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CA: Vote No on California's Bond Time Bomb (Proposition 57)
NewsMax.com ^ | Feb. 27, 2004 | Jon E. Dougherty

Posted on 02/26/2004 2:57:28 PM PST by calcowgirl

Arnold Schwarzenegger ran a successful campaign last fall to become California's governor, promising to put the state's "financial house" in order.

Voters agreed with the action star that, at tens of billions of dollars in the hole, the debt-ridden administration of Gov. Gray Davis seemed poised to lead the state over a financial cliff.

Now, just after his first 100 days in office, Schwarzenegger is pushing a plan he first mentioned during his campaign: a bond issue he and other state leaders say will be a huge first step towards achieving state financial solvency.

Called Proposition 57, the "Economic Recovery Bond Act" would allow the state to borrow up to $15 billion to pay off its accumulated debt.

Another issue, Proposition 58, called the "California Balanced Budget Act," would require state lawmakers to pass a balanced budget and establish a budget reserve; the latter proposition will come into effect only if the former is passed as well. Voters will make their choices March 2.

But is borrowing to pay off current debt the best fiscal policy?

Isn't that simply compounding the existing problem?

Yes, say critics, who are urging voters to reject Prop 57.

'Get What I Want'

According to an analysis of the plan by Schwarzenegger, indeed Proposition 57 means the state will have to borrow again. But, he explains, it's a better deal in the long run because rates will be cheaper and the subsequent Prop 58 would eliminate future borrowing: "Proposition 57 will refinance past deficit borrowing at low interest rates, and Proposition 58 tears up the credit card for good. It requires a balanced budget every year without borrowing, so we never get in this mess again."

Also, the 'Governator' is counting on federal tax money to help him erase the state's red ink.

In Washington on Monday for the National Governor's Conference, Schwarzenegger insisted his dogged persuasiveness would help him land the cash.

"How much money can I expect when I come here because so many other governors are asking for money?" he said, following a meeting with Senate Appropriations Committee chairman Ted Stevens, R-Alaska "I expect to get a lot of it, simply because I'm very persuasive. I am like a tick that hangs on and will not let go until I get what I want."

Other well-known financiers agree. Investment magnate and billionaire Warren Buffett has signed on to Schwarzenegger's approach; on Wednesday, he pitched the idea to some of the nation's largest bond underwriters in New York City.

Comparing Schwarzenegger's plan to President Franklin Delano Roosevelt's approach to rescuing the Depression-ravaged nation upon taking office in 1933, the liberal Democrat Buffett sounded upbeat: "It was one of the great turnaround stories of all time. Arnold has just finished 100 days [in office], and he has replicated in Sacramento what Franklin D. Roosevelt did in Washington.

"People in California started to believe in themselves again and believe in their state again. The most important thing he has done is he has brought people together. He's got people working together that were trying to cause each other trouble six months ago, three months ago," said the billionaire.

Doubts

Despite Schwarzenegger's confidence and the endorsement of some big-name backers, there are still many doubts about his two-pronged proposition plan.

For one, the California public isn't convinced. According to recent opinion polls cited by The Economist, only 35 percent of "likely voters" say they'll back Prop 57 though, ironically, about 57 percent said they'd vote for prop. 58.

Also, says Fresno Mayor Alan Autry, an editorial in the San Francisco Chronicle, the bond issue idea goes against the promise Schwarzenegger made to voters last fall.

"First, deficit borrowing is bad public policy," Autry writes in his Feb. 26 commentary. "Second, financing a state deficit bond through a grab of city taxes is even worse public policy. Third, there is a better way."

Autry, who says he considers himself a friend of the governor who supported his candidacy, would rather see state lawmakers "make structural changes to their spending habits."

"That, in fact, is what Schwarzenegger advocated during his campaign when he spoke of doing performance reviews and a comprehensive audit of the state's spending practices," Autry said. "To the governor's credit, that work has begun, but we should await its outcome before needlessly burdening future generations with debt that can be avoided."

Quit Digging Holes

Republican State Senator Tom McClintock, who opposes Schwarzenegger in the recent recall election, believes the proposals are also going to unfairly burden future generations.

"A multi-million dollar campaign has been launched to convince Californians to pass on $15 billion of debt - plus another $6 billion in interest - to pay for our own generation's mistakes," he says on his Web site.

"But the First Law of Holes is, "When your in one, stop digging."

He says the $15 billion bond will cost each California family $2,000 apiece to repay, "without a penny going to build a single new school or road.

