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May 10, 2007

PLAYING GAMES....Idiots:

Gov. Arnold Schwarzenegger is poised to call for privatizing the state lottery, a move that would bring California a cash infusion of as much as $37 billion to help solve pressing budget problems but also could sacrifice a major revenue source for decades to come.

....It comes at a time when the state is facing only a modest budget deficit for the coming fiscal year — about $1 billion. But billions more in bond payments will be due soon after.

Once again, Arnold "We Have To Stop This Crazy Deficit Spending" Schwarzenegger is desperately trying to figure out a way to increase our deficit spending so that he can continue to pretend that he hasn't raised taxes. That's all this is about.

He's already done this once with his deficit bonds, which will have to be repaid out of increased taxes eventually, and now, in order to make sure that "eventually" is sometime after he leaves office, he wants to raid the lottery to tide himself over. The result, of course, will be lower revenue in the future and therefore higher taxes. But not on his watch.

Schwarzenegger may have a sunnier persona than George Bush, but the cynicism on offer here is even worse than Bush's. Arnold knows perfectly well he's raising taxes. He's just hoping the rest of us are greedy enough to allow ourselves to be convinced otherwise.

Kevin Drum 11:53 AM Permalink | Trackbacks | Comments (69)
 
Comments

Ahnold may have won some political capital by embracing some issues spurned by the national party, such as environmentalism and stem cell research, but he still thinks like them in most ways: win today at all costs. Sacrifice the future to win today. This is the stupidest strategy imaginable to solve problems--yet that is the Republican approach to everything. Win today at all costs.

Posted by: c4logic on May 10, 2007 at 12:29 PM | PERMALINK

And they wanted to change the Constitution for this guy.

Posted by: shnooky on May 10, 2007 at 12:38 PM | PERMALINK

The Colorado Republicans have come up with a similar brilliant strategy, sell the lottery for lots of nice money now. Future revenue streams ? SEP (someone else's problem). Note the CO lottery provides funds for acquiring land for public recreation, despite several Republican attempts to divert the money to general revenues.
Luckily it's been killed on a legal technicality for the moment. I'm sure it will be back, it's one of these zombie ideas..

Posted by: Doug K on May 10, 2007 at 12:45 PM | PERMALINK

Can somebody tell me how to differentiate a "privatized" lottery from a privately owned casino?

Maybe the Sopranos explained it to the Terminator.

Posted by: clem on May 10, 2007 at 12:45 PM | PERMALINK

How does he manage to stay in the good graces of the Kennedy's? Does he get invited to Thanksgiving at Hyannis Port?

Posted by: lamonte on May 10, 2007 at 12:47 PM | PERMALINK

Haven't seen details on this. I figure the only way there will be a cash 'infusion' is if he 'sells' the state lottery (monopoly) to private investors.

A better way to raise revenues is to legalize most forms of gambling, allow private enterprise in that arena and collect taxes on the proceeds that are now going (state tax free) to the Native American casinos.

That would have to be worth BILLIONS each year.

The Indian tribes and gambling interests in Nevada would have to be battled on this issue though... and they have very deep pockets.

Posted by: Buford on May 10, 2007 at 12:48 PM | PERMALINK

Spiderman will have no problem coming up with a $billion. I guess the terminator is now an old toothless wimp who doesnt want the luxury boats rocked. $1 billion is chikenfeed to an economy like California's. A little creativity is all that is required; not a liquidation of assets.

Posted by: Michael7843853 G-O in 08! on May 10, 2007 at 12:50 PM | PERMALINK

"but the cynicism on offer here is even worse than Bush's"

I have to disagree. Taxing without raising taxes is one thing, but looking the world in the eye and claiming that Saddam (1) was a threat, (2) was not cooperating with the UN and IAEA inspectors, and (3) that Saddam had anything to do with al Qaeda, is orders of magnitude more cynical.

George Bush kills people. Hundreds and thousands of them.

Posted by: luci on May 10, 2007 at 12:51 PM | PERMALINK

Hey, I've got an idea: Let's get rid of the the dang lottery completely and stop pretending it's anything other than a tax on the mathmatically challenged and the addlepated. These funds should be on-budget as part of education, and the State shouldn't be in the "gaming" business.

Leave that to the Indian tribes and the goombas, like God intended.

Time to stop pretending education costs less than it actually does and pay for it in an aboveboard fashion (Calif. ranks quite low nationally in $/student).

Posted by: Trollhattan on May 10, 2007 at 12:52 PM | PERMALINK

Arnold has repeatedly used gimmicks to temporarily solve budget problems by accounting gimmicks and other measures that provide a one-time cash bump at the price of damaging the state's long-term financial picture. He's not unique in this, Gray Davis often did the same.

