Looming Recession Update: The Governor Should Have Played Two-Face In Batman Edition

by David Dayen [courtesy of Calitics - Front Page]

California is dragging down the rest of the country with its job performance statistics:

California gained just 900 payroll jobs last month, the state said Friday, a lackluster showing that reflects a national slowdown attributed in part to the housing slump.

The slight gain followed a revised loss of 13,500 jobs in October, the Employment Development Department said.

The slowing job market combined with declines in taxable sales and falling home prices "paint a picture of an economy that is slowing sharply," said Stephen Levy, senior economist at the Center for Continuing Study of the California Economy

In California, a little more than 1 million people were looking for work last month, an increase of 16,000 from October and up 186,000 compared to the year-ago period.

The state's unemployment rate was unchanged from October at 5.6 percent. It was 4.7 percent in November 2006.

Significantly, it's the rising cost of living that is playing a part in sinking the state.  With people unable to fall back on their home equity for cash, they slash spending, and nobody's buying any homes, which leads to declines in the construction industry.

So don't expect payroll taxes to somehow save us from our budget woes.  And don't expect the magic 10% across-the-board cut fix to work, either.  First of all, it's unconstitutional.  And that's just part of the problem.

"Can he get across-the-board cuts comprehensively? No," said Jean Ross, executive director of the California Budget Project, a nonpartisan group that advocates for poor and middle-class families. Not only does the state have to comply with various laws and court orders, it has debts to pay, paychecks to deliver, and everything from schools to prisons to maintain.

"I could go on and on and on," Ross added.

And this is where the recession meets up with the proposed health care reform.  Before such a program would kick in, you're looking at a governor who may attempt to throw the health care system into more chaos than it's in now, because it's one of the only areas where he isn't legally constrained against cutting:

"I think some people think that 10 percent may sound fair and it's not that much, until you recognize what that means on a human level," said Anthony Wright, executive director of Health Access, a statewide health care consumer advocacy coalition.

Wright said a 10 percent cut in the state's health insurance program for the poor means 680,000 of 6.8 million recipients could be left without coverage.

If people aren't denied coverage, Wright said the governor could slash benefits dramatically so that patients can't get wheelchairs, prosthetic limbs or asthma inhalers.

Whether ABx 1 1 would restore all this public money or not (and the price tag is low if they think it will), the amplification of costs from two years of a lack of even the most basic care for the poor would be enormous.  Yet the Governor will claim on one day that our health care problems are solved, while on the next day slashing budgets so that they end up even worse.  This is his modus operandi, and you can't trust someone with this track record.

Gov. Arnold Schwarzenegger won re-election in 2006 by selling himself as a problem solver who boosted California's economy and resolved the state's budget problems, all without new taxes.

The Republican governor declared in January that "through discipline and through new revenues that come from economic growth, we reduced the deficit over time and got our fiscal house in order."

But less than a year into his second term, the narrative has run dry [...]

"I think the problems were deeper and more structural than the governor realized when he was first elected," said Jean Ross, executive director of the California Budget Project, which advocates for poor and middle-class families.

"There is a fundamental imbalance between revenues and expenditures," Ross added. "Many budgets that were signed into law, including those signed by the current governor, made the problems worse, not better."

Remember the 2004 "Performance Review," which we were told was all that was needed to fix the budget problems ("Open up the books!  Then we'll see the numbers!")  Practically nothing that came out of that review was put into law.  Everything this Governor has ever said has been hype, as he plowed ahead with the same wrongheaded conservative solutions of passing off crises to future generations.

That's why, given the fact of watching this guy operate over 4 years, it's nearly impossible to give him the benefit of the doubt on anything.