"[Two thousand dollars] for nothing more than papering over the state's deficit."

In a piece originally written for the Wall Street Journal, McClintock argues the best fiscal medicine for California is cutting spending and wasteful programs.

"If the current rate of state spending were reduced 13.4 percent on January 1st and frozen through Gov. Schwarzenegger's first budget, the state would be back in the black, free and clear of external debt, and able to start the Governor's second year in 2005 with a clean slate," he wrote.

That kind of reduction means cutting $5.2 billion from the current year's budget, and setting next year's budget limit at $66.6 billion. "That's a big cut – and it means giving up billions of dollars of programmed spending increases next year. But it's still 15.2 percent more than California was spending when Gray Davis took office," he said.

McClintock estimates if the bond issue passes, which would be stretched out over a period of nine to 14 years, it would eventually require 8 percent of the state's budget to service that additional debt.

Property Tax Hike?

During Schwarzenegger's campaign, Buffet – an early supporter – caused a stir when he hinted the Republican actor could make up much of the state's deficit by adjusting Proposition 13, the state's historic effort to limit property tax increases.

Schwarzenegger moved to quell the controversy quickly, joking he would make Buffett do 500 sit-ups if he ever mentioned Prop 13 again.

That seemed to be the end of it, but according to Autry, property taxes may be hiked anyway.

"The $15 billion bond is secured by one-quarter cent of local sales tax revenues, the very revenues that Fresno and other cities depend on to provide critical local services such as police, fire, parks and street maintenance," he says. "Through a complex manipulation, known as 'the triple flip,' Proposition 57 relies on local resources for both collateral and debt repayment, including another raid on our local property taxes.

"To decimate local economies to pay off debt that should never be incurred does not build stability, but it could very well end up being a fast track to bankruptcy," he said.

Vote No ...

Nevertheless Schwarzenegger remains confident, both of the plan's eventual passage and its ability to solve the most populous state's fiscal crisis.

"For the rest of the country, March 2 means Super Tuesday," Schwarzenegger said in New York last week. "For us, of course, it means Super Comeback Tuesday because we know we're going to win this even though it's been a big struggle."

Sensible California taxpayers, however, can respectfully disagree with their new and popular governor and vote “no” on Proposition 57. By doing so they will force Sacramento to once and for all make stiff budget cuts and make their state solvent.


TOPICS: Editorial; Government; News/Current Events; Politics/Elections; US: California
KEYWORDS: prop57; prop58

1 posted on 02/26/2004 2:57:29 PM PST by calcowgirl
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To: calcowgirl
Only if the reduce government spending. Higher taxes are not the answer.
2 posted on 02/26/2004 2:59:51 PM PST by MAKOTHEDOG
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To: NormsRevenge; farmfriend; Carry_Okie; SierraWasp; Ernest_at_the_Beach; kellynla; Amerigomag; ...
Ping
3 posted on 02/26/2004 3:01:27 PM PST by calcowgirl (No on Propositions 55, 56, 57, 58)
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To: MAKOTHEDOG
Only if the reduce government spending. Higher taxes are not the answer.

So.... you won't give them the money now (taxes),
but you'll let them put it on their credit card (bonds) that WE get to pay for?

Taxes: We pay. Bonds: We pay.

The only way to ever see spending cuts is to oppose this bond.

4 posted on 02/26/2004 3:06:59 PM PST by calcowgirl (No on Propositions 55, 56, 57, 58)
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To: calcowgirl
The only way to ever see spending cuts is to oppose this bond.

You're right. Let them earn their money and figure out where to cut expenses. Cutting off support of illegal aliens would be a good start.

5 posted on 02/26/2004 3:15:00 PM PST by janetgreen
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To: calcowgirl
maybe that is what I was trying to say.

I think the government should find ways of saving money ( reducing gov. spending ) before relying on the bond.

California got themselves in this mess and they should have to deal with it themselves.

The bond is the feelgood way out of this mess.

california needs to start over from scratch and I am sure it will be a painful process for some.
6 posted on 02/26/2004 3:16:33 PM PST by MAKOTHEDOG
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To: calcowgirl
Warren Buffett is:

(a)KingMaker
(b)a rich old senile fart
(c)a bilderberger globalist
(d)all of the above
7 posted on 02/26/2004 3:18:47 PM PST by NormsRevenge (Semper Fi Mac ... Support Our Troops! ... NO NO NO NO on Props 55-58)
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To: calcowgirl
how much money would the calif. gov. save if they only handed money out to people who were american citizens or legal aliens? I would start there first.
8 posted on 02/26/2004 3:21:18 PM PST by MAKOTHEDOG
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To: calcowgirl
Taxes: We pay. Bonds: We pay.

