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Structural deficit

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I’ve used the term “structural deficit” a lot over the past few years, only to have it pooh-poohed by the anti-tax/anti-government reactionaries on the right, so I thought it might be useful to spend a little time discussing exactly what I mean.

Washington state relies on the sales tax for about 56.5% of general fund revenues, one of the highest ratios in the nation, and yet as this study paper produced by Economic Opportunity Institute cogently explains, our sales tax base over time gradually represents a smaller and smaller portion of our overall economy.

The sales tax base is growing more slowly than demand for state investments and the economy overall. Historically, sales taxes have been applied to goods and not to services. However, personal spending on services is steadily growing, and spending on goods is falling as a percentage of personal consumption. Goods and services subject to Washington sales tax represented 32% of total consumer spending in 1959, but only 26% in 2000.

And when your tax base shrinks, you really have only three options:  expand the base, raise the tax rate, or shrink the role of government in our economy and society.  And despite all the rhetoric about state government growth in real dollars over the past two budgets, Washington lawmakers have largely chosen the third option over the past couple decades, steadily shrinking both revenues and spending as a percentage of our overall economy.

As the following chart prepared by the Washington State Budget and Policy Center shows, both state revenue and spending have fallen or remained flat since 1995, relative to the state economy.

relativegrowth

(It is also interesting to note that the projected budget gap in the 2009-11 biennium is not due to an explosion in state spending, but rather to a precipitous decline in revenues.)

Yes, I know that for many of you on the right, this data may appear counterintuitive, but it is widely supported.  Indeed, even according to the conservative Tax Institute, the organization whose data Tim Eyman has long used to support his own anti-tax agenda, Washington’s state and local taxes as a percentage of personal income have fallen from 10.4% in 1994, when the Tax Institute ranked us at 17th nationally, to a 35th place 8.9% in 2008, well below the national average of 9.7%.

Different organizations may calculate different raw percentages, but they all generally report the same ranking and the same relative decline.  According to the Tax Institute, Washington’s 2008 state and local tax “burden” was exactly the same as that of Mississippi. That’s a fact.

And these numbers should come as no surprise.  Our over-reliance on a retail sales tax levied on an ever shrinking portion of our economy makes this long term structural deficit inevitable, and unless we reform our tax system to broaden the base, or permanently increase sales tax rates, the ability of our government to provide the services taxpayers expect and demand will continue to shrink in proportion to its revenue base.

There is a legitimate debate to be had over the proper size and scope of government… but we’re not having that debate.  Instead, even as Democrats dominate the Legislature and the governor’s mansion, the lower-tax/smaller-government Republican agenda is winning by default.

Weekend Roundup

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This was quite a week in drug war news, and by all indications, the focus on this long-neglected topic is not going away.

– Senator Jim Webb of Virginia is leading the effort to reform the criminal justice system. Webb has consistently been one of the loudest (and loneliest) voices on this issue, as other politicians often see it as too risky. This is the right time for this kind of reform to happen, though, and it’s already starting to happen in some states. Patty Murray is one of Webb’s co-sponsors for a bill that would set up a blue-ribbon commission tasked with an 18-month review of the train wreck our criminal justice system has become.

– During the internet town hall that President Obama held this week, he was finally able to acknowledge the fact that questions about marijuana’s illegality have dominated each of these online forums. Unfortunately, he treated it as if the interest in the issue was something to be mocked. I want to agree with Scott Morgan here that Obama gets this issue more than he pretends to, but that’s not going to be enough sometimes. In a week where Obama was dealing with the crisis in Mexico, for him to make a joke about what’s arguably the biggest reason Mexico has that crisis makes him look incredibly out-of-touch.

As I’ve said before, the illegality of marijuana is not the most important issue America faces, but it is an important issue for a number of reasons, and it’s the issue where the policies we currently have are the most detached from reality. That’s why questions about it dominate these online forums, because prohibition has become such a dangerous spectacle that we’re desperate to finally break the silence over it.

– A week after Eric Holder promised that the DEA would not raid medical marijuana dispensaries that are complying with state law, the DEA raided a medical marijuana dispensary in San Francisco. The DEA claims that it was in violation of state law, but won’t say which one. The speculation is about their financial dealings, either a failure to pay taxes or a policy that allows low-income people to obtain medicine for free. Either way, city officials didn’t seem to be aware that the raid was happening, so the DEA apparently believes that they, and they alone, will be the ones determining whether or not a dispensary is violating state law.

