largely outside the new Administration's control. If not for the tax cuts enacted during the Presidency of George W. Bush that Congress did not pay for, the cost of the wars in Iraq and Afghanistan that began during that period, and the effects of the worst economic slump since the Great Depression (including the cost of steps necessary to combat it), we would not be facing these huge deficits in the near term.

Again, I will not find any deficit hawk credible if he or she did not oppose the Bush tax cuts or demand that Bush find a way to pay for the wars in Iraq and Afghanistan.

If you weren't there fighting this fight under 43's misrule, when projections of over $5 trillion in surpluses were turned into trillions of red ink, I'm not really interested in listening to your blather now.

Bruce Bartlett has written another must-read column in Forbes about House Appropriations Committee Chair David Obey (D-Wisc.)'s demand that any expansion of the war in Afghanistan be paid through a tax increase and not by adding to the national debt.

Bartlett reminds us that the Bush Administration became the first in U.S. history not to ask its citizens to sacrifice to aid in a war effort. Instead, we were told to go shopping and to enjoy tax cuts that, like the wars, were funded through large increases in the national debt.

The same people who cheered on these policies have returned the balanced budget religion now that a Democrat is in the White House. Yes, it only matters when a Democrat is president. How convenient.

Wars that cannot be supported through the sacrifice of a large proportion of the American people, and not just the few families of people who volunteer for our armed forced, should not be fought. As Bartlett writes:

"If Americans aren't willing to follow John F. Kennedy and "pay any price, bear any burden, meet any hardship" to fight a war, then we shouldn't be fighting it."

Indeed. And it is well past time for the Republican supporters of these wars to be called out on their budget deficit hypocrisy. If these wars must be fought, we should pay for them -- not future generations.

Let's see them vote on this and watch these fiscal responsibility converts conveniently lose their newly found religion.

Bruce Bartlett posts a must-read column at Capital Gains and Games targeting all of those Republicans who today oppose health care reform but in 2003 voted for the Medicare prescription drug benefit as unbelievable deficit hypocrites. As Bartlett explains:

Just to be clear, the Medicare drug benefit was a pure giveaway with a gross cost greater than either the House or Senate health reform bills how being considered. Together the new bills would cost roughly $900 billion over the next 10 years, while Medicare Part D will cost $1 trillion.

Moreover, there is a critical distinction--the drug benefit had no dedicated financing, no offsets and no revenue-raisers; 100% of the cost simply added to the federal budget deficit, whereas the health reform measures now being debated will be paid for with a combination of spending cuts and tax increases, adding nothing to the deficit over the next 10 years, according to the Congressional Budget Office. (See here for the Senate bill estimate and here for the House bill.)

Maybe Franks isn't the worst hypocrite I've ever come across in Washington, but he's got to be in the top 10 because he apparently thinks the unfunded drug benefit, which added $15.5 trillion (in present value terms) to our nation's indebtedness, according to Medicare's trustees, was worth sacrificing his integrity to enact into law. But legislation expanding health coverage to the uninsured--which is deficit-neutral--somehow or other adds an unacceptable debt burden to future generations. We truly live in a world only George Orwell could comprehend when our elected representatives so easily conflate one with the other.

Where were all the tea partiers when the Republicans were holding open votes for three hours to pass the deficit-financed Medicare prescription drug benefit? Where were they when Republicans took large projected surpluses and turned them into debt (and a near depression) during the Bush Administration?

I'm sorry, but the Republican Party long ago lost any right to discuss fiscal responsibility. As Bartlett notes, real conservative objections to the expansion of government influence in health care exist: but cries of fiscal recklessness are not among them.

Do Californians realize that some senior members of the Governor's finance team were examining whether the state could become a federal territory as a reaction to the ongoing fiscal crisis? David Dayen found what he justifiably calls the "quote of the year" in a recent Wall Street Journal story about the fiscal problems facing the states:

"I looked as hard as I could at how states could declare bankruptcy," said Michael Genest, director of the California Department of Finance who is stepping down at the end of the year. "I literally looked at the federal constitution to see if there was a way for states to return to territory status."

But, but, I thought the Governor could solve all of our fiscal problems by blowing up the boxes and fighting the fraud, waste, and abuse through the use of his all-powerful blue pencil line-item veto pen?

