schwarzenegger and fiscal policy

California’s Republican governor, Arnold Schwarzenegger, outlined a budget proposal January 9 that constitutes a massive assault on health, education and other social service programs upon which millions of people in the state rely.

The $99 billion budget is aimed at eliminating a $14.3 billion gap between expected tax revenues and expenditures. It will include $4.6 billion in cuts, $1 billion in fund shifts from gasoline taxes (by postponing road construction projects) and an additional $2 billion reduction in education spending. In addition, the budget mandates a $729 million cut from higher education and a $165 million reduction from child-care programs for school goers.

The budget also forces state employees to pay an additional five percent of their wages into their pensions, to pay off state borrowing. Nearly one-tenth of the state budget gap will be shifted to local governments, as $1.3 billion in property taxes due to cities and counties will be siphoned off to the state.

There will also be a severe reduction in health and welfare services, in a state where six million residents have no health insurance and 60 hospitals have shut over the last decade. Administration officials admit that more than 110,000 poor Californians will lose health insurance due to the cuts, which include $880 million from Medi-Cal and $10 million from public health services. The state’s welfare program for mothers with dependent children—Cal-Works—will lose $790 million, while $126 million will be slashed from in-home services, $134 million from Supplemental Income payments and an additional $800 million from other health services.

It is hard to exaggerate the human impact of the proposed budget. Counties, already strapped for cash, will be forced to lay off thousands of employees. The budget will reduce public assistance benefits for 481,000 poor families, including childcare services, while stiffening work requirements. Enrollment for the state universities will be capped and those that enter will face increasing costs and fewer and smaller grants. Health services for the young and poor will be capped. Programs will be curtailed at youth correctional facilities.

Under conditions in which 1.13 million people are unemployed in the state and a record number of families have been dropped from employer-provided health insurance, cities and counties will be forced to engage in y...

... middle of paper ...

... to stave off even greater cuts. Several other unions are also negotiating concessions with the governor.

During last summer’s recall campaign Schwarzenegger concealed from the public the type of measures he would take if he reached the governor’s mansion. Instead he promised to eliminate the deficit by auditing the government and finding waste. While giving no specifics about his program he suggested he would not cut education or basic services for the poor. The news media also concealed this reality and gave its full support to the recall election and Schwarzenegger’s candidacy, which it generally hailed.

The Socialist Equality Party opposed the recall campaign as an attempt by the Republican Party to subvert democratic processes and impose a right-wing agenda rejected by the voters less than a year before. The SEP ran its own candidate in the recall campaign, John Christopher Burton, to present a socialist alternative for working people. The SEP campaign warned that whether Davis or Schwarzenegger prevailed, the working class would face drastic attacks on jobs, living standards and public services. This warning is now being confirmed in the actions of both big business parties.