The Ungovernable State

[DinoDoc]

Now, I see only two hopes for California.

Not one of your "hopes" attacks the source of the problem, which is the existance of your prop system itself. This situation should be an object lesson for people trying to emulate CA politics.

[Imran Siddiqui]

Because Californians bought into the idea of Reaganomics: You can have something for nothing.

Lies. Reagan was for cutting the government as well. Part of that was shifting services to the counties (or at least giving them the option of continuing those services).

Furthermore he raised taxes on certain things in his first term to balance the budget.

[Dinner]

He talked about cutting government but in reality as governor and as President he increased spending and the number of government employees. Zibber's post is dead on.

[Ben Kenobi]

CA is too big to fail.

54 reps and 54 electoral votes for the Democrats.

No way Obama fails to bail them out.

Now if it were Texas, they wouldn't need the bail out because they would be fiscally prudent.

[Ben Kenobi]

Furthermore he raised taxes on certain things in his first term to balance the budget.

Exactly. That's just the opposite of Reaganomics. Reaganomics lowers the taxes and increases revenues. Carternomics raises taxes and lowers revenues.

[Sprayber]

Any chance there will be a push to split the state into two states.

[Imran Siddiqui]

Zibber's post is dead on.

You mean the whole, he cut taxes in California... oh wait he didn't part?

[BlackCat]

Lex Luthor had the right solution for CA's problems

[Dinner]

CA is too big to fail.

54 reps and 54 electoral votes for the Democrats.

No way Obama fails to bail them out.

Now if it were Texas, they wouldn't need the bail out because they would be fiscally prudent.

You realize California isn't getting any bailout, right? Oh, who am I kidding? This is ben so of course he doesn't know.

The state can quite easily solve the budget deficit by a combo of cutting spending and raising taxes but the 2/3rds rule has resulted in gridlock. So it is just a matter of political will but both parties have no incentive to do the right thing and actually governor.

[Dinner]

You mean the whole, he cut taxes in California... oh wait he didn't part?

No, I mean the claim you made that he was small government. Yes, he cut taxes (for the rich) but he also greatly increased spending and hired a ton more government workers. It's the classic Republican deficits without end strategy which is absolutely not small government.

[Imran Siddiqui]

In 1967, Reagan signed a tax INCREASE in order to balance the budget. He did increase property tax exemption in '69, but realizing he wasn't going to be able to stop spending, he decide to raise taxes to get a balance.

[RGBVideo]

In 1967, Reagan signed a tax INCREASE in order to balance the budget. He did increase property tax exemption in '69, but realizing he wasn't going to be able to stop spending, he decide to raise taxes to get a balance.

yup

lot's of myths floating around in here wrt what Reagan did in California

here's a good interview for understanding the context:

http://www.reason.com/news/show/29318.html

REASON MAGAZINE: Let us shift for the moment from education to your Proposition One initiative that you campaigned so hard for. How would you describe the purposes of Proposition One, Governor?

REAGAN: Well, first of all, we realized that at the state level we could not do an awful lot to reduce the vast tax burden that the people of America carry. Right now, virtually half of every dollar earned in the United States is taken by governments–Federal, state or local. And governments in the United States are all growing at about the same rate, which is about 2-1/2 times as fast as the increase in population. We couldn’t do anything with the Federal rate, which is the big villain. Nor could we impose on local governments. But we said that if the biggest state in the Union can put itself on a basis of establishing a percentage of the people’s earnings above which government cannot go in taxation without the consent of the people, and if it works, then it sets an example that makes it almost impossible for the Federal government not to follow suit and do the same thing. And hopefully local governments also.

So I appointed a task force and this task force talked to economists like Milton Friedman who then volunteered to help. The task force report came back with all the facts and figures. We concluded that we could over 15 years reduce the percentage the California state government was taking–from about 8-3/4 cents out of every dollar down to 7 cents out of every dollar. It doesn’t sound like much, but at the end of 15 years the difference would be that you could triple the present budget of California at a seven percent rate, and you’d have a budget three times the present size of the budget. We thought the growth of the economy was such that people could recognize that you could have this tax rate reduction without doing away with any useful government service.

