Demos control Sacramento. Completely.

11.07.12 - 11:41 am | Tim Redmond |

(51)

The sleeper in this election is the apparent supermajority for the Democrats in both houses of the Legislature. This is huge news, if it holds; for the first time since the passage of Prop. 13 in 1978, which mandated a two-thirds vote to raise taxes, it's actually possible to govern and set fiscal policy without the no-taxes-ever-no-way Republicans being obstructionist.

In fact, as the Chron points out, Republicans would be essentially irrelevant in Sacramento.

That doesn't mean everything's just fine and dandy in the Legislature -- the moderate-to-conservative Dems are sometimes as bad as the Republicans. But it means that if the Democratic leadership can craft a sane budget plan that raises some taxes (beyond what Gov. Brown did with Prop. 30), there's a chance it could actually pass and the state could get back on track.

Of course, that assumes the governor will be on board, and he may not. Brown promised that he would never raise taxes without a vote of the people, and he got his vote, and it was close, and I bet he says: no more. Which is a problem, because Prop. 30, while absolutely necessary to keep California from falling off a cliff, only stabilizes the state's revenue situation. It does nothing to restore the billions in cuts that have been made in the past decade and doesn't even begin to put the state in a position to invest in, say, new education initiatives.

This could be a profound moment, a chance to make the state great again (and in the process, prove what can happen if you get rid of the minority-rule that's crippled the Legislature for decades). It's too great an opportunity to miss.

Election 2012

Comments

Much as you'd love unlimited tax increases, the people

will revolt like nothing you've ever seen if that power is abused. CA taxes are already sky high, so tread carefully, my friend. Very carefully.

Posted by Guest on Nov. 07, 2012 @ 12:39 pm

California is becoming defiantly liberal again

If you recall, Grover Norquist’s Americans for Tax Reform boasted that 279 Congressional incumbents — and another 286 challengers — signed his “Taxpayer Protection Pledge” to never vote for any tax increases under any circumstances."

Those days are over, friend.

R.I.P. GOP

Posted by Guest on Nov. 07, 2012 @ 1:42 pm

Yes, and you can thank the Occupy Movement

They put the spotlight on income equality and brought it back into the national (& state) discussion.

Posted by Guest on Nov. 07, 2012 @ 2:25 pm

LOL, Occupy was a nothing movement. It's naive to

read too much into natural cycles left and right. The Tea Party had a much bigger effect in the 2010 elections than Occupy had here.

Posted by Guest on Nov. 08, 2012 @ 7:09 am

I doubt Dems want to rush into a tax-raising frenzy

on the advice of the Guardian. A tax-raising measure just passed - give it some breathing room. Although I could see an oil extraction fee being a good thing since we're the only state which doesn't have one.

Posted by Troll II on Nov. 07, 2012 @ 12:42 pm

Voters don't want higher gas prices any more than they

want any more tax hikes. And those Dem's know how fragile their positions are in the next election if they are blamed for high taxes and not fixing the deficit.

Posted by Guest on Nov. 07, 2012 @ 1:02 pm

No correlation between oil extraction taxes

and higher gas prices. If there were California would have the lowest gas prices in the nation - because we're the only state in the nation without one! It's CA's oil - we should be paid a tax to get it out of the ground. Period.

Posted by Troll II on Nov. 07, 2012 @ 1:20 pm

Wrong. Companies and shareholdes target a specific

return AFTER all costs, interest, taxes etc.

Rause taxes on oil expro and your gas costs more. No way around it. Very regressive from of taxation.

Posted by Guest on Nov. 07, 2012 @ 1:52 pm

Oil extraction tax is paid for by the entire market.

For example, globally we all are now paying for extraction taxes in Alaska, Texas, Louisiana, etc. All those states have oil extraction taxes in place.

An oil extraction tax in California could generate another 1.5 - 2 billion a year, and that cost would be spread throughout the world among all petroleum users, as are all other states' oil extraction taxes.

