General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsThis Is BIG (Think Of the Implications): 'California in Surplus' - Paul Krugman/NYT
California in SurplusPaul Krugman - NYT
January 11, 2013, 9:00 am
As best I understand it, what’s going on in CA is a microcosm (a pretty big microcosm, actually — maybe more of a mesocosm or something?) of what’s going on at the national level. A severely depressed economy led to big deficits, because tax receipts are strongly affected by the state of the economy — indeed, are almost certainly much more cyclical than they used to be.
In response to those deficits, there was a lot of spending reduction plus some more modest efforts to increase revenue. And now that we have the beginnings of real recovery, it’s turning out that those efforts were enough to remove much if not all of the “structural”, as opposed to recession-driven, deficit.
As this reality becomes more obvious, the deficit scolds will of course go wild. They have staked their careers on crusading against supposedly intractable deficits, and they have their hearts (and more important, their wallets) set on exploiting the alleged fiscal crisis to dismantle social insurance programs. Good news will be a blow to everything they want, and will be furiously and vigorously denied.
But once again: deficits are receding as an issue before our eyes.
Link: http://krugman.blogs.nytimes.com/2013/01/11/california-in-surplus/?smid=tw-NytimesKrugman&seid=auto
.
= new reply since forum marked as read
Highlight:
NoneDon't highlight anything
5 newestHighlight 5 most recent replies
mucifer
(25,667 posts)We are in a total mess now. No end in sight. Our public aid program keeps getting more and more cuts and new regulations and the state pays all it's bills late.
But, a big congrats to California!
lunatica
(53,410 posts)Government workers were forced to take furlough days. Government offices like the DMV and court houses and other offices the public uses all the time didn't work 5 days a week and a lot of cuts to programs for the poor and women and children. I work in UC Berkeley and we had massive cuts twice and one year of furloughs. The students have had their registration fees go way up. This used to be free for California residents. Not anymore. UC has turned to foreign students because they pay an insane amount for registration.
It's been hard. This is good news.
xxqqqzme
(14,887 posts)Our after school program staggered through 30% cuts in our budget. We struggled to keep health insurance for our staff. They have had no pay increase in 4 years. Our Executive Director cut his salary twice (his salary is not that terrific to begin with). Our small program makes it possible for 120 low income families to keep their jobs because they know their kids are in a safe, nurturing environment after school.
Our fundraiser last year netted $30,000, which helped us through the summer, when day long children's programs are needed.
lunatica
(53,410 posts)I hope you guys get some of that 9% increase for education that he's talking about this year. He especially wants to focus on the poor students.
bluestate10
(10,942 posts)what worked for California voters. Democrats are simply better than republicans at governing and creating healthy economies, historical data proves that in reams. The problem is that Democrats are poor at explaining to voters what Democrats accomplish.
mucifer
(25,667 posts)We have some great progressives, too. But, the state legislature is a mess.
waddirum
(1,005 posts)and a Democratic Governor and big city Mayor.
Still, we always seem to be just a year away from marriage equality, medical marijuana, and the other fruits of enlightened governance. They tells us they don't have the votes in this lame duck session, but promise to "introduce the bill" in the next session.
BVictor1
(229 posts)There only became a supermajority after the November elections.
We may not have marriage equality yet, but we do have Civil Unions. We'll get it.
Melinda
(5,465 posts)Although we are more than ecstatic to have a Super Majority, for sure! Lots of new tax revenue allowing for revisiting and revising fiscal projections = a happy California these days. 
JDPriestly
(57,936 posts)sunshine, they will have to pay high taxes.
So far our beaches and sunshine are winning out over low taxes.
California is blessed. We have a lot to offer other than just opportunities to make money and avoid taxes.
Sirveri
(4,517 posts)Do anything high tech and you need folks with a high tech education.
wryter2000
(47,940 posts)More revenues as well as the fact that the Republicans can't obstruct anything.
Lordquinton
(7,886 posts)We are very progressive, but we are the target of every regressive in the country and have tons of money funneled into our state from everywhere else to keep us from progressing, every victory is one against massive opposition.
Flabbergasted
(7,826 posts)fasttense
(17,301 posts)That's what RepubliCONS do to a state. They turn it into a low, low wage right to be unemployed state.
