Feb 3, 2003
California Governor Gray Davis's proposed new budget is nothing but a massive attack against the services and programs that the state's workers and poor depend on. Public schools, kindergarten through college, are to lose 5.4 billion dollars in funding, which will lead to layoffs, larger class sizes and all kinds of cuts in programs and services. Medi-Cal, the state's health care program for the poor, will lose 3.6 billion dollars, which is expected to push more than 500,000 people out of the program. For those still eligible for Medi-Cal, the state will no longer pay for artificial limbs, dental and eye care, hearing aids, physical therapy, syringes and test strips for diabetics and catheters for heart patients. Davis's plan will reduce the cash aid from CalWorks, which provides relief to poor children and their families, by six%. Another program on the chopping block is the Supplemental Security Income, which currently helps nearly one million Californians who are aged, blind and disabled. Davis wants to cut their monthly payments by 49 dollars, the maximum amount allowed under federal law.
For state workers, Davis has 1900 job cuts in store – but that's only the beginning. He said he also wants to renegotiate contracts and threatened additional layoffs if union officials don't agree to concessions.
On top of all this, Davis is proposing tax increases amounting to 8.3 billion dollars, the burden of which will rest on the shoulders of people with low income. The sales tax is to increase by one cent per dollar; cigarette taxes will go up by $1.10 a pack; and there will be an additional surcharge for in-state telephone calls. Fees for various state services will also go up.
In declaring this all-out war on the workers and poor, Davis said he had no choice because of a record 35 billion dollar budget deficit California will run over the next 18 months. Other politicians and media "experts" jumped on the bandwagon, repeating like an old record: "We have no choice; we all have to sacrifice."
No choice? "All" have to sacrifice? First of all, where did this astronomic gap in the state budget come from? Who is really responsible for this outrageous deficit which is larger than the budget of any state except New York and Illinois?
These same politicians and "experts" blame the deficit mainly on reduced tax revenues, stemming from an economic downturn. The fall of the stock market reduced the taxable income of the wealthy, they say. Even if the wealthy had always paid all their taxes – which certainly isn't true – that drop in tax revenue, estimated between six and eight billion dollars, doesn't explain the nose dive of the budget from a 12 billion dollar surplus two years ago to a 35 billion deficit today.
If politicians don't want to discuss in detail what's really behind this budget shortfall, it's for a good reason: they are responsible for it. Throughout the 1990s, states just like big corporations underfunded their pension funds and then covered it up by speculating on the high-riding stock market. In 2000, what was obvious and inevitable finally happened: the stock market started to collapse, leaving them short of cash – not just in California but in almost every state.
And what did these politicians do with the extra billions they didn't put in state-run funds? Did they expand public services for the population? Did they hand the surplus they were running to the workers and poor – whom they are today trying to force to pay for the deficit?
Of course not. To the contrary: all those billions went, year after year, to the corporations and the wealthiest layers of the population. Some of these handouts are obvious – like the 6 billion dollars that Davis gave to electricity traders last year alone. The state will be paying much more for the long-term contracts that Davis signed during California's "energy crisis" in 2000, buying electricity from these companies at artificially inflated rates. Other handouts are harder to detect, more or less hidden in the form of subsidies and tax breaks. Corporate taxes in California, for example, have dropped from 10 to 5% in the last two decades. The share of corporate taxes in the state's total revenue has also been halved in the same time period, from 14% to 7%. And none of these low tax rates and tax breaks is being touched under Davis's "rescue" plan for the California budget – so much for us "all" sacrificing to "save" California!
When Davis now tells working people that we have to sacrifice, it's nothing but a continuation of what politicians have been doing all along, in California or elsewhere, whether the economy looked up or down, whether the budget had a surplus or a deficit: let the rich get richer at the expense of the workers and poor. It's just that the cuts are bigger now.
Behind the smokescreen of the budget deficit, Davis in Sacramento is playing the same game as Bush in Washington, with tax cuts for the rich and budget cuts for the workers and poor. With one alleged difference: Davis is a Democrat, and both chambers of the California legislature are controlled by the Democrats!