Posted by Bob In Portland on Nov. 07, 2012 @ 3:14 pm

Nope, drivers will pay any higher gas taxes

and gas taxes are regressive

Posted by Guest on Nov. 07, 2012 @ 7:38 pm

California oil belongs to Californians and we should all benefit from it. The highest producing oil field, online for over 100 years, is in Kern County. All those 100 years Californians got nothing from it - that should change. Impose an oil extraction fee NOW.

Posted by Troll II on Nov. 07, 2012 @ 9:04 pm

No, oil belongs to whomever pays to extract it.

Levy costs on the extractors and gas prices go up

Posted by Guest on Nov. 08, 2012 @ 7:10 am

Yes on the fee.

But oil companies aren't above punishing Californians for it at the pump. We know they raise prices on any pretext, not related in most cases to actual higher business costs.

Posted by Hortencia on Nov. 08, 2012 @ 10:41 am

Of course oil companies charge the most they can.

As does everyone in every business. But on the other hand, there has to be a floor under the price of gas, based on the required profit margin over cost. If that's not there, they simply won't provide energy.

Posted by Guest on Nov. 08, 2012 @ 4:25 pm

You're defeating your own argument

Market prices are set by market demand.

You yourself just said, "oil companies charge the most they can." That means that they are getting what the market will bear.

If the tax gets added, that doesn't mean that the market (Joe Blow driving to work) will suddenly bear more. It means that the gas companies will have lower margins.

Note that if the companies slowly raised their prices in anticipation of the tax such that the market absorbed it and then the tax didn't go through, they wouldn't give that price back unless the market demanded it, right? Now that they knew that people would pay more, they'd keep the price up and make more, right?

Why isn't the reverse true? Well, it is. If the people won't pay more, the company will have to absorb the cost.

This fallacy about how increased costs directly impacts increased prices is a meme set up against regulations that would increase costs.

Whether or not companies *try* to raise prices because of it - to keep their margins - is a separate matter. Whether the market tolerates the increase is marketing. If the market doesn't tolerate the raise in prices, then the business can work with lower margins or go out of business.

Posted by Guest on Nov. 09, 2012 @ 7:46 am

The problem is that we do everything back-assed here

In most other countries, oil is considered a national resource. Here, we sold off the oil to privateers at firesale prices and let them charge us whatever they want for something that should be ours in the first place. Our slavish devotion to capitalist ideology continues to bite us in the ass.

What the government should really do is nationalize the oil. Severance taxes are a poor substitute, but at least it's something.

Posted by Greg on Nov. 09, 2012 @ 9:04 am

No, you missed his main point

If the market will bear a price that will give the company the profit margin they want, then they charge that price.

If it doesn't, they quit the business and invest elsewhere where that profit margin is available.

So either they make the profit they want and need, or they go elsewhere.

Posted by Guest on Nov. 09, 2012 @ 10:47 am

I didn't miss his point

That's apples and oranges.

The question was about a fee for taking the mineral resources under CA.

He said they can't because it would make the prices go up. (That's my first point in response above.)

The point he made that you're addressing I didn't think needed to be countered because obviously, if they don't like CA's tax, they can't go elsewhere to drill under CA.

They can either pay this hypothetical tax or not drill.

If they don't think they can make enough money from the drilling to absorb the cost of the tax under market rates, then they won't drill (the "go out of business" portion of my above argument). That's not to say that the entire company would go away. Just business operations located in CA.

[Let's not kid ourselves: the oil company isn't going to fold up their tent in a field that is that productive and leave it for someone else when all the sunk cost has been put in and it is effectively putting a (very complicated) straw in the ground now.]

If they *did* leave, either someone else will decide that *they* can make it work with those taxes, or no one will. If someone else does, CA still gets the money. If no one does, CA wasn't getting the money anyway. They'll have to figure out a different plan to counter losing the economic impact of the production operation leaving, but economies are full of moving parts and this is the comments section of an article, not an Econ semester, so we don't really have time to cover the whole thing.

As far as CA getting their oil supply: oil is fungible. It'll come from somewhere. It's not like the oil pulled from under CA goes right into refineries in-state and directly into Californians' tanks. It's a world market.

Posted by Todd on Nov. 09, 2012 @ 11:13 am

I didn't miss his point

That's apples and oranges.

The question was about a fee for taking the mineral resources under CA.