If so, this completely undermines the policy that Obama and Holder have announced. As we’ve discovered here with our medical marijuana laws, unless you have a clear defense against being arrested (or having your supplies confiscated), nothing is going to stop it. If the DEA can just say (without proof or agreement from state or local officials) that a facility is in violation of state law, it’s not much different from the Uncle Jimbo policy, where all you need to do is say something at the time of the raid in order to justify it. If this raid was not based on an actual violation of state law, either people in the DEA’s office need to be shown the door, or Obama’s policy is still an empty promise.

– Speaking of this state’s medical marijuana laws, another patient received some long-delayed justice this week. Timothy Adams of Kennewick was able to pick up 40 marijuana plants and growing equipment that was taken from him by police in 2005. An Appeals Court judge ruled that Adams was wrongly convicted in 2007 and was entitled to his stuff back.

– The decriminalization bill in Olympia may have died, but it’s been inspiring more and more people to speak up on the issue. Lynnwood state representative Mary Helen Roberts doesn’t understand why it’s a crime to grow a plant in one’s house.

– Remember the weird editing from the Jon Stewart/Jim Cramer interview? The reason for it was because Cramer said that he’d be ok with legalizing drugs (specifically cocaine).

– The Drug War Chronicle has a plus-sized roundup of the week’s corrupt cop stories.

Wise words from Gregoire

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Sometimes, you just have to do the right thing…

The last time the state had a comparable budget shortfall was in 1981-1982, when Republicans controlled both houses and the governor’s mansion. The Republicans raised taxes to help deal with their budget woes, and come the 1982 elections, Democrats were elected back into power in both the House and the Senate. Two years later, Republican Gov. John Spellman was voted out as well. In 1993, majority Democrats had to raise taxes and cut programs to deal with budget problems, and in 1994, lost their majority in the House and hung on to a one-seat majority in the Senate.

Gregoire said that history lesson shows it won’t be easy.

“There’s no easy way out of this,” she said. “And you have to look past the political consequences, and do what your heart and your head says is the right thing to do.”

And if the right thing to do is raising some taxes to help the state through these tough economic times, as both Republicans and Democrats have reluctantly done in the past, let’s hope that Gov. Gregoire is able to lead the legislature toward it, the political consequences be damned.

That “not Goldy” guy isn’t posting

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I would like to alert my fan (singular) that I will not be posting for a while due to a long-scheduled vacation. I’m going to go research my cultural heritage at the John Brown Museum and Cabin, in hopes of developing a line of John Brown license plate holders and car antenna flags.

I’m also envisioning some silver on black John Brown mudflaps. I really don’t understand why the accessory options are limited to the Confederate side. This could be an entirely new market.

Now is the time for a “high incomes tax”

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I’ve got no particular insight into how the budget dance is being choreographed, if at all, but it’s hard to believe the cuts-only budgets being introduced next week are intended to be anything but an opening gambit.  Most Olympia insiders I’ve talked to expect an effort to put a tax measure before voters at a special election in June, a measure that would most likely include a temporary increase in the state sales tax to fund specific programs.

And progressive activists like me will once again be expected to promote a highly regressive tax increase on the lower- and middle-income families who can afford it least.  Huh.

The truth is, it would be irresponsible to attempt to close a budget gap this big without relying on cuts, deficit spending, and new revenue, and there are few current revenue options in Washington state that don’t impose a substantially regressive burden.  And regardless of how distasteful I may find yet another sales tax increase—let alone the even more regressive excise taxes that would likely accompany it—I fully understand that there isn’t the time to implement the type of structural reforms I would prefer, while still meeting the immediate needs of the new biennial budget.

Yet that doesn’t mean Democratic legislators and their progressive constituents are free to simply shrug their shoulders and accept the status quo.  Indeed, passage of the regressive June measure may provide exactly the opportunity we need to move our state forward toward a more equitable and sustainable tax structure.

So here’s the deal.  Put a sales and excise tax increase on the June ballot, and folks like me will give you our support… but only if you also put on the November ballot a measure that would repeal the June increase, and replace the revenue with a tax on incomes over $200,000 a year.

According to the Economic Opportunity Institute, a “high incomes tax” of 3% on incomes between $200,000 and $999,999, and 5% on incomes over $1 million, would raise about $2.58 billion per biennium, yet fall on only 4% of WA households.  I’m guessing that’s slightly more than the June measure would be expected to raise.

