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The Daily Capitalist: California’s No. 1!
This is going to be good. The election is just over and the fur is flying here in California.
Before last week’s special election Gov. Arnold Schwarzenegger said that anyone who thinks the $24 billion deficit can be fixed “with just cut doesn’t know math. And they should go back to Math 101. ... I despise tax increases, but mathematics is much more powerful than ideology.”
He did a quick 180. Arnold now says “This means cuts, cuts, cuts, and living within our means. That was the message of the people.”
Gov. Arnold Schwarzenegger and lawmakers scrambled Wednesday to avert a financial meltdown, and public officials across California braced for annihilating cuts on the day after voters trounced their leaders’ rescue plan for the state.
— Los Angeles Times, May 21, 2009
The problem is that our legislators in Sacramento have no idea how to not spend money. Every program has a constituency and is precious to someone who is on the receiving end. The media are stressing the “harshness” and “brutality” of the expected spending cuts. No surprise there. Our politicians are now threatening us. As one of our former legislators said:
“People are going to have to figure out: Do they want schools, do they want roads, do they want public safety, do they want to take care of the less fortunate?” said former state Senate President Pro Tem John Burton, D-San Francisco, who is now chairman of the California Democratic Party. “At some point, that’s going to happen.”
Our Democratic-controlled government has been spending and spending for years without regard to the well being of the state and its taxpayers. When the economy crashed it hit California hard and tax revenues declined. Legislators have done everything in their power to not cut spending and have used every accounting trick in the book to cover their tracks. They have borrowed from supposedly dedicated single-purpose tax funds, such as the highway fund, and have continued to borrow on the general credit of the state.
Now the voters have said we don’t want to be taxed further. I don’t believe that will stop them entirely. On Monday, the Los Angeles Times reported that we can expect a tax increase of $1.50 per pack of cigarettes. That would raise about $1.2 billion. Well, who cares about the damned smokers; it’s a health measure in their best interest.
Sacramento is also talking about “borrowing” the money it is supposed to give to local governments from the property taxes it collects. It also looks as if the rest of U.S. taxpayers will bail us out with another $6.8 promised by President Obama. I think we’ll still see more use taxes that do not require a vote of the people.
Here’s what they will have to do:
» Cut all programs across the board.
» Cut all salaries across the board.
» Eliminate programs.
» Lay off workers.
» Find ways to deliver services cheaper and more efficiently.
» Suspend or reduce pension benefits.
I have no clue as to how they are going to do this, but I will admit it’s fun to watch them scramble. The teachers, prison guards, police and fire, and service employees unions are very powerful in California and are big donors to the Democrats. The Republicans are mostly useless: permanently gerrymandered into the minority party.
Arnold came in surrounded by yes men/women, with visions of grandeur. Remember when the talk going around to change the U.S. Constitution so an immigrant could be president? We all know who that immigrant was.
His political sense is faulty. In 2005 he held a special election with four initiatives — curbing teacher tenure, reining in union dues, capping spending, and redrawing political districts. They were soundly rejected by voters. Why? Because he unwisely attacked the powerful unions that rallied their substantial forces to defeat all four propositions. If Arnold had just focused on redrawing political districts he might have won. If he had won that battle, we might have been able to undo the gerrymandering that resulted in a permanent Democratic majority. That may have led to reduced spending. But, alas, no.
Now California is the No. 1 state in unemployment. In April we lost 63,700 jobs, dwarfing Texas, which lost 39,500 jobs. With high taxes and restrictive business regulations it doesn’t look good for us.
Here’s Arnold’s new mantra: “I’ll be back — not.”
— Jeff Harding is a principal of Montecito Realty Investors LLC. A student of economics, he has a strong affinity for free-market economics. This commentary originally appeared on his blog, The Daily Capitalist.
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» on 05.26.09 @ 01:46 AM
BE OF GOOD CHEER - “The Spectrum” (of St. George, UT) top of page one headline for Monday edition - May 25th “Utah job losses near 40,000”—actually 39,800 job losses since April, 2008. Unemployment rate in The Beehive state @ 5.2%. WHEN GOV. JON HUNTSMAN IS CONFIRMED BY US SENATE FOR AMBASSADORIAL DUTIES TO MAINLAND CHINA, THE NUMBER SHALL INCREASE ONLY MARGINALLY!
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» on 05.26.09 @ 04:53 AM
Wonderful commentary!
I have to agree that after so many years of watching Gerry Brown, Pete Wilson, Gray Davis, and now Arnold kowtow to the State legislature and spend the state into oblivion, it is delightful to see them dance.
California is now likely to see a significant drain of individual “economic stimulators” (i.e. business owners that actually produce jobs and revenue for the state) because the coming taxes will be the proverbial nail in the coffin for them after years of unfavorable employment rules, mandatory benefits, etc.
As a California native, I find it a shame what is happening to our great state.
Let’s hope this painful purge stays in the minds of the people through the next few election cycles and we can get a chance to clean house!
