Bush Legacy

Just wanted to remind folks who got us into the economic mess we still are trying to dig out of. President George Bush inherited a booming economy with a budget surplus. After 8 years in office, he turned that budget surplus into an enormous budget deficit and a ballooning national debt. And just for good measure, he left us with two unnecessary wars and the worst recession since the Great Depression. And that, combined with his encouragement of corporate outsourcing, cost the nation many millions of jobs.

President Obama has ended one of those wars (and will hopefully end the other someday). And he has turned the economy around -- with a booming stock market, falling unemployment, rising home prices, and a shrinking budget deficit. He probably could have done even better if not for GOP obstruction, but that's still pretty good considering the economic mess he inherited due to Bush's incompetence.

It's Time To Eliminate "Capital Gains" Tax

(The image above is by the inimitable DonkeyHotey.)

Did you ever wonder how it is that Mitt Romney could pay only a 13% tax when he made over $20 million in income? The reason is something called a "capital gains" tax. If Romney had worked for his income, it would have been classified as earned income and he would have had to pay about 36% minus his personal deductions (which was the top tax rate at the time). But since it was investment income (classified as a capital gain), he only owed a 15% tax rate (which was lowered to 13% due to personal deductions).

This is one of the most unfair parts of our tax system -- that the rich get to pay a much smaller tax rate of their income (which is mostly capital gains, or investment income) than the middle class (who actually have to work for their income). It hasn't always been like that, and conservatives haven't always touted the value of a special capital gains tax rate. In fact, conservative icon Ronald Reagan didn't support giving the rich a special and lower tax rate than ordinary Americans. He thought the rich should pay more because they made so much more.

It was only after George Bush became president that the special capital gains tax came into being. Bush fell for the ridiculous Wall Street argument that a lower capital gains tax would spur investment and create jobs, so he lowered the capital gains tax to only 15% (less than half of what that income was being taxed at). Of course it didn't spur investment or create new jobs. The money just went into the bank accounts of the very rich, while the Bush administration presided over one of the worst periods of job creation in our history.

When President Obama raised the top tax rate from about 36% to nearly 39%, he also raised the capital gains tax rate for the very rich from 15% to 20%. That is still only about half of what they should be paying (if their income was taxed as earned income, like it has been in the past, and like the bottom 90% of all Americans have to pay). What should have been done is to eliminate the capital gains tax altogether, and return to taxing all income at the earned income rate.

The Republicans (creators and protectors of the special capital gains tax rate) have been whining that our deficit (and national debt) is too large. But one of the most significant things that could be done to lower the budget deficit (outside of cutting the bloated military budget) would be to raise the capital gains tax rate to equal the earned income rate. This special tax rate for the rich is going to cost our government about $161 billion in revenue this year (and could pour nearly $2 trillion into the government coffers over the next 10 years). That's not pocket change.

This special tax rate for the rich is both unfair to other Americans (who work for their money and pay a higher rate) and is costing the government hundreds of billions in revenue every year. It should never have been created, and it needs to be done away with as quickly as possible. There is simply no legitimate reason for the rich to be taxed at a lower rate than hard-working middle class Americans.

Fixing The Problem Caused By GOP Policies

This chart, from The Maddow Blog, once again shows the Republicans are just lying when they called the Democrats the "big spenders" who create large deficits. If you'll remember, there was no budget deficit at all when President Clinton left office. In fact, there was a budget surplus (that was slowly paying down the national debt).

It was George Bush, with his waging two unnecessary wars and give unnecessary tax cuts to the rich, that created the budget deficit that we currently have. And the deficit during Bush's final year in office was the biggest budget deficit this nation has ever seen -- and was larger than any budget deficit in any year of the Obama presidency (and faster than any deficit reduction since World War II).

Now the Republicans will try to claim that the budget is being reduced now only because of the cuts they have forced. That is just not true. Their vaunted "austerity" has kept our crippled economy from recovering from the Bush recession as fast as it could have, and has kept joblessness at a very high rate. Most of the lowering of the deficit is because of new revenues (which the Republicans opposed, and finally had to be forced to accept).

