Sense on Cents

A few weeks back, I wrote As California’s Economy Goes, So Goes the Country to address the financial precipice of the largest state in our country. As California faces financial armageddon, the state finds itself challenged with the prospects of massive budget cuts, significant tax increases, or a combination of the two.

Are we witnessing the prequel for what our entire country faces? I believe we are. Let’s navigate.

“Governator” Schwarzenegger is adamant about not raising taxes. The prospect of significant spending cuts is causing a firestorm with rank and file union members. Democratic pols find themselves between the proverbial rock and a hard place.  The Los Angeles Times writes, State’s Budget Crisis Opens Rift Between Unions and Democrats:

The Capitol’s usual political alliances are being tested by the state’s severe financial problems as interest groups scramble to hold onto as much as possible of the state’s shrinking coffers.

The relationship between Democratic leaders and some of their labor benefactors has turned particularly frosty: Many of the programs union members rely on for paychecks — and the unions rely on for dues — have been slated for deep cuts.

In a period of massive fiscal deficits, obviously no stones are left unturned, everybody must contribute, and pain is felt by all parties. Really? If that were the case, then what good is politics and winning elections?

We may want to think that our political process achieves the greatest common good. In my opinion, though, the political game has become a function of “get as much as you can for as long as you can.”  In the process, the politicians have become wedded to their constituencies and incestuous relationships have developed deep roots.

To this end, it is no surprise to see the large unions in California enraged at their political cronies for not “taking care of them.” The LA Times provides insights on this angle:

The friction started when the Democrat-dominated Legislature produced a budget in February that raised taxes but also cut programs and included a GOP-driven plan to put the brakes on state spending. A handful of labor groups then spent millions to help defeat the May ballot measures that the budget spawned.

“Many public employee unions, teacher unions [are] thinking that they were thrown under the bus in the last budget,” said Assemblyman Charles Calderon (D-Montebello). “So now they’re asking themselves: If these Democrats are not going to stand up for us, then what good is it to have them there?”

Why are the California unions so enraged? Well, all we really need to do is review what has occurred on the national level. Why is it that the Supreme Court is reviewing the sale of Chrysler to Fiat? Very simply, Obama overran standard bankruptcy procedures in delivering for the UAW. He justified his “means” because he viewed his “ends” as best for the economy. He ran the same play in the GM bankruptcy.

California union members want a bite from the same apple. Why aren’t they getting it? The great equalizer in our country and economy!! What’s that? The fear of failure. That is, Democratic politicians in California know the pulse of the overall electorate as reflected by the energy embedded in the April 15th “Tea Parties.”

The Times again provides interesting color,

But even some of the most liberal Democrats say some union leaders are ignoring the reality of an angry public, a sour economy and a state government approaching insolvency. Moreover, more taxes would require Republican support in the Legislature, and the minority party has made clear that there will be none.

“We have an economy which is in intensive care, and another round of tax increases . . . would put that patient in cardiac arrest,” said Assembly GOP leader Sam Blakeslee of San Luis Obispo.

Barack, Nancy, Harry….are you listening?

Insights from our friends on the “left coast” are always appreciated!!

LD