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» on 05.26.09 @ 07:17 AM
Yeah! It’s fun to watch people lose their jobs and tell people that their hours are being cut and they are taking pay cuts! (Sarcasm off) Dear Jeff, there’s nothing fun about it. This whole thing is sad.
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» on 05.26.09 @ 07:31 AM
The apparently unmentionable topic in all this seems to be illegal immigration. Might it be possible to get a non-politicized accounting of the real costs and benefits of illegal immigration? How much education expense? How much medical expense? How much actual tax revenue? When, for example, the University of California says it does not and will not verify citizenship, that is a tacit admission that the UC system is educating illegals on our tax dollars. Emergency room? Same thing. How much of the state deficit is due to use of government services by illegals?
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» on 05.26.09 @ 12:07 PM
Are the Republicans gerrymandered into impotence? Probably true. Those who make the rules benefit by the rules they make. But there is a Republican in the shot-calling chair, so stop whining, Mr. Harding.
“Government spending” is just code for social services for those individuals not possessing the family backing, resources, educational advantages, business acumen, skill for sharp dealing, craft, work ethic or whatever it is that put someone like Mr. Harding into and through law school and in profitable career of real estate investing. Blame the unions for all of California’s problems? That’s a good one - easy to blame regular working people and wage earners - there are more of “them,” so they must be the problem.
Mr. Harding has kindly provided a laundry list of what needs to take place to get California out of the red. Shocking that asking corporations and the mega-rich to pay their fair share is not on the list! Mr. Harding does not oppose spending, it’s just who is getting the government largess that is the problem. Mr. Harding is not complaining about the real beneficiaries of socialism-United States style: the corporations who get decades of bailout after bailout - and then pay out bonuses to incompetent money “managers” with our tax money, who get virtually free public subsidies, mineral extraction deals, grazing deals, pollution breaks, timber deals, farmland deals, who get tax break after tax break, who place their profits in off-shore shell subsidiaries rather than investing in our own economy (with the exception of yacht and luxury car manufacturers).
The problem is that Howard Jarvis, the anti-tax cabal, and other selfish “haves” of that ilk, have driven this state into the ground with Prop 13 and absurd constitutional provisions like the super-majority tax and budget rules. (Only California and two other states require a 2/3 majority of the legislature to pass a state budget or new taxes.) We can thank Jarvis and the Republicans for the budget deadlocks.
The fact is that sales taxes and the myriad hidden taxes on consumers, like utility, gasoline, etc., “fees,” which always hit the lower income folks hardest, are the problem, not taxes on the corporations which saddle this state with decades of external “costs’ like pollution, free infrastructure use, tax dodges and subsidies for building sports and entertainment centers, etc.
Blame the unions for rallying their “substantial forces”? Sounds like grass roots democracy to me. But, if you look at the places where U.S. corporations invest the most in assembly plants and other outsourcing of industry and jobs, it is the least democratic countries in the world - where autocratic governments simply sponsor death squads and other less obvious techniques to make sure labor unions don’t get started and wages remain dirt level to make U.S. corporations eager to set up shop with minimal labor costs. E.g, those beacons of human rights: China, Indonesia, et al.
The fact is, for all the whining about how government regulation and taxes hurt their competitiveness against foreign firms, or even out of state firms, California corporations are not going anywhere. People live in California and businesses do business here for many reasons, and it is unlikely that demanding that corporations and the super wealthy pay their fair share will result in a grand exodus. And if you are going to blame the “Democratic-controlled government” of California for the job losses and other economic problems, just remember who was living in the executive mansions in Sacramento and Washington DC these past years, supposedly steering the ship.
“Free” market? That term always makes me laugh. “Free” to pillage and plunder the witless public that year in and year out votes against its interest by electing Demopublicans who are beholden to corporations for all that campaign cash and lobby perks.
The electorate voted against the governor’s ill conceived propositions, but not necessarily for the reasons Mr. Harding states - yes, the voters don’t want taxes raised - we are paying enough, but they also don’t trust the back room deals a reactionary minority tries to impose on the rest of us on the brink of a budget collapse, and maybe they saw this time that the short term fix, just like in the ongoing Wall Street meltdown, is not so good if you don’t read the fine print - especially when the fine print is headed toward amending the California Constitution.
PS to “MesaMan” (another anonymous commentator): If mandatory benefits are such a burden to California businesses, then do you support SB 810 in California and HR 676 in Congress - single payer health care - that would lift the burden of providing employee health care insurance off businesses?
John Douglas
Goleta
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» on 05.26.09 @ 12:51 PM
To “John Locke”:
In the 1990s the Rand Institute conducted detailed studies and published various monograms and books - all available online - with the results showing that in the US as a whole, immigrants - documented and undocumented - pay more in taxes than they take out in government services. In fact, on average, undocumented immigrants are less likely to get most government benefits as compared with others due to their inability to provide proof of residency and citizenship. According to the studies, California bears greater burdens of illegal immigration in providing emergency services, etc., but California businesses also have benefitted from lower labor costs. John Douglas
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» on 05.26.09 @ 01:45 PM
Amen John Locke, it appears that “economic justice” has been served and the middle class has been punished for not providing enough welfare to illegals. Here is the result and will it end? No it will get worse, until we are not better off than Mexico, as long as the topic is “unmentionable”.
