Bustamante’s Bad Business

The San Francisco Gate declares that Cruz Bustamante is bad for business in California. Indeed, looking at Bustamante’s policy proposals, they’re practically guranteed to make California’s record debts continue to skyrocket as even more businesses flee the state.

Bustamante’s budget plan seems oblivious to the trouble California businesses are in. The state’s workers’-compensation program is troubled, as businesses have seen rates shoot up 70 percent over the past three years. In 2004, California employers will pay double the unemployment-insurance rates they shelled out in 2002. Health-care premiums are also skyrocketing, yet Bustamante wants California businesses to pay $2.9 billion in increased property taxes.

In this year’s legislative session, the California Chamber of Commerce led the fight against legislation to increase nonresidential property taxes, calling the bill a "job killer." According to the association, California businesses already pay nearly two-thirds of the state’s property-tax revenues, and many business properties are regularly reassessed to their full market value.

Bustamante’s plan is to ensure that the people who employ half of all workers in this country – small business owners – get the shaft even more than they already do. Such an ideology is completely unsustainable. You can’t expect to raise tax revenues when even more people are jobless in California. You can’t raise tax revenues when small and medium-sized businesses are going belly-up statewide.

Of course, Bustamante also goes back to that tried and true dogma of liberalism: when in doubt, soak the rich:

Bustamante’s budget would also increase the highest income taxes on the top 4 percent of taxpayers. The wealthy are easy targets — they’ve got too much money anyway, we figure. But every penny the wealthy (or any of us) has to send to Sacramento or Washington is money they are not spending in the economy, giving to a local charity or investing, thus freeing financial institutions to loan their money out to us little guys.

Furthermore, the government could raise the tax levels on the top 4% to astronomical levels, and it still wouldn’t help the problem. You can only soak the rich so much before the law of diminishing returns starts to kick in. The only way California can restore fiscal sanity is by cutting spending. Tax increases will only make the problem worse by cutting off the economic growth that California desperately needs to get out of its mess.

4 thoughts on “Bustamante’s Bad Business

  1. According to the numbers you presented to me about a month ago, the wealthiest 4% of voters are the biggest Democratic constituency. Are you honestly trying to convince us that your heart bleeds for this group (which has seen its top tax rate fall by more than 70 percent in the last 50 years) and that they should be held harmless from any possible tax increase in the future, enabling them to donate more money to the Democratic party? Once again, your rhetorical wheeling-and-dealing fails to hold up to common sense, but then again little to do with modern conservatism ever does.

    And all economists with any credibility would be quick to inform you that the monstrous budget cuts that would be required to erase $38 billion in government debt would cause as much if not more stress on a state economy than tax increases. You make it sound as if tax increases are the only thing that obstructs economic growth, again because you fail to even acknowledge the humanity of the sorts of people most affected by government budget cuts. Indeed, your lust for putting Democratic constituencies (government workers) into the unemployment line makes the prospect of draconian budget cuts not only painless, but a badge of honor to you people.

    Also, I don’t know if you’re merely ignorant about the specifics of California’s budget crisis, or merely choose to ignore the facts because they cripple your defense for recalling Gray Davis. Either way, Californians have voted to allocate a certain level of spending allotments for various items in previous referendum votes that date back all the way back to 1978. As a result, Gray Davis or ANY Governor that may replace him will have virtually no wiggle room in cutting existing spending commitments mandated by the people of California. This fact of life is getting very little press, but the Dems would be wise to advertise it since it virtually eliminates all credibility to the argument that Davis should be recalled on the grounds of gross incompetence. Whoever replaces him (if that indeed happens) will not be able to do much (at least legally) that Davis isn’t already doing after the deplorable power grab eventuates.

  2. As Schwarzenegger himself pointed out, you have three policy options for dealing with this debt.

    1. Raise taxes, and see the economy decline because California is already a tax hell for small business.

    2. Cut services, which helps, but won’t solve the problem long-term.

    3. Grow the economy, which raises the amount of tax revenue and helps everyone.

    Of these three options #1 is the absolutely most idiotic thing to do, and unsprisingly this is what the liberal Democrats want.

    The second is a short-term stopgap. The third is what needs to be done.

    Bustamante would destroy any chances for economic recovery in California, and his policies would hurt everyone in the state of California.

  3. Thank you, Mr. McAuliffe, er, excuse me, Mr. Reding. For a second there, I had you confused with the DNC spin machine, which you and many others have accurately pointed out has nothing proactive to offer voters.

    Your solution to California’s problems as outlined in your retort to me is not unlike the faceless economic development rhetoric of Howard Dean, John Kerry and Dick Gephardt are proposing for the nation’s problems. In other words, nothing even remotely substantive. You are committed to the generic “Option 3” proposal of “growing the economy to create jobs and boost tax revenue.” So am I. So are all nine Democratic candidates for President. So is Gray Davis. Presumably so is George Bush, although it’s debatable if promoting robust economic development is really consistent with Bush’s agenda of defunding government.

    Unfortunately, it’s takes alot more than rhetoric or wishful thinking to grow the economy otherwise politicians would have had it covered nearly three years ago when the economic downturn first began. Compounding the stagnancy of the economy is the fact that nearly all of the states are forced to either slash government spending or raise taxes, both of which suppress economic growth. The only thing you’ve mentioned specifically about how “growing the economy” can be accomplished in California is the same tired line of sticking it to injured workers and continue the never-ending strip mining of workers compensation, a system which has failed to even remotely live up to its commitment to providing a serious safety net to injured workers for at least 10 years now. Nonetheless, it’s always seen as the perennial conservative pin cushion, further motivating already loosely regulated labor-intensive industries to become even more lax in worker safety standards. It’s all part of an extremely calculated strategy in the new non-union and unregulated American job market that goes hand in hand with our immigration policy to turn all labor-intensive jobs into “jobs Americans won’t do”, make working conditions as oppressive as possible while simultaneously scaling back workers compensation regs year after year, and then holding labor costs down by maximizing turnover, crippling one disempowered immigrant worker and then replacing him or her with a healthy one and starting the whole process over again.

    Other than the standard “cut workers comp costs” for business claptrap, what other substantive suggestion do you have to offer California right now in the face of a $38 billion deficit with precious little wiggle room to slice and dice?

  4. Here’s a start:

    – I agree with Arnie. The first thing that has to be done is an outside audit to determine exactly where the hell Davis lost billions of dollars. Even with California’s mandatory government spending, there’s no reason why the state should be running such a deficit.

    – Complete a spending freeze on all discretionary budget items. All non-essential government services should see a freeze in their budgets. The Departments of Transportation, Education, and Human Services should present cost-cutting plans within the first three months.

    – End the wasteful prison guard’s health plan that Davis signed as a pandering to the prison guards union and replace it with a system. This alone could save $1 billion in this fiscal year.

    – Eliminate the car tax, and eliminate all taxes on capital improvements for small and medium businesses for at least the next year with an option to renew the cuts each fiscal year. Also, cut marginal tax rates across the board and simplify loopholes that allow people like Arianna Huffington to avoid paying taxes despite huge amounts of income and wealth.

    – Create additional tax credits for new business creation and additional labor for existing businesses.

    All of these will ease the situation in the short term until the economy can recover on its own. Finally, the long term solution is also clear:

    – California must have an amendment to its consitution along the lines of the TABOR amendment in Colorado. Any spending increases above a certain level must be approved by referendum. This will prevent the government of California from going into another fiscal downward spiral as it did under the inept and corrupt Davis Administration.

    These programs have been demonstrated to work in other states, and would work in California. The real question is will the new governor have the political will to implement these changes?

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