The next time the Governor or one of his supporters argue that fraud, waste, and abuse or overspending the cause of our fiscal crisis, perhaps we could ask why the governor's team is looking at ending our statehood when he has had five years of state budgets he could blue-pencil without real fear the state legislature would override him.

The California Progress Report reprints the letter State Controller John Chiang wrote to the governor and legislative leaders on Friday to explain the state's impending cash flow crisis -- and why he needs corrective action taken by June 15.

Our latest projections show that beginning on July 29, California will not have the cash needed to meet all of its payment obligations. On that date, the State will be in the red by $317.1 million; two days later, on July 31, our cash deficit increases to a negative $1.02 billion.

As the attached chart demonstrates, the State's cash problems will only grow in severity in the subsequent months without Legislative action. The State will reach its lowest cash balance in April 2010, when we will fall short of meeting our payment obligations by nearly $22 billion.

And California's radical conservatives get closer to the date for which they have long dreamed: when they can follow Grover Norquist's dictate and drown the rest of California's safety net in a bathtub.

California State Assembly Budget Committee Chair Noreen Evans has put together an informative video that refutes some widely believed myths about the California budget. The video, and her new blog, California Budget Blog is worth your time to review.

Atrios has had a couple of posts about why he is pessimistic about the economy. For example, noting that the World Bank president fears the stimulus plans are not large enough and unemployment could lead to political unrest and states and local governments are broke, which will lead to cuts that depress the economy and remove services to people who need them during this economic crisis.

But let's continue focusing on green shoots. Yes, that's a happier story. For now.

Calitics' Brian Leubitz is right: it is not helpful to see U.S. Senator Dianne Feinstein buy into the right wing spin about the recent special election.

Especially since that analysis completely ignores what people are telling the pollsters.

...the special election voters were not a representative group of Californians. Their vote choices cannot be relied upon as accurate indicators of the fiscal preferences of all of the people. -- Mark Baldassare, president and CEO, Public Policy Institute of California

It's a lesson that Republicans at all levels of politics have placed in an ideological box and refuse to reconsider. Economist Mom, for example, makes note of this idioticeconomically partisan thought from House Minority Leader John A. Boehner (R-Ohio) about the economic stimulus package proposed by President-Elect Obama:

"I remain concerned about wasteful spending that might be attached to the tax relief. Simply put, we should not bury future generations under mountains of debt," Boehner said.

Um, Mr. Minority Leader? Those tax cuts will also add to the debt. They always do -- and often add more debt over time, because it is far more difficult to reverse a tax cut than it is to cut spending (see, for example, the $12 billion a year in taxes that have been cut in California over the past 15 years -- taxes that cannot be reversed even as the state approaches a fiscal armageddon.)

In fact, a true fiscal stimulus would not focus on tax cuts -- because they are not as economically effective as targeted spending -- something Economy.com's Mark Zandi explained.

New America Foundation's Joe Mathews recounts how then-candidate Arnold Schwarzenegger fell for the radical conservative "no taxes" line rather than pragmatic advice about the California budget crisis.

In the meeting, [Ed] Leamer was the only one to speak up and argue that it made sense to increase taxes then in 2003. The economy had recovered from recession, and the budget was badly out of balance. Leamer went further: the economy wouldn't stay strong, so borrowing and hoping the economy will grow would not be enough to pull the state out of its budget crisis. And, Leamer added, if the budget imbalance was pushed off into the future, the state might have to raise taxes later at a bad economic time. Leamer argued that Schwarzenegger should propose a package of tough spending cuts and temporary tax increases.

Instead, the Governor laid the foundation for the current budget crisis with his ill-advised decision to slash the vehicle license fee without finding an offsetting source of revenue or spending cuts. That one decision had a $8 billion annual impact on the California budget -- and added to the debt this Governor has run up on his gubernatorial credit card.

The Republican line on taxes the past two decades has always been "cut them." At the top of the business cycle and at the bottom. In times of budget surplus, and budget deficit.

But when the answer stays the same regardless of the facts of the situation, one should realize that he or she has run into an ideology and not a way to govern.

