Budget expediency overwhelms logic

Many factors go into making political deals – ideology, self-interest, expediency and emotion to mention just a few.

Logic rarely enters the equation, and if it does, it usually dwells at the bottom in importance.

Two cases in point are to be found in the final deal on a $213 billion state budget that was hammered out last weekend, just a few days before the June 15 deadline, by Gov. Gavin Newsom and legislative leaders.

The first is an agreement to use money from the state’s “cap-and-trade” program of auctioning off carbon emission allowances to improve local water systems, mostly in impoverished communities. Up to a million Californians now have substandard water supplies so the goal is certainly a worthy one.

Newsom and his predecessor, Jerry Brown, wanted a tax on water to generate money for the much-needed repairs, but legislators were worried about a backlash were they to impose such a tax while the state is running up multi-billion-dollar budget surpluses.

The expedient solution was to tap the cap-and-trade fund, which is supposed to be used for projects that reduce greenhouse gases, but that has evolved – surprise, surprise – into an all-purpose political slush fund.

The rationale offered by Newsom budget adviser Vivek Viswanathan was, to put it mildly, creative.

“In these communities where there isn’t access to safe drinking water, you’re often bringing in bottled water, you’re trucking in water that’s safe to drink and all of these have emissions impacts,” Viswanathan said. “We believe these investments not only help those communities by giving them safe drinking water but also fulfill the goals of the cap-and-trade program.”

That very strained, and completely illogical, rationalization for political expediency further undermines the original intent of the system and further converts it into just another hidden tax on consumers. Cap-and-trade, for instance, raises gasoline prices by an estimated dime a gallon.

Example No. 2 is the decision to expand state-subsidized medical insurance, including – for the first time anywhere – to some undocumented immigrant adults.

To finance the expansion, Newsom and legislators agreed to reinstate the “individual mandate” that was part of the original Obamacare legislation but was erased by Congress and President Donald Trump two years ago.

Those who didn’t purchase health insurance in some fashion were to be fined. Newsom proposed, successfully, to reinstate the fines in California of $695 a year or 2% of income, whichever is greater.

“Without the mandate, everybody’s premiums go up,” Newsom said in proposing it, adding that Obamacare “has been vandalized” by the mandate’s removal and “We’re here to get it back on firmer footing.”

Here’s the catch: Newsom, et al, characterize the charges for non-compliance as fees, rather than taxes, thus evading the two-thirds legislative votes needed for taxes.

However, when the federal individual mandate was before the Supreme Court, it ruled 5-4 that it is a tax. As Chief Justice John Roberts put it, “The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”

Logically, how can fines for failing to buy insurance be considered taxes by the U.S. Supreme Court – the only way they could be considered legal – but as fees by California’s state government?

By expediently stretching definitions to their breaking point, these two budget actions, no matter how well-intended their purposes, contribute to popular cynicism about manipulative politicians.

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