Schwarzenegger Wants to Spend Money

According to yesterday's Chronicle, Schwarzenegger has finally woken up to the fact that California desperately needs to undertake massive and expensive repairs to the state's infrastructure. (The most critical, of course, are the levees--and I'm not saying that just because my parents' home would be under 18 feet of water in a 500-year flood.)

That's the good news.

There's some not terribly great news in the selection of projects, aside from levee repair. It's all very vague and tentative at this point, but they're talking about adding freeway lanes, toll roads, and such--nothing for mass transit.

There's potentially bad news in the talk of 'public-private partnerships' being part of the package. Privatization means all kinds of reduced accountability, and generally entails cutting corners on everything from wages to environmental compliance. If Schwarzenegger is properly chastened by his crushing electoral defeat this year, he'll likely give ground in those areas; but his pattern up until now would be to deliberately include provisions he knows to be unacceptable to the opposition, just to provoke a fight. There's no guarantee he won't be stupid enough to do it again.

But the really bad news is that Schwarzenegger's dawning consciousness of the need to spend money doesn't appear to include any modification of his superstitious (or cynical) position on taxes. The radical notion of raising taxes to pay for all of this is apparently not on the table. They're talking about paying for some of it through fees (that's some Reagan nostalgia there) and the aforementioned 'public-private partnerships', but the reality is that the bulk of the funding will come from general obligation bonds.

And let's be clear about this: when you commit to spending money, you are increasing taxes--that is, you are increasing the amount that will eventually have to be paid in taxes. The more you delay raising the revenue, the more people will eventually have to pay. If you make the decision to keep taxes on the wealthy at artificially low levels, then it will be middle- and lower-income people making up the difference.

So until and unless Schwarzenegger decides to fund these projects by increasing taxes on the wealthy, we need to think of this whole package as the Schwarzenegger Middle-Class Tax Increase.