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By Robert Cruikshank, Courage Campaign (originally printed at http://www.couragecampaign.org/page/community/post/roberticruickshank/C2t5 with links to sourcing) June 9, 2009 (Sacramento)--It's a question that I rarely ever see asked, and one that is *never* answered, certainly not in a state where the conventional wisdom is that revenue increases are impossible, even though we've never tried to make them happen. Instead the supposed "political reality" of no new taxes is trumping the economic reality that taxes are preferable to spending cuts in a recession. The result is that spending cuts are treated as inevitable even though they are a sure path to Depression.

Yesterday's LA Times had a remarkable editorial calling for no delay or hesitation in making the cuts. But the only time they made mention of the economic impact of the cuts was when they argued against permanent revenue solutions: Be smart about new taxes. Reject, for the current year, broad-based sales and income tax increases as damaging to the recession economy and as politically infeasible, but move forward on carefully targeted temporary taxes, specifically on tobacco, alcohol and snack foods, to prevent cuts in particular health and human services (but not necessarily agencies). And yet this ignores the evidence gathered by Peter Orszag and Joseph Stiglitz which showed that income tax increases were actually *better* for the economy than spending cuts. Had the opinion page editors read George Skelton's column that ran in the same edition, they might have understood how that abstract point works out in practice:


Faced with what he calculates to be a potential $24-billion budget deficit in the fiscal year starting July 1, Gov. Arnold Schwarzenegger has proposed cutting state supplemental payments for the elderly and disabled down to the minimum allowed by federal law. It would be their third cut this year. The Legislature already has approved a $20 monthly cut beginning July 1, lowering the grant for single people to $850. That's it: No food stamps, and that includes any Social Security. This was the cut Jean had read about.


But the governor also is seeking another $20 trim starting in September, reducing the benefit to $830. The rent for her one-bedroom condo is $850. What Jean's story shows is the ripple effect of safety net spending. I've heard it said that Cal-WORKS, for example, is de facto one of the most important rent subsidy programs in the state. When the state cuts aid to the needy, whether it's a poor family or an AIDS patient or a college student, they have to make up the difference out of their own pocket. That means they have to cut back on other spending, which means more foreclosures, more rental vacancies, less consumer spending, less tax revenue, fewer jobs, and more business failures.


Nobody in Sacramento has explained to the people how these cuts will help produce economic recovery. They ought to, and we should demand that we get such an explanation before any legislator votes for a single cut. I want an answer to the $24 billion question. Who in Sacramento will give it? The opinions in this editorial reflect the views of its author and do not necessarily reflect the views of East County Magazine.

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