5

House budget vote makes strange bedfellows

The House has voted 322-94 to approve the two-year budget deal hammered out by Senate Budget Committee Chairwoman Patty Murray and House Budget Committee Chairman Paul Ryan.

But the vote made for strange bedfellows: Two diametrically opposed Northern California House members I interviewed for last Sunday’s storyBarbara Lee and Tom McClintock – both voted against the deal, albeit for very different reasons.

Barbara Lee (Dec-2010)Lee, D-Oakland, said she couldn’t vote for a deal that doesn’t extend unemployment benefits beyond Dec. 28 for 1.3 million long-term jobless Americans.

“The least we can do for the millions of long-term unemployed who are struggling just to get by during this holiday season is to pass this three-month extension,” she said. “This budget does nothing for the millions of jobless people and asks nothing from the people who caused our economic crisis and continue to benefit from economic inequality. Please remember, this is not about showboating or statistics; we are talking about people’s lives. We are talking about people living on the edge. We are talking about 1.3 million people who will lose unemployment benefits during this holiday season. It is cruel. It is morally wrong, and it is economically stupid.”

Tom McClintockMcClintock, R-Granite Bay, says the deal undoes even what scant good sequestration had done for reducing the nation’s long-term debt and deficit. The most stinging indictment of the deal might come from former Reagan budget director David Stockman, McClintock said.

“His verdict is chilling: ‘It’s a joke and betrayal. It’s the final surrender of the House Republican leadership to Beltway politics and kicking the can and ignoring the budget monster that’s hurtling down the road.’” McClintock said. “The new Congressional budget is a mistake at a time when we can’t afford many more mistakes. The path of least resistance, even if paved with good intentions, is not a path America can afford to travel any longer.”

All other Bay Area House members voted for the deal.

In the hours before Thursday’s vote, Rep. Eric Swalwell had wrangled members of the bipartisan freshman United Solutions Caucus he helped found to urge the deal’s passage.

The 13 lawmakers – eight Democrats and five Republicans – who signed Swalwell’s statement noted the deal will give citizens and businesses a sense of fiscal stability that has been “sorely lacking of late,” and will replaces parts of the automatic sequester cuts while still reducing the long-term deficit.

“No agreement is perfect and there are aspects of the Ryan/Murray budget with which all of us disagree,” the statement reads. “But, that is what legislating in Congress is all about – cooperating to achieve an agreement which on balance would improve the lives of the American people. We encourage all Members to support this budget and help us take this step forward, together, in getting our fiscal house in order.”

Other signers of the statement included David Valadao, R-Hanford; and Scott Peters, D-San Diego.

4

Lee & Hoyer offer ‘Half in 10’ bill to cut poverty

Halving the number of Americans who live in poverty is the goal of a bill introduced Thursday by Rep. Barbara Lee with support from one of the House’s most powerful Democrats.

With 46.2 million Americans living in poverty in 2011, including 16.1 million children in households below the poverty line, “we’re at a critical time in our nation,” Lee, D-Oakland, told reporters on a conference call. “The economy still is not working for anyone.”

Barbara Lee (Dec-2010)“At every turn, our nation’s most vulnerable cannot find pathways out of poverty that they need to achieve the American dream,” she said. “It’s time that we make a commitment to confront poverty head-on.”

Her Half in Ten Act of 2013 would establish the Federal Interagency Working Group on Reducing Poverty, which would develop and implement a national strategy to reduce poverty by half in ten years, as well as provide regular reports on their progress.

“It’s morally the right thing to do … but it’s also the economically sound and fiscally prudent thing to do,” Lee said. ”

House Minority Whip Steny Hoyer, D-Md., is an original co-sponsor of Lee’s bill, and recently formed a Democratic Whip Task Force on Poverty and Opportunity.

