Blockbuster Democracy

Former LA Mayor and state education secretary Richard Riordan is getting a lot of attention, here and elsewhere, for his screed against Gov. Schwarzenegger and the budget measures on the May 19 special election ballot. What no one seems to have noted, however, is that Riordan doesn’t seem to have a clue about California fiscal realities.

In just 777 words Riordan manages to leave no California budget canard behind.

More taxes on the rich “will be economically disastrous for California,” Riordan (“and I am one of them”) writes. It is perhaps a sign of how little taxes matter to the rich that Riordan seems not to have noticed that California has spent the last three decades lowering his taxes.

Since 1978 California has slashed property taxes. It eliminated the inheritance tax and lowered the top income tax rates on high incomes. It has lowered both the nominal and effective corporate income tax rate, and in 2011 will let multinational and multistate companies reduce their payments even more. Economists may quarrel about who bears the burden of the corporate income tax, but to the extent it falls on wealthy shareholders and owners –– and they always insist it does –– the rich now pay less.

As a result, even with the temporary .25 percentage point income tax hike in the recent budget (which hit the middle class proportionally harder than the rich), the wealthy pay lower tax rates today on their income and property than when Ronald Reagan was governor. This trend hardly seems likely to set off the “exodus” of the rich that Riordan suggests.

That’s not the only exodus Riordan imagines. “Anti-business rules and laws…are scaring companies out of California,” he writes. Except that they aren’t, as Jed Kolko and his colleagues at the Public Policy Institute of California have comprehensively demonstrated in a series of studies: “Policymakers’ (and the media’s) concerns about jobs leaving California are for the most part unwarranted.”

Riordan is equally unhinged from the facts on the spending side of the budget. He throws around all the usual buzzwords: “duplicative,” “bureaucrats,” “unions,” “special-interest groups.” But Riordan seems not to have noticed that California has been the nation’s leader in restraining costs in public health programs; it spends less per MediCal beneficiary than any other large state. Or that it is near the bottom in per-pupil spending in schools, with the largest secondary school classes in the nation.

Yes, California needs to reform health care and education (an effort that notably ground to a halt during Riordan’s tenure in Sacramento as education secretary). But “save billions of dollars” without significantly reducing the quality of health and education? Only in your dreams.

If Riordan’s uninformed shriek, written by the former mayor of the state’s largest city and published in the state’s most important newspaper, represents the level of seriousness at which the May election issues will be discussed, California is in even bigger trouble than I imagined.