Privatizing state assets in exhange for one-time revenue is equivalent to a family deeply in debt pawning their possessions one-by-one.

Posted by: Joe Buck on May 10, 2007 at 12:56 PM | PERMALINK

I am concerned about the moral ambiguity. Gambling is considered wrong in CA, so it's illegal. Native Americans are permitted to run casinos because of supposed treaty rights. The state runs a lottery based on the bizarre idea that gambling is immoral when private industry does it, but it's OK when the government does it.

If the state lottery is sold to a private group, there will be no excuse at all to ban gambling. How can it be OK for the chosen vendor to run a lottery, illegal for other vendors from operate lotteries?

We seem to be moving toward a total legalization of gambling in CA, for better or for worse.

Posted by: ex-liberal on May 10, 2007 at 1:03 PM | PERMALINK

From Joe Buck: Privatizing state assets in exhange for one-time revenue is equivalent to a family deeply in debt pawning their possessions one-by-one.

That's right, and this is a very special state asset. The only reason the state tolerates a lottery is because the franchise was granted exclusively to the itself, for the benefit of its citizens. Now, feeling greedy and dimwitted, the state wants to sell the privilege it holds in trust to private interests do not identify with the interests of the people of the state.

Posted by: clem on May 10, 2007 at 1:03 PM | PERMALINK

Arnold Schwarzenegger's entire career is proof of the truth of H.L. Mencken's statement: "nobody ever went broke underestimating the intelligence of the American people."

Posted by: TCinLA on May 10, 2007 at 1:07 PM | PERMALINK

This is the stupidest strategy imaginable to solve problems--yet that is the Republican approach to everything. Win today at all costs.
Posted by: c4logic on May 10, 2007 at 12:29 PM | PERMALINK

It's a stupid strategy if you're concerned about the future of the party.

It's a brilliant strategy if all you want to do is get into office, cash-in on corporate welfare using borrow-n-spend, smoke and mirrors, and get out and shred the evidence before anyone can be prosecuted.

It's the Bush model.

You give the other party a chance to run things for a while, and when the lobbyist money catches up with them, you shout about how corrupt they are, and the voters switch teams again to the other corrupt party. Voters can't seem to remember longer than 10-12 years at a time. No one seems to remember how badly Reagan-Bush screwed up the country (interest rates, mortgage defaults, S&L failures) with the borrow-n-spend crap.

All they remembered in 2000 was Dan Rostenkowski, and Clinton's blowjob.

In 2008, all they'll remember is Bush's crimes.

In 2012, 2016, all they'll remember is the 2008-winner's scandals- and they'll toss him out of office, and elect another Republicrat.

Posted by: osama_been_forgotten on May 10, 2007 at 1:08 PM | PERMALINK

Guys, look at the upside in all this!
How long till the state lottery is followed by state brothels?

At some point the religious right is going to run hard into the no-tax right, and my money is on the no-taxers winning.

Posted by: Maynard Handley on May 10, 2007 at 1:11 PM | PERMALINK

Why does California always have such crappy governors?

Posted by: EmmaAnne on May 10, 2007 at 1:19 PM | PERMALINK

Anent the "Thanksgiving at Hyanisport" question upthread, it has been speculated that the marriage of Arnold Schwarzenegger to Maria Shriver is part of a long-range plan to breed a race of bulletproof Kennedys.

Posted by: Rand Careaga on May 10, 2007 at 1:19 PM | PERMALINK

Maynard;
I agree. Worshippers of Mammon (the Holy Church of the Invisible Hand), and Worshippers of the Judeo-Christain God are teamed up on the Republican side for now. But at some point, those Judeo-Christians are going to remember the 1st Commandment - Jesus's admonition about "serving two masters". These two factions are diametrically opposed to eachother, and the Judeo-Christians, at least, don't realize they're being used. They get off on all the Right and Wrong stuff about Property Rights. But the Invisible Hand-ers have been slowly chipping away at the other rights, to the point where, once they realize they've been fooled, it will be too late for them to do anything about it, and the Invisible Hand folks won't NEED the big bucks that the mega-churches bring in (tax free).

Posted by: osama_been_forgotten on May 10, 2007 at 1:27 PM | PERMALINK

I never vote for bonds. They are stupid. If we need the money, we should raise taxes. Also, the government should save money during good times to spend during bad. I always hate when some dumb politicians sends me a check for $57 because we have a surplus one year. It is asanine.

