Tuesday, July 21, 2009

CA Passes a Budget

You know that we have low expectations for our government when we get excited that we passed a budget. It sort of reminds me of that Chris Rock stand-up act bit about how some people (no, I'm not going to write that word) take credit for stuff that they are just supposed to do. Such as "I take care of my kids" or "I've never been to jail." What do you want, a cookie?

A large part of the hold up was because the Republicans categorically refused to discuss any kind of tax increase. Now, I'm not saying that taxes should be increased, necessarily, but the fact is that there are only two ways to bridge the gigantic chasm of a budget gap that we have (other than pillaging a rainy day fund, which we don't have anyway): decrease spending or increase taxes. If you refuse to even talk about tax increases, you are tackling the problem with one hand tied behind your back.

Spending should be cut, and drastically. However, most of the union's states are experiencing budget short falls. And 37 of them have increased taxes in some way, and not all of them involved the third rail of income taxes. Kansas, for example took away the tax credit for those who make films in the state, and others have raised taxes on booze and smokes. Maine extended its sales tax to car repairs, dog grooming and dry cleaning. South Dakota increased charges on laundromats.

I believe that raising taxes could screw up incentives, and could have have the opposite of intended consequences if used in the wrong circumstances (reducing demand for consumption goods). But I also think that refusing to talk about raising taxes because of an ideological aversion is not helping anyone.

But with the governator able to asked poignant questions like this, is it any wonder he has forced anyone pragmatic into a corner?

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