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How the Deficit Dem's Approach Budget Deficit

Posted: 5/14/2012 3:35 PM

How the Deficit Dem's Approach Budget Deficit 


This is from Gov. Brown in California.  You know, the state that once was the country's biggest economy.  Brown and his accounting office recently reported that (shockingly) the states tax dollar haul from last year was less than projected.  Who would have thought in an economic disaster that the tax revenues would decrease?!

So, Gov Brown has decided to address the deficit in two ways.  Both designed to get votes from the masses while hiding the results.

1.  Increase the income tax on individuals that earn 250K or more to 11%, pus a .25% increase in the state sales tax, currently at 8.3%.  This will get votes as the majority in CA don't earn $250k and feel the .25% sales tax is acceptable as they have been scared by threats of cutting the local schools budgets, city budgets, and LEA budgets by millions. 

2.  Mandate a 5% pay cut for all state employees and a mandatory 1 day off per week.  This will get votes as the masses again will see the pain being spread to the state employees who are largely responsible for helping to create this huge deficit.

The actual hidden results:

#1.  The Gov. of Illinois recently put in place a reported 66% increase in state taxes.  The result of this action after the first year was less revenue and an increased deficit.  Why?  In part because businesses that could relocate to friendlier tax climates did.  Residents who didn't eat this increase also left.  The vacant jobs were refilled of course, but at a much lesser salary resulting in less income tax paid to the state.  Thus, the deficit actually increased.  Expect the same in CA.  Businesses will continue to leave the state, salaries will continue to shrink and the expected tax revenue will fall will not come to fruition.

#2.  This one is almost comical in approach.  On the surface a public stance by the Governor seems to point to him taking on the state employees unions and forcing them to feel the same pain as the citizens.  You will take a mandatory 5% pay cut.  Ok, that means they have less money to spend, so that .25% sales tax increase will equate to zero increases at the state treasury.

Even more political manuevering in this mandated action is what really is happening.  Besides the publicized 5% pay cut, the employees are being mandated to take a 1 day per week "vacation."  The result here, when worked thru, is just plain ridiculous.  The state unionized employees are taking a 5% pay cut, but are now working 32 hours per week instead of 40.  So they work 20% less for 5% less pay.  That is actually a hefty hourly raise!  Gov. Brown knows he needs the union votes or his bill dies.  So, he gets non union votes by publicizing the pay cut, and he gets union votes by giving them much less work for a slightly smaller pay check.

An you can bet that IF this state ever gets out of this huge ever increasing deficit nightmate, the State Employees will keep that new, much higher hourly wage when they return to their 40 hour work week.

Governor Brown.  A professional, lifelong politician who cares not about the actual deficit.  He cares about maintaining power and appearing to address the issue.  Of course, in the end the deficit will grow, he will return again for another tax increase and the downward spiral will continue... Sort of like GREECE, ITALY, SPAIN......
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Posted: 5/14/2012 4:16 PM

Re: How the Deficit Dem's Approach Budget Deficit 


FYI, the overall sales tax rate in CA is 7.25%.  However local communites have added on their own little grabs.  Some comunities pay 8.75%!  Regardless, CA pays the highest sales tax rate in the nation.


Last edited 5/14/2012 4:19 PM by a10koaksfed

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Posted: 5/23/2012 10:03 PM

Re: How the Deficit Dem's Approach Budget Deficit 


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