Please ensure Javascript is enabled for purposes of website accessibility

US Consumer Spending Falls as Trump Tariff’s Muddle Economy

17 hours ago

US Supreme Court Lets Parents Take Kids Out of Classes With LGBT Storybooks

18 hours ago

In Win for Trump, US Supreme Court Limits Judges’ Power to Block Birthright Citizenship Order

19 hours ago

California’s Newsom Sues Fox News for $787 Million for Defamation Over Trump Call

19 hours ago

Motorcycle Collides With Tractor in Fatal Fresno County Collision

19 hours ago

Fourth of July Celebrations Begin Saturday. Here’s Your Fresno Area Guide

22 hours ago

Bill Moyers, Broadcaster and LBJ’s White House Press Secretary, Dies at 91

2 days ago

State Department Approves $30 Million for Gaza Humanitarian Foundation

2 days ago

Cargo Ship That Caught Fire Carrying Electric Vehicles Sinks in the Pacific

2 days ago

4 Million Acres of California Forests Could Lose Protection. What Trump’s ‘Roadless Rule’ Repeal Could Do

3 days ago
Walters: Pandemic Relief Package Has a Downside
dan_walters
By Dan Walters, CalMatters Commentary
Published 4 years ago on
February 22, 2021

Share

The immense drop in state revenue that Gov. Gavin Newsom and legislators anticipated last year when COVID-19 struck the state never materialized.

Instead, high-income Californians who are the basic source of the state’s ongoing tax income continued to work and prosper, and what was originally described as a $54 billion budget deficit morphed into multibillion-dollar windfalls.

Dan Walters

Opinion

Last week, Newsom and legislative leaders agreed to spend an extra $9.6 billion on pandemic relief, mostly in direct aid to lower-income workers and their families and small businesses that have suffered the most in the pandemic-induced recession.

“As we continue to fight the pandemic and recover, I’m grateful for the Legislature’s partnership to provide urgent relief and support for California families and small businesses where it’s needed most,” Newsom said in a statement. “From child care, relief for small business owners, direct cash support to individuals, financial aid for community college students and more, these actions are critical for millions of Californians who embody the resilience of the California spirit.”

Writing Checks to Low-Income Californians

The centerpiece of the relief package, which is certain to receive rapid legislative approval, is more than 5 million payments, mostly for $600, to those who qualify by their low incomes, including undocumented immigrants who cannot receive federal relief checks.

It’s obviously good news that the state budget dodged the revenue bullet, thus providing the wherewithal to help those who are hurting the most.

However, there’s no such thing as a free lunch, and the expanded version of “Golden State Stimulus,” which Newsom first proposed with his budget in January, could have adverse long-term consequences.

Although the fiscal meltdown didn’t occur and revenues surged unexpectedly, Newsom’s budget and the Legislature’s budget analyst, Gabe Petek, both see serious deficits in the years ahead as spending already locked into law outpaces anticipated revenues — even with economic recovery.

“Under its own revenue forecast, the administration also anticipates the state would face operating deficits if the Legislature adopted the governor’s budget proposals,” Petek says in his analysis. “Specifically, these deficits would grow from $7.6 billion in 2022-23 to $11.3 billion in 2024-25.”

The relief package that Newsom and legislative leaders want to enact is not supposed to be permanent, but rather one-time or short-term until the pandemic is tamed and the economy swings upward. In theory, as businesses reopen and begin earning profits and as workers are called back to their jobs, the need for direct aid will vanish.

Closing Income Gaps

However, temporary government benefits have a way of morphing into permanent entitlements and advocates for those receiving the aid may see it as a pathway to long-sought structural changes of fiscal and economic policy to close California’s very wide income and wealth disparities.

Whether one likes or dislikes the possibility of those changes, there’s no question that they would carry very large price tags on top of the budget deficits already on the horizon.

Universal single-payer health care, universal early childhood education, guaranteed family incomes, vastly expanded services to the homeless, and other items on progressive political agendas would cost tens of billions of dollars. Thus, they would require hefty increases of taxes on Californians who already are carrying one of the nation’s highest taxation burdens.

On one hand, Newsom has publicly endorsed some of those costly new entitlements. But on the other, he has opposed the new income or wealth taxes that some left-leaning legislators have proposed to finance them, clearly fearing that new taxes would escalate migrations of employers and high-income taxpayers to other states.

There is no free lunch.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more stories by Dan Walters, go to calmatters.org/commentary.

