Natomas school district budget crisis

A news story in today's Bee recounts the budget balancing of the Natomas School District by teachers giving wage concessions.

How did we get into this fix?  Well, first was the economic collapse caused by the bankers and the real estate fraud artists.  That took 13 Trillion from the economy crashing the U.S. and the international economy.  That produced a dramatic drop in sales tax and property taxes and a California economic crisis.  School funding reveals the nature of crisis.  In the last two years the k-12 budget “solutions” have cut 4.6 billion dollars from the schools. We have larger classes and fewer teachers.  School reform has stopped- except for the politicians hot air.  School funding makes up a total of 30% of the state budget.  Any crisis in the state budget and any cuts in the state budget will make school budgets worse.  The crisis will get worse.

California will need to raise taxes to fund the schools and to repair the social safety net.  Anti tax radicals and Republicans  oppose any tax increases.

Natomas was one of the early casualties.  Many more will follow- even with the teachers giving up salary.  The states and California are in a downward spiral and it will continue for at least 3-4 years.  The children, and the working people are paying for the robbery of the financial classes. And, they just held up unemployment benefits until the Republicans gave them a $700 Billion tax benefits. 
See the prior posts on the financial crisis and the state budget crisis.

Taxes and deficits.

The tax extension forced by the Republicans will make the deficit problem worse.  Republicans claim that they want to cut the deficits, but what they have done is increase the deficit to give millionaires a tax cut.

The two deficit commissions have begun a consideration of the growing national debt.  It is important to notice what they have not considered.  The Simpson-Bowles group actually proposed to cut taxes on the corporations while cutting benefits to social security and other programs.

            There are alternatives.  First, the Congress  should restore the Clinton era tax levels on millionaires, the top 2% of the nation.  Republicans have said no and have blocked unemployment benefits to force their way.  It seems that the Obama Administration has given in.  Note.  The Democrats  did not have the votes in the Senate to win.  Losing elections has a cost. 

 The Economic Policy Institute has developed a balanced fair plan that does not tax the middle class while giving tax breaks to the rich.  And they note, as most agree, social security is not in crisis. (http://www.epi.org/publications/entry/investing_in_americas_economy/)

            Another alternative would be to establish a 2% sales tax on stocks, bonds, and securities.  You and I pay 8% sales tax in the county while the “dealers” on Wall Street pay no sales tax.  Such a  tax would quickly reverse our debt problem.  It would tax the very people who created the financial crisis 

The budget deficit and debt

The Budget Deficit and the Debt
What You Need to Know

 

1. The deficit is the gap between what the government spends and the revenues it collects each year. We didn’t always run deficits. When President Clinton left office, the federal budget was running a surplus of $236 billion, or about 2% of the U.S. economy. And that extra revenue was being used to pay down the national debt. To understand how we moved from big surpluses to a growing deficit, it’s helpful to examine each of the major factors driving our nation’s current deficits.
2. Every million additional jobs we generate reduces the deficit by $54 billion.
3. It’s misleading (and dangerous) to confuse the short-term budget shortfall with the medium-term deficit or the long-term debt. Here’s a way of understanding it:
   1. The Short-Term Recession Shortfall (1-3 years): The Great Recession wasresponsible for 61 percent of the deficit last year.
      1. Tax receipts fell as people lost jobs and income and businesses failed; federal tax revenues declined from 18.5% of GDP in 2007 to 14.8%.
      2. Spending rose with government supports such as unemployment insurance, the Recovery Act, TARP funds, payments to Fannie Mae and Freddie Mac and discretionary outlays for defense spending, from 19.6% of GDP in 2007 to 24.7%.
   2. The Medium-Term Bush Deficit (10 years):
      1. We ran a $236 billion surplus before the Bush tax cuts, but we have run deficits for the past 9 years.
      2. The ten-year projected deficit is entirely explained by the economic downturn, the Bush tax cuts and the wars in Afghanistan and Iraq. Bush tax cuts and the wars made up $500 billion of the 2009 deficit and will create $6 trillion in deficits and debt service over the next decade. From the Economic Policy Institute.http://www.epi.org/publications/entry/investing_in_americas_economy