California has been the economic powerhouse in the United States. It last stood as the fifth largest economy in the entire planet. New Mexico, meanwhile, though I consider it the Greatest Secret in the United States, lags at near the bottom in any number of economic indicators, owing to its status as a colony of the oil/gas industry (see this article calling next door, western Texas, an oil/gas "colony"), and cultural traits where people expect little from their state and local governments except cronyism and corruption.
The coronavirus crisis' economic crisis is here, and will get worse--much worse. The Congress and Trump will likely approve more state aid, but whether that is enough is a dream. It will never be enough without the paycheck guarantee program which Congresswoman Pramila Jayapal (D-WA) and US Senator Bernie Sanders (D-VT) are demanding, and even right wing Senator Josh Hawley (R-MO) are calling for something very similar. So, what can a state government do?
The two states I currently know best are California, where I lived for nearly forty years, and New Mexico.
The two states I currently know best are California, where I lived for nearly forty years, and New Mexico.
California: California Governor Newsom has proposed batten-down-the-hatches cuts in response to the crisis. My take is the governor needs to re-review California's strengths and act accordingly. California's strengths include a largely well educated workforce (the linked-to article shows the least well educated in California are in a mini-agriculturally based colony of Central California), remains a beautiful location, and has a diverse economy. Instead of panic-driven and draconian cuts, California should pass a new initiative to modify its deeply constraining Balanced Budget Amendment, and allow the State to run a deficit of up to 30% of the State's Gross (Domestic) Product, which GDP last stands at $3.137 trillion, yes, trillion. This modification will allow the State to issue bonds, and engage in spending, that completes infrastructure redevelopment, invest in free-at-point-of-service tuition at all its public colleges and universities, cancel all student debt of those who incurred the debt while residing in CA, and currently residing for a year or more in CA), plus being a tax based single payer medical insurance system, which services will be limited to those who can prove they have resided in the State for at least one year (oh, and yeah, that will include residents who are not citizens, since those people often work, and it is time to join true civilization). This will almost completely avoid cuts in services. Yes, it is almost always a good idea to audit various programs, and find cost-efficiencies. However, with this modification, the State's governmental leaders would better inspire its residents to feel they are looking forward with confidence in themselves and the future. And trust me on this: Most other nations and businesses in other nations will invest in California's future, and purchase those bonds across California's diverse economic strengths.
New Mexico: This State could begin to put itself on the road to California level economic strength if it only invested its ridiculously high land grant and other grant funds into itself. The State is sitting on a total of $23 billion set of grants or funds, largely for education needs. The State's budget is a fraction of CA's massive yearly budget, and stands at its still highest level of $7.6 billion, that's billion with a B. For comparison, CA's budget for this year, before the crises, was $153 billion. New Mexico's gross state (domestic) product is only $105 billion, in other words a relatively tiny fraction of California's economic product. New Mexico Governor Lujan-Grisham is going to be told to make deep cuts in education and other services, similar to what Governor Newsom is proposing. As noted at the outset, New Mexico is already near or at the bottom among states in the United States in most economic indicators, so that spending cuts will immediately and adversely affect the State's most vulnerable residents.
The solution for New Mexico is to not go on a spending cut spree for a state where too many of its residents are already impoverished. While New Mexico has a balanced budget requirement, I am not calling for that balanced budget requirement to be modified--as I think that is only something to do when our fellow citizens gain more confidence in the state governmental leaders. The proposed solution is three pronged: First, use more of the land grant fund to fund the education budget over the next two years, so as to leave room to pay for other government services. In return, I am fine with at least foregoing the teacher and staff raises passed at the start of this tumultuous year. Second, use $1 billion out of the nearly $5 billion severance tax fund to prop up smaller businesses in the State, as a form of a mini-payroll guarantee act. I know there are limits, either legislatively or constitutionally, to how much of these funds may be removed at a given time. However, the State can decide to use the political will of this moment, and openly have the existential argument we need over the way in which these funds have not been adequately used for investment in the State's residents, local businesses, and environmental protection. Third, if there are to be cuts, then concurrently restore the top marginal income tax rate from before 2004 for those who earn or gain more than $300,000 a year. Remember, this is a marginal increase, so that the increase does not apply until earning or gaining the first dollar above $300,000, and only applies to those marginal sums above $300,000. Poor people get asked to sacrifice by having less services provided. Rich people get asked to pay more taxes to sacrifice. Anyone want to guess who that still hurts more? If you don't know, please put down Atlas Shrugged for a moment and look around.
And if we don't know how the oil/gas industry in New Mexico is already being bailed out of obligations and commitments, then read this article from the Santa Fe New Mexican, dated April 21, 2020. This bailout is on top of the monies the federal government doled out to this industry, and on top of the subsidies, credits, exemptions, etc. the oil/gas industry receives each year to destroy our planet. It is ridiculous to give these companies a further break from their obligations, as I see nothing in the article showing any give back to the workers who toiled for the oil/gas companies--and obviously, the land pollution in the ground is not going away without costs to the communities where the drilling had been occurring. I am not sure what New Mexico's otherwise liberal-minded Land Commissioner is up to here, but I hope I am wrong about the part regarding workers. And if this does not show how New Mexico is a colony of the oil/gas industry, where the resources are depleted or at least abused, workers and communities paying the cost, while profits are subsidized at each step of the economic processes, then I am not sure what else can convince you. And maybe read this post about how colonialism works, from a sharp heterodox economics blog, known as Naked Capitalism.