Yes, an income tax would take some time to implement, and yes, its constitutionality would surely be challenged.  House Speaker Frank Chopp and other legislators have conveniently argued that any income tax would require a constitutional amendment—a nearly impossible political feat—but the Tax Structure Study Commission concluded in 2002 that if challenged, the 1933 decision would likely be overturned:

[T]here is ample reason to believe that a modern income tax, established by the Legislature or by the voters, would now be upheld. The basic reason is that Culliton was based on an earlier Washington case which the State Supreme Court clearly misread.  More importantly, the earlier case was based on a line of United States Supreme Court cases that have subsequently been reversed.

[…] Today there are only two states (Pennsylvania and Washington) whose courts have not reversed earlier decisions treating income as property.  In all other states where this issue has been considered, the income tax is treated as a form of excise tax or in a category of its own.  Accordingly, there is a reasonable likelihood that if the Washington State Legislature or voters enacted an income tax today, Washington’s courts would approach the issue with a fresh view and might very well decide the matter in a manner consistent with the dominant view in other states with similar constitutional provisions.

Legislators who avoid this contentious issue by merely dismissing an income tax as unconstitutional are being disingenuous; it’s been 75 years since the state Supreme Court has directly addressed the core arguments, and many constitutional scholars have testified that they expect the 1933 decision would be reversed if challenged.  Furthermore, the scenario I describe, in which the severability clause is written so that the existing tax is not repealed until the new one is implemented, averts any potential 1933-like fiscal crisis that might be created should the court rule the other way.  Unless otherwise repealed, tax increases from the June measure, if passed, would continue to generate revenues until the high incomes tax is fully implemented, if ever.

Should the Legislature put a sales and excise tax increase on the June ballot, it will only be due to an overwhelming consensus amongst Democrats that additional revenue is desperately needed to help maintain crucial services during this economic downturn; if you believe the money is needed, there’s really no other way to generate it fast enough to make a difference.  But by tying it to a more deliberative November measure that would repeal the June package and replace it with a progressive, high incomes tax, Democrats would also be given the opportunity to take a clear stance for or against the interests of working and middle class families.

In short:  if we agree the revenues are needed, how best to raise them?  From families who already pay up to 18% of personal income in state and local taxes, or from the wealthiest 4% of households who have long benefited from the most regressive tax structure in the nation?

Are state Dems on the side of the wealthy or the rest of us?  This may be the session in which we finally find out.

King County Conservative District

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It was close, but in a streak of futility that rivals that of the Chicago Cubs, King County’s conservation community once again failed to win its chosen candidate a seat on the board of the King County Conservation District, with (u)SP endorsed Preston Drew edging out HA favorite Mark Sollitto by a 1,357 to 1,199 margin.

Ah well.  I guess the people have spoken.  You know, all 2,757 of them… out of a pool of over 1.1 million registered voters.  That’s a turnout rate of less than 0.25%, compared to the respectable 83.9% of registered voters who turned out last November.

What a stupid, fucking, ridiculous way to run an election.  I mean, why even bother?  Why not just rename the damn thing the King County Conservative District, and save the half-hearted effort to pretend this is an election at all?

No vote-by-mail, no neighborhood polling places, no voter’s pamphlet… not even a goddamn postcard reminding you to vote. Only a handful of blog readers and well-informed activists on either side even knew there was an election, as evidenced by the fact that Sollitto got 43.5% of the vote as a write-in candidate, seven times that of third place David Mauk, who was one of only two names on the ballot.

Standing in line behind Richard Pope at the Bellevue Library voting station, a poll-worker chastised me for talking politics in the polling place, warning that I was violating the law—oh God was I tempted to challenge her to call the cops.  In fact, I wasn’t talking about the race at all, but rather, how stupid, fucking ridiculous the entire KCCD election process is.  I mean, only a 0.25% turnout, and there’s a fucking line?

What a total joke.

(u)SP RIP?

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Eric Earling of (un)Sound Politics has given up blogging for a paying gig on the other side of the media relations divide.  Eric was a relative voice of reason on (u)SP (even when, as usual, he was dead wrong), and I genuinely wish him the best of luck.

But I’m not nearly as sanguine toward the blog he leaves behind.

After our friend Stefan burnt out or lost interest or went into rehab or whatever has distracted him from blogging, Eric quickly became (u)SP’s most prolific writer, and his departure will surely leave a big hole.  How big?  (u)SP recently went nearly two days without an update (three if don’t count Pudge’s contributions as actual posts), and one of the first rules of blogging is that you don’t keep your audience if you don’t keep up the frequency.

I know how much I’ve come to rely on my HA co-bloggers to keep the content fresh; it will be interesting to see how Stefan copes with losing his top contributor.