However, I always wondered why we didn't legalize full las vegas style gambling in two places: 1) Lake Tahoe, CA and 2) Barstow. If you could get full gambling in those places, you would see a ton of money being moved out of Nevada into CA, and you wouldn't see a major disruption to most Californians lives.

Posted by: exhuming mccarthy on May 10, 2007 at 1:27 PM | PERMALINK

Kevin,

Privatizing State lotteries is all the rage now. Blagojevich has been trying to do the same thing in IL, for the same reason.

Posted by: Disputo on May 10, 2007 at 1:30 PM | PERMALINK

It's also interesting to note, Maynard, that when you look at the Muslim countries, where there are these radical groups blowing stuff up; THERE, the religious right, and the fiscal right, are at odds with eachother.

When the fiscal right, in the US, decides to cut-loose the religious right, expect the same kind of holy war here. It almost happened during the Clinton years, when the DLC put the Democratic Party into bed with the Corporatists (fiscal right). Feeling unempowered, the religious right went ape shit, and you had things like the Oklahoma City bombing going on.

Posted by: osama_been_forgotten on May 10, 2007 at 1:31 PM | PERMALINK

So, how much money do we steal from the poor and give to the upper middle class with this regressive lottery?

Posted by: Matt on May 10, 2007 at 1:32 PM | PERMALINK

ex-liberal says: Native Americans are permitted to run casinos because of supposed treaty rights

'supposed' treaty rights? What's 'supposed' about them? Native American tribes are explicity not under the authority of state governments, therefore they are not subject to state anti-gambling laws. You might as well argue that Nevada or New Jeresey only have a 'supposed state right' to have legalized gambling simply because Oregon, California, new York, etc. have essentially banned the practice. I grew up near a tribe north of Seattle, and crossing onto tribal land was essentially like crossing into Oregon; different laws, different law enforcement agency jurisdiction, different tax structures. The tribes fall under federal law enforcement jurisdiction, just like any other state, and derive federal representation just like anyother US citizen, they just don't fall under state statutes. Like me, I imagine you grew up in a non-tribal jurisdiction - that land you were raised on was once used by indigenous groups for their own livlihood. The federal government signed a treaty with a local tribal group to settle American citizens on that land (or didn't, and just took it anyway). I would say your (assumedly) middle-class upbringing was worth the semi-sovereignty that the tribes recieved as part of the reservation agreements. Socio-economic conditions in Indian tribal communities are notoriously poor, and the revenue recieved via casinos supports education and healthcare programs - they turn vice into positive economic investment. So get off your high horse.

Posted by: EverblueStater on May 10, 2007 at 1:49 PM | PERMALINK

Whether selling the lottery for cash today is a bad deal or not, you certainly can't tell from this article. public schools, which received nearly $1.3 billion from the lottery in fiscal 2006.
The ballot measure mandated that 34% of revenue created by the lottery go to public schools. Lottery sales last year totaled more than $3.5 billion.
Nowhere is there an indication of the pay-out from the lottery. These state tickets are usually paying less than the old numbers games, about 50%, so if there were sales of $3.5B, $1.7B was paid out and the schools got $1.3B, where did the other $450 million go?
At current interest rates, what is a revenue stream of $1.3B worth? At 4%, it's around $33-34B. So how is a $37B offer such a bad deal? Where the other $450 million goes is key to analyzing the deal since the PV of $1.75B is greater than that of $1.3B (I put that here for the innumerates like Kevin who has admitted in the past that despite going to Harvard, he can't add more to more than 10 unless he's wearing sandals).
What have sales in the past been? Are revenues increasing or as in many states, declining as casinos expand and other costs rise/ What are the expenses, besides the school cut of the pie.
This may be a bad deal for the state, but you can't tell from this one article. Oh, wait, Lord Kevin the Innumerate, can tell.

Posted by: TJM on May 10, 2007 at 2:14 PM | PERMALINK

Republican perfidy. Apply directly to your brain.


Republican perfidy. Apply directly to your brain.

Republican prefidy. Apply directly to your brain.

Posted by: gregor on May 10, 2007 at 2:20 PM | PERMALINK

The crux of the problem here is that the national media -- blogs included here -- have managed to reduce American politics to a series of superficial popularity contests, where emotional reaction holds sway over sober consideration and rational judgment.

The public is actively encouraged to consider as its primary criteria for public office looks, personality and celebrity (not necessarily in that order), while those those candidates who display a wide breadth of knowledge and experience are more often than not contemptuously held up for ridicule as dull technocrats and pointy-headed intellectuals.