Fire Walk With Me
(38,893 posts)bluestate10
(10,942 posts)employment growth will continue to fill it's coffers. Now, if California can have some of the tax money that it ships off to red states by the trainload back. I often have argued with conservative numb skulls in blogs. My point was that California's economy is so large and productive that if that state got just 10% of what it sends to red states back to keep, California would run a budget surplus within 2 years and will run surpluses in infinitum. Jerry Brown was not able to get 10% of Californian's tax money back from red states, but he took other responsible routes for getting California back into the green.
Fire Walk With Me
(38,893 posts)Great news for once! Whoohoo!
dooner
(1,227 posts)Bainbridge Bear
(155 posts)Whitman was filthy rich and so, without any political experience, she thought she should be the governor of our largest state and run it like a corporation. Unbelievable. Good riddance, Meg.
JDPriestly
(57,936 posts)I live in a somewhat poorer area (middle class in any other part of the country, but poor for Los Angeles) and discussed the Occupy movement with my neighbors. A surprising number of them sympathized. This covered a lot of age groups. I think that the Occupy movement gave people some encouragement to vote for the tax increases. It wasn't real obvious but it changed people's hearts.
WillyT
(72,631 posts)people started looking at the articles, charts/graphs, and realized just who was fucking them over.
Starry Messenger
(32,381 posts)The first version of the Millionaire's tax was written by union teachers who had been inspired and/or involved in early Occupy efforts. I'm still kind of amazed it got through, there was so much money fighting it.
phantom power
(25,966 posts)It's just a rhetorical tool to flog their base into a froth whenever it's politically convenient for them. Any cursory examination of history shows that it's not a problem they actually care about.
bullwinkle428
(20,662 posts)"Deficits don't matter!"
AlbertCat
(17,505 posts)Indeed.
I they (or anyone) were serious about it they'd cut 1/3 of our military budget and we'd be fine.... and still have the biggest military budget in the world.
tex-wyo-dem
(3,190 posts)When little boots was spending like no tomorrow on treasonous wars and, at the same time, cutting taxes for everyone (especially the wealthy), you didn't hear a peep out of the so called "conservatives" for running up deficits at alarming rates. That, by the way, has never been done during "war time"...in fact the exact opposite has been the historical president (raising taxes has always been the shared sacrifice during wartime).
But now, when a Democratic (and black) president is increeasing deficits to get us out of the worst economy since the Great Depression, all of a sudden the deficit is going to kill out children...
...what a bunch of shit!
Good on Cali and Gov Brown!
Taverner
(55,476 posts)W00t!!! Can I hear a shout out for Keynes? Can I hear mad props for John Maynard? Can I hear some love for Mistah Govnah JERRY BROWN!!!!
WillyT
(72,631 posts)
Odin2005
(53,521 posts)JERRY! JERRY! JERRY!
Melinda
(5,465 posts)I voted for Jerry the first couple times too... remember when he dated Linda Ronstadt? You know, Stone Ponies? Oh wait, I got foggy brained for a sec.... you're still a young whippersnapper. 
Taverner
(55,476 posts)Part of his (and his father's) policies were:
- Free Community Colleges, Universities and Colleges
- Death Penalty eliminated
- Unofficial De-Criminalization of weed
- THE AQUADUCT!!!
Lordquinton
(7,886 posts)I hope he makes real headway now.
libdem4life
(13,877 posts)WillyT
(72,631 posts)Now known as Ron Reagan Jr. were the terrors of the dunk tank at the Reagan Mansion in 1970.
This is a couple of years later.
Shh...
We kicked booty.
WillyT
(72,631 posts)
Damn I feel old... but I got to vote for him again in 2010 !!!
There's THAT !!!
SunSeeker
(58,283 posts)Man, that hurt me. STFU you little whipper snapper!
Follow The Money
(141 posts)Obviously this has national implications, is this being widely discussed in the corporate media today?
They rich will whine and cry no matter what we do. It seems the people with the most money are the biggest whiners of all, money is not making them happy so we might as well tax them fairly so the rest of the 98% don't keep suffering and dying because of their policies of more for the already wealthy.
Puzzledtraveller
(5,937 posts)
MineralMan
(151,269 posts)Odin2005
(53,521 posts)Response to WillyT (Original post)
Post removed
tblue37
(68,436 posts)always confuse them.
freshwest
(53,661 posts)And the debt is what on that credit card - that is, it's someone else's money that is being used. I'm trying to get my head around this as we're going into a new era of determining priorities. Some things, for example, are not under fire by creditors in other nations, such as social spending or here, military expenses.