He said they can't because it would make the prices go up. (That's my first point in response above.)

The point he made that you're addressing I didn't think needed to be countered because obviously, if they don't like CA's tax, they can't go elsewhere to drill under CA.

They can either pay this hypothetical tax or not drill.

Posted by Todd on Nov. 09, 2012 @ 11:18 am

"Market prices are set by market demand."

Unless it's for something essential like gasoline. The oil companies can charge whatever they want, really. What...are people not going to drive?

Posted by Hortencia on Nov. 09, 2012 @ 1:05 pm

Republicans reaped what they sowed

Republicans are fading into irrelevance by alienating Latinos, blacks, gays, and women. Their slide into marginalization is accelerated in a state where native-born whites are becoming an increasingly small minority.

Add to that their steadfast obstructionism in Sacramento, and it's no wonder that voters are electing fewer and fewer of them. Even in the Republican wave of 2010, they lost ground in California.

Ironically, the coup the grace was their own attempt at redistricting to get themselves more seats. I said it at the time and I'll say it now -what they were trying to accomplish -getting more seats by making districts more competitive, is mathematically impossible given their registration numbers. I predicted during that cycle that if their initiative passes, all they would do is set the stage for 2/3 Democratic majorities in both houses. And now that's come to pass.

Congratulations wingnuts. Hopefully now we can get the state some much-needed revenue.

Posted by Greg on Nov. 07, 2012 @ 5:53 pm

People said that about the Dem's in their big 2010 defeat

You can never write off either of the big two parties. And straight white men are still easily the most powerful demographic, and the Dem's don't appeal to them

Posted by Guest on Nov. 08, 2012 @ 7:12 am

No. It's not *just* them

Dems do appeal to straight white men. It's just that they don't appeal to *just* straight white men.

The GOP appeals to straight white men, too. They *also* bank heavily on appealing to the straight white men that don't like the *rest* of the people that the Dems appeal to - the non-SWM.

It hasn't always been this way. The Dems used to appeal to that latter group.

That was right after Lincoln, the progressive Republican, signed the Emancipation Proclamation and made these folks give up their slaves. They decided to vote Democratic for generations. That's where folks like Strom Thurmond, George Wallace, and Zell Miller come from.

Then, after Democratic President LBJ signed the Voting Rights Act and "lost the South for a generation", these people decided to vote Republican.

Do you see the common thread?

I wouldn't take pride in associating myself with that group. But then again, I'm one of the SWMs that usually votes Democratic.

Posted by Guest on Nov. 09, 2012 @ 8:33 am

"This could be a profound

"This could be a profound moment, a chance to make the state great again"

LOL. Tim hasn't noticed that Federal taxes are about to shoot up, and the higher Federal taxes are, the more state and local taxes hurt taxpayers. Pack up the moving van!

Only a third of the welfare recipients in the US live in California - we just aren't trying hard enough!

Posted by Demented, Yet Terribly, Terribly Persistent on Nov. 08, 2012 @ 7:33 am

Tim genuinely believes that more taxes, borrowing and

spending makes us all wealthier. That's a fundamental disconnect with reality and experience.

Posted by Guest on Nov. 08, 2012 @ 7:46 am

You Didn't Build That!

All wealth and progress comes from the government!

Just ask Obama!

Posted by Demented, Yet Terribly, Terribly Persistent on Nov. 08, 2012 @ 7:59 am

Because, of course, none of

Because, of course, none of us have actually seen what he said or understood it.

Outside of the abbreviated clip from Fox News, I mean.

Posted by Todd on Nov. 09, 2012 @ 11:01 am

I enjoy reading about on SFBG

how all non-progressives are fooled by FOX news.

SF "liberal-progressives" self identify as the smarties and yet resort to attributing all counter opinions as FOX news inspired... while posting on agitprop SFBG.

So good.

Posted by matlock on Nov. 09, 2012 @ 8:06 pm

High taxation leads to

High taxation leads to greater and better distributed wealth creation, lower taxation leads to less and worse distributed wealth creation. The historical record trumps Chicago School economic sharia.