Gov. Arnold Schwarzenegger is merely a creature and primary beneficiary of this system. California should consider itself lucky that he is also a reasonably intelligent man, and isn't stupid like George W. Bush -- the key operative word here being "lucky".

When it comes to our own governance, we become overly dependent upon fortune and happenstance whenever we become so self-absorbed and indulgent that our country's politics is reduced to a vicarious form of public entertainment, rather than seen and understood as the deadly serious business that it truly is.

And frankly, we will need all the luck we can get whenever we foolishly allow one candidate's slick public relations campaign to trump another's attempts to hold meaningful, in-depth and substantive public discussions about the pressing issues of the day.

Posted by: Donald from Hawaii on May 10, 2007 at 2:22 PM | PERMALINK

"Schwarzenegger may have a sunnier persona than George Bush, but the cynicism on offer here is even worse than Bush's."

No! Have you ever heard of George Bush? Are you talking about the Current President of the United States George Bush?

On a completely different note...The whole post gets at the difference between Democrats and Republicans: Democrats allow future politicians to lower taxes, while Republicans force future politicians to raise taxes.

Posted by: reino on May 10, 2007 at 2:25 PM | PERMALINK

clem: Can somebody tell me how to differentiate a "privatized" lottery from a privately owned casino?

A casino takes money only from people on its property. A lottery is a tax on people who don't understand math all over the state.

EmmaAnne: Why does California always have such crappy governors?

Not always, just lately. Hiram Johnson, Earl Warren and Pat Brown were pretty good. For that matter, Jerry Brown wasn't bad, and even Deukmejian is looking better in retrospect.

Posted by: anandine on May 10, 2007 at 2:44 PM | PERMALINK

"ex-liberal" wrote: I am concerned about the moral ambiguity.

Since when does "ex-liberal have any standign to comment on morality?

Posted by: Gregory on May 10, 2007 at 2:44 PM | PERMALINK

The whole post gets at the difference between Democrats and Republicans: Democrats allow future politicians to lower taxes, while Republicans force future politicians to raise taxes.
Posted by: reino on May 10, 2007 at 2:25 PM | PERMALINK

which is why the whole thing seems like a confidence game. It's as if they portray this big ideological conflict between these two parties - but it's fake, nothing actually changes, and all they're really doing is, together, scamming the people into switching back and forth between "tax-n-spend" and "borrow-n-spend" every 8 years.

So, how much money do we steal from the poor and give to the upper middle class with this regressive lottery?
Posted by: Matt on May 10, 2007 at 1:32 PM | PERMALINK

Well, by definition, anyone who actually WINS the lottery will not remain poor.

Posted by: osama_been_forgotten on May 10, 2007 at 3:06 PM | PERMALINK

everbluestater: 'supposed' treaty rights? What's 'supposed' about them? Native American tribes are explicity not under the authority of state governments, therefore they are not subject to state anti-gambling laws.

What I find questionable about treaty rights to operate casinos is that our government does subject Native Americans to a host of other laws. Laws against murder and robbery and other crimes, Laws on voting rights. Laws regarding the subsidies provided to reservations, etc.

It makes me suspicious when one particular type of law is held not to apply to Native Americans, and certain people are making a fortune because they are not being held subject to that particular law.

Posted by: ex-liberal on May 10, 2007 at 3:10 PM | PERMALINK

Excuse me while I pick myself off the floor - I agree with ex-lib. If (when) Ahnold privatizes the lottery, how quickly will Bally's, et al, sue for the right to build casinos?

As far as selling the lottery, it would be shortsighted if Cali were making anywhere near the $37 billion private industry would pay for it. Does anyone know Cali's annual take from the lottery?

Posted by: MeLoseBrain? on May 10, 2007 at 3:10 PM | PERMALINK

I don't know about Bally's, but the indians already have casinos and there are numerous private card clubs. The Indian take last year was $7 billion

Posted by: TJM on May 10, 2007 at 3:53 PM | PERMALINK

What I find questionable about treaty rights to operate casinos is that our government does subject Native Americans to a host of other laws. Laws against murder and robbery and other crimes, Laws on voting rights. Laws regarding the subsidies provided to reservations, etc.

I suppose I know as little about tribal sovereignty questions as anyone here, but I imagine they have their own laws against murder, theft, etc. The catch is, gambling is (afaik) not against federal law, only against state law or regulated and zoned by the state.

So if you think that there's some terrible injustice in reservations being able to make a tidy profit from the casinos that operate within their jurisdiction, the right people with whom to voice your grievances would be the people who oppose legalized gambling either on principle, or on NIMBY grounds. Those people would invariably be your local Moral Majority.