If people are the priority, those are considered what is necessary to keep the government going - like a healthy workforce. If defense is top of the list, then armaments are the necessary item for government to survive - and possibly then the people's health.
Sometimes we hear social safety net items referred to as 'liabilities' or 'unfunded liabilities.' Defense is not considered in those terms. If it was, it would bring about a more reasonable policy.
As to that matter, what actually are the 'assets' of a nation? Public land, the works of labor, air, water, armaments, resources? Who owns or has right to put those things under the control of government?
I think we are coming to some interesting questions about the nature of government, such as the Founding Fathers did.
tblue37
(68,436 posts)misunderstanding that makes people think that a "budget surplus" means we have paid off our debt, when in reality it doesn't reduce the debt unless it is actually applied to the debt to do so--which is, of course, not likely to happen.
A surplus just means that the outlays in a given fiscal year are less than what the goverment takes in, but since the outlays include interest on the debt rather than payments on the principle, the "surplus" just refers to a short-term situation, not to a reduction in debt, much less to a paying off of debt. The debt we owe is the total of years and years worth of huge deficits.
In every year that the government runs a deficit, that adds to the total debt, but when it doesn't run a deficit, it's like treading water rather than sinking deeper. If there's a surplus, then the money left over after the current bills (including interest on the debt) are paid can be applied to paying down the debt a little--if the people and the politicians don't mistake it for "free" (unearmarked, unspoken for) money, which, unfortunately, is what inevitably happens, specifically because the politicians deliberately play on the common misunderstanding of what "surplus" means.
The federal government still owes those trillions of dollars, even if the "deficit" disappears in a given fiscal year, and even if we run a Clintonian surplus at some point. That "surplus" doesn't mean we have paid down the debt, but a lot of people mistakenly believe it does. That's why the CheneyBush administration was able to push through ginormous tax cuts--because many people thought the "surplus" left by Clinton meant that there was no more debt to be paid off, so the Republicans were able to convince the public that the government had taken "extra" money in taxes that wasn't needed to run the country, so, the Republicanps said, the government should give that money back.
When the economy goes into a deep recession or depression, hiring collapses, and the government has to act as the employer of last resort, despite the debt, and despite the deficit, which increases the debt. Obama got as much stimulus as he could out of the obstructionist congress, but it fell far short of what was needed. But if the economy starts humming along again, so that we start seeing budget surpluses again, that would be a good time to begin paying down the debt, but that is not likely to happen, because politicians will encourage people to believe "surplus" means we don't owe so much money any more.
IOW, I am agreeing with you that California still has plenty of debt to pay down, even if it has a budget "surplus" this year. I also agree that instead of using a "surplus" to shovel more money at the super wealthy and at huge corporations, we need to invest in infrastructure and social capital. Unfortunately, though, I doubt that will happen, even if we start running surpluses.
NuttyFluffers
(6,811 posts)when i can't make ends meet, i'm running negative. i need money that i don't have. (deficit)
i have stuff that must be paid for. i need to borrow. i'll have to pay that lender back. (debt)
awesome, i'm earning more money! i can pay for my needs and still have some left! (surplus)
once i pay back everyone i borrowed from, i can save my own money for later. (reserves)
samsingh
(18,426 posts)tblue37
(68,436 posts)at the undeniable evidence that the economy has been improving under Obama and that unemployment is decreasing.
Their way of dealing with good news, which is bad news for them, is either to deny it--even claiming that the numbers are cooked--or to complain that it isn't improving fast enough. That latter complaint, of course, is true, but only because RW obstructionism prevented the Obama administration from injecting a large enough stimulus into the economy and also blocked every jobs bill that might have improved employment numbers more rapidly.
samsingh
(18,426 posts)this could be because repugs tend to be very afraid of everything. Instead of thinking they cower in groups, self-serving platitudes, and a made up past.
DaveJ
(5,023 posts)I'm not an expert in politics, but in business, most Republicans I've known had less interest in work and more interest in how to make money without working. That does not make Republicans smarter, just lazier.
samsingh
(18,426 posts)evidence in the economy in every industrialized country demonstrates that left wing governments (as long as they don't become too left) are better for the economy, for law and order, for families, and the quality of life.
repugs/right wing become parasites consuming what the left wing governments created. in the end the repugs cover everything in crap and are thankfully thrown out of power.
when will the people learn and not give the right the ability to do this to their country and families?
