FDL's David Dayen Demands Ponies in California Budget

It seems that every time there is a Democratic triumph in an election, the professional whiners on the Left get out their claws and teeth and start gnashing them. Since President Obama's election, we have seen a nonstop barrage of hitjobs on him. Then in the last election, when the whole country was experiencing a red wave, in California, we kicked their butts, and Democrats swept all statewide offices while Barbara Boxer was returned to the Senate.

So what now? The notorious FDL's David Dayen ("dday" on many corners of the Internet) is now going after the governor of California, Jerry Brown. Brown has to deal with a state budget shortfall of $28 billion, in a state where raising taxes is nearly impossible on the state level - even placing a tax increase on the ballot legislatively takes two-thirds vote of the legislature. His budget reflects quite a bit of pain, but it's without gimmicks, funny math or the illusion that everyone can me made happy and it won't cost us a penny. Apparently, Mr. Dayen is very mad that E. J. Dionne had the temerity to call such a plan "brave." After acknowledging the fact that Brown's attempt is at least honest, the whining begins:
Brown has ducked many more fundamental governance issues in the state. He hasn’t gone near a tax structure where people making $47,500 a year pay the same in income taxes as those making $999,999. He won’t approach the third rail of California politics, the artificially low property taxes resulting from Prop 13. He won’t expand the sales tax to cover services, which would allow the rate to be lowered while still gaining more revenue (and becoming more progressive, as higher-end services get used by wealthier people). He’s basically doing the bare minimum possible on revenue generation, and even then he won’t commit to raising them himself, preferring to put them up for a vote of the people.
Umm, ok, let's take these things one by one. It is true that California's income tax structure provides for a flat, 9.3% tax on everyone earning between $46,766 and $1 million on every dollar of income earned (2011 figures).  Within that bracket, it is regressive. But make the income tax structure more progressive would require raising taxes on some brackets, which would have to muster either a two-thirds vote in the California state legislature or be voter approved. As it is, Brown is having a hard time finding the votes to put on the ballot measures to extend just a few revenue-extending measures. Brown's proposal is seen as measured, and is slowly gaining support from both labor and business communities. Given that the measures would need to be approved on the June ballot, it won't pass without support from both business and labor. Throw a poison pill into the mix for any community (like, oh, I dunno, raising taxes for six-figure income earners), and you have a disaster at the ballot box as business groups' ads hurt not just the prospect of those tax hikes but of all revenue-extenders.

Same story for Prop 13. Actually the story is worse for Prop 13 and property taxes. While there is no doubt that it's a misguided law that protects commercial property rather than just residential, the average voter is hard pressed to make that distinction. In fact, a field poll in 2009 found that Californians remain overwhelmingly opposed to changing Prop 13 to allow the legislature to raise taxes with a majority vote (69% opposed), or even to creating a separate property tax structure for commercial property (52% opposed).

Just what would that mean? It would mean another $12 billion in necessary cuts to the state's services. So if I'm reading this right, and David Dayen isn't completely clueless, he is willing to risk a near-certain additional $12 billion in cuts in the state budget just to reset the state's income and property tax rates in a 3-month time frame. I suppose that's 'brave.'

Oh, and by the way, there is a way to rework the California income tax rates. A ballot initiative initiated and submitted by the state's citizens rather than the legislature. It would require the collection of about 700,000 signatures - so it probably won't be on the June ballot but on a subsequent one. This begs a question. Why isn't an influential contributor to a blog that routinely uses its cash to affect politics (including ballot initiatives, such as FDL's "Just say now" project) lobbying his boss, Jane Hamsher, to front the money to start such a petition drive? Why not put your money where your mouth is and show us how "brave" you are?

The funniest of all? David thinks the sales tax is or can be made "progressive." According to him, if we just expand the sales tax to include all services, it will become "progressive." In what world? A consumption tax is by definition regressive. Yes, rich people use more expensive services, but they also use more expensive products, so expanding the sales tax to services doesn't make it any more progressive. And while rich people may use more expensive services, the vast majority of commercial services are used by the middle class. The ferry boat that takes workers from San Francisco to many parts of the bay is a service. Tax preparation is a service. Fixing the plumbing in your house is a service. You wanna bet on whom the burden of any flat consumption tax falls? It's the middle class.

And if a consumption tax, applied on everything consumed, is "progressive," are we then to assume that Mr. Dayen is in favor of a federal flat consumption tax also?

Before I move on to the next point, I want to address the dumb-ness of whining about how Brown doesn't want to do the revenue extenders himself, instead preferring to put them up for a vote. First of all, during the campaign, Brown promised to do exactly that - to not add taxes without voter approval. Second, when tax extenders are blessed by voters, you are immune from the right wing criticism of "tax and spend," since voters got to make the decision.

