Wednesday's lead New York Times story from California-based Adam Nagourney strongly suggested that tax hikes promoted by Gov. Jerry Brown (and Nagourney himself) were paying off in economic resurgence in the already tax-high state: "California Finds Economic Gloom Starting To Lift."
After nearly five years of brutal economic decline, government retrenchment and a widespread loss of confidence in its future, California is showing the first signs of a rebound. There is evidence of job growth, economic stability, a resurgent housing market and rising spirits in a state that was among the worst hit by the recession.
California reported a 10.1 percent unemployment rate last month, down from 11.5 percent in October 2011 and the lowest since February 2009. In September, California had its biggest month-to-month drop in unemployment in the 36 years the state has collected statistics, from 10.6 percent to 10.2 percent, though the state still has the third-highest jobless rate in the nation.
The housing market, whose collapse in a storm of foreclosures helped worsen the economic decline, has snapped back in many, though not all, parts of the state. Houses are sitting on the market for a shorter time and selling at higher prices, and new home construction is rising. Home sales rose 25 percent in Southern California in October compared with a year earlier.
After years of spending cuts and annual state budget deficits larger than the entire budgets of some states, this month the independent California Legislative Analyst’s Office projected a deficit for next year of $1.9 billion -- down from $25 billion at one point -- and said California might post a $1 billion surplus in 2014, even accounting for the tendency of these projections to vary markedly from year to year.
A reason for the change, in addition to a series of deep budget cuts in recent years, was voter approval of Proposition 30, promoted by Gov. Jerry Brown to raise taxes temporarily to avoid up to $6 billion in education cuts.
“The state’s economic recovery, prior budget cuts and the additional, temporary taxes provided by Proposition 30 have combined to bring California to a promising moment: the possible end of a decade of acute state budget challenges,” the report said. “Our economic and budgetary forecast indicates that California’s leaders face a dramatically smaller budget problem in 2013-14.”
Nagourney got around to the conservative rebuttal in paragraph 19.
Democrats here have been quick to argue that the improvements in fiscal conditions that the state is now projecting after voters approved the temporary tax increase may embolden other states, and Congress, to raise some taxes rather than turn to a new round of cuts.
In one sign of a new spirit, some Californians are again promoting the idea of their state’s setting the cultural and policy pace for the rest of the country, a meme that, if ever true, appeared at least questionable as California endured cuts that diminished its once-great higher education system. Rick Jacobs, the head of the Courage Campaign, a liberal advocacy group, argued that Californians, by voting to raise their taxes, set a model Washington should follow in negotiations over how to avert the so-called fiscal cliff.
“One might argue that what happened in California will set the trend for what will happen in the country, meaning that opposition to taxing the wealthy is opposition to the future,” he said.
Conservatives took a nearly opposite view, arguing that the state’s latest tax increases and its thicket of regulations would drive out businesses and people.
California has faced attacks by conservative leaders for much of this presidential election year, as they presented the state as a model of Democratic policies gone awry. Mitt Romney compared California to Greece. Peggy Noonan declared that the “mythic place where Sutter struck gold” had become a symbol of failure. “California is going down,” she wrote. The conservative Manhattan Institute devoted an 8,500-word report to “The Great California Exodus.”
A photo caption took as fact that higher taxes will help California, as if it's not already a high-tax state: "Gov. Jerry Brown scored political success with passage of a tax increase that has improved the state's budget outlook." Nagourney ignores how steep California taxes already are.
Nagourney's December 1, 2011 story helped pitch the tax hikes he is now praising: "Yet the sheer abundance of undisguised tax-increase proposals is the latest evidence that spending cuts in California, arguably deeper and further along than almost anywhere in the country, may be producing a reconsideration among voters about taxes and the value of government. Democratic leaders said the tax campaign marks the start of the backlash that many of them, starting with Mr. Brown, had predicted would set in as budget cuts turned into the reality of closed parks, shortened school years, a reduced number of police officers on the streets and, in the case of California, the early release of felons from overcrowded jails and prisons."