DaveJ
(5,023 posts)I seriously do not want Republicans in power again, and I think that their ideology will prevent that from happening.
Over the coming decades, if Democrats can continue to control things, then maybe we can get the entire country's affairs in order.
samsingh
(18,426 posts)- protect the right of States to decriminalize drugs (e.g. pot)
- protect public healthcare
- keep taxes low on the middleclass
- get tougher on criminals, reduce gun violence
we will stay in power for years to come.
Flatulo
(5,005 posts)unemployment is among the lowest in the industrialized world.
They're doing something right.
samsingh
(18,426 posts)Flatulo
(5,005 posts)to the Far East is the beginning of the death spiral.
samsingh
(18,426 posts)
airplaneman
(1,386 posts)I remember when Wilson was recalled so Arnold could fix the deficit problem (I believe it was 13 billion at the time). Of course Arnold left with the deficit problem much bigger than when he entered (60 billion is what I recall and a record for the state of California). The scoreboard continues to improve under democratic control.
-Airplane
xxqqqzme
(14,887 posts)who was the recall target. The recall was plotted before Davis was re-elected. Ken 'Enron' Lay was the instigator.
airplaneman
(1,386 posts)
SwankyXomb
(2,030 posts)He had it all set up so he could usurp the governor's mansion, then Arnold declared, and he was lost in a flood of candidates, most of who would have to work their way up to be declared looney tune fringe.
Historic NY
(40,037 posts)a simple reinstitution of the stock transfer tax would help and step up tax collections owed by corporation and individuals....would close the gap.
Doctor_J
(36,392 posts)they are a drain on all of this nation's resources, and drag us down financially, intellectually, and socially. they do not consider themselves part of the US anyway.
Response to Doctor_J (Reply #35)
Post removed
Javaman
(65,711 posts)repukes try to stage a fake energy crisis to unseat Democratic Governor.
oh wait...
HiPointDem
(20,729 posts)supercats
(429 posts)I have voted for him every single chance I could since the seventies. And have never regretted it!
thetonka
(265 posts)And let's hope people can be mature about what worked and what did not without resorting to name calling and party bashing ........
Nevermind.
forestpath
(3,102 posts)
Cha
(319,073 posts)pointing it out.. so Eloquently!
Thanks WillyT
WillyT
(72,631 posts)
DonCoquixote
(13,960 posts)Many Californians are mad because Jerry Brown made budget cuts; his "conservative sellout" make the most liberal of America look fascist.
WillyT
(72,631 posts)Thanks in advance.
DonCoquixote
(13,960 posts)Point one...conventional wisdom says austerity is the way to go, the same convention wisdom that is wrong at least 6 out of 10 times.
Point two..Many people feel that Jerry Brown has been far too CONSERVATIVE. Red Ted Rall insult him for doing ANY budget cuts
Point three..If Jerry Brown used liberalism to heal the world's eighth largest economy
and
many Californians feel he has not gone ENOUGH to the LEFT,
that means that we have not gone far enough to the left,
and we can prove the ideas of the left DO WORK.
WillyT
(72,631 posts)Jerry Brown, as Governor, cannot print money, and is bound by law/reality to balance the state's budget.
He HAD to go semi-austerity because of the two-thirds rule, at the time, and Republican intransigence.
BUT... in this fairly Liberal State, with a large number of Liberal activists, and a whole lot of Liberal voters...
Prop 30, 38, and the anti-two thirds that passed. Made it possible...
For Jerry, who I voted for twice in more the 40 years, and has done good; it was Liberal voter that came to believe, and came home to deliver for the Democratic Party.
If we are smart... we will keep them in our fold.
Kingwithnothrone
(51 posts)Yes "our side" makes government "work",within a disgusting Capitalist framework that impoverishes millions.Of course prop30 gets passed after devastating cuts and Jerry Brown gets to play hero on the "left".Jerry Brown has balanced his budget on the backs of the poor,the elderly,the disabled,and the working poor.A 3-1 spending cut-tax revenue ratio,is hardly reason for the rejoicing of glorious political victory and "balanced budgets".And do tell,will the surplus be used to restore programs (to previous levels which were completely inadequate in the first place) that the poor of California depend on as a lifeline?Of course they won't Willy.There will be the usual talk of how "we" must now be prudent with "our" savings and just where are those jobs?