Oh… just shut up and laugh

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It’s not often I have the opportunity to disagree with The Stranger’s David Schmader and the ultra-conservative American Family Association at the same time, but Family Guy is by far the funniest show currently on broadcast television, and I have absolutely no qualms about watching it with my 12-year-old daughter.  (Children benefit from a robust comedy education.)

Sure, Family Guy is offensive and often way over the top, but it is the near total freedom of the creators to both offend and disappoint that makes possible some of the show’s funniest moments.

[flash]http://www.hulu.com/embed/aSjjHG1uriBTSojiT2dZUQ[/flash]

Gross?  Yeah.  Relentless?  Well, that’s kinda the point.  But man did my daughter and I bust a gut watching this scene.

Silly derivatives traders of the written word

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Nothing says “silly” like dismissing the concerns of regular folks.

SIX Democratic legislators have introduced a bill to stop Boeing from threatening to move out of Washington. That’s right: threatening to move. Such is a silly end to a silly story.

Um, I think those six were trying to make a larger point. But I wager the editorial writers know that.

These editorial keepers of the gate, freshly content with their re-installation of Dave Reichert, probably don’t like how this labor bill issue actually became a big story in the first place. As they admit in their editorial, the newspaper can’t possibly abide a law that keeps corporations from forcing workers to attend anti-union pep rallies against their will. So to them, anyone who cares about the issue is silly.

Have you ever noticed that anyone or anything who isn’t approved by The Seattle Times winds up being portrayed as not serious? And the legacy media wonders why people have it in for them. After nearly four decades of class warfare waged against the earning power of regular citizens, a key worker’s rights issue is demoted to a mocking editorial.

Nothing the Seattle Times editorial board (or most editorial boards, frankly) does comes as much of a surprise, especially when it comes to labor issues. Basically these editorial writers are a sort of mini-derivatives trader of the written word, whose currency is not phony-baloney financial products but the equally phony and intellectually dishonest job of defending concentrated and corrupt economic power while trying to appear compassionate, thoughtful and pro-democracy. It’s getting hard and harder to do without reality smacking them in the face, though.

These derivative-editorialists also must make sure only the “right” kind of people and ideas are allowed into the sandbox of democracy, because after all it’s their sandbox. Only certain types of candidates are truly allowed, and while the will of the people must be respected, it need only be respected to a point, or more accurately, along a certain spectrum of conventional thought. Should anyone question excessive militarism or promote clean energy and worker rights too loudly, they risk being sent packing without their pail and shovel.

In the sandbox, it’s okay for corporate lobbyists to put out the word to kill legislation that was likely going to pass, because the media, economic and political elites of this state deem it acceptable practice. Nothing silly about that, for certain. It’s probably the most not-silly thing I can recall while living in this state for the last 19 years, at least in terms of revealing in very stark terms who pulls what levers.

Sadly for these editorial traders in derivative thought, their market is collapsing as badly as the real derivatives market did, and predictably enough newspaper owners have asked for their own bailout in the form of a tax break.

What would be truly silly is wasting taxpayer dollars on a special tax break for newspapers that relentlessly attack and mock the democratic process itself. Given the budget situation, you’d be better off buying some extra paste and construction paper for the wee kiddies; at least first graders have some dignity and original ideas.

This is America, land of laissez-faire promise you know! If The Seattle Times and the rest truly believe in the business uber alles world view they constantly espouse, they don’t need government help. Neo-liberal philosophy itself says so. The grand results of this philosophy touch Washington state households every day in the form of decimated 401(k) statements, job losses, foreclosure notices and ruinous medical bills.

Or is it “silly” to point all that out?

Fighting Back in Kidnap County

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Yesterday morning, Bruce Olson was acquitted of all charges against him. I’ve been following his case (and his wife’s case) for almost a year, and seeing a jury rule in his favor was extremely satisfying. I’ve never met Bruce personally, but I know several people who have, and each of them were certain of his innocence. Yesterday’s verdict makes it abundantly clear that there were no hidden surprises about what he was doing. Bruce and Pamela Olson were the couple that everyone knew them to be, law abiding citizens growing plants that both of them (and their doctor) had discovered to have medicinal value.

When the Olsons were raided back in 2007, the WestNET drug task force initially threw poisoned meat into their yard, presumably to ensure that their dogs wouldn’t be a hindrance to their invasion. Their two puppies required roughly $2000 in vet bills. At the time of the invasion, the Olsons had no plants that were harvestable (it was their first attempt at growing), yet they were being threatened by Kitsap County prosecutors with very serious drug distribution charges. In the effort to fight these bogus charges, they wound up having to sell their home and move into an RV.