And more revenues still could be accomplished. The simplest way would be to eliminate the capital gains tax rate (now at 20%, even for billionaires), and tax all income at the same rate (the earned income rate). This would bring huge amounts of new revenue into the government -- and it would do so without raising the top income tax rate for the rich. Another excellent idea would be to put a small tax on the trading of huge amounts of stock.

My point is that the budget could be lowered much further -- and it could be done without hurting those Americans still struggling to recover from the last recession (the unemployed, the poor and disadvantaged, the elderly, and children). And it could be done without causing further damage to the middle class.

Cutting Social Security Won't Fix The Budget

I'm getting very tired of all the lies about Social Security. Social Security is not the cause of a single penny of the budget deficit (because it is funded through a dedicated payroll tax paid by workers, and not by the federal government). Even conservative icon Ronald Reagan knew that. And he also knew that cutting Social Security would not balance the budget (since it didn't create the budget deficit). So it's time for Congress to stop searching for sneaky ways to cut Social Security benefits (like the chained CPI method of figuring inflation). Just leave Social Security alone, and pay back the money borrowed from the Social Security Trust Fund.

If you really want to cut the budget deficit, then spend more money helping the poor and creating jobs -- which will create more taxes and taxpayers as it creates demand and new jobs. Then eliminate subsidies for the corporations, ban the tax advantages for outsourcing, and tax the funds they are hiding overseas. And raise taxes on the rich, so they pay a bigger percentage than the middle class does (and tax all income as earned income).

Those things would eliminate the budget deficit. Cutting benefits for Social Security would not. Stop lying to the people!

Duping America

The mantra of the Republicans these days, which they repeat incessantly, is that the budget deficit of the federal government is out of control and growing rapidly. They says that more budget cuts must be made to bring the budget deficit down. Is this true? NO!

The truth is that the budget deficit was out of control in the Bush administration -- due to tax cuts for the rich (including lowering the capital gains tax), two unpaid-for wars, and an increasing military budget. But since President Obama has entered office the budget has been significantly cut -- and the budget deficit has been reduced. The deficit has not only been reduced, but even if no more cuts are made it will continue to go down in the coming years.

The sad part is that most Americans have bought into the Republican lie. As the chart above shows (compiled from a Bloomberg News poll), about 62% of the general public thinks the budget deficit is getting larger and another 28% believe the budget is staying the same. Only 6% of the public knows and understands the truth -- that the budget deficit is going down. The Republicans have successfully duped (with the help of the mainstream media) about 94% of Americans.

NOTE -- The national debt is still growing, since there is still a budget deficit. But that debt growth has also been slowed (since the budget deficit is shrinking), and will continue to slow. More budget cuts will not help though, since that would just slow economic growth and cost jobs. What is needed to start to bring the national debt down is robust job creation and more government revenues -- and stopping the growth in military spending certainly wouldn't hurt.

State Money For Events - But Not For Schools

As I've posted several times before, the state of Texas has a serious budget shortfall for the next biennium -- a shortfall of at least $27 billion. The legislature is currently in session trying to create a budget that will make up for that missing money. And since the Republicans control both houses of the legislature, they are trying to do it without raising taxes (or broadening the tax base) or cutting subsidies for the corporations.

The budget they have proposed so far has cut the money for schools (even though Texas was already last among the states in per student funding of schools). These drastic cuts will mean perhaps as many as a hundred thousand teachers could be laid off for the next school year. In addition, there have been huge cuts in all social programs and all state agencies. The mantra the Republicans keep repeating is that the state just can't afford these things.

But while the Republicans can't seem to find the money to help children, the unemployed, the poor, or the elderly, they always magically seem to be able to find the money to do the things they like. For instance, the state has a fund (the Major Events Trust Fund) that will spend millions of dollars to bring major athletic, entertainment and political events to the state.