“Too often we don’t see the poverty that exists around us,” he said on Thursday’s call, adding that focusing on developing and coordinating a real campaign against poverty is especially “important as the devastating Republican policy of sequester takes a blunt ax” to the nation’s social safety net. “Congress should be taking steps to make it easier, not harder, for lower-income Americans to enter the middle class.”

steny hoyerBudget sequestration – across-the-board cuts in federal programs including those that help support the poor – was the result of a 2011 deal between President Obama and House Republicans that created a Joint Select Committee on Deficit Reduction. That “super committee” was tasked with producing legislation that would decrease the deficit by $1.2 trillion over a decade, but it turned out to be just as deadlocked as the rest of Congress, and so these deep, automatic cuts kicked in earlier this year.

And House Republicans have contended that budget cuts are necessary to reduce the nation’s deficit, stimulate the economy and create jobs that will left workers out of poverty.

Lee said the House Budget Committee had a debate around her amendment that’s similar to this new bill, and she saw some bipartisan agreement on the goals. But the House GOP’s budget ultimately “eviscerated all of the building blocks that lead to pathways out of poverty,” she said. “The rhetoric on the Republican side is not matching what they’re actually doing.”

Hoyer noted the faith community strongly supports poverty-reduction efforts such as this, and so he hopes Republicans – many of whom “are people of strong faith and convictions” – can be won over.

3

John Chiang: California’s books still look good

California took in $15.03 billion in revenue in April – $119.9 million short of estimates, but still leaving the Golden State in relatively solid financial condition, state Controller John Chiang reported today.

Total revenues for the first 10 months of the fiscal year exceeded Gov. Jerry Brown’s January projections by $4.6 billion (6.1 percent), due largely to $4.4 billion (8.5 percent) in better-than-expected personal income tax revenue.

“We’ve reached an important milestone in California’s economic recovery. For the first time in nearly six years, we closed out a month without borrowing from internal state funds to pay our bills,” Chiang said in a news release. “But, there remains significant debt that must be shed before we can claim victory and these unanticipated revenues provide us with an important opportunity to take further steps toward long-term fiscal stability.”

Chiang said California had to borrow at unprecedented levels over the past six years from its own internal special funds and from Wall Street to meet its payment obligations; the state also withheld some payments and used IOUs for only the second time since the Great Depression. June 2007 was the last time the State was able to pay its bills without leveraging its internal funds.

California ended the last fiscal year with a $9.6 billion cash deficit, but April 30, that deficit narrowed to $5.8 billion, Chiang said. The gap is being covered by $10 billion in external borrowing, which the state will start repaying later this month.

Personal income taxes for April came in $275 million (2.2 percent) below monthly estimates outlined in the governor’s budget, due mostly to fewer returns filed and more refunds paid out than expected in the month of April. But corporate taxes for April were $6.6 million (0.5 percent) above monthly estimates and sales tax receipts were $113.4 million (26.6 percent) above estimates.

9

Poll: Support slipping for Brown’s tax measure

Grim news for Gov. Jerry Brown: Support for his proposed November ballot measure to hike California’s sales tax and income taxes on the wealthiest residents is slipping, even after news of a larger-than-expected budget deficit.

The latest University of Southern California Dornsife/Los Angeles Times poll, conducted May 17 through 21, shows 59 percent of voters support his ballot measure while 36 percent oppose it. That’s a five-point drop in support from March, when 64 percent supported it and 33 percent opposed it.

The margin narrows further when voters are given arguments for and against Brown’s proposal, along with information – first announced by Brown on May 14 – that California faces a budget deficit of $16 billion, much higher than the initial projection of $9 billion.

In the face of these new numbers, 51 percent of likely voters agreed it’s “more important than ever to support Governor Brown’s proposal to temporarily increase the income tax on high earners. No one wants higher taxes, but we need to make these tough choices to protect public schools, higher education and public safety.”

But in contrast, 41 percent of likely voters agreed “the increased budget deficit shows clearly that state government does not know how to balance a budget or spend taxpayer dollars. It’s more important than ever to oppose Governor Brown’s proposal to temporarily increase the state sales tax because the money will just be wasted again.”

