The Legislature's Republican leaders, as expected, have condemned the governor's call for a combination of tax increases and spending cuts to bring the state's budget back into balance. I understand their ideological position in favor of smaller government and more individual, rather than collective, action. In fact I share it. But I have never understood the refusal of virtually every California Republican legislator to ever even consider raising taxes. It seems to me like a position of weakness that allows one's decisions to be dictated by the actions of long-dead legislators who established today's mix of tax types and tax rates.
Essentially, the Republicans were arguing 6 weeks ago, when they threatened to override a possible Schwarzenegger veto of the budget, that $102 billion was the ideal level of spending for California, because $102 billion happened to be the projected total of revenue coming to the state this year. But now that the revenue projection has droppped to $91 billion due to the recession and the collapse of the stock and housing markets, is $91 billion also suddenly now the ideal level of spending? This is auto-pilot thinking: whatever the tax system provides, that's the level of spending we need. It seems so passive to me.
A more prudent approach would be to evaluate California's needs, put a price tag on them, and then figure out a way to finance those needs with the mix of taxes that does the least damage to economic growth. And if you think that higher taxes damage the economy, you should then weigh that damage against the possible damage done by cuts to schools or health care, law enforcement and infrastructure. Isn't it at least theoretically possible that the damage done by cutting spending would be worse than the damage done by raising taxes, even temporarily? Wouldn't you want to know before casting your vote?
Finally, the no-new taxes-ever mindset prevents the Republicans from ever being able to negotiate with the Democrats for long-term reforms. As long as the Republican refuse to consider even temporary revenue increases, there is no incentive for the Democrats to vote for spending cuts. They have done it from time to time, but they would certainly be open to more reductions, and more structural change, if Republicans came to the table with something to offer in exchange. If I were a Republican legisaltor, I think I would consider a long term deal that lowered the spending trajectory in exchange for higher revenues, especially if it held the possiblity of finally stabilizing the state's volatile finances. I would tend to think that the constant state of crisis in Sacramento was not the best thing for economic growth. A business owner thinking of coming to California or expanding here can't be too impressed by the leadership he or she sees in the Capitol.
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