Federal borrowing and spending is not a problem so long as the federal government is the sole creator of USD and is able to set interest rates, bond vigilantes notwithstanding.

You are wrong.

Posted by marcos on Nov. 08, 2012 @ 8:43 am

"Federal borrowing and

"Federal borrowing and spending is not a problem so long as the federal government is the sole creator of USD and is able to set interest rates, bond vigilantes notwithstanding."

Because that worked **so** well for Weimar Germany and Zimbabwe. When foreigners are no longer interested in holding our dollars, because we printed so many of them, what then?

Question for you, Marcos - how many times to you think US government debt will get downgraded in Obama's second term?

Posted by Demented, Yet Terribly, Terribly Persistent on Nov. 08, 2012 @ 9:10 am

If you think that the US

If you think that the US economy in any way resembles Wiemar Germany or Zimbabwe, you must hate the US more then you hate the Democrats and the Democrats hate the US combined.

Did the downgrade in the US debt have any impact on the interest rate for federal debt? Of course not because the interest rates for federal debt are set by the federal government.

The downgrade was done as a political act to create the conditions for Obama's "grand bargain" to fuck over the Democrat base by eviscerating Social Security and Medicare so that those resources can be diverted to the perpetual war machine and further Wall Street bail outs.

Posted by Guest on Nov. 08, 2012 @ 9:31 am

Dunno. It depends on the Tea Party

Because, if you read the report where the US got downgraded for the first time, they explicitly said that it was the (Tea Party) Repubs in Congress that caused the downgrade.

The Debt Ceiling is not about new spending. It's about living up to the promise to pay money we've already spent/borrowed.

Holding the Debt Ceiling hostage in a negotiation is holding our creditors - and our credit rating - hostage.

You don't have to take my word - or common sense - for it.

The rating agency said so themselves.

Posted by Todd on Nov. 09, 2012 @ 10:59 am

Big gov = paradise found

Yes, if the government takes over all aspects of wealth creation and sets interest and bond rates, we will live happily ever after.

Posted by Troll the XIV on Nov. 08, 2012 @ 11:33 am

What do you think that the

What do you think that the Federal Reserve is, but a government delegation of monetary sovereignty that controls the amount of base money, interest and bond rates?

Posted by marcos on Nov. 08, 2012 @ 11:56 am

Marcos, you assume wealth inequality is a bad thing.

But the idea that rewards accrue to those with talent, hard work, education etc. encourages all of those qualities. If we all got equal wealth regardless, where would the incentive be,

The most dynamic economies have low taxes e.g. Hong Kong, Dubai etc.

Posted by Guest on Nov. 08, 2012 @ 4:27 pm

Paris Hilton

Really, that's all I have to say about your thesis.

Posted by Hortencia on Nov. 08, 2012 @ 5:18 pm

Dubai is a big steaming pile

Dubai is a big steaming pile of popped bubble shit.

Western Europe, Germany in particular, has high taxes and low wealth inequality and is the engine of Europe. In fact, the disposition of Germany's euro surplus, the relative concentration of wealth within the eurozone is what led to the debt crisis in the first instance.

"There is nobody in this country who got rich on his own. Nobody. You built a factory out there, good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory"

--Elizabeth Warren, US Senator Elect from MA, she who vanquished Scott Brown.

Posted by marcos on Nov. 08, 2012 @ 5:51 pm

"--Elizabeth Warren, US

"--Elizabeth Warren, US Senator Elect from MA, she who vanquished Scott Brown."

... to become the first female Native American in the United States Senate!

Posted by Demented, Yet Terribly, Terribly Persistent on Nov. 08, 2012 @ 11:10 pm

Yes, and she's a professor too!

What the Scott Brown campaign failed to understand -typical Republican appeal to anti-intellectualism may work in Nebraska and Tennessee, not so well in a state with some of the country's best universities.

Posted by Greg on Nov. 09, 2012 @ 9:01 am

LOL, so relationship between success and work?

It's all just random and, anyway, due to having big government!

You can't make this stuff up.

Posted by Guest on Nov. 09, 2012 @ 10:52 am

Yes, your economic and

Yes, your economic and political views are based on theology and contradicted by history.

