YOU ARE HERE: LAT HomeCollections

Back to business

In Washington and in Sacramento, crucial work must be accomplished before the end of 2008.

November 17, 2008

Welcome as a postelection breather might be for public officials and citizens alike, Congress and California's Legislature have important, if unpleasant, business to conclude before the end of the year.

In its lame-duck session beginning this week, Congress will be focused on proposals to jump-start an economy that remains stalled even after the approval of a $700-billion financial rescue plan. Democrats are most enthusiastic about a stimulus package, but the idea also has been endorsed by Federal Reserve Chairman Ben S. Bernanke and likely will receive the support of some Republicans. Lawmakers in Sacramento hope to get some help from a federal stimulus program, but they also may have to raise taxes, cut programs or both -- ideally in a surgical way that provides maximum protection for the state's most defenseless residents.

Usually a lame-duck Congress isn't the ideal crucible for new legislation, especially after an election that alters the alignment of the parties, as the one Nov. 4 did. That is why fortified Democratic majorities in both houses are happy to wait until next year, when prospects will be better for deserving initiatives (stronger curbs on torture in CIA interrogations, inclusion of gays and lesbians in anti-discrimination laws, voting rights in Congress for the District of Columbia) and undeserving ones (the abolition of secret ballots in union organizing elections).

The exception to the rule, obviously, is the economy. A second emergency stimulus program in a single year is almost a foregone conclusion. Nevertheless, its contours are important.

Extending unemployment benefits has been proved to boost consumer spending, and providing funding for local infrastructure projects that are ready to be built also would be helpful. More government borrowing won't be of much help to the economy, however, unless it pays off in greater productivity. Lawmakers should seek to convert idle assets into working ones in ways that will keep delivering benefits after the money has been spent.

The marquee initiative for Democrats is a proposal to extend billions of dollars in loans to General Motors Corp., Ford Motor Co. and Chrysler. But the Bush administration and Senate Republicans appear set to block it, at least temporarily, because of concerns about the companies' long-term prospects. Here the Democrats' rush to do something, anything, is harder to justify.

Simply getting GM, Ford and Chrysler through the current downturn won't help them stop the decades-long slide in market share that has been gradually undermining their businesses. Congress has already approved $25 billion in loans to help automakers transform old factories into new ones capable of producing more fuel- efficient vehicles. Without a better cost structure for producing cars, however, the new factories won't be enough to save the Big Three.

It's understandable that congressional Democrats would see the explosion of government intervention in the economy as an opportunity to provide succor to hardworking constituents in an industry that is emblematic of this country's proud industrial history. We'd like to see policymakers find an effective way to help U.S. automakers. But despite the apocalyptic warnings from Detroit, this is one economic issue that can wait until next year.

In Sacramento, leaders of the Assembly and Senate have been staggered by increasingly dire warnings about the size of the state's budget shortfall, now thought to be upward of $11 billion. Incoming Senate President Pro Tem Darrell Steinberg (D-Sacramento) last week promised that he and his colleagues would lobby Washington for investment, as he put it, in California's economy, but he acknowledged that squeezing more money out of Congress won't be easy.

That leaves California with a host of options, all unpleasant. Some tax increases seem inevitable, as do many program cuts. Gov. Arnold Schwarzenegger proposes some of each -- a good starting point. He is also looking for ways to expedite spending of state infrastructure bond money, which could create jobs with funds voters already have approved. But, as on the federal level, projects must be ready to be built.

What's not acceptable in Sacramento is inaction. Without quick and dramatic moves, the state could run out of operating money early next year. That would shut down essential services to those who most need them at a time they need them most. As in Washington, it's important not just to make tough decisions but to make the right ones.

Los Angeles Times Articles