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One State, Two States

One State, Two States

By Benny Morris

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Stuff the Bankers, Starve the Kids

Posted on May 26, 2009
AP photo / Rich Pedroncelli

Gov. Arnold Schwarzenegger gestures as he discusses his revised state budget proposal for the coming fiscal year during a news conference in Sacramento on Thursday.

By Robert Scheer

All sorts of startling conclusions are being drawn about the failure of California’s ballot funding initiatives last week. Newt Gingrich hailed it as another Boston Tea Party, and New York Times columnist Paul Krugman insisted that it condemns California, one of the world’s largest economies, to banana republic status. But if it was such a big deal, how come the voter turnout was so low?

Maybe because the statewide ballot initiatives were a bit of a political practical joke played by a Republican governor and leading Democrats pretending to be dealing on a statewide basis with the consequences of a national economic crisis that can be solved only through massive federal intervention. There is no way that the people of any state will vote to increase their taxes in the midst of a deep recession, and certainly not when the funding demands seem to have little to do with solving the problem at hand. As a subheading in the ever-sober Economist magazine put it, “Voters reject a ballot they could not comprehend.”

I tried, and after reading the opposing argument in the literature supplied at my nearly empty polling station I voted for the ballot propositions that our governor, Arnold Schwarzenegger, had requested. I assumed that this would help our vastly underfunded inner-city schools. Later, my son Chris, who teaches in one of those schools, told me that I might have been wrong and that the convoluted paragraphs of the all too typically obtuse California propositions could not improve matters much at all.

So, filled with doubt and guilt, I took solace in the fact that in terms of the money involved it wasn’t that big a deal, and that surely the feds, to whom we Californians send more in revenue than any other state, would bail us out as they have the banks. Heck, the entire projected California budget shortfall comes to only $21 billion, a tiny fraction of the banking bailout. Yes, only—what is $21 billion in federal loan guarantees for California to skirt bankruptcy compared with the $45 billion given to Citigroup, along with $300 billion more in guarantees for that company’s toxic paper? Or how about the $185 billion doled out to AIG? If Citigroup is too big to fail, isn’t the state of California? Does anyone seriously believe that the national economy can snap back to health if California is in the dump?

The cause of California’s, and almost every other state’s, predicament is an economy ruined by deregulation policies that were secured by the lobbying efforts of Wall Street, led most prominently by Citigroup. So, I expected a federal government that has spent trillions salvaging the banks that got us into this mess to find the relatively minor sums needed to bail out California and other states that have been the victims of Wall Street’s dangerous games.


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But I didn’t count on the tough-love steeliness of President Obama’s senior adviser David Axelrod, who told Californians that “there’s a limit to what the government can do” when it comes to bailing out our state (as opposed to the banks). Or of White House press secretary Robert Gibbs: “Obviously, the state has to make some very tough fiscal decisions … [given] the budgetary constraints that they have.”

Tough for whom? Not the politicians of either party. The results of such decisions are tough for the poor of America, two-thirds of whom are kids, left to the tender mercy of the states, thanks to the sweeping “welfare reform” and other programs put into place by the Clinton White House in one of that Democratic administration’s signature triangulation ploys.

The Los Angeles Times summarized the direction of those difficult choices in a story headlined “Poor would be hard hit by proposed California budget cuts,” which stated that Schwarzenegger “is considering a plan to slash California’s safety net for the poor by eliminating the state’s main welfare program, health insurance for low-income families and cash grants to college students.”

Bail out the banks, but not the 500,000 poor families with children served by the CalWorks program, which will be dismantled, or the 928,000 children covered by the Healthy Families program, slated for oblivion.

At a time when the feds are spending with such abandon in an effort to stimulate the economy, why is it tolerable to leave states in a position where they are forced to fire teachers? As the Los Angeles Times reported: “Schwarzenegger has proposed slashing state spending on education by $3 billion to help close the budget gap, and the state would pay dearly for canceling classes, firing instructors, cutting class days and shortening the school year, experts said.” How can there be federal funds readily available for banker bonuses but not to keep teachers in the classroom with their students? It must have been the kids who caused the meltdown.

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By AmiBlue, May 27, 2009 at 6:08 am Link to this comment

The *State* of California does NOT deserve a bailout. It’s not the economy that got California into trouble.  The voters got themselves into this mess and must decide if they want to live with reduced police, fire, health and school services or increase taxes.  I have no sypmpathy for Californians at all.

