`The Laughter Curve: The funny thing about California's growing deficit

Governor Brown just announced that the state's budget deficit for the fiscal year was likely to be $16 billion rather than the $9.2 billion he projected in January (NYT, May 13, 2012) The main culprits are lower-than-expected individual and corporate income tax receipts and, to a lesser degree, faster than budgeted growth in expenditures. The funny thing is that units of economic activity are having smaller tax revenues associated with them. The solution proposed by Gov. Brown? Higher taxes, of course.