Posted by: kth on May 10, 2007 at 3:53 PM | PERMALINK

Crap, I forgot to mention that as in oh, so very much else, ex-lib (our government does subject Native Americans to a host of other laws. is wrong about this, too.
Tribes are sovereign nations that run their own governments.

Posted by: TJM on May 10, 2007 at 3:58 PM | PERMALINK

Selling the furniture to meet the mortgage payments, that's what this is, it stinks.

Posted by: Northern Observer on May 10, 2007 at 3:59 PM | PERMALINK

TJM: Crap, I forgot to mention that as in oh, so very much else, ex-lib (our government does subject Native Americans to a host of other laws. is wrong about this, too. Tribes are sovereign nations that run their own governments.

On this particular issue, Ex-lib is not entirely wrong. Remember the case in which the Supremes said tribes were subject to state anti-drug laws. "The U.S. Supreme Court (held) that the free exercise clause of the First Amendment did not prohibit the State of Oregon from banning the sacramental use of peyote through its general criminal prohibition laws, or from denying unemployment benefits to persons dismissed from their jobs for such religiously inspired use."

The person "had ingested the peyote sacrament during a traditional religious ceremony of the Native American Church."

Posted by: anandine on May 10, 2007 at 4:09 PM | PERMALINK

"How long till the state lottery is followed by state brothels?

At some point the religious right is going to run hard into the no-tax right, and my money is on the no-taxers winning.
Posted by: Maynard Handley"

And after that the legalization and taxing of marijuana.

Posted by: slanted tom on May 10, 2007 at 4:21 PM | PERMALINK

ex-lib: What I find questionable about treaty rights to operate casinos is that our government does subject Native Americans to a host of other laws. Laws against murder and robbery and other crimes, Laws on voting rights. Laws regarding the subsidies provided to reservations, etc.

It makes me suspicious when one particular type of law is held not to apply to Native Americans, and certain people are making a fortune because they are not being held subject to that particular law.

I'd imagine there are federal statutes which dictate the necessity (or the expectation) that the tribes have murder laws; although, I am unsure as to the judicial jurisdictional issues. Most cases involving tribal v. non-tribal parties are argued before federal courts. Tribal governments, I think, have authority to establish their own internal courts, but I am nowhere near an expert on tribal/non-tribal jurisdictions.

Regarding Anandine's citation of the peyote case out of Oregon, I am pretty sure the legal basis of that ruling may have come, in part, from the Commerce Clause, which is where federal drug laws derive their legitimacy. Legalized narcotics on tribal lands constitute the same legal issues surrounding state level drug legislation, the idea being marijuana grown in, say, Washington State effects Oregonian health because there are no trade barriers between the states. I'm not sure how this would apply to an Oregonian law and its conflict with tribal governance, but from what I understand, Peyote is banned by federal statute, and certain religious sects have, in fact, had their right to the use of peyote confirmed by the SCOTUS derived from the first amendment. Perhaps a legal scholar could weigh in?

Posted by: Everblue Stater on May 10, 2007 at 4:22 PM | PERMALINK

I wonder how long untill we start talking about the Christians and there treatment of the Mormons long ago.Somehow sticking farmers to there barns with pitchforks and making there women walk barefoot in the snow just won't sit well with Jesus.

Posted by: john john on May 10, 2007 at 4:24 PM | PERMALINK

Excuse me while I pick myself off the floor - I agree with ex-lib. If (when) Ahnold privatizes the lottery, how quickly will Bally's, et al, sue for the right to build casinos?

If Arnold's proposal is anything like the one in IL, the state will retain legal ownership of the lottery, and in reality is merely selling mgmt rights.

Posted by: Disputo on May 10, 2007 at 4:35 PM | PERMALINK

This is nothing. In Ohio, our short-sighted governor - a Democrat, mind you - is trying to sell off the state's portion of the tobacco settlement.

No-taxers are a pestilence on the body politic. They corrupt everyone and everything.

Posted by: Susan on May 10, 2007 at 4:36 PM | PERMALINK

Whether selling the lottery for cash today is a bad deal or not, you certainly can't tell from this article.

The problem with your analysis is that you are assuming good faith.

In reality Arnold is proposing to sell off a guaranteed future revenue stream financing education for a lump sum pay off of general state obligations all for the higher purpose of avoiding raising taxes during his tenure.

That is a bad deal, regardless of the PV of the future revenue stream.

