In just a few short weeks, we’ll be offered the opportunity to vote in State and local elections. Most of us won’t vote. In the 2006 California mid-term election, nearly 60% of eligible voters declined to cast a ballot. While that statistic is lamentable, here’s the silver lining: a relatively small number of motivated voters can determine the tone and direction of San Diego and California. That could be you!
While non-presidential election turnouts have historically been dominated by older voters (who vote more often, regardless), the presence of Proposition 19 (the pot law) this year on the California ballot has some pollsters predicting a shift in the electoral “off year” mood that may defy the declarations that this election is all about “tea parties” and “voter anger”. So pull up a chair and stay tuned over the next few weeks as I walk you through the candidates and ballot proposals for 2010.
The Big Lie(s) Meet Mass Marketing
Perhaps you’ve seen the TV ad claims that go something like this: “Jobs are leaving California”, “High taxes are to blame for the economic recession”, “Tax cuts will create jobs”, “Small businesses are under attack”…yada, yada. The actual “words” may change, depending on which organization or party is sponsoring the message, but the underlying assumptions are the same.
After all, no political party—and both can claim plenty of credit here—is going to fess up and actually admit that the last round of bi-partisan economic policy was a miserable failure. So, in order to understand the current election, it’s best to first take a look at some of the underlying assumptions that are being portrayed as “reality” throughout the campaigns.
When you use the term “big lie”, most people thank back to Nazi Germany. Hitler first used the term to blame the Jews (and Marxists) for covering up “the truth” about Germany’s loss in WWI. The CIA’s predecessor, the Office of Strategic Services, in their psychological profile of Hitler, asserted that:
His primary rules were: never allow the public to cool off; never admit a fault or wrong; never concede that there may be some good in your enemy; never leave room for alternatives; never accept blame; concentrate on one enemy at a time and blame him for everything that goes wrong; people will believe a big lie sooner than a little one; and if you repeat it frequently enough people will sooner or later believe it.
While virtually no contemporary political entity will admit to admiring the Nazi propaganda machine, the inescapable fact is that this methodology is widely employed today. It’s called “spin”. Republican strategist Karl Rove put a modern face on this when he defined politics as the art of getting people to vote against their best interests.
Unless you’re part of the elite at the top of the heap, it should have come to your attention by now that the economy sucks. From this kernel of truth, many great Big Lies have sprung forth. It’s the gift that keeps on giving for both political parties. For most of us our economic status is connected to our jobs, or lack thereof. So when the teevee starts telling us that more taxes equals less jobs or that there are no jobs because taxes are so high it strikes a nerve—that nerve that runs right through our empty wallets.
Which brings us to Big Lie Numero Uno: While there can be a connection between taxation and employment, that’s not what’s going on right now. There is virtually no connection between current levels of taxation and current levels of employment (or lack thereof). There is a connection between our taxation system and unemployment, but that’s a connection that you are supposed to ignore.
The people who designed the current tax system promised us that lower taxes on capital and dividends would boost the economy, promote investment, create jobs, spur market performance, and raise everybody’s income. They were wrong. Pick your metric—median income, employment, stock market returns, economic growth—the low-tax ’00s sucked. Yet proponents of keeping the tax cuts persist in making the argument: To avoid a repeat of the past decade, we must have the exact same tax policies as we did for the past decade. This sounds like a definition of insanity, or more likely, something we’re supposed to believe if it’s said loudly and often enough.
We’re being told that, if the Bush tax cuts on the wealthy aren’t extended, they will amount to the largest tax increase in history. Back in 1993 we were also told that President Clinton supposedly had imposed the “largest tax increase in history.” Not only was this false in absolute or percentage terms, it also conveniently missed the fact that individuals earning under $115,000 (that’s $173,000 in 2010 dollars) didn’t see their income taxes go up. (This time around the cut-off point for any tax increase is $250,000.)
And what happened after those extra income taxes were imposed on upper-income Americans? The disaster predicted by Republicans? Nope. Twenty-two million new jobs were created. I won’t be so bold as to claim that those jobs were caused by that tax increase. But it obviously wasn’t an obstacle, either.
The Sky is Falling!
The flip side of Big Lie Numero Uno is the “jobs are fleeing California” (due to high taxes) line of reasoning. The most serious promoters of this fairy tale like to list companies (along with the number of employees) which have vamoosed to tax paradises like Arizona and Nevada. And it’s all because the big bad meanies of the California Legislature are determined to suck the “Free” out of enterprise.
So lets wander over to these tax paradises and see just how that’s working out. Hey if all these businesses are fleeing California for Nevada because of high taxes, how come Nevada has a 14.4% unemployment rate? Or how about Arizona, where 347,600 jobs have gone elsewhere during the same time period?
California’s losses from employer movement are well below the national average of the states, according to a recent study quoted in the Sacramento Bee. And there are new businesses starting up here: California ranked 9th with 410 startups per 100,000 people in 2009. The largest increase came in the high tax hell known as the Bay Area.
Are jobs disappearing in California? You betcha. Manufacturing job levels have shrunk rapidly in California and across the nation. During the past nine years manufacturing job levels fell by 5.4 million nationally and 540,000 in California. This has nothing to due with taxes and everything to do with the shifting landscape of the US economy.
Another 500,000 of the jobs lost over the past two years have been in construction, finance, real estate and industries related to construction. These industries are all in the tank for reasons that have nothing to do with taxation and everything to do with Ponzi schemes posing as “free market/deregulation” economic policies pursued during the Clinton and Bush administrations.
These job losses come on top of nearly three decades of bad news for most Americans. From 1980 to 2005, more than 80 percent of total increase in Americans’ income went to the top 1 percent. Productivity increased by about 20 percent. Yet virtually none of this increase translated into wage growth at middle and lower incomes.
The Rich Get Richer
In the early years of the 20th Century the richest 1 percent accounted for 18 percent of the nation’s income. These were tumultuous times when the accumulated wealth of America’s richest families—the Rockefellers, the Vanderbilts, the Carnegies—helped prompt creation of the modern income tax. The socialist movement was at its historic peak, and a wave of anarchist bombings was terrorizing the nation’s industrialists. There has never been a time when class warfare seemed more imminent.
Today, after years of dismantling of the progressive tax structures of the early 20th Century in the name of economic growth, the richest 1 percent account for 24 percent of the nation’s income. And thanks to the “Big Lie”, a significant part of the population thinks this is the road to prosperity. Things are great for the rich. Numbers recently published by the Federal Reserve demonstrate that corporate profit margins have hit record levels; the latest Flow of Funds report says corporate profit margins rocketed to 36% in the first quarter. Since records began in 1947 they have never been this high. The highest they got under Ronald Reagan was 30%.
California, once a safe haven for a large middle-class, and for upwardly mobile poor moving up to the middle-class, now has a typical Third World structure: An upper-class that enjoys the bounties the state has to offer; a shrinking middle class; and a large and growing lower class that, if it wishes to move into the middle class, leaves the state for opportunity elsewhere. This change has nothing to do with taxation levels and everything to do with the taxation system.
Now, we’re ready to start talking about the elections. To be continued….Starting with the State Propositions…