An example of this was the Super Bowl recently held in the Dallas-Ft. Worth metroplex. The state spent $31.2 million dollars to help defray the expense of the host cities in hosting the event. The excuse they use for spending that money is that the events bring in a lot of money to the area hosting the event. My question is if the events bring in so much extra money, why can't that extra money defray the cost of hosting the event instead of using state funds -- funds that could be used to finance schools or social programs?

Now the House has passed a bill (and the Senate probably will also pass it) that would add many new events to the ones that can tap the state fund for money, especially in bringing new events to the recently built Cowboys Stadium in Arlington. Events that could get state money include the Country Music Awards, political conventions (of both parties), and the Cutting Horse Triple Crown. The Super Bowl, Collegiate Basketball Final Four, and the NBA All Star Game are already on the list for state money.

Now I have no problem with these events being held in Texas -- and the new Cowboys Stadium would be a good venue for a vast array of events. But the state should not spend any money to bring the events to Texas, especially since we can't even properly finance our schools (which is much more important to all Texans, whether the Republicans realize it or not).

I will go even further. If schools and social programs can't be properly funded, then the Major Events Trust Fund should be abolished. That money should go to education. If the state has a serious budget crunch then priorities must be established -- and hosting a major event can never be more important than educating our children.

But this law will be passed, because for Republicans there is no higher priority than funding the rich -- and besides, they'll probably get complimentary tickets to the events.

Another Reason To End The Death Penalty

I have believed for many years that the death penalty just doesn't make sense. There are many reasons for this -- it's cruel & unusual punishment, it lowers the state to the criminal's level, killing is wrong for any reason (except self-defense), it doesn't deter future violent crimes, and far too many innocent people are sent to prison (and possibly death row).

But none of these reasons have seemed to appeal to a majority of people -- especially in states like Texas where the right-wing Republicans rule the government. These right-wingers want their pound of flesh. To them, revenge is the same as justice.

But there now may be a reason to do away with the death penalty that will appeal to right-wingers -- saving money (and therefore preventing tax increases). It seems that greed is just as powerful as revenge for some right-wingers. Take for example, Judge Donald McCartin of California (who has earned the nickname of "the hanging judge" because of the large number of death penalties he has issued). McCartin is a self-professed right-wing Republican, but he wrote an editorial a couple of days ago for the Los Angeles Times calling for ending the death penalty. Here is some of what he said:

I watch today as Gov. Brown wrestles with the massive debt that is suffocating our state and hear him say he doesn’t want to “play games.” But I cringe when I learn that not playing games amounts to cuts to kindergarten, cuts to universities, cuts to people with special needs — and I hear no mention of the simple cut that would save hundreds of millions of dollars, countless man-hours, unimaginable court time and years of emotional torture for victim’s family members waiting for that magical sense of “closure” they’ve been falsely promised with death sentences that will never be carried out. . .It’s time to stop playing the killing game. Let’s use the hundreds of millions of dollars we’ll save to protect some of those essential services now threatened with death.

I'll take whatever reason a person wants to give, even saving money, as a reason to end the death penalty. I personally think some other reasons (like possibly executing an innocent person) are more important, but if saving money works then that's Ok with me.

Here in Texas we have as big a budget problem as California does (and we execute a lot more people). This state is looking at a huge budget shortfall (about $27 billion) for the next biennium. And the Republicans in charge of state government have promised to balance the budget for the next biennium without raising taxes or using the "rainy day fund" ( a few billion dollars the government has been saving for an emergency).

It would make sense that Texas politicians would also consider doing away with the death penalty. Texas would probably save more money than any other state by doing this. But I doubt it will even be considered. Our Republican-dominated state government takes pride in killing more people than any other state in the union (nobody else even comes close). They would rather destroy education, deny children medical care, kick the elderly of out nursing homes, cut money for the homeless (even veterans), deny treatment for the mentally ill, and cut nearly everything that helps ordinary Texans. But they don't mind wasting money (that we don't have) to kill people in the name of the state.

Now I don't feel sorry for people that commit heinous crimes. They need to be separated from society -- sometimes for the rest of their miserable lives. But life in prison with no possibility of parole is a better option than killing them (and it's reversible if we find later that they were innocent).

