The Campaign Spot

What Can We Learn From the California Propositions’ Termination?

Gov. Arnold Schwarzenegger and California state legislative leaders, including a few Republicans, went to the voters with a plan to deal with their state’s massive budget deficit. At the center of the plan, $16 billion in new income, sales and car taxes.

And the voters responded with a resounding “NO.”

It’s even more surprising since the “YES” side dramatically outspent opponents. Ten to one by some estimates.

For Californians, the debate now turns to spending cuts – Schwarzenegger is talking about laying off 2.1 percent of the state’s workforce (about 5,000 workers), selling state properties, more borrowing, cutting benefits of state healthcare programs. Liberals are telling themselves it’s a failure of the nominally Republican Schwarzenegger, and in some cases blaming the voters for being “not realistic.”

Can this overwhelming demonstration of anti-tax-hike sentiment be replicated elsewhere? Well, no state uses referenda the way California does, and in a way, the tax-hike proponents made their first mistake when they allowed the public to have a say.

Nonetheless, this was a mid-spring election, and turnout was strikingly low, suggesting that tax opponents were way more motivated than Califorrnia legislators’ usual allies. (Like other special elections, we’re seeing that Obama fans who turned out to elect the first black president in November 2008 aren’t interested in other voting days.) The voters are being described as “disdaining” and distrusting their political leaders, a rather clear contradiction to recent claims that Americans want government to do more.

Finally, a person who’s willing to turn out on a May Tuesday to vote against a tax hike is probably willing to show up on a November Tuesday to vote against a lawmaker supporting tax hikes.

There is, however, a possibility that California’s problems could become national problems, if the California Democrats start arm-twisting the Obama administration and say, “You owe us. Give us a bailout.” In a way, state lawmakers would be arguing that the most populous state has become “too big too fail.”

Megan McCardle:

If Uncle Sugar bails out California, California will not fix its problems.  Perhaps you want Obama to make it fix the problems, using the same competence, power, and can-do spirit with which he has repaired all the holes in the banking and auto manufacturing sectors.  But Obma is not in a good position to do this.  California Democrats are a huge part of his governing coalition.  All Obama can do is shovel money into the bottomless pit of California’s political system.

On the other hand, demanding that U.S. taxpayers in other states shell out for a special bailout of California’s bad budgetary decisions seems like one of the few moves that Obama could make that would shred his shiny approval rating overnight.

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