CA DOWN $16B! BROWN WARNS OF BIG CUTS: ‘Worst recession since 1930s’
The shortfall has widened from the $9.2 billion Brown estimated in January, after lawmakers resisted the Democrat’s call for cost cuts, the federal government blocked other reductions and April income-tax revenue missed budget forecasts by $2 billion. On May 14, he’s set to unveil a revised spending plan and to say how he would erase the gap.
Brown, 74, set out an initial budget in January with $92.6 billion in spending for fiscal 2013, which begins in July. That plan stripped more than $4 billion from health and welfare programs while relying on higher income and sales taxes. The levy increases will go before voters in November. If rejected, schools will lose $4.8 billion midway through the year.
“We are still recovering from the worst recession since the 1930s,” Brown said in a YouTube video cited on his Twitter post. “Tax receipts are coming lower than expected and the federal government and the courts have blocked us from making billions of necessary budget reductions. The result is that we are now facing a $16 billion deficit.”
Gov. Jerry Brown announced on Saturday that the state’s deficit has ballooned to $16 billion, a huge increase over his $9.2-billion estimate in January.
The bigger deficit is a significant setback for California, which has struggled to turn the page on a devastating budget crisis. Brown, who announced the deficit on YouTube, is expected to outline his full budget proposal on Monday in Sacramento.
“This means we will have to go much further, and make cuts far greater, than I asked for at the beginning of the year,” Brown said in the video.
Lawmakers and others were hoping that a rebounding economy would help the state avoid steep cuts to social services. But revenue in April, the most important month of the year for income taxes, fell far short of expectations, leading to a shortfall of at least $3 billion in the current fiscal year.
The state has also spent $2.1 billion more than expected, according to the controller, further worsening California’s financial health.
LOS ANGELES — The state budget shortfall in California has increased dramatically in the last six months, forcing state officials to assemble a series of new spending cuts that are likely to mean further reductions to schools, health care and other social programs already battered by nearly five years of budget retrenchment, state officials announced on Saturday.
Gov. Jerry Brown, disclosing the development in a video posted on YouTube, said that California’s shortfall was now projected to be $16 billion, up from $9.2 billion in January. Mr. Brown said that he would propose a revised budget on Monday to deal with it.
“We are now facing a $16 billion hole, not the $9 billion we thought in January,” Mr. Brown said. “This means we will have to go much further and make cuts far greater than I asked for at the beginning of the year.”
Mr. Brown disclosed the news in a video that had all the trappings of a campaign announcement. In it, he aggressively accounted for the steps he said he had taken to try to scale back a $26 billion deficit he found upon taking office. And he urged viewers to back an initiative he is putting on the November ballot that would increase sales taxes by 0.25 percent and impose an income tax surcharge on wealthy Californians to try to stave off more cuts.
State officials said Mr. Brown’s proposal would include a package of immediate cuts, as well as others that would be triggered only if voters failed to approve his tax plan. The sales tax increase would expire after four years, while the income tax surcharge would last for seven years.
What we have tried could never work , , ,
– – – – – – – – – – – – – — – – – – – – –
January 20, 2009
Dear Mr. and Mrs. Yertle AKA President Obama:
I am concerned that the manner in which the federal government is operating is eerily like how the Krupps munitions factory was still billing the Nazi’s – after Hitler committed suicide. Benjamin Franklin once remarked that the definition of insanity is doing the same thing, and expecting different results. The congress has passed bailouts, and rescues, and soon a, stimulus package, all in an empty effort to save the Republic from the financial malfeasance of governments small and large. If they failed to work in the past what reason do you believe that they will work in the future? It appears to me that the solution is obvious. Forgetting financial reality for a moment. In a given year the US economy generates 10 to 15 trillion dollars. I say why wait for the year to pass. Next time all of you are at your respective posts pass a bill to print $12.5 Trillion and disperse it. At least that way we will all know who is getting the money.
Obviously, however enticing, this idea is absurd. Is it any more so than one insolvent institution, the US Government ($2 Trillion running deficit, $12 Trillion in debt), giving another insolvent institution, US Banks(Bloomberg news service reports $4-$5 Trillion required to re-capitalize them, at the current rate of loss), money it does not have anything to back it other than more debt, and a beaten up taxpayer? With ink so fresh on the bonds that the Communist Chinese government has yet to collect the interest on it? I fail to see the wisdom in how creating a smaller hole in one spot, and a bigger hole in another will ever do any of us any good. This philosophy has not worked in the past and it will not work in the future. The evil economic stew we are cooking has been brewed before, and it will taste just as bitter this time.
When Ronald Reagan took the reigns of this nation in 1981 we were in far worse shape than we are in today, a large portion of our military qualified for poverty assistance, a business owner could not breathe without the governments permission, inflation was sky high, unemployment at double digits. Unless we do the right thing now we will be there again, rapidly. Our economic problems today are manufactured by our own fiscal malfeasance – there is no shortage of food, energy, labor, or capital. What we have too much of is the heavy hand of government deciding who gets what, how much, and when via a complex set of regulations and tax policy. President Reagan, to the largest extent possible, ended that madness, and while the 80’s were no picnic, that decade created 20,000,000 new jobs, strengthened this nation so we could carry on in the future, and we brought most of the world with us as a lucky strike extra. The economic lesson of the 80’s is that freedom and economic liberty are viral, and the only antidote for it is big government – this is something we have forgotten or chosen to ignore. Up to now President Obamas rhetoric has been the antithesis of this pro growth philosophy. Mr. Obama thinks that a combination of targeted tax cuts, welfare, and government make work projects are the cure for our ills. To do this Mr. Obama will need more bureaucrats, and add more legal and fiscal complexity to meet his goals. I reject this economic cure and its implementation. Remember, what the government gives to one it must take from another. How does the government know that the capital or wealth it is redistributing will not be used for a much wiser purpose then the one it has ordained? It doesn’t. Like an alcoholic in a bar, the government drinks without accountability, and spends the monthly mortgage payment on whiskey without forethought, and hurts everyone it claims to care about. Remember these thoughts as you create the next seemingly free government give away; someone has to pay for it, that someone will be our children, their payment will either be in gold or blood.
This insanity of printing, borrowing, and misallocation of capital must stop. No country on earth has ever borrowed, spent or taxed it’s way to recovery, let alone prosperity. War and Depression? Absolutely. If this economic cancer is allowed to metastasize we will once again be pushed as a nation into a choice of not whether we should or should not do something, but whether or not we can. The “stimulus package” legislation all of you are considering is nothing more than economic suicide.