Economic recovery and higher revenue has left California with a significantly improved budget outlook:
After months of doomsday scenarios and apocalyptic warnings about cuts to California schools, parks and the police, the news from Gov. Jerry Brown on Monday was nothing short of startling: California is now expected to see $6.6 billion more in revenue over the next two years than had been expected. [...]
The unexpected improvement in the fiscal picture was a result of rising incomes. California workers will make, on average, an additional $4,000 over the next two years, the state now estimates, which will mean more income taxes coming in.
This applies to Washington as well. Given the extent to which the recession is responsible for our budget woes -- nearly 75 percent of deficits since 2007 are attributable to the Great Recession -- economic recovery is crucial to reducing deficits and stabilizing our debt load over the medium-term. Likewise, just as California still needs additional revenue after a decade of low taxes, the federal government needs to raise taxes in order to stabilize its debt over the next 10 years. And as the Center on Budget and Policy Priorities notes, this can be accomplished by simply allowing the Bush tax cuts to lapse when they expire in 2012:
That revenues have such a huge impact on debt reduction puts lie to the Republican view that we can solve our fiscal woes through spending cuts alone (or, in their words, "Washington does not have a revenue problem. Washington has a spending problem"). The question is whether we have the political will to raise the necessary revenues. Unfortunately, we seem to be in a California-like bind, with a rabidly anti-tax opposition party that would rather see the economy burn than raise taxes and has the institutional power to make that happen.
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