How California Turned Its Own Sequester Into Higher Taxes and Economic Growth

Posted on Mar 4, 2013

Neon Tommy

California Gov. Jerry Brown.

If President Obama follows the example of Gov. Jerry Brown in California, he can use devastating budget cuts to deal conservatives a crushing blow, argues David Sirota.

Although Democrats have a tight grip on the Golden State, Republican lawmakers have historically been able to keep taxes low thanks to a hocus pocus budgeting process and the anti-tax fervor of residents.

Gov. Jerry Brown, who campaigned on the promise to restore adult supervision to the budget, was faced with the choice of making tough cuts or papering over California’s shortfalls. Brown made the cuts, but he also made the case that Republicans were to blame, and he used austerity as a teaching moment (at the expense of the most vulnerable Californians, it must be said) and was able to persuade voters to pass their own tax increases to help fund popular programs like education.

The results are in, writes Sirota:

Last month, California budget officials reported a surplus. Meanwhile, following the tax hikes, Reuters reports that the state’s “job growth tops the national average, unemployment has fallen to below double-digit levels for the first time in nearly four years.” Meanwhile, Bloomberg reports that “California’s credit rating on its general-obligation bonds was raised by Standard & Poor’s for the first time since 2006.”

These results, if they hold, come with the prospect of tectonic political change because they so clearly counter the standard GOP talking points about budgets and taxes. Yes, rather than tax hikes harming the economy, the tax hikes and California economic recovery are happening simultaneously (and Brown’s poll numbers have hit a record high).

The Salon scribe (and syndicated columnist) says President Obama now faces his Jerry Brown moment: “Will Obama and congressional Democrats follow the Brown model? Will they cite the cuts to fundamentally challenge the anti-tax zeitgeist that has dominated American politics since the 1980s? Will they, in short, maximize the opportunity?”

—Posted by Peter Z. Scheer. Follow him on Twitter: @peesch.

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