Texas needs to stop killing people and calling it justice. If the immorality and irreversibility of it is not a good enough reason, then how about because it'll save the state many hundreds of millions of dollars? Is killing people more important in Texas to right-wingers that budget-cutting?

Time To Eliminate Gas Production Tax Cut

Back in 1989 the Texas budget was in good shape, so the legislature acted to help the gas industry. In an effort to spur more gas drilling, they gave the gas industry huge tax cuts to develop the technology to drill for natural gas in places where it was much more difficult to get. And it worked. The technology was developed and there has been a huge increase in drilling in those areas (most notably the Barnett Shale).

Things are different now. Due to Republican mismanagement the state is mired in recession and faces a budget shortfall for the next biennium of about $27 billion. And there are some who think it's time for the tax cuts for the gas companies to end. The technology has been developed and is being used every day. Now that tax cut just goes to fattening the bank accounts of the giant gas producers.

State Rep. Lon Burnam (D-Fort Worth) has introduced a bill to repeal these tax cuts. Burnam (pictured) says they are no longer needed and repealing them will put about $2.3 billion over the next biennium. That wouldn't fix the budget shortfall, but it would certainly be a good start. And amazingly, it looks like at least some Republicans are willing to at least consider the idea.

State Senator Steve Ogden (R-Bryan), chairman of the Senate Finance Committee, is saying that "everything" is on the table. He's considering appointing a sub-committee to examine removing the unneeded tax cut.

I suspect the move to consider the tax removal is little more than a publicity gimmick by the Republicans. When their draconian budget cuts result in the lay-off of 100,000 teachers and tanks the Texas economy, they want to be able to say they considered all ideas and were "forced" to make the cuts. It's not true (much could be done to avert or minimize those budget cuts), but that is the story they'll be trying to sell to the citizens.

The tax should be repealed. It has served its purpose and is no longer needed. And Texas needs those companies to pay their share of taxes to help pull the state out of the mess the Republicans have put it in. But what should happen and what will happen are two different things.

Texas Republican leadership in Austin sold out to the corporate interests long ago, and their actions regularly favor corporations over citizens. It is very unlikely that this sensible bill will ever make it out of the legislature, and if by some miracle it did, Texas' corporate-owned governor would probably veto it.

This is a good bill and it would help the citizens of Texas. That's why the Republicans will kill it.

Rick Perry Said What ?

The clown occupying the governor's mansion in Texas has long shown a large degree of incompetence. Now he wants to blame others for his own mistakes.

A few years ago the state of Texas had to redo the way it financed Texas schools. They legislature, with the blessing and support of the governor, decided to replace a state property tax with a business tax. The State Comptroller at the time warned Perry and his cohorts that the new tax would not work, and she predicted it would result in a shortfall of billions of dollars. But they didn't listen.

The Comptroller was right. Even though Texas funded its schools at a lower level (per student) than any other state, they have now found themselves facing a budget shortfall of at least $27 billion for the next biennium. Perry's solution to the shortfall is to cut education (and many other state agencies) even further. His cuts are so deep that they will result in the lay-off of nearly 100,000 teachers statewide.

Now he doesn't want to take credit for his own ineptness and incompetence. As teachers prepare to rally against this ridiculous action by Perry and his Republican legislature, Perry has come forward to say it is not the state that is laying off teachers -- it is the local school districts.

While he may be technically correct, he cannot avoid the responsibility. When school districts receive billions of dollars less in state money, they will have no alternative but to lay off teachers (they have already laid off many other staff because of the state's stinginess). Perry may not be the one sending out the pink slips, but he is definitely the reason for them.

Rick Perry is an embarrassment to all Texans.

Texas - Not A Good Economic Model

The last election put Republicans back in power in many states (due to a large influx of corporate money from secret donations that was used to help Republican candidates). There was far more money spent in the last election than ever before in an off-year election -- mainly due to the misguided decision Supreme Court decision in Citizens United vs FEC.

