There's a great diary up on the rec list about the devastating impact of the Illinois budget crisis. Here in California, where we seem to have invented the budget crisis, we're facing a similar catastrophe. Because Governor Arnold Schwarzenegger and his Republican cronies blocked a solution to the state's looming cash crisis late last night, California is going to lose $7 to $8 billion in savings. And as a result of that, California's government is going to have to pay IOUs to those it owes for the first time in 17 years.
If you are owed any money by the state of California (unless, of course, you are a bondholder) you're going to get an IOU. That includes folks still expecting a tax refund, anyone who still needs state financial aid for school, and the hundreds, perhaps thousands of businesses that do business with the state.
Back in February, when IOUs were nearly sent out during an earlier budget crisis, the Courage Campaign (where I work as Public Policy Director) joined with Andy Cobb of The Public Service Administration and longtime Kossack Malacandra to create Arnoldbucks. We felt that if Californians were going to be paid in funny money that banks may not even accept, we should make sure that everyone knows that Arnold Schwarzenegger is responsible for this mess.
See the video:
And see the Arnoldbuck Malacandra created (click it for a printable PDF version):
Why is this happening to California? The worst economic downturn in 60 years is playing a big role. But so is the US Senate's moronic decision to cut nearly $100 billion in state stabilization funds from the stimulus earlier this year. That money would have gone to states like Illinois and California, helping keep schools open, keep kids on health care, and prevent budget cuts from strangling economic recovery.
But the most blame goes to those Republicans who are using this crisis to bring the shock doctrine to the US and destroy government, regardless of the economic consequences, as Harold Meyerson explained in today's WaPo:
Right-wing ideologues see the crisis as an opportunity to shrink government regardless of the consequences. Schwarzenegger is proposing to end welfare, not just as we know it but altogether, and to throw 1 million children off the rolls of the state's healthy families program. But the consequences of closing the deficit simply through cutbacks will be felt by more than the poor. Already reeling from $15 billion in cutbacks that the state put through in February, many school districts, including that of Los Angeles, have canceled summer school this year. Scholarships that enable students of modest means to attend California's fabled university system have been slashed. Most of the state's parks may have to be closed as well.
The terrible irony in decimating the public sector to save the state is that the California that was the epicenter of the postwar American dream was fundamentally a creation of government. Fighting a Pacific war during World War II compelled the federal government to spend billions on California industry and infrastructure, and the state was the leading beneficiary of Pentagon dollars during the Cold War. As Kevin Starr, California's leading historian, points out in "Golden Dreams," his brilliant new history of the state in the 1950s and early '60s, fully 40 percent of all defense dollars for manufacturing and research in 1959 went to California, anchoring the state's booming economy in a well-paid workforce that was either unionized or professionalized, and seeding an electronics and high-tech sector that was to blossom in the following decades. Building on that prosperity to create more prosperity, Earl Warren, Goodwin Knight and Pat Brown -- two Republicans, one Democrat -- invested state dollars in schools, universities, freeways and aqueducts that were the best in the world. The Golden State was never more golden.
Today, its governor seems determined to turn that gold to dross. On Monday, the Democrats in the legislature passed a budget that included cuts of $11 billion, levied a tax on oil companies and tobacco, and raised auto registration fees by $15 per car to keep the state parks from closing. Schwarzenegger reiterated his refusal to raise any taxes or fees and said he would veto the budget.
So what is there to do about this? The Courage Campaign isn't just producing videos and Arnoldbucks, useful though they are as pieces of political theater. We're pushing legislators to close corporate tax loopholes instead of making these insane budget cuts. We're mobilizing to restore majority rule and repeal the 2/3rds rule that enables Republicans, a minority party in this state, to block sensible solutions.
In California, just as in Illinois or Arizona or Pennsylvania or any other state facing a budget fight, we have to unite and organize to fix these budget disasters and stop the right-wing from using them to destroy what is left of our chance at economic prosperity and security.