Kevin Drum sums up the failure of the gimmicky initiatives that were intended to forestall California's intended budget disaster:
There are legal, judicial, federal, and contractual limits to how much spending can be cut, and there are political limits (i.e., the Republican rump in the legislature) to how much taxes can be raised. The sums just don't add up.
Californians are living in a dream world. Prop 13 slashed property taxes and nobody wants to amend it, even for commercial property. Arnold Schwarzenegger got elected in the middle of a budget crisis by promising to cut taxes. When that proved to be an unsurprising disaster, the voters approved billions in borrowing, making the budget situation even worse. It's easy to blame Sacramento for this mess (and I do!), but the public has been complicit every step of the way.
I think this is largely right, and it's true that the voters can't be let off the hook for using a bad system irresponsibly. But the key is still that the California initiative system is, in fact, a very bad system -- the result of restrictions on tax increases without limits on spending increases is pretty much what the rules would be expected to be produce. I would also reverse the way in which Kevin describes the dilemma in the first paragraph. The primary limits on draconian spending increases, it seems to me, is political: Californians, for good reason, don't want a Mississippi level of social services. The biggest limits on tax increases, conversely, are constitutional and institutional. It's true that the Republican rump makes necessary tax increases impossible -- but it's able to obstruct tax increases because of idiotic counter-majoritarian rules that permit them to do so. (Although, of course, Kevin is right that the voters are responsible for said idiotic constitutional rules.)
It also should be emphasized that Gray Davis -- who at least tried to deal intelligently with these revenue shortfalls deserves a lot of retrospective credit (just as he does on energy deregulation), and his recall in favor of Schwarzenegger's ice-cream-castles-in-the-air proposals was a predictable disaster.
UPDATE: Similar thoughts from Yglesias here.
--Scott Lemieux