Posted by: Disputo on May 10, 2007 at 4:39 PM | PERMALINK

Alas, it's a safe bet that we ARE greedy enough to fall for this stratagem. Voters always have been in the past, after all -- which is precisely why, before the American Revolution, some thinkers were skeptical that democracy could ever be made to work. Just maybe they'll turn out to be correct in the long run -- now that Keynesianism, by saying correctly that there are SOME situations in which we should run a deficit, has provided politicians with the alibi they've dreamed of for centuries for saying that we should ALWAYS do so.

Posted by: Bruce Moomaw on May 10, 2007 at 5:04 PM | PERMALINK

A lottery is a tax on people who don't understand math all over the state.
Most players realize the lottery is a game of (astronomically poor) chance. However, it is a game with some amount of entertainment value. What are the maths skills of people who pay $10 to see Spider-Man where the probability of winning money is 0?

Posted by: apm on May 10, 2007 at 5:10 PM | PERMALINK

The problem with your analysis is that you are assuming good faith.

Noooo, I was asking for more information in order to make the analysis. You seem to think that cash isn't fungible. If the lottery was sold and the state repaid debt (or defeased it), the savings could be enough to allow the state to substitute part of the education budget with general revenue instead of lottery proceeds.
But there is no information in the article to do that, which allows readers, like you, to conclude the answer is the answer they would have given anyway.
It's akin to buyers of lottery tickets who put down money every day not knowing that their expected outcome is 50 cents.

Posted by: TJM on May 10, 2007 at 5:35 PM | PERMALINK

"Native Americans are permitted to run casinos because of supposed treaty rights."

Supposed? LOL! That's like complaining that you have to hold up your end of a deal because you "supposedly" signed a contract.

Posted by: nemo on May 10, 2007 at 5:37 PM | PERMALINK

$37B in cash up front might actually be worth more to the state than raising taxes. this is a case where everybody needs to spend time with a calcuator and make explicit, not implicit, claims about the economic effects of the infrastructure projects.

Someone above made the analogy of selling furniture to pay the mortgage. In some circumstances, it would be better to sell the furniture than to default on the mortgage or pull money out of savings (or business expansion.)

Raising taxes takes money out of incomes and spendings, and hurts the economy in some ways while helping in others. It's not like it creates any new money. As a California resident, as is Kevin Drum, my first guess would be that selling the lottery (if it is legal) would cost the state less in the long rund than would a tax increase. Taxes already offend some of the entrepreneurs sufficiently to dissuade them from moving here or expanding here.

If you did raise taxes, where would the money come from, and what would be the real cost to the state?

Posted by: MatthewRmarler on May 10, 2007 at 5:45 PM | PERMALINK

Unfortunately certain "Democrats" try to pull this stunt, too. Mayor Richard Daley (of the Daley Party) in Chicago decided it was a bright idea to sell the Chicago Skyway, a toll road. Never mind that there's a certain racist aspect to the Skyway -- the road connects predominantly black neighborhoods in Chicago and northeastern Indiana and is the only tollway within the city limits. Daley turned an annuity into a one-time cash infusion.

Now a private company owns the tollway, and the only condition is that the company could raise the toll to no more than $8 within the next 10 years. (It's now $2.50.) In other words, they can raise the toll at a hyperinflation rate if they wish.

Posted by: A Pilot on May 10, 2007 at 5:45 PM | PERMALINK

If the lottery was sold and the state repaid debt (or defeased it), the savings could be enough to allow the state to substitute part of the education budget with general revenue instead of lottery proceeds.

That goes without saying. My point is that although it *could* happen, that it most certainly will *not* happen.

Posted by: Disputo on May 10, 2007 at 5:47 PM | PERMALINK

anandine: "Hiram Johnson, Earl Warren and Pat Brown were pretty good [governors of California]."

I must confess that my favorite California governor is Milton Latham.

I recently discovered Gov. Latham's official portrait solemnly hanging with alongside those of his fellow chief executives in the State Capitol in Sacramento. I was surprised to note on his name plaque that he had served from January 9, 1860 to January 14, 1860 -- five days in all.

Fascinated, and now finding myself in need to know the backstory behind his short tenure, I subsequently learned from a Capitol docent that Mr. Latham, a 32-year-old Democrat, had resigned his office upon his appointment by the California State Legislature to fill a sudden vacancy the United States Senate, which had occurred because the incumbent, David C. Broderick, had been killed in a duel.

Sen. Broderick, an anti-slavery Democrat, was shot by David Terry, former Chief Justice of the California Supreme Court who lost his bid for retention to that post because of his advocacy for the extension of slavery into that state. He pointedly blamed Broderick for the loss and eventually challenged the senator to a duel, which took place at Lake Merced (in present-day San Francisco) on September 13, 1859.

