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Friday, March 28, 2008
Recession and partisanship makes for more bad policy

By Steve Pehanich
text only version

Our President was surprised at a press conference to learn that gasoline may soon rise to $4 per gallon. Sometime soon, most of us will get a check from Uncle Sam which we are respectfully asked to spend on stuff --- any stuff.

To be fair, very few presidents know the price of a gallon of anything --- they don't get out by themselves much. And many jobless and low-income people need the funds.

A series of developments --- from the housing bust to record gas prices --- is fueling the current economic uncertainty.

It is too early to tell if we are in a recession yet --- it takes two straight quarters of negative growth. Economists have different definitions for a recession, and the number-crunching takes a couple of months.

Technically, we could be out of a recession before the numbers show we were in one. Added to that, there is that self-effacing joke told by economists: if you get two of us in a room, you'll get three opinions.

Nevertheless, Washington has moved with unprecedented, bipartisan speed in creating an economic stimulus package for U.S. taxpayers. (This being an election year probably helped.)

We're being urged to buy more stuff. Unfortunately, many will be buying food, electricity, gasoline and other basic commodities with their checks.

And in a high cost of living state like California --- which is facing a $14.5 billion budget deficit and is at the epicenter of the housing situation --- spending a refund on necessities may be truer than in other parts of the country.

The stimulus package during the last recession in 2001 may have helped families in an economic crunch. Some said it was "a day late, and a dollar short," but most conceded it helped if even in a small way.

Studies from that experience seem to indicate that lower-income families and individuals spent more of their stimulus quicker --- albeit for items like groceries and gasoline. (Isn't that just a common sense conclusion?)

I will let economists debate the wisdom of the economic stimulus package, and the best approaches to economic, fiscal and tax policies. But one thing is clear --- California leaders need to do something soon about the economic situation and do so in a bipartisan manner.

We are in a period when trial balloons on how to respond to the governor's budget proposal --- such as taxing oil companies --- are rising and falling daily. Democrats and Republicans are reciting their standard rhetoric. They'll get serious about it in May, when the revised budget is released.

In the meantime, a lot of Californians are facing some very serious threats. The California Budget Project, a respected non-partisan analyst, has offered some estimate of the impact of the current budget proposal:

---Nearly 200,000 children will lose financial support from CalWORKs. While California has debated how adults are assisted by the program, there has always been bi-partisan support for caring for children.

---California's 5.9 million public school students face cuts of $786 per child --- about a 10 percent reduction. California teachers will soon be getting layoff notices. Many will eventually retain their jobs, but how deep the cuts will be is not known yet.

---Low-income seniors and disabled people will not receive Cost of Living Adjustments. This group is perennially the target of cost cutters and has already taken a big hit already in the first round of budget adjustments enacted by the legislature in February.

Unfortunately, the list could go on and on.

"The economy should serve people, not the other way around," say the U.S. Bishops in their 1986 letter, "Economic Justice for All."

Just how that will happen is up to California lawmakers. It should not be left up to well-worn political platitudes, partisan bickering and intransient positioning.

There should be no political line in the sand when it comes to peoples lives.

We go through this budget dance every year in California. Last year, everyone just threw up their hands and went home when the stalemate went on too long.

As far as I know, we didn't elect people to hide behind party walls --- we hired them to govern the State of California.

Scaring teachers and disabled people with posturing and blustering is not governing. Nor is threatening to take away assistance from children.

The Federal stimulus package may or may not have much of an impact as intended, but it is an effort at bi-partisan policy that at least has some chance of succeeding and making positive impacts on people.

Let's urge California lawmakers to bridge their partisan gaps sufficiently to do the same.

Scaring teachers and disabled people with posturing and blustering is not governing. Nor is threatening to take away assistance from children.



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