The Wrecking Crew
As the signed petitions pile up, Californians look ever more likely to head for the polls this fall to recall their hapless governor, Gray Davis. His crime? Opponents call it fiscal mismanagement. But his real crime might best be called DWD, or Driving While Democratic. His foes are simply out for blood.
Davis is being made to take the fall for California’s yawning $38.2 billion budget deficit. The gap has lowered the credit rating of the nation’s richest state to near junk-bond status. It’s threatening havoc in the state’s education, transportation and, as Josh Richman reports on Page 1, its most essential social services.
Californians are right to be angry, but they’re blaming the wrong guy. If they really want to punish the culprits responsible for their state’s sorry finances, they should be looking at George W. Bush and his Republican wrecking crew down in Washington, D.C.
The fiscal crisis battering California is national, not local. It’s a fish that stinks from the head. Nothing could have made that clearer than the breathtaking $455 billion federal budget deficit projection announced by the White House this week.
The figure beggars the previous record set in 1992 — by the last President Bush. As a share of the nation’s total economic output, 4.2% of GDP, it’s the highest since the record set in 1983 by Bush’s ideological mentor, Ronald Reagan. Leaving aside the surplus in the theoretically-separate Social Security trust fund (yes, Virginia, Social Security is in surplus, not free-fall) the deficit actually comes to 5.7% of GDP, a post-World War II record. It’s more than double the deficit limit imposed by the European Union on those supposedly profligate socialists of Old Europe. If America were a Third World country forced to get budget approval from the World Bank, we’d be in receivership.
But of course, the World Bank doesn’t tell Washington what to do. Just the reverse: Washington does what it wants, hands out goodies to those it favors and sticks others with the tab.
And so taxes are cut for the wealthy, then cut again. Corporations get billions in handouts. Budgets are slashed for just about every federal program except national security. The economy goes down, unemployment hits record highs, the federal budget collapses, but Republicans just keep dancing.
No, it’s not all Bush’s fault. He inherited the tech bust that started the economic slide. The September 11 attacks compounded it. Bush didn’t create the crisis. But he hasn’t fixed it, either. He’s made it worse.
The crisis puts states in an impossible squeeze. As suffering spreads and federal programs are cut, states are forced to step in with billions of dollars in urgent social services. But state revenues are shrinking just like Washington’s — and unlike Washington, most states must balance their budgets. It’s a recipe for disaster.
California isn’t the only state to face fiscal crisis this year. Nearly all of them have. New York closed its $11.5 billion budget gap through a variety of gimmicks, service cuts and a $2 billion tax increase passed over the governor’s veto. Illinois closed a $5 billion gap by borrowing against the state’s already-underfunded pension fund. Connecticut’s governor had to send state troopers to round up unruly legislators to pass a critical $1.2 billion tax hike. Even tax-shy Alabama is considering a hike. Some New York state school districts are facing property-tax increases as high as 47%. For many working Americans, the net effect of Bush’s fiscal management is poorer schools, dirtier streets, more crowded hospitals — and a higher net tax bill.
If California’s troubles are more dramatic, that’s partly because everything there is bigger. It’s also because of the state’s reckless tradition of democracy-by-referendum. In this case, the prospect of booting the Democratic governor has removed the incentive for Republicans in Sacramento to settle on a budget deal. And so, unlike the other states, California twists in the fiscal wind.