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I offer these proposals in an effort to help us all think bigger than we are told to do in our corporate influenced politics and media. I admit I could be dead wrong, and am likely to be at least partially wrong, with respect to these proposals. However, I offer these proposals because we need to look at each State in our nation, and recognize each State's strengths and challenges, and look at long range, not merely short range, interests of each's State's residents, for our nation, and our planet. If we simply panic, propose and enact deep spending cuts, and let people suffer, we are not preserving anything. Worse, desperate people are more likely to take power into their own hands, which will not be pretty. The true purpose of government has come into focus again, and it is time we speak to it and about it. And maybe people who don't know what I mean by "true purpose of government," here and here are intellectual rants from the Funky Academic, Irami Osei-Frimpong, a PhD in Philosophy student at University of Georgia. He grew up in Baldwin Hills, CA, in Los Angeles County, CA. He is perhaps the most brilliant person on the topics of governmental purpose, the social contract, and related topics, as I've seen in a long time. He speaks with such fun excitement, and with true insight. It may also help to read Ron Chernow's Alexander Hamilton biography, because it helps explain how Hamilton, as a major Founder, viewed the purpose of government as investing in people, using natural resources wisely--and not being afraid of debt if the debt is geared toward human and other investments.
New Mexico: This State could begin to put itself on the road to California level economic strength if it only invested its ridiculously high land grant and other grant funds into itself. The State is sitting on a total of $23 billion set of grants or funds, largely for education needs. The State's budget is a fraction of CA's massive yearly budget, and stands at its still highest level of $7.6 billion, that's billion with a B. For comparison, CA's budget for this year, before the crises, was $153 billion. New Mexico's gross state (domestic) product is only $105 billion, in other words a relatively tiny fraction of California's economic product. New Mexico Governor Lujan-Grisham is going to be told to make deep cuts in education and other services, similar to what Governor Newsom is proposing. As noted at the outset, New Mexico is already near or at the bottom among states in the United States in most economic indicators, so that spending cuts will immediately and adversely affect the State's most vulnerable residents.
The solution for New Mexico is to not go on a spending cut spree for a state where too many of its residents are already impoverished. While New Mexico has a balanced budget requirement, I am not calling for that balanced budget requirement to be modified--as I think that is only something to do when our fellow citizens gain more confidence in the state governmental leaders. The proposed solution is three pronged: First, use more of the land grant fund to fund the education budget over the next two years, so as to leave room to pay for other government services. In return, I am fine with at least foregoing the teacher and staff raises passed at the start of this tumultuous year. Second, use $1 billion out of the nearly $5 billion severance tax fund to prop up smaller businesses in the State, as a form of a mini-payroll guarantee act. I know there are limits, either legislatively or constitutionally, to how much of these funds may be removed at a given time. However, the State can decide to use the political will of this moment, and openly have the existential argument we need over the way in which these funds have not been adequately used for investment in the State's residents, local businesses, and environmental protection. Third, if there are to be cuts, then concurrently restore the top marginal income tax rate from before 2004 for those who earn or gain more than $300,000 a year. Remember, this is a marginal increase, so that the increase does not apply until earning or gaining the first dollar above $300,000, and only applies to those marginal sums above $300,000. Poor people get asked to sacrifice by having less services provided. Rich people get asked to pay more taxes to sacrifice. Anyone want to guess who that still hurts more? If you don't know, please put down Atlas Shrugged for a moment and look around.
And if we don't know how the oil/gas industry in New Mexico is already being bailed out of obligations and commitments, then read this article from the Santa Fe New Mexican, dated April 21, 2020. This bailout is on top of the monies the federal government doled out to this industry, and on top of the subsidies, credits, exemptions, etc. the oil/gas industry receives each year to destroy our planet. It is ridiculous to give these companies a further break from their obligations, as I see nothing in the article showing any give back to the workers who toiled for the oil/gas companies--and obviously, the land pollution in the ground is not going away without costs to the communities where the drilling had been occurring. I am not sure what New Mexico's otherwise liberal-minded Land Commissioner is up to here, but I hope I am wrong about the part regarding workers. And if this does not show how New Mexico is a colony of the oil/gas industry, where the resources are depleted or at least abused, workers and communities paying the cost, while profits are subsidized at each step of the economic processes, then I am not sure what else can convince you. And maybe read this post about how colonialism works, from a sharp heterodox economics blog, known as Naked Capitalism.
______________________________
I offer these proposals in an effort to help us all think bigger than we are told to do in our corporate influenced politics and media. I admit I could be dead wrong, and am likely to be at least partially wrong, with respect to these proposals. However, I offer these proposals because we need to look at each State in our nation, and recognize each State's strengths and challenges, and look at long range, not merely short range, interests of each's State's residents, for our nation, and our planet. If we simply panic, propose and enact deep spending cuts, and let people suffer, we are not preserving anything. Worse, desperate people are more likely to take power into their own hands, which will not be pretty. The true purpose of government has come into focus again, and it is time we speak to it and about it. And maybe people who don't know what I mean by "true purpose of government," here and here are intellectual rants from the Funky Academic, Irami Osei-Frimpong, a PhD in Philosophy student at University of Georgia. He grew up in Baldwin Hills, CA, in Los Angeles County, CA. He is perhaps the most brilliant person on the topics of governmental purpose, the social contract, and related topics, as I've seen in a long time. He speaks with such fun excitement, and with true insight. It may also help to read Ron Chernow's Alexander Hamilton biography, because it helps explain how Hamilton, as a major Founder, viewed the purpose of government as investing in people, using natural resources wisely--and not being afraid of debt if the debt is geared toward human and other investments.