Now the new (and old) Republican officeholders are trying to repay their corporate masters by busting unions, laying off workers, cutting pay and benefits and giving corporations (and the rich) more tax breaks. The most obvious example of this is in Wisconsin, because the workers there have begun to fight back and by doing so have made headlines. But the same thing is going on in many other states.

These Republicans are trying to turn these states into low-tax corporation paradises, where there are a large quantity of desperate people willing to work for poverty wages and no benefits (because that's all that's available). In addition they want to cut education and other state services and put the burden of paying for those cut-back services on workers and the middle class. It's the old Republican dream of giving more to the rich and less to everyone else.

It's called "trickle down" economics. It is the reason that we are currently in a recession, but the Republicans have been pushing this failed version of economics so long they can no longer see reason.

Here in Texas we have had this Republican economic dream for quite a while now, and it's been an unmitigated disaster. The corporations and the rich don't have to pay much in taxes, and there aren't any unions to force them to pay decent wages and benefits, so they like it in Texas. It's everyone else that is suffering. The state has poor schools with a huge drop-out rate, the largest percentage of uninsured people in the nation, low wages with poor benefits, poorly paid state workers and inadequate social services.

And what has this Republican dream produced for Texas? A $27 billion budget deficit for the next biennium (as the above sign shows -- taken by the excellent Juanita Jean). That's far more than any of the strong-union states. Cutting taxes for the rich and cutting services for everyone else is not the way to develop a healthy economy. It just makes the rich even richer and everyone else poorer, while putting the future of the state in jeopardy.

Here's how columnist and Nobel Prize winning economist Paul Krugman puts it:

Consider, as a case in point, what’s happening in Texas, which more and more seems to be where America’s political future happens first.


Texas likes to portray itself as a model of small government, and indeed it is. Taxes are low, at least if you’re in the upper part of the income distribution (taxes on the bottom 40 percent of the population are actually above the national average). Government spending is also low. And to be fair, low taxes may be one reason for the state’s rapid population growth, although low housing prices are surely much more important.


But here’s the thing: While low spending may sound good in the abstract, what it amounts to in practice is low spending on children, who account directly or indirectly for a large part of government outlays at the state and local level.


And in low-tax, low-spending Texas, the kids are not all right. The high school graduation rate, at just 61.3 percent, puts Texas 43rd out of 50 in state rankings. Nationally, the state ranks fifth in child poverty; it leads in the percentage of children without health insurance. And only 78 percent of Texas children are in excellent or very good health, significantly below the national average.


But wait — how can graduation rates be so low when Texas had that education miracle back when former President Bush was governor? Well, a couple of years into his presidency the truth about that miracle came out: Texas school administrators achieved low reported dropout rates the old-fashioned way — they, ahem, got the numbers wrong.


It’s not a pretty picture; compassion aside, you have to wonder — and many business people in Texas do — how the state can prosper in the long run with a future work force blighted by childhood poverty, poor health and lack of education.


But things are about to get much worse.


A few months ago another Texas miracle went the way of that education miracle of the 1990s. For months, Gov. Rick Perry had boasted that his “tough conservative decisions” had kept the budget in surplus while allowing the state to weather the recession unscathed. But after Mr. Perry’s re-election, reality intruded — funny how that happens — and the state is now scrambling to close a huge budget gap. (By the way, given the current efforts to blame public-sector unions for state fiscal problems, it’s worth noting that the mess in Texas was achieved with an overwhelmingly nonunion work force.)


So how will that gap be closed? Given the already dire condition of Texas children, you might have expected the state’s leaders to focus the pain elsewhere. In particular, you might have expected high-income Texans, who pay much less in state and local taxes than the national average, to be asked to bear at least some of the burden.


But you’d be wrong. Tax increases have been ruled out of consideration; the gap will be closed solely through spending cuts. Medicaid, a program that is crucial to many of the state’s children, will take the biggest hit, with the Legislature proposing a funding cut of no less than 29 percent, including a reduction in the state’s already low payments to providers — raising fears that doctors will start refusing to see Medicaid patients. And education will also face steep cuts, with school administrators talking about as many as 100,000 layoffs.


