I am sitting in the airport, waiting to return to the Philippines, where I hope to earn enough money to become a profit center for the state instead of a cost of doing business. On my way to the airport, I heard the Governor slam the Republican borrowing plan really hard, calling it "bad" and "how the state got into this trouble in the first place." First, he is wrong on how the state got into this trouble. This Governor got into this mess the same way the last Governor did, by refusing to stand up to a spendthrift majority in the Legislature. What is worse, he was warned, by me and by others, who saw this doom coming, and whom he dismissed as irrelevant. While it is true that we were irrelevant in those negotiations, it was only because he refused to listen to the prophets forecasting his impending doom. He now wants to shoot the messengers (to mix the metaphors), and cover up his failures and his lack of discipline by punishing the taxpayers of the state of California, instead of the tax receivers. Big government bureaucrats and government unions live off the taxpayer. They pushed the majority to enact the out-of-control spending over the last three years. They, not the people of this state, should pay the price for creating this crisis.
In the end, the Republican plan says that I would rather be a debtor than a thief. The truth is, taxes are little more than legal theft (for a great discussion of this true fact, go to P.J. O’Rourke’s Parliament of Whores, he hits the nail on the head on taxes). Yes, it is true that borrowing is not a good thing. What it does, in this case, however, is slow down the growth of government. When the state hit this same budget wall in 2002-03, I actually proposed the borrowing plan that got the state through that huge crisis without a tax increase. Susan Kennedy and her cohorts in the Davis administration were pushing Republicans for a tax increase. Some of those Republicans were thinking about it. I knew that the political will to do the nearly $13 billion in actual bottom line cuts was not there, and that a tax increase would come before the cuts. The borrowing plan, while not perfect, solved the immediate problem, but more importantly, slowed the growth of government in the boom years that followed. The state had to pay off that debt, and therefore couldn’t spend that money on ongoing programs. Indeed, had we not borrowed in 02-03, the depth of the budget problem today would probably be $13 billion worse, because neither the Democrats, nor this Governor, can control themselves. They have to spend every dime they get.
That is why the Republican plan works. Borrow the money, and pay it back out of the growth over the next 5 years. If the state borrows it from local government, even better. That slows the growth of government in this state at two levels over the next five years. The biggest problem facing this state is out of control government spending at all levels. Practical plans that figure out how to slow that growth are the only ones Republicans should consider, and borrowing the money from local government is just that sort of plan.
Sometimes people get themselves in a bind by stupidity, spending money they don’t have on things they don’t need. Their choices when the cash flow stops are either: (1) Run up the credit card to pay off past due debt, and cut spending in the future, until their revenue stream catches up to their desires; or (2) Go out and rob a few banks to pay off the debt, and then continue to rob those banks each year to make up the difference. One way, you are a borrower, the other way you are a thief. The Governor has proposed that the state government become a bigger thief than it already is. Truth is, I’d rather be a borrower than a thief. Republicans know borrowing isn’t good, stealing is worse. They should stick to borrowing to get out of this immediate crisis, so that the theft will not occur.