Wednesday, December 15, 2010

Jerry Brown's shock doctrine

Robert Cruickshank at Calitics suggests a label for Governor-elect Brown's approach to the disaster of a California state budget outgoing Gov. Arnold Schwarzenegger is leaving him in Jerry Brown's Budget Plan: A Progressive Shock Doctrine? 12/09/2010. "Reality shock doctrine" would also fit.

"In June 1978," he writes of the passage of the (in)famous Proposition 13, "the right succeeded in destroying the California Dream. In June 2011, the left will finally have a chance to restore it."

He describes Jerry's likely approach as presenting a stark choice for the state budget for the fiscal year 2011-12 starting July 1. One would be covering the state's $28 billion deficit with program cuts only, the other covering it with some program cuts and some new revenues, to be approved by the voters in a state referendum. One of his campaign promises was "no new taxes without voter approval".

That seems to be consistent with the way Jerry is approaching the budget forums he's been doing, one last week and one on Tuesday of this week. He will be proposing his budget on January 10, and is saying he wants to get it approved within 60 days, which would be the kind of timing he would need to put options on the June ballot.


With or without new revenues, there will be cuts and it's not going to be pretty. He said at his budget forum at UCLA on Tuesday, "Please sit down when you read the stories on the budget on Jan. 10."

The budget cuts in themselves are neither progressive nor liberal, though where the cuts are taken will reflect political choices. What is progressive and sensible about Jerry's approach so far is that he's trying to lay out the blunt realities of the budget mess California has after three decades of conservation "starve the beast" tax cuts and seven years of an incompetent Republican Governor.

And given California plebescitory system, in which major budget decisions are heavily restricted on both the spending and revenue side by statewide votes that cannot be overridden by the state legislature, that means he has to put the choices bluntly before the general public. If that helps shatter the illusion at the state level that we can forever cut taxes and not wind up with a drastic reductions of services, that will be a major progressive achievement in itself. (The federal deficit is a whole different matter.)

But whether the $28 billion additional comes from all cuts or partially from increased revenues, it will have a pro-cyclical effect on the state economy, working against recovery. The tax cuts in the Obama-Republican tax deal will have far less stimulative effect than Congress providing more money to the states to avoid cuts at the state and local levels. Those cuts will at least partially offset any stimulative effects from the tax cut deal over the next year, assuming the deal passes.

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