The really striking thing about all this isn’t the cruelty — at this point you expect that — but the shortsightedness. What’s supposed to happen when today’s neglected children become tomorrow’s work force?


Anyway, the next time some self-proclaimed deficit hawk tells you how much he worries about the debt we’re leaving our children, remember what’s happening in Texas, a state whose slogan right now might as well be “Lose the future.”

Rainy Day Fund Should Be Used

For the last twenty years the state of Texas has had a rainy day fund -- a sort of government savings account that can only be used in an economic emergency. The fund is made up of some oil & gas taxes and any surplus from the state budget in a good biennium. Although the fund has been tapped a couple of times in the past, it has never been as large as it currently is.

The fund has traditionally been less than a billion dollars. However, the discovery of new natural gas fields and high consumer prices for oil and gas has caused the fund to balloon since 2007. There is presently around $8 billion in the fund, and by the end of the next biennium the state comptroller projects the fund will have as much as $9.4 billion.

The Republican governor and legislature campaigned on a platform of no new taxes in the last election, even though no one knew just how large the budget shortfall would be for the next biennium. It turned out that shortfall was larger than expected -- a whopping $27 billion. The Republicans are still saying they can make up that shortfall without any new taxes (although they are already talking about raising fees on nearly everything -- as though those weren't taxes). But inexplicably, they are also saying the rainy day fund should not be used to help balance the budget.

Instead, they are recommending massive cuts in state programs -- especially in the areas of education (where as many as 100,000 teachers and school employees could be laid off) and health & human services (making life much harder for the poor and working classes, especially the children). While some cuts to state programs may be unavoidable in this recession, there is no need for the massive cuts being talked about by the Republican legislature.

What is a rainy day fund for, if not for use in an economic emergency. In fact, that is what the fund was created for. Could there be a bigger economic emergency than a $27 billion budget shortfall? The fund has been used to cover much smaller budget shortfalls in times where it didn't have anywhere near the funds it now has. It simply makes no sense to not use the rainy day fund to offset some of the budget shortfall -- maybe as much as a third of the shortfall.

The problem is that the right-wingers are in charge in Austin. They have never liked programs that are funded by tax dollars, regardless of who those programs help (except of course for corporate welfare). They see this as a golden opportunity to abolish or massively defund many state programs, and they don't really care who gets hurt in the process.

Unfortunately, there may be enough of these fringe far right-wingers in the legislature to block use of the rainy day fund. When created, the legislature didn't want it to be too easy to tap the fund (so it would be saved for a real emergency), so they fixed it so that a two-thirds majority of both houses must approve using the fund. That process may well give the right-wing nuts in the legislature their way to block use of that $9.4 billion, since they easily make up more than a third of the legislature.

The truth is that the proposed massive cuts are simply not needed. A combination of the use of the rainy day fund and a broadening of the sales tax base (along with small raises to most fees) could take care of most of the budget shortfall. But that wouldn't let the right-wingers use the shortfall to impose their hard-hearted agenda on the backs of ordinary Texans, so it probably won't be done.

The massive cuts they want will not help the Texas economy. It will ripple through the economy and cause unemployment to rise, children and others to go without health care, classroom sizes to grow, dropout rates to climb, college costs to rise, decrease protection from abuse for children and the elderly, decrease help for the blind, and generally hurt ordinary Texans.

It is beyond hard-hearted that these kind of massive cuts are even being considered -- especially since the rainy day fund has $9.4 billion. That fund should be used. Not using the fund should not even be considered in the present economic emergency.

Texas "Economic Miracle" Is An Abject Failure

The Texas legislature meets today for it biennial legislative session, and as I posted yesterday, it was expected that they would face a budget shortfall of between $21 and $25 billion.   It turns out that those figures were just wishful thinking -- the actual budget shortfall is more than that.

The Texas Comptroller, Susan Combs, gave her official estimates for the upcoming biennium yesterday and the news was not good.   According to Combs, the amount of money needed to maintain state services at its current levels (and remember, this is after three budget cuts have already been put in place) is about $99 billion.   The amount of income the state can expect is $72.2 billion.   That means the actual budget shortfall is projected to be about $26.8 billion (or 27.1% less than the amount needed to maintain the current pared-down level of services).