The Kitsap County Prosecutor’s motivations in this case remain largely a mystery. There hasn’t been any information provided about their one “witness,” a longtime drug user named Steven Kenney, who was flown up from Oklahoma for the trial and whose story was clearly not believed by jurors. Where did he actually come from? Did he stand to gain anything from his testimony? The prosecutor explained his discredited testimony by saying that he was “nervous.” Hell, I’d be nervous too if I were perjuring myself.

Considering how Pamela Olson’s case unfolded, there should be even more concern about the behavior of Russ Hauge and the Kitsap County Prosecutor’s Office. Pamela was threatened with jail time if she didn’t take a plea bargain. She feared having to go to prison, so she took the deal, even though the verdict this week makes it clear that she was innocent all along (both Bruce and Pamela were tried separately for the same offense stemming from the same raid). Now she has a criminal record and is still unable to use medical marijuana according to the State Department of Corrections’ policy for those on probation. And since this trial has started getting attention, we’ve been learning of even more Kitsap County patients who have ended up in the same boat.

As I’ve written about in the past, this kind of heavy-handed behavior from prosecutors and drug task forces is not that uncommon, although some of the more alarming incidents we’ve seen across the country have generally involved a racial component. A new movie coming out soon called American Violet is based on the story of Regina Kelly, a black woman arrested along with 28 others in Hearne, Texas. Most, if not all, of those arrested were innocent, but many of them took plea deals to get reduced sentences. Kelly didn’t, and was ultimately successful in exposing the corruption.

What’s happening in Kitsap County right now isn’t quite that pernicious, but Hauge is using the same kinds of scare tactics in order to force plea deals that keep the people he’s targeting out of the courtroom – where a jury might discover that they don’t belong there. One of those people, a quadriplegic named Glenn Musgrove, is scheduled to be wheeled into a courtroom in Port Orchard on Friday.

For a while now, activists and patients within the medical marijuana community have been referring to Kitsap County as “Kidnap County.” Now we have a better idea why. The state’s medical marijuana laws are not being honored by the Prosecutor’s office. Patients who try to grow their own plants have been arrested, presumed to be drug dealers, and forced to prove otherwise to a jury – often at great personal expense. This is not how the law is supposed to work, and I hope that Kitsap County residents remember that the next time they vote for their county prosecutor.

Finally, it’s important to look at the actions of the WestNET drug task force. These sorts of drug task forces exist on the premise that rural areas don’t have the resources to adequately enforce drug laws. Unfortunately, these drug task forces tend to be very common places for overzealous policing and outright corruption. Even worse, the Obama Administration has decided to increase funding for these units in the stimulus bill.

Why the WestNET drug task force is being used to bust medical marijuana patients (and finds nothing wrong with poisoning their dogs) rather than trying to go after real criminals is a question that they – and Prosecutor Hauge – need to answer.

Gov. Rob McKenna

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While we’re talking about the budget, I’ve got three words of advice for House and Senate Democratic leaders as they ponder their vision of Washington’s future:  Governor Rob McKenna.

I’m as big a fan of Rep. Jay Inslee as any Puget Sound area progressive, and despite some recent harsh words, I’m not unfond of Senate Majority Leader Lisa Brown, but in my opinion, either Dem would be the definitive underdog against Republican Attorney General Rob McKenna in the 2012 gubernatorial race.  Really.

Sure, I don’t trust him as far as I can spit, but McKenna is by far the most adept politician in Washington state at the moment.  And while yeah, McKenna is totally in the pocket of Boeing, the realtors, AWB and those corrupt bastards at the BIAW… who in Olympia isn’t these days?

McKenna has meticulously crafted a moderate image despite his conservative credentials and his slavish devotion to the business interests who finance his campaigns, but unlike Dino Rossi, he’s managed to do it without coming off like a used car salesman.  Listen to him on KUOW, or even on my old show on 710-KIRO, and he comes off eminently reasonable and rational… even likeable, in his own gawky, geeky sorta way.

But most importantly, he has made a career out of pandering to a political press corps that lovingly felates him in return.  McKenna’s communications people are good.  How good?  When I lost my radio show, his was the only state office from which I received a personal note of condolence and best wishes.

Keep your friends close and your enemies closer, and all that.

So again, as Democrats in Olympia ponder what to do with their huge majorities during these extraordinary times, I hope they fully understand that their window for effectively using these majorities may soon be coming to a close.  In another few years Republican Gov. Rob McKenna may be setting the agenda and wielding the veto pen.  And if I were betting man, I’d bet he will.

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