If I may offer just an itsy-bitsy correction to your statement:

Taxes: We pay. Bonds: We pay with interest.

There. That's better.

And who is going to be financing the bond? Why the big-bux financiers like **Ta-Daa** --Warren Buffett.

No wonder he's so bullish on Ahnold's Bond Biz...

9 posted on 02/26/2004 3:24:25 PM PST by Ol' Dan Tucker
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To: calcowgirl
Fully convinced bumperootus!
10 posted on 02/26/2004 3:38:59 PM PST by ErnBatavia (Gay marriage is for suckers...)
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To: calcowgirl
I voted NO on all four propositions but . . . be afraid, be very afraid. We have been bombarded by media pressure to vote YES and the sheeple are stupid.
11 posted on 02/26/2004 3:40:15 PM PST by Saundra Duffy (For victory & freedom!!!)
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To: Saundra Duffy
Saundra sorry to go off topic but I receieved your election special in today's mail and no mention of Prop 57/58.

Whatsup?

See my recent post regarding the matter on the California topic.

Thanks.

12 posted on 02/26/2004 3:46:39 PM PST by Amerigomag
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To: MAKOTHEDOG
maybe that is what I was trying to say.

I figured it was, I was just venting my frustration, I think.
Some people think bonds are just free money, that they
miraculously get paid off with someone else's money.
There is only one set of pockets to pick: OURS!

13 posted on 02/26/2004 3:57:16 PM PST by calcowgirl (No on Propositions 55, 56, 57, 58)
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To: calcowgirl
No on Propositions 55, 56, 57, 58) ....ditto!!!!!!!
14 posted on 02/26/2004 3:58:55 PM PST by GrandMoM (....for the mouth speaks out of that which fills the heart {Matthew 12:34})
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To: calcowgirl
I'll be voting "No" with pleasure.

Start the Armageddon cuts already, Arnold!
15 posted on 02/26/2004 4:00:07 PM PST by djreece (Recall Lockyer!!!)
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To: NormsRevenge
Warren Buffett is:

(a) KingMaker
(b) a rich old senile fart
(c) a bilderberger globalist
(d) ******** ***** (Not fit for publication)
(e) *** ***** **** (Not fit for publication)
(f) ***** ******** (Not fit for publication)
(g) all of the above

Answer: g
16 posted on 02/26/2004 4:00:33 PM PST by calcowgirl (No on Propositions 55, 56, 57, 58)
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To: calcowgirl
I could tell you are frustrated. I would be. Last time i was in calif. was during the simon-davis election and I knew that something in that state had to give. Universal day care- who pays for that and with what money I thought to myself

My vents are to the article and not the people that post them. I am on your side.
17 posted on 02/26/2004 4:03:50 PM PST by MAKOTHEDOG
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To: Ol' Dan Tucker
Taxes:   We pay.         Bonds:   We pay with interest.
There. That's better.

Yep! Thanks for the correction. Better.

18 posted on 02/26/2004 4:07:04 PM PST by calcowgirl (No on Propositions 55, 56, 57, 58)
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To: MAKOTHEDOG
I am on your side.

Sure wish you were here voting! lol

19 posted on 02/26/2004 4:10:23 PM PST by calcowgirl (No on Propositions 55, 56, 57, 58)
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To: calcowgirl
I wish I could vote a thousand or so times, especially in calif.

20 posted on 02/26/2004 4:13:55 PM PST by MAKOTHEDOG
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To: calcowgirl
Hey Cal Cow Girl!

Voting NO on anything that is a yes or no question. Why quibble with what the proposition is? This NO philosophy works until we get that "We really meant it when we said-Marriage = Man + Women-" proposition. Anyone starting a drive for the "We really meant it" provision?

Cheers:

DD
21 posted on 02/26/2004 4:57:29 PM PST by DiamondDon1 (Member VRWC (recovering spineless Arnold voter))
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To: DiamondDon1
Voting NO on anything that is a yes or no question.

Is that a question?

I'm not following you in trying to make some correlation to the marriage issue. I support maintaining the current definition of marriage, i.e. no marriage for homosexuals.

22 posted on 02/26/2004 5:03:27 PM PST by calcowgirl (No on Propositions 55, 56, 57, 58)
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