Is California’s past America’s future?

July 4, 2011

There should be a word for an event that, in being remarkable enough to merit comment, is depressing because it should be normal enough to pass without mention. Linguistically, this seems like a job for the Germans. And if they’re looking for an example, they could turn to California, which is celebrating the prompt passage of its 2012 budget.

It’s not a very good budget. But unlike all but five others in the past 25 years, it made it into law before the start of the fiscal year. In California, that’s a big deal. Now you see why I wanted the Germans to come up with that word.

The writer Alison Lurie once said that “as one went to Europe to see the living past, so one must visit Southern California to observe the future.” The north is worth a look, too, particularly Sacramento, where well-meaning but poorly-designed rules have left the political system gridlocked, and where Republicans seem to be looking for inspiration as they consider how to remake Washington.

During the Great Depression, California’s voters decreed that no budget could pass in a year of slow growth without the approval of two-thirds of the members of each house of the legislature. In the 1960s, that requirement was extended to all budgets. In 1978, Proposition 13 applied it to all tax increases, too.

These rules — designed to encourage bipartisanship and fiscal responsibility — have resulted in paralysis and polarization, with minority legislators seeing more upside in obstruction than compromise. As the Los Angeles Times’ editorial board wrote, “California’s persistent fiscal mess is based less on poor budget decisions in Sacramento than it is on the inability to make a decision of any kind.”

During last year’s election, Californians passed Proposition 25, permitting the budget to pass on a simple majority vote and docking the legislators’ pay if they procrastinated. But they preserved the two-thirds majority required for taxes. As you might expect, the budget passed by the deadline, but it focused almost entirely on cuts.

“Proposition 25 is why we have an on-time budget,” sighs Jean Ross, California Budget Project director. “The bad news is that the legislature still has one hand tied behind its back. It can cut, but it cannot tax. It’s a very destabilizing position to be in. We have tax loopholes that everybody agrees are either inefficient or set up perverse incentives for businesses to move out of state, and we can’t close the loopholes. So we instead cut funding for higher education.” That’s not how you win the future.

But it’s almost exactly the budget process Republicans want to bring to Washington. The GOP’s latest debt-ceiling demand is a balanced-budget amendment creating a California-like requirement that tax increases garner a two-thirds supermajority in both houses of Congress and restricting federal spending from exceeding 18 percent of the previous year’s gross domestic product. The amendment is so extreme that even Paul Ryan’s budget — itself quite radical — would be considered unconstitutional.

Some of this is by design. There was a bipartisan balanced budget amendment floating around the House — one that simply balanced the budget rather than creating new rules for taxing and spending — but Republicans preferred the hard-line version because the Democrats couldn’t vote for it, and thus Republicans could use it to campaign against them. “They’re clearly just looking for something to take and put balanced-budget Democrats like me on the spot and say, ‘He doesn’t really support a balanced-budget amendment.’” Rep. Peter A. DeFazio (D-Ore.) told Politico. “Well, I do, but I want an honest one. I yearn for the days of the Gingrich revolution compared to these people. I never thought I’d be saying that.”

But even DeFazio’s option would court disaster: It sounds like a bid for fiscal responsibility and is in fact a recipe for economic and constitutional crises. In the recession the states, almost all of which have to balance their budgets, saw their finances collapse. A federal government yoked to a balanced-budget law couldn’t have stepped in to help. The recession, bad as it was, would’ve become worse. Deficit spending isn’t a popular choice, but it is, at times, a necessary one.

In California, the electorate came to believe that certain tools — namely party-line votes and taxes — came to be overused, and so they put them high up on the shelf, out of the legislature’s reach. Decades later, the state is coming to see that those tools, though not always pleasant to use, were needed. And so a once-great state is falling into decline, slashing away at its future and bickering away its present. The question is whether that’s going to be America’s future, too.

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