A Lesson for Arnold
Schwarzenegger: Warren Buffet to the California Democrat's Rescue
by Thomas Sowell (August 21, 2003)
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|Summary: The ability of the
Republicans to snatch defeat from the very jaws of victory
is one of the political marvels of our time.
[CapMag.com]Just a week ago, Arnold Schwarzenegger was the political
sensation of California -- and of the national media, with his face
on the cover of both Time and Newsweek. Polls
showed him leading everyone in the horde of candidates for governor
by a wide margin.
Now Arnold is trailing an undistinguished
political hack named Cruz Bustamante in the polls. The ability of
the Republicans to snatch defeat from the very jaws of victory is
one of the political marvels of our time.
The most dramatic example was the elder
President Bush, who looked so unbeatable back in 1992 that all the
Democrats' heavyweights stayed out of the primaries, leaving the
field wide open for a little-known governor of Arkansas to become
President of the United States. President Bush 41's breaking of his
"no new taxes" pledge was a major part of his downfall.
Apparently the Schwarzenegger camp has still
not learned the lesson of 1992, that raising taxes is not the way to
get Republican votes. Arnold's slide in the polls began after his
economic adviser Warren Buffett opined that California property
taxes were not high enough.
Political damage control is now under way but
it is a little like trying to save the Titanic after it hit the
There is something bordering on the obscene
about a billionaire blithely talking about raising taxes on people
who are a long way from being billionaires, in order to bail out a
state government whose reckless spending has turned a large surplus
into a record deficit in just a couple of years.
Too many politicians of both parties are too
quick to look to higher taxes as the answer to fiscal problems. The
very idea of cutting back on spending never seems to occur to them.
Even when they talk about spending "cuts," what they often mean is
that they are not going to increase spending by as much as they had
Even the famous federal government shutdown of
1995 was over these fictitious kinds of "cuts" that in fact had the
government spending more money than ever.
The reason for favoring higher taxes over lower
spending is quite simple: Every spending program has a constituency
that will yell like stuck pigs if their "funding" is cut and will
flood the media with claims that terrible calamities will occur
unless they get their money.
Meanwhile, taxpayers are largely unorganized
California's property taxes are lower than
those in some other states but the circumstances in California are
also very different.
Since the 1970s, severe building restrictions
in California have led to skyrocketing housing prices, due to the
drastically increased price of the land where it is still
permissible to build.
When the market value of your home quadruples
in a decade, your income is unlikely to quadruple along with it.
Therefore, taxes based on the assessed value of your home take an
ever larger share of your income.
The fact that your home is worth a lot more
than you paid for it doesn't help you to pay your bills. The only
way to get your hands on those paper profits is to sell the house --
and, since you still have to live somewhere, that means buying
another house whose price has also skyrocketed.
Only by leaving California and going someplace
where home prices are lower -- which is virtually everywhere else --
will you actually see some hard cash you can use. In recent years,
more and more people have done just that, as more Californians have
moved to other states than people from other states have moved into
However, for those who want to continue living
in the golden state, the answer has been very different and it is
called Proposition 13. This was an initiative that limited the
amount of property tax increases that could hit someone who
continued living in the same house.
Big spenders have blamed Proposition 13 for
virtually everything that has gone wrong in California in the years
since it was passed. But most of those big spenders have been
Now Warren Buffet has made the attack on
Proposition 13 bipartisan. This may save the governorship for the
|About the Author: Thomas Sowell
has published a large volume of writing. His dozen
books, as well as numerous articles and essays, cover a
wide range of topics, from classic economic theory to
judicial activism, from civil rights to choosing the