“Governor Brown and his advisors have argued that the prospect of difficult spending cuts would lead to increased support for additional revenues, but the ongoing news coverage of the state’s budget problems may be creating an obstacle for his ballot initiative as well,” said Dan Schnur, who directs the poll as well as USC’s Unruh Institute of Politics. “Voters have indicated a willingness to pay more for public schools and public safety. But they are also getting skeptical about whether their elected representatives can be trusted to spend their money wisely.”

Here’s a video of Schnur and Times reporter Anthony York discussing the poll results:

Brown’s proposed measure for November’s ballot would raise the state’s sales tax by a quarter cent – from 7.25 percent to 7.5 percent – for the next four years. It also would, for the next seven years, create three new high-income tax brackets for those making more than $250,000 per year, the top 3 percent of California taxpayers. Of these new revenues, which Brown estimates at $9 billion but the nonpartisan Legislative Analyst’s office pegs at $6.8 million, 89 percent would go to K-12 education and the rest to community colleges.

Brown’s job approval rating stands at 49 percent, virtually unchanged from the March poll, but his disapproval rating rose from 35 percent to 39 percent.

Brown’s May budget revision includes spending cuts such as reducing state employees’ workweek by 5 percent, from 40 hours a week to 38. The new poll shows voters support this by a two-to-one margin – 60 percent to 30 percent – so long as public safety workers aren’t affected, in order to save an estimated $400 million. Latino voters were much less likely than voters overall to support the state workweek cut: Only 44 percent favored this, with 45 percent opposed.

But when told this cut would mean state offices are open four days a week, overall support for reduced work hours for public employees declined to only 54 percent, with 39 percent opposed.

The poll’s full sample of 1,002 registered voters had a 3.5-percentage-point margin of error.

2

What they’re saying about the budget forecast

The Legislative Analyst’s Office today issued a fiscal forecast showing California’s state budget deficit for the fiscal year starting next July 1 will be almost $13 billion.

If the state Finance Department concurs next month, this could mean $2 billion in mid-year “trigger cuts” this year, mostly in the K-12 and higher education budgets.

From Gil Duran, spokesman for Gov. Jerry Brown:

“California’s budget gap is the result of a decade of poor fiscal choices and a global recession. This year, we cut the problem in half. Next year, we’ll continue to make the tough choices necessary until the problem is solved.”

From Assembly Speaker John Perez, D-Los Angeles:

“Today’s announcement by the LAO is indicative, but not determinative of the final decision on whether the budget triggers will be pulled next month and we must wait until the Department of Finance December forecast, which will have up to date information and certainly may alter the trigger calculation to lessen the level of trigger cuts.

“Given the uncertainty in the global economy, we included these triggers as a mechanism to ensure California’s fiscal solvency through this budget year. We approved budget solutions that eliminated seventy five percent of the ongoing structural deficit over time, and we have more work to do to accelerate the elimination of the remainder of that deficit.

“Ultimately, we all know that the best long-term solutions to our budget challenges are rebuilding our economy and putting Californians back to work, and we will continue working to build on the progress we’ve made with respect to job creation in the coming year.”

From state Senate Majority Leader Ellen Corbett, D-San Leandro:

“I am deeply troubled by this forecast and the prospect of making another round of deep cuts to public schools and higher education. The Legislature and governor should explore all of our available options, and do everything we can, to prevent mid-year cuts.

“The bottom line is our public schools and institutions of higher education are woefully underfunded, and we must find a way to reverse this trend of cutting their support if we are serious about providing Californians and their children with a bright future.”

From Assembly Budget Committee Vice Chairman Jim Nielsen, R-Gerber:

“The Legislative Analyst’s Office report indicates, as predicted, that the budget passed by Democrats with only a majority vote was overly optimistic and based on shaky assumptions. In this budget, state spending is predicted to increase by 12 percent by 2012-2013. It is clear that state spending has not been brought under control, and that’s not even factoring in the enormous cost of the federal healthcare mandates.