[activecampaign form=19]

DON'T MISS

What Are Fresno Real Estate Experts Predicting for 2025 and Beyond?

DON'T MISS

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

DON'T MISS

Trump Sends in DOGE to Slash Federal Gun Regulations by July 4

DON'T MISS

Tensions Flare at Announcement of Major Fresno County Gang Takedown

DON'T MISS

Measure C ‘Blackmailed’ As Fresno Enviro Coalition Gets Huge Say on Transportation Tax

DON'T MISS

Despite $49M Deficit, Fresno Unified Gives Top Brass 5% Raise, 3% One-Time Bonus

DON'T MISS

US Consumer Spending Falls as Trump Tariff’s Muddle Economy

DON'T MISS

US Supreme Court Preserves Key Element of Obamacare

DON'T MISS

US Supreme Court Lets Parents Take Kids Out of Classes With LGBT Storybooks

DON'T MISS

Fresno Unified Trustees Will Get Automatic Raises on Tuesday

DON'T MISS

Alleged ‘Fake’ ICE Agents Charged. Fresno Court Date Set

DON'T MISS

In Win for Trump, US Supreme Court Limits Judges’ Power to Block Birthright Citizenship Order

UP NEXT

Things Netanyahu Might Say if Injected With Truth Serum

UP NEXT

California Politicians Ignore Ag’s Troubles, but Boost Movie Business

UP NEXT

Trump’s Courageous and Correct Decision to Bomb Iran

UP NEXT

How the Attacks on Iran Are Part of a Much Bigger Global Struggle

UP NEXT

Groceries Are Now a Luxury. So Is Breathing.

UP NEXT

California Politicians Agree on School Money, but Poor Test Scores Need Attention

UP NEXT

Sen. Alex Padilla: This Is How an Administration Acts When It’s Afraid

UP NEXT

Bay Area Transit Systems Want More Money. But Their Payrolls Soared as Ridership Declined

UP NEXT

History Suggests the GOP Will Pay a Political Price for Its Immigration Tactics in California

UP NEXT

Only Nonviolence Will Beat Trump

Despite $49M Deficit, Fresno Unified Gives Top Brass 5% Raise, 3% One-Time Bonus

14 hours ago

US Consumer Spending Falls as Trump Tariff’s Muddle Economy

17 hours ago

US Supreme Court Preserves Key Element of Obamacare

18 hours ago

US Supreme Court Lets Parents Take Kids Out of Classes With LGBT Storybooks

18 hours ago

Fresno Unified Trustees Will Get Automatic Raises on Tuesday

19 hours ago

Alleged ‘Fake’ ICE Agents Charged. Fresno Court Date Set

19 hours ago

In Win for Trump, US Supreme Court Limits Judges’ Power to Block Birthright Citizenship Order

19 hours ago

California’s Newsom Sues Fox News for $787 Million for Defamation Over Trump Call

19 hours ago

Motorcycle Collides With Tractor in Fatal Fresno County Collision

19 hours ago

Ringo Is Ready to Rock Your World With ‘Pawsitive’ Vibes!

19 hours ago

Trump Sends in DOGE to Slash Federal Gun Regulations by July 4

WASHINGTON — The U.S. Department of Government Efficiency has sent staff to the agency that enforces federal gun laws with the goal of revis...

13 hours ago

American Flag Revolver
13 hours ago

Trump Sends in DOGE to Slash Federal Gun Regulations by July 4

Rob_Bonta_Speaking_At_Press_Conference_1280x720
14 hours ago

Tensions Flare at Announcement of Major Fresno County Gang Takedown

Garry_Bredefeld_Sandra_Celedon_Mesure_C_1280x720
14 hours ago

Measure C ‘Blackmailed’ As Fresno Enviro Coalition Gets Huge Say on Transportation Tax

Fresno_Unified_Raises_1280x720
14 hours ago

Despite $49M Deficit, Fresno Unified Gives Top Brass 5% Raise, 3% One-Time Bonus

Eastern Market in Washington, D.C.
17 hours ago

US Consumer Spending Falls as Trump Tariff’s Muddle Economy

Obamacare Sign in San Ysidro, California
18 hours ago

US Supreme Court Preserves Key Element of Obamacare

Pride Flags Fly in New York
18 hours ago

US Supreme Court Lets Parents Take Kids Out of Classes With LGBT Storybooks

19 hours ago

Fresno Unified Trustees Will Get Automatic Raises on Tuesday

Help continue the work that gets you the news that matters most.

Search

Send this to a friend