This certainly has to be disappointing for those touting the trickle down economic policies of the Republican Party.   More than any other state in the Union, Texas has faithfully followed those policies -- having had a very conservative Republican leadership in both the governor's office and the legislature for many years now.  

Texas doesn't have a state minimum wage law, has no state income tax ( and the taxes it does have are very regressive -- the kind of taxes Republicans love), is extremely corporate-friendly (even going so far as to give companies money and tax breaks to come to Texas), restricts government health insurance to only children and the disable (giving it the highest percentage of uninsured people at over 26%), funds its schools at one of the lowest per-pupil rates in the country (with a nearly 30% high school dropout rate), has some of the strongest anti-union laws in place of any state, ranks very low in median income for citizens and pay for state employees, and has deregulated most utilities (causing electric rates to climb to among the highest in the nation).

In short, Texas has followed the Republican game plan to the letter and it has resulted in a citizenry that is hurting and a government facing a financial disaster -- having one of the largest budget deficits in the country.   Texas was supposed to be the "economic miracle" that showcased the Republican policies.   What it really shows is that the Republican policies are the recipe for economic failure.

Governor Perry is trying to put a good face on this economic disaster saying,   "I don't think it's the end of the world.   I don't think it's apocalyptic."   While it is not the "end of the world", it is as big an economic mess as that faced by any state (including California).

The governor has been bad-mouthing the federal government, and saying that it should be following the economic example of Texas.   Now he must swallow his pride and depend on the federal government to help bail Texas out of the economic mess the Republicans have created.   The federal government is offering Texas about $7 billion in stimulus money, and the governor is going to have to accept that money with his hat in hand.

That will still leave more than a $19 billion shortfall that the governor and the Republican legislature must make up.   I don't think they can do it without raising taxes and robbing the state's "rainy day" fund -- both of which the Republicans assured voters they would not do.   It should be interesting to see what they do now, especially since the voters (in a recent poll) said they didn't want education and human services to be cut -- the two largest areas of the state budget.

Between A Rock And A Hard Place

The building pictured above is the capitol building of the State of Texas.   It will once again be a bustling place starting on Tuesday, January 11th, when the legislature meets for its biennial session (unlike most other states, the Texas legislature only meets once every two years -- on the second Tuesday of each odd-numbered year).  

This is also the week that the state's comptroller gives her official verdict on what the state's budget looks like for the next two years.   And it is expected that the legislature will find themselves, as my grandmother used to say, between a rock and a hard place.   The comptroller is expected to announce that the state will have a budget shortfall of between $21 and $25 billion dollars -- a huge deficit for a total budget of around $95 billion dollars.

Even knowing they would have a huge budget shortfall to face in this legislative session the Republicans campaigned on a platform of no new taxes.   They promised voters that they could fix the deficit with cuts to government services alone -- cuts that would not damage the necessary services delivered by government.   It was a promise that will be impossible to keep, but the voters fell for it and gave the Republicans huge majorities in both houses of the legislature.

 To keep their promise the Republicans would have to cut all state agencies and other state outlays by about 26%.   This is in addition to a couple of 10% cuts that have already been done and a 5% cut that is currently underway.   It doesn't take a genius to figure out that there is no way the services delivered by the state's agencies can survive such a massive cut (on top of the cuts already done).   Services will suffer, and in some cases may disappear altogether.   In addition, the state's schools would be in serious trouble if the state contribution to education was cut by such a massive amount.

The three biggest items in the state budget are criminal justice (Department of Criminal Justice, Texas Youth Commission, Department of Public Safety, etc.), education (elementary & high schools, higher education, etc.) and human services (AFDC, Medicaid, Food Stamps, Child Protective Services, Adult Protective Services, etc.).   Since these are the biggest items in the budget, then it makes sense that they would have to suffer the biggest cuts.