Governor Schwarzenegger really knows how to motivate people. As today's Daily Roundup explains, speaking of Schwarzenegger:

"He urged California voters to start pressuring lawmakers and use the November election as a referendum on their disappointing performance.

"'You can have the power,' the governor said. 'I alone can't do the lifting.'"

So, let's get this straight. It seems like this stalemate is turning into a push for the redistricting initiative, which will help Republicans pick up seats -- even though the governor seems to be blaming them for the budget standoff? It sort of reminds us of that old P.J. O'Rourke quote: Democrats are the ones who say government can work. Republicans are the ones who say it can't work, and keep getting elected and proving it.

I sometimes wonder if President George W. Bush realizes that he is the president of the United States of America. Not Iraq.

Anyway, his decision to "rebuff" a bipartisan call of the nation's Governors for the federal government to spend money rebuilding our aging infrastructure is just myopic. Our infrastructure needs rebuilding -- why is Rachel Maddow the only person I hear consistently raising this issue?

Anyway, Robert Pear's story in the New York Times does also do us the service of revealing -- again -- where President Bush's priorities are:

Brian G. Turmail, a spokesman for the Transportation Department, said highway spending was not an effective way to stimulate the economy because “it takes too long to get the money into projects.”

Rather than asking for an increase in federal highway spending, Mr. Turmail said, governors should seek additional money from the private sector, including pension funds and investment banking concerns.

Yes. Don't come to the government for your investment needs. The private sector always has all of the answers.

That didn't take long. Just three days ago, I complained that my local newspaper had a bad habit of publishing editorials arguing that we need to focus on "overspending" in California government on one day -- while calling for more spending on others.

I decided to highlight this propensity because it is an important example of one of the key problems in California government: people who say the state has an overspending problem at the same time they demand more and more services. It should probably go without saying that few people want the state to take a look at all of the tax cuts enacted over the past 13 years -- tax cuts that amount of $11 billion less annually into the state's coffers.

As our current president once so infamously said, "The math doesn't work."

Today provides not one, but two new examples of this phenomenon. Even more impressive, in one of the articles calling for new spending today, the editorial writers even make note of California's budget deficit before saying that the spending would be worthwhile.

That's quite a feat of mental gymnastics.

One editorial calls for reform and more oversight of California's State Compensation Insurance Fund. That's a good idea. But oversight cannot be done with volunteers.

Today's second editorial, which does not appear on-line at the moment, discusses early-warning systems for earthquakes (obviously a big issue here in the Bay Area) and argues:

It goes without saying that California and the Bay Area, which is undermined by a honeycomb of faults, should install such a system. The problem, says [University of California, Berkeley seismologist Richard] Allen, is that we would need a network of at least 650 newly remotely operated seismometers, which would cost $10 million to $30 million.

We would also have to upgrade 250 or so existing seismic stations at an as-yet-undetermined cost. Although $50 million to $100 million may not seem like much in this era of multi-billion-dollar projects and programs, state government is strapped with heavy debt and faces a $14 billion deficit next fiscal year. Adopting a proven, sophisticated seismic early warning system would, however, be well wroth the investment.

Why, yes. It would.

But California has an "overspending" problem, remember? The paper just argued this three days ago. No word yet on what spending the Contra Costa Times would cut or what tax cuts from the past 13 years (remember, they add up to $11 billion annually) the paper would like to see reversed to fund these worthwhile investments.

President Bush clearly believes that the American people are stupid and do not have any memories of the previous six years. Alas, I am hardly surprised at his audacity. Budget expert Stan Collender writes about the president's new-found aversion to earmarks:

There are times that George W. Bush's audacity on budget matters is truly breathtaking.

The president last week said that Congress hadn't done enough to slow the growth of earmarks and had directed OMB Director Jim Nussle to consider ways not to spend the designated funds.

Never mind that this is the same president who over the previous six years signed every appropriations bill sent to him by the Republican Congress and, therefore, explicitly approved of and presided over the largest increase in earmarked spending in U.S. history. Never mind that, when he was chairman of the House Budget Committee, Nussle did nothing to stop earmarks from happening. And never mind that when he ran for governor in Iowa, Nussle boasted about the earmarks he obtained for projects in that state.

Apparently, that was then and this is now.