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By Eugen, May 27, 2009 at 6:08 am Link to this comment

You have to wonder who is pulling Obama’s strings.
Facism in the making.

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By SteveK9, May 27, 2009 at 5:44 am Link to this comment

California’s extraordinary problems are the result of the choices that California’s residents have made.  They (and we) will have to suffer the consequences.  I am not willing to spend one nickel ‘rescuing’ California.  The state needs a complete overhaul of it’s constitution and new districts (non-gerrymandered).  Even today the residents don’t get it, hence the low turnout.  Schwarzeneggar will do lousy things—-so be it, they elected him.

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By Dis Gruntled, May 27, 2009 at 5:40 am Link to this comment
(Unregistered commenter)

I sat out the election because I didn’t understand the ballot initiatives. Over the years, I have come to hate ballot initiatives because each one has unforeseen consequences (we still suffer from the loss of revenue and unfair benefit to the rich created by Prop 13), many pages of actual text to hide special interest provisions, and poorly written encapsulated descriptions on the ballot itself.

So my general game plan is to vote no unless some group can prove to me the importance of voting yes beyond a reasonable doubt. During this last election, the LA Times published a moving piece about one of the initiatives that would silently take away money from kids’ early intervention medical programs. As the father of an autistic child, it seemed horrible to risk such a result.

Then, to make matters worse, I received a phone call asking me to vote for one of the initiatives. When I questioned the caller about the possible ramifications of a yes vote, it turned out she was not knowledgeable about the proposition in any way. In fact, my few pointed questions (which were said politely) caused her to hang the phone up on me.

So . . . I may have been a part of the problem. But there are too many elections each year in California. Just the month before, there was a mail-in municipal election. And in each election my mailbox becomes stuffed with toss-away partisan cards that offer glossy family pictures and little intelligent analysis of issues. And there is no real authorship written on the cards other than a suspicious name like “Citizens for a Better Government.” Who sends these? The cost of such a mass mailing is exorbitant. I always figure there is some moneyed interest unfairly trying to catch my vote.

There is plenty of money in the state of California to solve every problem. Every citizen knows this. But will we ever create a fair and reasonable tax system? Sadly, the odds are against it.

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By Inherit The Wind, May 27, 2009 at 5:26 am Link to this comment

Cali has long been described as the “Land of Fruit and Nuts” and certainly this has come home to roost.

BTW, the Enron debacle was NOT because of California but because of Washington and Phil Gram inserting a little tiny clause into a bill at midnight in 1999 (when both houses were strongly GOP) that allowed crooks like Enron to game and sheer the system.

Curiously they always put Schwarzenegger on the pictures and I think the guy has the worst job in the nation, even worse than being President, because his hands are tied far more, yet he still gets blamed.  I don’t think ANYONE, Dim or Re-thug could be doing better given the mess they are in.

Cali’s prop law has proven to be insane.  It gave them unbalanced property taxes, where two identical tract houses side by side can be paying FAR different tax rates—where’s “equal protection” there? It’s given them this incredibly ugly Prop 8, funded by the Mormons, who can’t HELP sticking their noses into other people’s business and bedrooms.

Now it’s prevented needed taxation because NOBODY votes to raise taxes.  People would rather pay thousands of dollars to repair their Porsches than thousands of dollars to repair their roads so the Porsches don’t NEED repairs.

Even the recall election was insane.  Luckily for Cali, they got someone smart and determined and actually a decent manager, someone who’s more Dim than Re-thug.

But held up to the cold light of day, it does seem totally insane to bail out CITI and not bail out Cali, which needs far less.

Last thing though: California pays the most to the Feds because it has the most people.  Dollar for dollar, we in NJ pay FAR more than they do.  The Fed Govt spends $.78 in California for every dollar it gets from Cali.  In NJ, that number is only $.61, or $.17 less per dollar.

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By Big B, May 27, 2009 at 4:44 am Link to this comment

Has anyone noticed that, as more time passes, Prez Barry looks more and more like GW in blackface?

Trickle down economics is alive and well in Barry’s administration. He and his cadre of neo-liberal idiots seem to think that all the natons problems can still be solved by leaving the door to the treasury dept open, and any big business can walk in and take whatever they want. But any state or municipality, or any individual who wants to grab a couple of bucks is stripped searched and sent to guantanamo.

