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Just Pledging "No New Taxes" Won't Solve the Budget Dilemma

July 1, 2010

The current political climate in our country including Sacramento seems to demand something akin to blind allegiance.  With the unflinching (and at times even illogical) opposition to any tax increase being the prevalent and overriding political philosophy of the right, it has become almost impossible for a typical Republican politician to break ranks and take a position contrary to the party line.  But we remember that Governor Schwarzenegger once sold himself to California voters as someone who is not a typical politician.

“No new tax” pledges are nothing new, nor are they confined to California.  And some of this hold-the-line ideology has a degree of merit, especially in light of runaway government spending, lack of spending discipline and budgetary controls, earmarks and built-in deficits.

However, an absolute denial of the existing reality, and a refusal to consider any kind of revenue enhancement (under any circumstances) is counterproductive and defies logic. No tax increase, no matter what?  Could there be the breaking point? Would the “no new taxes” folks stick to their party directives if the budget deficit grew to thirty percent? What about fifty percent?

There are some who say that no amount of deficit would force them to consider an increase in taxes.  They maintain that state government, and all the programs it offers, must be forced to “live within its means.”  These are often the same people who are nostalgic about the low tax rates of 1960’s and measure prosperity by only one yardstick – hard cash in their pockets.

This logic is flawed and misconceived.  To insist on a revenue freeze is akin to insisting that life be frozen in one certain time frame.  Most of us enjoy considerably more amenities (including state-funded programs and services) than we did in 1960s. Much of new infrastructure and conveniences have come at a considerable cost to the local, state and federal governments and need more funding to be maintained.

Many of the current legislators live in communities that did not even exist in 1960’s.  Most of them drive on roads built after that time.  And all of them draw 595 percent more than the legislators’ salary of late 1960’s (they made 726 percent of the 1960’s salary before the recent 18 percent reduction) – not including per diem and other perks. And like all of us they enjoy the marvels of new age such as Internet, wireless phones, air-conditioned homes and healthier life styles.

Getting out of the current highly polarized stalemate will not be easy.  Many of the anti-tax folks are so deeply entrenched in their philosophical position that they may be unwilling to entertain the idea that they could (and should) change their mind.

But recently – on the subject of offshore drilling, at least – the Governor has displayed a willingness to adapt his prior stance as he recognizes the changing circumstances.  He has shown some political maturity and courage.  We hope he displays further fortitude and strength as the state budget is worked out this summer.  Courage and foresight will be needed in leading the state out of its current fiscal morass by finding balanced solutions, comprised of both a reduction in expenditures and an enhancement of revenues.

This is the time to lead, not follow the party lines blindly. And when comes to one’s party, may be this is the time to direct, not simply act.