Brown's budget, as I said, includes a good amount of pain as it cuts state services to balance the budget (which we are Constitutionally required to do). One of the cuts concentrate on the state's Medicaid program, known as Medi-Cal. It implements certain limits and cuts that David describes thusly:
Capping Medi-Cal (California’s Medicaid) doctor visits is a literally insane policy. There is an exemption if a doctor certifies more visits as “medically necessary,” but this only ensures that more Medi-Cal patients will have advanced diseases and illnesses near the end of the year before seeking help. I don’t see how that doesn’t increase Medi-Cal spending in the final analysis. In addition, patients will bear the burden of more of the cost of care with higher co-pays. And, patients will likely see reduced access to providers, because their rates will be slashed another 10%.
Note how he neglects to mention what precisely this "capping doctor visits" means, even as he admits that the cap does not apply to medically necessary visits. Well, luckily, we have the budget itself to help us out. On the Health and Human services portion of the budget, we find this:
This proposal establishes utilization controls at a level that ensures that 90 percent of beneficiaries who utilize a particular service remain unaffected, which is consistent with federal Medicaid law. Specifically, it sets a maximum annual benefit dollar cap on hearing aids ($1,510), durable medical equipment ($1,604), incontinence supplies ($1,659), urological supplies ($6,435), and wound care ($391), limits prescriptions (except life‑saving drugs) to six per month, and limits the number of doctor visits to ten per year.
Just on what planet does 10 doctor visits (with an exemption for medically necessary visits that can go over that amount) a year "ensure that more Medi-Cal patients will have advanced diseases and illness?" Let's also talk about the cost sharing for a second. What are these higher co-pays we're talking about? Noting the currently copays are voluntary, the governor's budget proposes:
$5 co‑payment on physician, clinic, dental, and pharmacy services ($3 on lower‑cost preferred drugs) for savings of $294.4 million in 2011‑12. There would also be a $50 co‑payment on emergency room services (saving $111.5 million in 2011‑12) and a $100/day and $200 maximum co‑payment for hospital stays (saving $151.2 million in 2011‑12).
Now keep in mind that the health reform law eventually has the states bring their Medicaid programs in line with the level of benefits offered by average employer plans. If you have an employer plan, you know that the above levels are probably far more generous than most any employer plan. Still, Medi-Cal is a program for the low income and the copays would hit them. As difficult as that is, even with these copays, California will remain one of the most generous states in terms of Medicaid beneficiaries. The idea of zero health care costs is attractive, but it's hardly the reality. Since California's state portion of Medi-Cal is funded by the general fund, which has a limited amount of cash, the choice is two-fold: either implement some cost sharing or cover less people. I would choose the former, just as Gov. Brown did.

Another one of David's pony-demands is that the governor not take reserve money from the California First Five program - a program implemented to ensure pre-school and well being of children age 0-5 - to fund children's health care in California. And here, David essentially makes a claim I think he knows to be false:
By raiding this money, First 5 will have to reduce their own contributions to children’s health care, preschool and child abuse prevention in order to accommodate the taking of $950 million.
This is flatly not true. The governor is not removing any money currently being used for the First Five program. It instead takes half of the current $2 billion reserve that First Five holds through its county commissions. He is using that money to fund children's health care in California. So David's argument is about as valid as those that claim that there is no real trust fund for social security.

Lastly, David Dayen takes a potshot again at the governor by accusing him, not-so-subtly, of wanting to spend no more money than in 1972, and thus being a Reaganite.  Here's what he has to say:
UPDATE: A quick stat:
The general fund portion of the state budget proposed by Gov. Jerry Brown spends $5.05 per $100 of personal income earned statewide. That’s the lowest amount since the 1972-73 budget year, when Ronald Reagan was governor and state spending per $100 of personal income was $5.01.
Needless to say, things are a bit more expensive now than they were in 1972.
Except he hopes that no one will check out that link he lifted the quote from. I did. The thing he doesn't account for is that personal income has grown in California over those years, and the need for services tend not to grow at the exact same ratio as personal income. Which gives us the following chart, comparing the actual sizes of the general revenue fund in 2011 vs. that in 1972.

CA general fund 1972 vs 2011

That's roughly a 15-fold increase. But wait a minute, smarty pants. Adjust for inflation, you say. Good thinking. The inflationary factor between 1972 and 2010 is roughly 5.25 (i.e. what $1 bought you in 1972, you'd need $5.25 to buy in 2010). See calculator here. So adjusted for inflation, the state's general fund has grown by about three times since 1972. So this Reaganite comparison is a bunch of horse manure, and David Dayen knows that full well.

As you can see, every single pony-wish of Mr. Dayen's can be broken down to just that, a pony-wish. He needs an opportunity to whine, and if your goal is simply to be an ideological puritan whiner, you are hard pressed to look into all the facts. And when people who are supposedly on the left throw out the demands for their various ponies rather than filing constructive criticism and constructive action (e.g. fronting the money to put up a ballot initiative to implement a more equitable income tax structure), all we have is a battle for show while the real problems worsen.

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