Taxes must be raised.
Either that, or teachers and cops will be laid-off, and the people of California will suffer.
So says Governor Jerry Brown, as he seeks to convince Californians that they should vote themselves higher taxes. The Golden State’s circumstances are dire, yet Jerry Brown is facing the crisis with an approach that’s nearly forty years old. He was saying this same thing – leveling these same threats - back in 1978.
We’ll go back to the 70’s in a moment, but first let’s put California in its current context. Despite how anybody feels about our 31st state, California should be regarded as an economic epicenter and a spectacular place in the world. It is, after all, home to the highest mountain in the contiguous forty-eight states (Mount Whitney), the lowest valley (Death Valley), “Surf City, U.S.A.”(Huntington Beach), Apple Computers, Mattel Toys, The World Champion San Francisco Giants, eBay, Legoland, Cisco Systems, the most fertile farmland in the world (the San Joaquin Valley), Twitter, Hollywood, three U.S. Presidents (Richard Nixon by birth, and Herbert Hoover and Ronald Reagan by “adoption”), Mitsubishi Motors of North America, and – for better or worse – Facebook.
This is to say that California can be and should be a place of robust economic opportunity across multiple sectors. Yet tax-and-spend-and-regulate politicians like Brown have had a stranglehold on the state for the past twenty years or so. And while capital has been leaving, productivity has been slumping, and tax revenues have been declining, Governor Brown and company have continued their same failed policies.
Brown was sworn in to his third term as Governor in January of 2011. At his first State of the State address, he announced that his plan to solve California’s dreadful fiscal problems would involve both cuts in government spending, and – if California voters approved – tax increases.
This seemed very reasonable. Very practical. Very “bi-partisan,” if you will. And indeed Governor Brown brought about some modest cuts in government spending: he eliminated taxpayer funded mobile telephones and vehicles for some government workers (most of us in the private sector don’t get “free” mobile telephones and cars from our employer anyway, but this had apparently become standard operating procedure for privileged government employees in California).
But Brown then went about spending millions of more non-existent tax dollars on certain unionized government employees. For example, in April of 2011, knowing very well that California’s budget deficit was headed upwards of $15 billion or more, Brown nonetheless approved a new contract for the California Prison Guard’s union, which now allows guards to accrue unlimited numbers of un-used paid vacation days each year, and then cash-in the un-used vacation time when they retire.
So why placate the prison guard’s union at a cost of an additional several hundred million dollars, even as the private sector is shrinking? Because Jerry Brown owed them big time – the prison guard’s union, alone, had contributed over $2 million to his 2010 campaign coffers.
As for the California legislators, they’ve spent the past four years ignoring the national recession, as well as their own state fiscal crisis. Instead, they’ve been focusing on such high-minded things as banning the sale of caffeinated beer; raising taxes on “sugary soda drinks (too bad if you’re a beverage vendor);” requiring all public school children to be taught “Gay History,” regulating the density of kid’s baseball bats; requiring that all underage minors wear a helmet while skiing; banning the sale of shark fins (these are an Asian delicacy, but to heck with the restaurant owners – the sharks are endangered); establishing an official California “Parks Make Life Better” month; banning the sale and distribution of plastic grocery bags; requiring the use of a fitted sheet, instead of a flat sheet, on hotel beds; and implementing a statewide sales tax on internet-based commerce.
Governor Brown and his California Democrat party have behaved as though the private sector economy will always produce, no matter how law makers abuse businesses and taxpayers. If the government runs out of money, then threaten to fire teachers and cops – that always puts voters in the mood to authorize even higher taxes. Governor Brown is playing this game now, just as he did nearly forty years ago.
The year was 1978. In the midst of the Carter-era stagflation, and after years of tax increases, Californians were about to pass a statewide ballot initiative known as “Proposition 13,” which sought to freeze local property tax rates. A young, forty-year-old Jerry Brown traveled the entire state (at taxpayer expense, of course) warning that if property taxes were not permitted to rise on a regular basis, teachers would be fired, schools would close, and police and fire services would dwindle.
Brown was in his first term as Governor, and I was in the eighth grade. I remember very well the scare tactics in my public school, and Brown’s fear and loathing on the nightly tv news. Yet Californians were un-daunted by his threats - with a record-high 70% of the electorate voting, Proposition 13 won in a landslide in June of that year.
Will Brown’s ’78-styled fear campaign work in November? It may very well, but it won’t fix the problem. Higher taxes or not, California’s government must abandon the tax-and-spend-and-regulate cadence – before the party’s over.
Austin Hill is an Author, Consultant, and Host of "Austin Hill's Big World of Small Business," a syndicated talk show about small business ownership and entrepreneurship. He is Co-Author of the new release "The Virtues Of Capitalism: A Moral Case For Free Markets." , Author of "White House Confidential: The Little Book Of Weird Presidential History," and a frequent guest host for Washington, DC's 105.9 WMAL Talk Radio.