Posted by Matthew J. Cunningham at 12:00 am on Feb 13, 2009 Comments Off on Balancing Budgets Through Higher Taxes: A History Lesson
Apologists for the massive $14 billion tax increase being
advanced as a solution to the chronic state deficit like to point
to 1991 as validation of this strategy.
Then, as now, California was in the depths of recession. Then,
as now, the confronted a historically huge budget deficit — which
at the time was $14 billion.
At the end of the day, Gov. Pete Wilson struck a deal with the
Democratic majority to erase the deficit with $7 billion in tax
hikes and $7 billion spending cuts, and succeeding in toppling
Assembly GOP Leader Ross Johnson and pealing off the necessary 7
Republicans to vote for the deal.
Conventional wisdom, viewing that deal through the gauzy mists
of time, hails it as a grand compromise of statesmanlike proportion
that restored health to the budget, and as a model that we should
emulate today.
Too bad it’s a myth, because inflicting a massive tax increase
on a weak economy had the opposite effect, and the next year the
state was faced with a $3 billion deficit.
Former Sen. Ray Haynes laid out the truth of what transpired in
this 2005… Read More