The Republican right-wing assholes are at least honest about which side they're on.Their screed is...eat shit and die you poor fuckers.We get compassionate austerity from "our side".As one of the compassionate posters on "our side" from another thread so aptly put it in so many words.I love my state,if you move out here just stay out of the interior valley where those dumb,uneducated,poor people, with STDs reside.Fuck em that's conservative country anyway.Hmm,not a Democrat to be found among those poor bastards i guess.
I'm sure if Barack and "our lefties" in congress balance the national budget just like Jerry and make "long overdue and needed" cuts to the safety net,the denizens on "our side",along with compassionate Capitalist water carrier Krugman will be equally overjoyed.Our great compassionate austerity leaders will pose for fantastic photo ops that will be distributed far and wide for public viewing.After all,we did extract a few token pennies from the "winners and strivers" who reside in the five percent Willy.
Amen to Capitalism.Many have given much for the cause and we thank you all for keeping the dream alive.The winners and strivers can raise the boats of the poor with their tide of prosperity.God bless the United States of austerity and "balanced" budgets.Tough love was needed.How can you have any pudding if you don't eat your peas poor people?There seems to be a fundamental weakness in the American Dream or is it Scheme?Poor people keep showing up Willy.
Austerity and "balanced budgets" have nothing to do with the advancement of working class power in this country.Of course this is a site for the Democratic Party, not Leftists,so it's understandable the reactions to anything that can be held onto as a victory.I just wish some people here would stop calling themselves the left.They do NOT represent leftist politics in any way or form.At least people should be honest about who they are and what they represent.
Left wing government in a Capitalist Empire is bullshit Willy.The cognitive dissonance of the enablers of the pestilence and starvation is astounding.
That being said WillyT,i like most of your posts.
DonCoquixote
(13,960 posts)Do answer me this
If Jerry Brown does not have the legal authority to raise taxes, what is he supposed to do, bomb the state Senate? I am to the left of Obama, but I do get tired of hearing people say "so and so did not do this" when they do not say how they could have done it.
JayhawkSD
(3,163 posts)Not even close.
California endured two years of ruthless and very painful spending cuts, across the board, affecting every aspect of government; education, public safety, social services, safety net, and all aspects of public service employment. Those cuts have not been restored. Cuts at the federal level have been essentially nonexistent.
California raised taxes on incomes over $250K rather than the $400K federal level, by a larger percentage than at the federal level, and raised the sales tax. Our tax increases have been an order of magnitude higher than at the federal level.
The projected surplus is also the result of some rather unrealistically optimistic revenue projections. We'll have to wait and see if they actually materialize. They usually do not.
To say that California is "a microcosm of what's happening at the federal level" is an unusually idiotic statement coming from Krugman
John2
(2,730 posts)California raised taxes but the state is not responsible for two Wars or the failure of the U.S. economy. We have a capitalist system and private enterprise is basically responsible for most of the failure of the U.S. economy not the Federal Government or the responsiblity the Federal Government takes in the social safetynet or things such as national disastors or infrastructure.
Don't get the idea the Federal Government hasn't given any money back to California either for things such as education and grants. The U.S. Government has tried to make the environment tenable for private enterprises to create jobs for the economy as much as they could through less taxation and deregulation for the last twelve years. The people at the top just abused those privileges by downsizing and outsourcing U.S. jobs for cheap labor and more profits going to share holders.
To put the blame on U.S. workers and the poor is outrageous by suggesting the U.S. Government should cut safety net programs. California is not supporting an Empire either with troops spread out over the World in over 150 countries under the disguise of National Security. That Empire and nation building has mostly benefited the military industrial complex too and most of that is in red districts through out the U.S. The President is on the right path by going after the people that created the problem and should keep his hands of Social Security, Medicare and Medicaid period. Go after people like the Mitt Romney's, Kochs and Sheldon Addison's loopholes where he will find plenty of money. Go after the Oil companies also that made all those profits everytime they jacked up oil prices. and make them pay for taking jobs out of this country. I think they all should be made responsible just like we did to the auto Industry. It seems like they are the only industry announcing new jobs in the U.S. now.
valerief
(53,235 posts)so that the nation can piss away more money and bankrupt us, making us one step closer to a dictatorship.
1983law
(213 posts)But this "surplus" is projected based on a budget. I have seen this before, but the revenues never seem to turn out as expected. Hoping for good news, but years of government sleight of hand has left me cynical.