Now we could have probably passed Proposition One if we had settled for the percentage the state is now taking and proposed freezing the percentage at the present level. But you see, the opposition was very dishonest. (And when I say this I include the State Employees Association, the whole educational establishment of California that opposed it, and the League of Women Voters, who made it very plain that they were going to oppose anything that limited government’s ability to get more money.) These people dishonestly campaigned and convinced the people that to reduce the state’s share we were going to dump the load on local government, so that the local property taxes would go up. We couldn’t make clear the fact that in our plan there was a distinct prohibition on the state transferring this cost over to local government without lowering the percentage comparably. And so we lost. I still think it’s an idea whose time has come.

REASON: Governor, given the way that Prop. One was misrepresented in California by these very strong interest groups (which would exist in other states as well), how would you restructure a campaign to sell it to the people, to counteract that kind of misrepresentation?

REAGAN: Well, as I say, it was so complicated. Maybe if we had to do it all over again, I shouldn’t be so greedy. Maybe we should have settled for the present percentage, and then just held at the present spending, while waiting for people to realize that maybe you could then reduce spending in the future as you were successful with it. That would have robbed our opponents of their argument. You see, if they hadn’t been able to say, "They’re going to reduce the money the state’s getting–so they must be going to get it from someplace else"–if they hadn’t been able to say that, we could have refuted anything else they said by saying, "Wait a minute–if they don’t want it frozen at the present percentage they must be telling you that they’re going to raise taxes if they have their way."

REASON: Governor, isn’t it true that in your first year in office there was actually a 24 percent increase in the state budget?

REAGAN: Oh, for heavens sakes, I don’t know what the percentage was–but you see, the problem was that the state budget we inherited didn’t mean anything. We got in and found that to get through the election year, the previous administration had changed the bookkeeping and had a budget that was financed by 15 months’ revenue. By changing to an accrual method of bookkeeping, what they really were doing was postponing until after the election what they knew was going to have to be a tax increase. We won and found that out to our surprise –because we were quite unable, even in the period between election and inauguration, to get very much information from the outgoing administration. It was not an orderly transition! In fact, the Director of Finance in his briefing said to one of my representatives, "Look, we’re spending a million dollars a day more than we’re taking in–I’ve got a golf game–good luck." That was our briefing in finance! We had to–much as we objected–institute a gigantic tax increase, and put the state back on a solvent basis. I said at the time that I did not recognize that as permanent–that we were going to try to give the money back to the people, just as we could institute reforms. Over the eight-year period we gave back in the form of one-time rebates, tax cuts and even bridge toll cuts $5.7 billion–which comes pretty close to giving back the amount of that increase.

[Ben Kenobi]

You realize California isn't getting any bailout, right? Oh, who am I kidding? This is ben so of course he doesn't know

You are talking about Barack, 'Bailout king' Obama.

The state can quite easily solve the budget deficit by a combo of cutting spending and raising taxes but the 2/3rds rule has resulted in gridlock. So it is just a matter of political will but both parties have no incentive to do the right thing and actually governor.

The Governor first has to cut spending. The public is tapped out. Raising taxes will dwindle revenues even further.

[RGBVideo]

You are talking about Barack, 'Bailout king' Obama.

blah blah blah PORKULUS blah blah blah

Exactly. That's just the opposite of Reaganomics. Reaganomics lowers the taxes and increases revenues. Carternomics raises taxes and lowers revenues. [..]

The Governor first has to cut spending. The public is tapped out. Raising taxes will dwindle revenues even further.

1. Lower taxes
2. ???
3. Profit!

If the model fails, it's because a democrat is in charge. Elect republicans who'll repeat the same model succesfully.

[RGBVideo]

What pisses me off is that nobody who has heard of the Laffer curve seems to understand what it means anymore. Raising taxes will raise revenues and lowering them will lower revenues. Raising/lowering taxes will create a negative/positive incentive with regards to wealth-creative work which will mean that raising/lowering taxes by 5% will not raise/lower revenues with 5%, but by slightly less (the amount of "less" depending of the overall taxation rate). It does NOT mean that raising taxes by 5% will lower revenues by 5% or vice versa.