Saturday, December 15, 2012


A joke in the old Soviet Union concerned a departed leader who left his successor two envelopes with these instructions: “When you are in big trouble, open envelope number one. When you are in really big trouble, open envelope number two.”

A few years later the official was in a huge mess, so he opened the first envelope. It said, “Blame everything on me.” After a while the official was facing an even greater crisis, so he opened the second envelope. It read, “Prepare two envelopes.”

The moral of the story is that scapegoating becomes routine in a system that doesn’t work. California’s politicians have transformed this practice into a fine art.

For several decades the dwindling numbers of Republicans in Sacramento were regularly blamed by Democrats and their media allies for the state’s wildly imbalanced budget. As is the case now in Washington D.C., GOP opposition to tax increases took the political rap for deficits—not the other party’s penchant for spending that, adjusted for inflation, increased over 40 percent per capita in the Golden State from 2000 to 2010.

Now that Democrats possess sufficient numbers to make Republicans irrelevant, one would think this supermajority would have to own the consequences of their belief that, as one skeptical commentator put it, “California is only one massive tax increase away from being fixed.” This consequence seems especially reasonable given that voters recently approved Governor Brown’s Proposition 30 tax increases.

There is considerable evidence, however, that the big government crew is building up a new scapegoat beyond the GOP, oil companies, and those dastardly Koch brothers—just in case higher taxes don’t produce revenues that keep pace with continuing demands for more “stimulus and investment.”

The new scapegoat for failed economic policies in Sacramento appears to be Proposition 13. Recently State Senator Mark Leno introduced legislation that would reduce from two-thirds to 55 percent the majorities needed to increase local property taxes. Other ideas designed to “reform” Prop. 13 focus on assessments for commercial property.

The speed with which these proposals appeared after the passage of Prop. 30 suggests that Democrats don’t expect Brown’s new taxes to be the magic bullet that will cure California’s ills. This assumption is reinforced by recent figures from the State Comptroller’s office showing November’s revenues came in 10.8 percent ($806.8 million) below budgetary expectations.

In short, if new taxes don’t produce a flood of additional revenue and a balanced budget, Sacramento’s prescription will be more of the same. The two revolving envelopes for these legislators will always read “Blame the rich” and “Raise taxes.”

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