Sen. Broderick's unfortunate but thoroughly avoidable demise made him, much like anti-slavery radical John Brown, a martyr to the national abolitionist cause, and was one more fateful event that accelerated our country's downward spiral into the Civil War. The town of Broderick, CA and San Francisco's Broderick St. are both named after him.

Who said history was dull?

Posted by: Donald from Hawaii on May 10, 2007 at 6:17 PM | PERMALINK

We ran a similar story regarding Gov. Perry (R-Texas) over at Angrybear. Since the news article there offerred how much Texas is bringing in terms of cash flows, we were able to offer a present value estimate of the giveaway of taxpayer monies. Just posted over at Angrybear Kevin's excellent catch and comments. Now if someone can fill in one piece of information, we can do the same present value modeling of how ARNOLD is robbing the taxpayers. But who will be able to steal our money by making this deal? And how much in side payments is he making to ARNOLD and friends? Time to recall this horrific governor.

Posted by: pgl on May 10, 2007 at 6:25 PM | PERMALINK
Once again, Arnold "We Have To Stop This Crazy Deficit Spending" Schwarzenegger is desperately trying to figure out a way to increase our deficit spending so that he can continue to pretend that he hasn't raised taxes. That's all this is about.

No, this is about a Norquistian jihad against government carried out by someone a lot more clever than most of the rest of the Republican Party. It's not about "raising taxes" stealthily in the out years, with destroying existing revenue streams as just a means to that end, its about destroying revenue streams as a way to cut government services in the long-run. Most of his attempts to destroy government directly have been rebuffed, though some major service cuts have slipped mostly under the radar. But his moves to fundamentally destroy the long-term viability of government and force future program cuts by destroying revenue streams and the ability to raise revenue in the future have, while not completely successful, succeeded much better.

The result, of course, will be lower revenue in the future and therefore higher taxes.

No, it will be lower revenue and thus less government services. At least that's the intent, that's why he's also tried to do everything he can to make it harder to raise revenues (both legally and politically) and to increase the degree to which spending cuts are favored.

Schwarzenegger may have a sunnier persona than George Bush, but the cynicism on offer here is even worse than Bush's.

I don't know that "cynicism" is necessarily the right word.

Arnold knows perfectly well he's raising taxes.

No, he's not "raising taxes". He's reducing revenues and (in the other past policies you point to) increasing government non-service financial obligations. That could lead to future tax increases or to future service cuts, and he's done everything that he can get away with to guarantee that the latter will be preferred over the former. So accusing him of stealth tax increases is missing the point entirely.

Posted by: cmdicely on May 10, 2007 at 6:56 PM | PERMALINK
The town of Broderick, CA and San Francisco's Broderick St. are both named after him.

More accurately, the town of Broderick (formerly Washington), CA, was (re-)named after him; the town hasn't existed, as such, since West Sacramento became a city in 1987.

Posted by: cmdicely on May 10, 2007 at 7:13 PM | PERMALINK
Native Americans are permitted to run casinos because of supposed treaty rights.

Nope.

Native American tribes are permitted to allow casinos on their land because of federal statute (the Indian Gaming Regulation Act), and, in the case of casino gaming, tribal-state gaming compacts agreed under the Indian Gaming Regulation Act.

"Treaty rights" are only tangentially relevant, in that some (but not) Indian reservations have their origin in treaties (some are products of federal statute, executive order, etc.)


Posted by: cmdicely on May 10, 2007 at 7:21 PM | PERMALINK

It's brilliant. The state could make even more money by selling off state parks, the capital, and other state lands; selling waivers from various environmental regulations; and auctioning off licenses to smoke pot and drive 90 mph on the interstate.

BTW, who has a credit line worth 37 billion? The Chinese?

Posted by: B on May 10, 2007 at 7:29 PM | PERMALINK

B: there are a dozen private equity firms in the US alone who can raise $37 Billion if they want to. The question, of course, is would they?
The price is too high for simply administration rights, there must be a cut of the gate, or even most of it, on the table.

Posted by: Northzax on May 10, 2007 at 8:19 PM | PERMALINK

What i meant to include was that a monopoly would have to be part of the package. But for a state sponsored monopoly in a pure cash business with a double digit profit margin and a potentially addicted customer base? I might be tempted

Posted by: Northzax on May 10, 2007 at 8:24 PM | PERMALINK

"The state could make even more money by..."

You are thinking small. How about auctioning off the right to levy property and income taxes?

Posted by: jefff on May 10, 2007 at 8:49 PM | PERMALINK

"You are thinking small. How about auctioning off the right to levy property and income taxes?"

