Although I am modestly hopeful that Congress will embrace spending cuts through a civil debate, I suspect that it is more likely the process will look a lot like the “California budget debate”. The saving grace for the American people is if the California situation gets uglier, Congress may be more willing to embrace a “real world” compromise to avoid more drastic cuts. So far the California government is stuck in an alternative reality due to fanciful estimates of government revenues and spending. Part of the problem is that our local, state, and federal governments have been lying about their financial position for so long it is difficult to trust the current estimates. If a budget compromise cannot be reached, the de facto result is a “do nothing” strategy. When we have another financial crisis the de facto strategy results in flat cuts to every department. We can see the de facto strategy at work in the California budget debate. Due to the relative size of social services in the budget, these categories are getting the larger portion of the cuts. The same situation exists in the federal budget. A flat budget cut is a difficult political issue to demonize your opponents with. This is a lose-lose position for the progressive wing of the Democrat party.
In a little more than month, the state of California lost over $6 billion in ground on its latest budget. With the deficit now thought to be $25.4 billion, Gov. Schwarzenegger calls a special session of the legislature to start on December 6.
Some Assembly Democrats think this is a political gimmick–what’s changed in the 5 weeks since they last approved a budget that could make things better?–and their biggest priority is something that would make the deficit bigger, not smaller–reversing a Schwarzenegger line item veto of $256 million worth of day care.