Thread: Raise some taxes; budget cutting alone will harm the economy

Raise some taxes; budget cutting alone will harm the economy

By Bill A. Lloyd and Eric Banks
Originally published July 3, 2010 at 6 p.m., updated July 4, 2010 at 12:02 a.m.

Mortgage defaults, bank failures and unemployment have rocked California. Gov. Arnold Schwarzenegger’s budget calls for spending reductions, cuts that some say will further damage the economy.

Counterpoint
Don’t raise taxes, cut public employee compensation

Virtually every American has paid a steep personal price for Wall Street’s mismanagement and the predatory practices of big banks, but unlike the financial giants, homeowners didn’t get a bailout – and didn’t get a hand from the banks we rescued. Here’s what we got: 800,000 families forced into foreclosure since the recession began, 2 million Californians who have lost their health insurance and 1.2 million Californians who have lost their jobs.

In San Diego County alone, 162,000 are unemployed. And, according to RealtyTrac, 31,728 families are facing foreclosure or find their mortgages are in default.

The latest jobs numbers and the continuing foreclosure crisis make clear: a double-dip recession is a real threat.

Without a doubt, our $20 billion state budget hole needs repair, but the worst thing we can do is pass a budget that triggers a second dip.

The May budget revise represents one approach: cutting more than $14 billion from the state budget, putting hundreds of thousands of Californians out of work and cutting the safety net for poor children and frail seniors. Legislative leaders in Sacramento have laid out a very different path: making very painful cuts balanced with new revenue from oil extraction, along with postponing $2 billion in corporate tax cuts slated to go into effect in 2010-2011.

We have to get this budget right. That’s why the Service Employees International Union sought the professional opinion of top University of California economists who analyzed the May revise as well as alternatives that rely on revenue. Using industry standard computer models, these leading researchers compared both approaches in terms of their impact on jobs and the economy.

The choice is clear. The UC researchers found that the May revise budget, which relies on cuts only, would cost 15 times as many jobs and inflict seven times as much economic loss on the state compared to a plan that balanced budget cuts with targeted revenue increases.

An all-cuts budget would cost California 330,000 jobs, boosting the state’s already dismal unemployment rate by an additional 1.8 percentage points and completely wiping out job growth projected for 2011. Researchers said the cuts also would cost California more than $36 billion in lost economic output.

The impact of a cuts-only approach to the budget is so devastating for several reasons: it targets $5.4 billion in cuts to health and human service programs that bring in significant federal matching funds; it disproportionately impacts low-income workers and families who put money back into the economy in the greatest proportions; and much of the estimated “savingsâ€

IT IS TIME TO TAX RELIGIOUS ORGANIZATIONS...They are all involved in politics and that crosses the line...

TAX RELIGIOUS GROUPS, Churches, Mosques, Synagogues, etc NOW...