Why yes, that's a great idea. Of course, the new owners will need to raise their own armies and create their own legal systems (etc) to go along with this.

Have you forwarded this idea to Karl Rove yet?

Posted by: Buford on May 10, 2007 at 9:13 PM | PERMALINK

Ooh. Sorry I missed this one.

Here we have Gov. Pawlenty who practives similar leger de main with the money. Those who support him just ignore this and at the same time encourage him to look towards the presidency.

This I can't understand. The man's petulant and absolutely self-absorbed. One who could actually be a worse president than Bush.

Where do the republicans find these guys?

Posted by: notthere on May 10, 2007 at 11:48 PM | PERMALINK

cmdicely: "More accurately, the town of Broderick (formerly Washington), CA, was (re-)named after him; the town hasn't existed, as such, since West Sacramento became a city in 1987."

Thanks for the update and clarification. I haven't lived in California since graduating from high school in 1980. I didn't realize that Broderick as a municipality no longer existed, and I had thought West Sacramento was part of Sacramento proper.

It's always nice to know these sorts of things, especially if I get transferred up to Sacramento (as company rumor has it) sometime next year.

Posted by: Donald from Hawaii on May 11, 2007 at 1:01 AM | PERMALINK

Thank you Kevin - this is exactly what I thought when I opened my paper this morning.

Posted by: craigie on May 11, 2007 at 1:11 AM | PERMALINK

Oh no, I finally agree with something ex-liberal wrote, way upthread at 1:03

Posted by: craigie on May 11, 2007 at 1:13 AM | PERMALINK

cmdicely: He's reducing revenues and (in the other past policies you point to) increasing government non-service financial obligations. That could lead to future tax increases or to future service cuts, and he's done everything that he can get away with to guarantee that the latter will be preferred over the former.

that's right.

I previously posted the source for the following, but I don't have it now. The California population is growing because the excess of births over deaths is greater than the excess of emigration over immigration. Net migration is out-of-state. Immigration is principally from Mexico, and emigration is to neighboring states with lower tax rates. Across the California economy, net migration of entrepreneurs and professionals is toward the outside. When Schwarzenegger ran for governor he promised to do what he could to prevent tax increases and to invite businesses back into California.

Like it or not, he is basically doing what he promised to do: grow California businesses and prevent tax rate increases. When he was first elected, he and the right-wing candidate bethween them got about 65% of the vote. When he was re-elected he got about 65% of the vote himself.

His first attempt at governing by initiative was successful. His second attempt was not successful. In the last election the infrastructure projects that he backed were passed. In a number of ways, his is an historic governorship. If California's economy can grow a little faster than it is growing now, it will be able to pay off its debts without tax rate increases.

Posted by: MatthewRmarler on May 11, 2007 at 2:29 AM | PERMALINK

This is a new Republican strategy. Governor Rick "Just as dumb as our last Governor" Perry of Texass is trying it, too. He wants the monye to pay for his Transcorridor Highway travesty.

Posted by: Eric on May 11, 2007 at 11:17 AM | PERMALINK
Thanks for the update and clarification. I haven't lived in California since graduating from high school in 1980. I didn't realize that Broderick as a municipality no longer existed, and I had thought West Sacramento was part of Sacramento proper.

Well, for the last couple of years I've lived in West Sacramento (the part that used to be Bryte, which shares a zip code with the part that used to be Broderick), and actually went to dig out the history (which I didn't know at all) because I kept getting mail that, though otherwise addressed properly, would often have the city listed as either Bryte or Broderick.

Posted by: cmdicely on May 11, 2007 at 2:18 PM | PERMALINK
Like it or not, he is basically doing what he promised to do: grow California businesses and prevent tax rate increases. When he was first elected, he and the right-wing candidate bethween them got about 65% of the vote. When he was re-elected he got about 65% of the vote himself.

In the world of real facts, Schwarzenegger and Tom McClintock combined got 62.1% of the vote for a replacement in the 2003 recall election—which might, generously, be described as "about 65%"—and Schwarzenegger got 55.9% of the vote in the 2006 general election which, except through dyslexia, can't reasonably, even generously, be described "about 65%".

Posted by: cmdicely on May 11, 2007 at 2:27 PM | PERMALINK

Anyone who had been paying attention knew that the gropinator was a bought and paid for hack for his deep pocket backers. Yet Californians voted for the steroid drunk narcissist. I can't honestly say I feel sorry for California.

Posted by: joe on May 12, 2007 at 5:28 AM | PERMALINK




 
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