That's not going to be easy though.   Cuts to criminal justice is not going to be popular with the public.   It will mean thousands of criminals being dumped back into the communities with little or no supervision and no help to find jobs (which don't exist anyway) or programs to help with drug and alcohol problems (also severely cut by the state).   A Republican legislature is not going to like the public uproar this will create.

Cuts to human services will also be hard to do.   Cuts to programs partially funded by the federal government, like Medicaid or Food Stamps, would result in a loss of federal funds and put the state in an even bigger financial bind.   And cuts to programs like Child or Adult Protective Services will just result in more children and elderly Texans being abused and mistreated (the kind of things guaranteed to make negative headlines and public outrage).

Education is even tougher.   Texas already ranks near the bottom of all states in the amount of money it provides for education per pupil.   And considering that the dropout rate is near 30% for Texas high schools, it would seem outrageous that cuts to education would be on the table for legislative consideration -- but they are.   It would seem that tax cuts for wealthy Texans is more important than the education of Texas students.

Making matters even worse for the Republican legislature is the fact that although they were elected on a platform of not raising taxes, a new newspaper poll shows significant majorities of Texas citizens are opposed to cuts in education and human services.   The survey, conducted by Blum & Weprin Associates for several newspapers, shows that 70% of the public opposes any cuts to education (high schools and elementary schools).   Although 53% would allow cuts to higher education, only 11% would approve of large cuts even there.

And Texans are not much more responsive to cuts in human services.   About 62% of Texans oppose cuts in health care to children or low-to-moderate-income families.

This definitely puts the legislature in a difficult predicament.   Although elected on a promise not to raise taxes, the public definitely opposes significant cuts in the parts of the budget that  contains the most spending.   They can either make the public mad by raising taxes or make the public mad by cutting necessary and popular programs.   And either way, the Republicans must shoulder the blame since they have the governor's office and huge majorities in both houses.

I suspect they will do a little of both -- cut the budget and raise taxes.   But they will raise taxes in a sneaky way so they can have some deniability -- such as broadening the sales tax base to include items now exempt instead of raising the tax rate, and raising the fees for many services like driver's licenses, marriage licenses and hunting licenses.   They will then claim they kept their word since a fee is not a tax.   It's not true of course, but that's what they'll claim anyway.   There's only one thing we can be sure of -- taxes and fees on corporations and the rich will not be raised.   Texas has the most regressive taxes in the nation and that will stay the same.

This dog-and-pony show will start on Tuesday, and it should be interesting to see how the Republicans get themselves out of the mess they have created with their past actions.   The only good thing is that this time they can't blame the Democrats for their own actions.

TxDOT Lies Are Exposed

For months now, the Texas Department of Transportation (TxDOT) has been trying to tell the citizens of Texas that they have a budget shortfall, and cannot build the highways necessary without turning many of our freeways into toll roads and giving them to private corporations.

They have even spent state money on publicists to try and convince voters of this. Then they said they had a shortfall of funds and put many planned road projects on hold. They blamed the budget shortfall on a lack of expected state and federal funds.

Now the truth comes out. The problem was due to their own internal communications. They admitted they had three different officials estimating funds they would receive, and wound up double-counting several sources. But that only accounted for $1.1 billion.

State Senator Judith Zaffirini (D-Laredo) said she believes TxDOT has invented the budget crunch as a ploy to put pressure on legislators to allow more building of private toll roads. She points out the legislature gave TxDOT $23 billion in the last session -- $7.5 billion more than the previous legislature. Senators also pointed out that TxDOT has not used billions of dollars in bonds approved by voters.

The truth is there is NO NEED FOR PRIVATE TOLL ROADS in Texas. The supposed need was just a lie concocted by state Republican leaders and promoted by TxDOT officials. It's just a money-making scheme (probably full of kick-backs) to enrich their corporate buddies.

It is time for new leadership at the top levels of TxDOT. But we need to go even further. We also need to replace the state Republican leadership that put these nuts into those positions. The whole thing stinks of corruption.

We can make a good start on this by electing more Democrats to the state legislature this November.