But the people of California are partly responsible for their own financial predicament. They have an ineffective state house, a governor’s office that is up for sale to any kook who can fund a referendum, and a two thirds majority law that guarantees that the minority will always rule over the majority.

However, make no mistake, Barry could bail out the states, but he won’t, for he is as beholden to corp interests as any pres we have ever had. Sorry kids, no cheap education for you, uncle Barry has to give a couple hundred billion more to banking industry so they can make you a student loan at 9%.

We are all so fucked.

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By godistwaddle, May 27, 2009 at 4:43 am Link to this comment

Well, do we want to continue government by the plutocrats, for the plutocrats, and of the plutocrats (as established by the Constitution) or not?

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By thebeerdoctor, May 27, 2009 at 4:38 am Link to this comment

re: Purple Girl

Time was when California was held up to be at the vanguard of American society. An idea that was steadfastly reinforced by productions from Hollywood. But after installing a bad muscle bound actor who can not even speak English all that well, the luster as they say, is off the rose.
A decade ago, California allowed the Enron corporation to shut down power plants, in order to raise the price of energy. California’s solution was to bring in the terminator. I wonder if the citizens are happy with their choice?

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By Purple Girl, May 27, 2009 at 4:28 am Link to this comment

The Exodus Out of CA?
We MI’ers will let them borrow our Sign “Last one out turn off the lights”. We don’t need it anymore after nearly 30 yrs of neglect,Abuse and abandonment there isn’t many of Us left to vacate the premises anyway.Sure way to drive down housing prices, Economic collapse is as much a population depleter as a Hurricane. Will LA and SF look like Detroit and Flint in the future? Ghosttowns with only those too Poor to evacuate left behind. Oh yeah they have Sun & Fun there- but it doesn’t pay the bills or feed your kids does it? Not to mention the ever present dangers of Earthquakes,fires and mudslides.
I lived in CA for several years - there is a certain air of arrogance inregards to it’s standing as opposed to the rest of US- perhaps a lil’ humble pie will do them some good.It wasn’t until I got out there that I realized the phrase was ‘Dog EAT Dog’, not ‘doggy dog’.As a Midwesternere, Doggy Dog had a sense of community- we are all in it together.But on the West Coast- Dog EAT Dog refers to ‘do onto others before they do it to you’, and many in CA adhere to that adage. Perhaps these hard time will have a silver lining for CA’ers they will finally develop a sense of interconnectedness and altrusim.

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By ardee, May 27, 2009 at 2:50 am Link to this comment

Thus is revealed the true nature of our governance. Treasury money is not for the benefit of the people, not for the residents of California, not for the residents of any state in our union.

That money has been given away in freight car size lots to financial institutions, to the very crooks who wrecked our economy and profited greatly from that wreckage.But , when faced with a shortfall that will surely lead to drastic cuts in essential services affecting many Californians what do we hear from our “progressive” President? Sorry, but AIG might need a few tens of billions more, cant risk giving it away to a state now can we?

What crock is our image as a democratic nation. We are just a profit center for a few wealthy old white guys.

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By Folktruther, May 27, 2009 at 1:00 am Link to this comment

It’s articles like this that justify Scheer’s existence, such as it is.  He hits a number of points tht need emphasizing: the referendums are written in a way to deceive the population, so that even professional truthers can’t understand them easily, or at all.  That the government is so in thrall to the banks that it will not bail out its largest state.  That the political establishment scapegoat the poor Der Gropenfueher’s failure. that the voting is rigged in a number of ways to intentionally decrease the vote by the poorest residents, or most of the people.

And California is richer than most of the other state.

The solution is to take money away from the rich, as I believe I have mentioned before.  TAKE MONY AWAY FROM THE RICH.  And most important, power.  What we need is an anti-rich movement to resist the predation their power structure is promoting to grind the American people into the ground.  Where money for the banks takes precedence over the lives of forty million people of California.

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By P. T., May 27, 2009 at 12:14 am Link to this comment

In economic crises, the ruling class will always bail themselves out first.

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By thebeerdoctor, May 27, 2009 at 12:05 am Link to this comment

These people need air! You better git your ass to Mars!

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