“It indicates that a lot more needs to be done to get California’s budget under control, and that does not happen through tax increases. Government has changed very little in how it conducts its business in the last three years.”

From state Controller John Chiang:

“Today’s news is no surprise. Our economy’s sluggish growth means a tax windfall is unlikely, and not a penny of the estimated $4 billion has been collected to date. The Governor and lawmakers were smart to backstop their hopeful budget projections with mid-year cuts, but they may not have gone far enough. Today’s report tracks with the troublesome pattern we have seen in the State’s receipts and spending, which could mean a cash-flow problem in California’s near future.”

From state Senate President Pro Tem Darrell Steinberg, D-Sacramento:

“Today’s numbers make it clear that the state’s first priority must be to get to the ballot in November and raise needed revenues to avoid any more damage to Californians. The notion of cutting deeper into education, public safety and services for those in need is unthinkable. I imagine an overwhelming majority of Californians agree.

“We’ve cut to the point that the results are being felt like never before. The cupboard of easy solutions is bare. Just ask the students in our higher education systems; the more than one million elderly, blind, or disabled living in poverty; the families who see their kids go to school where the classrooms are more crowded and the resources are dwindling. We’ve hit a crossroads where the time has come to turn things around.

“Democrats have tackled more than half of the reoccurring deficit problem we’ve been plagued with ever since Governor Schwarzenegger cut the Vehicle Licensing Fee. As the LAO points out, last year’s budget actions have put our ongoing deficits at the lowest we’ve seen since the recession began. By building on that foundation, new revenue will finally allow the state to recover and reinvest.”

Read more, after the jump…
Continue Reading

2

Mike Honda speaks out on deficit reduction

Letting the Bush-era tax cuts sunset and ending military spending in Afghanistan and Iraq would go a long way toward getting the nation out of its deficit hole, Rep. Mike Honda told constituents today.

honda.jpgHonda, D-San Jose, held a conference call to tell voters how the Budget Control Act passed last month will affect their lives and what the so-called “Super Committee” is tasked with doing now.

The bipartisan, 12-member Joint Select Committee on Deficit Reduction has until Nov. 23 to decide how to further reduce the nation’s deficit; if Congress doesn’t approve a plan for $1.2 trillion in additional deficit reduction by Jan. 15, bone-deep cuts will be automatically triggered.

Honda said today that the debt-limit showdown that led to the committee’s creation was “engineered” for political reasons.

“This was a manufactured crisis” in which Republicans “turned our routine housekeeping issue of raising the debt limit into a crisis when they should have been focused on jobs,” he said. “We do have deficits and we do have debt, but we need to look at how we got there.”

The committee should focus on job creation initiatives that will help buoy the economy and reduce the deficit, while increasing revenue by returning rich Americans’ tax rates to what they were during the Clinton era’s surplus years and continuing to draw down military resources from Afghanistan and Iraq, Honda said. He had listeners follow along with a presentation posted on his website to advance his arguments.

Honda spokesman Michael Shank said word of the call had been put out on Facebook and Twitter, on the congressman’s website and e-newsletter, and via a mailer; “a couple hundred” constituents actually dialed in, he said. “Definitely not as big as our telephone town halls (where we have a several thousand) but that’s because we do those in the evening and use a calling service to call out to constituents. Here we relied on people calling in of their own volition.”

Honda serves on the House Budget and Appropriations committees. He also chairs the Congressional Progressive Caucus’ Budget Task Force and so elped draft the caucus’ “People’s Budget,” which the caucus says would eliminate the deficit in 10 years, put Americans back to work and restore the nation’s economic competitiveness. The budget among other things calls for letting the Bush tax cuts sunset, ending the wars in Afghanistan and Iraq, creating a public health care option, eliminates the individual Social Security payroll cap and invests in education and infrastructure.