Posted by marcos on Nov. 09, 2012 @ 10:30 pm

Germany

Doesn't let the Turks run rampant in their country.

The progressive conceptual ideal of "they do it in Europe" usually is unworkable when accounting for the American welfare class and open borders driving down wages.

We will never be able to raise taxes enough to support our government employee over class in the style they expect. There will never be enough $$$ for our welfare class. There will never be enough money to support driven down wages workers, or enough to educate and prison the offspring of the people who come here illegally.

The nuts and bolts of government are ignored by the political over class because they couldn't give a shit about the average citizen. College costs will never go down in any major way, no matter how much the political class begs for cash for the basics, that money will be pissed away time and time again. Why do you people keep falling for it?

Posted by matlock on Nov. 09, 2012 @ 8:17 pm

Your factory

also is in dire need of the governments committee on LGBTQWERTY.

How a factory operated before the DEA, NEA, the war in Iraq, the various levels of the security state, the redundant armed forces, etc...

The democrats proclaim the need for government then proceed to throw the money away on bullshit schemes.

Posted by matlock on Nov. 09, 2012 @ 8:27 pm

"If you think that the US

"If you think that the US economy in any way resembles Wiemar Germany or Zimbabwe, you must hate the US more then you hate the Democrats and the Democrats hate the US combined."

LOL. $12 trillion in debt, heading rapidly for $20 trillion. Yeah, I'm the one who hates the US.

"Of course not because the interest rates for federal debt are set by the federal government."

LOL - people and institutions have to be willing to buy the debt, and they set the rate that the Federal government has to pay. During the Carter Administration, long-term rates on federal debt were 15% - was the Carter Administration setting **that** rate?

In reality, at the moment, people don't want to buy the federal debt, so the Federal Reserve is instead, in the rounds of so-called "quantitative easing". This is nothing more than the government just printing money, which keeps interest rates low for the moment, but is setting us up for the Wiemar Germany-Zimbabwe scenario. Obama just hopes that happens after he leaves office.

Cue the bouzouki music!

Posted by Demented, Yet Terribly, Terribly Persistent on Nov. 08, 2012 @ 9:45 am

Here's one to rattle around

Here's one to rattle around your tin foil hat: inflation only happens when there is more money than supply chasing a particular good or service. Cheap money inflated the real estate bubble, housing prices inflated. That same cheap money inflated equities. QE likewise tried to reinflate housing prices and succeeded in inflating equities. No complaints from you all there.

If it turns out that there is excess demand driving price inflation domestically, then all the government need do is tax off the increment and extinguish those dollars.

The USG is the sole printer of dollars, the USG debt is denominated in dollars. Problem?

Posted by marcos on Nov. 08, 2012 @ 2:34 pm

Supermajority has to address pension problems

I think the super-majority will be great for some things like funding education.

However, public-sector workers, with their defined-benefit pension plans and hugely underfunded pensions, are a big problem. And the unions have many Democrat pols eating from their hand.

Gov. Jerry has hinted that the coming catastrophe needs addressing, but many of his fellow Democrats aren't interested.

Public-sector workers need to start covering their own pensions and paying some of their own retirement/healthcare costs. If there is no reform, I'll have to start voting Republican for the first time in my life.

Posted by Troll the XIV on Nov. 08, 2012 @ 11:30 am

Yep, and it would have been better if Prop 30 had failed since

that would have forced Sacramento to deal with the pensions timebomb rather than sweeping it under the rug.

Posted by Guest on Nov. 08, 2012 @ 4:28 pm

Oh yes, wouldn't that be great

Students get an immediate 40% tuition increase, and we get to cut pensions sooner rather than later. No downside! If you're Mitt Romney, that is.

Posted by Greg on Nov. 08, 2012 @ 6:00 pm

How else will the pensions timebomb be fixed?

It's clear that politicians lack the spine to fix it, unless of course we make them by starving them.

Posted by Guest on Nov. 09, 2012 @ 10:48 am

I sure hope the Wall Street Journal is right!

Wouldn't it be great if things really did work out this way?
http://online.wsj.com/article/SB1000142412788732489410457810694150683733...