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» on 05.26.09 @ 02:00 PM
I knew this would happen in California, because we have too many workers making too much money—Poor leadership from the tax and spend liberals…
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» on 05.26.09 @ 02:07 PM
The people of this country are sick and tired of welfare, and free money & health care going to illegal aliens—The social service gig is up—family’s neeed to help one another and not ask for free hand-outs from you and I..
Blame the Liberals for this welfare social service mess…
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» on 05.26.09 @ 02:57 PM
John Douglas: Doesn’t the fact that the top 1/2% of the income taxpayers in CA pay 50% of the income taxes while 50% of the citizens pay no tax at all indicate that the “rich” already pay their fair share? What, in your mind, constitutes “rich” and what, in your mind, is their “fair share”.
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» on 05.26.09 @ 04:26 PM
Yes notice the lumping of immigrants- illegal and illegal, into the same bucket and saying they pay more taxes than they take in in services. Nobody is talking about LEGAL immigrants here Mr. Douglas. But nice try. What is it that you open borders advocates don’t understand about the difference between legal and illegal?? Stop trying to blur the lines of distinction people are not stupid. An undocumented worker obviously cannot pay taxes and why would they? You think they steal someone’s social security number so they can pay taxes? They are paid in cash and send it right down to Mexico, that is, if they actually have jobs and are not criminals. You are not even considering those who do not work and just suck in services!
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» on 05.26.09 @ 04:32 PM
As I read John Douglas’ remarks I am lead to believe that he is someone without “the family backing, resources, educational advantages, business acumen, skill for sharp dealing, craft, work ethic or whatever it is” necessary to take responsibility for oneself and one’s needs. Instead, people who believe as Mr. Douglas does see government as the great equalizer, who take from the undeservingly successful and give to the underservingly unsuccessful. Mr Douglas’ view that it “is unlikely that demanding that corporations and the super wealthy pay their fair share will result in a grand exodus” is wrong and has been demonstrated as wrong over the past 20 years.
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» on 05.26.09 @ 05:37 PM
Time to get concessions from the unions, pay cuts from state workers, and open up offshore drilling for both financial and environmental gain. About time they get serious about these issues. Stop dancing.
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» on 05.27.09 @ 05:30 AM
In response to and support of a comment by one John Goleta, to quote, “...“MesaMan” (another anonymous commentator): If mandatory benefits are such a burden to California businesses, then do you support SB 810 in California and HR 676 in Congress - single payer health care - that would lift the burden of providing employee health care insurance off businesses?”
I could not agree with you more about HR 676 and/or SB 810. However, on the subject of anonymity let me say this; the person speaking is not important, but what they say is. I could be a bike messenger or a doctor and it would not change the fact that a national Single Payer healthcare system (HR 676) is our best hope of getting our economy back on track. For some this type of healthcare is a dream, for others it smacks of socialized medicine.
Single Payer healthcare is NOT socialized medicine. Socialized medicine is when the government both owns the hospitals and hires the doctors. In a Single Payer system the government pays the bills, via taxes, but the services are provided by doctors who own their practices. The individual burden in taxes will be much less than the current average insurance premiums.
For those who fear socialized medicine will have to brave.
A research article which everyone can find at the bottom of the home page of http://www.calnurses.org shows how such a system can create jobs, reduce individual expenditure on healthcare, and yet provide healthcare to everyone. This is no pipe dream. 36 industrialized nations (all with higher rankings than our own) provide healthcare to their citizens. Only the United States allows run-away profits to be had at the patient’s and the nations expense.
Obama has said that healthcare is the primary anchor around our collective necks (I’m paraphrasing), but unfortunately he has said that a Single Payer healthcare system (AKA HR 676) is off the table. Why would he do that? Because that anchor is made of gold.
Only when we take the for-profit-healthscare system “off the table” will we EVER be able to fix the nation from the inside out. And until we do we will neither be FREE or BRAVE.
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» on 05.27.09 @ 08:09 AM
InsuranceTeaseDOTcom has it right. The behavior of the health care industry over the past decades has demonstrated that they will put profit over health care, as should be expected in a private system. The result is that, while we may have the best health care in the world for some folks, others have none. Medicare has functioned essentially as a single payer system for years and actually works pretty well, not to say that Medicare in its current for is THE solution, just that a single payer system can work. Only problem is burgeoning cost, but then that’s a problem in the private system as well. But no one should be fooled into thinking that “the government” is going to pay; the government has no money; only taxpayers have money; it is the taxpayers who will pay. Not that there’s anything wrong with that, as Mr. Seinfeld used to say
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» on 05.27.09 @ 02:46 PM
Hey, Mr. John Locke,
Isn’t it amazing how the ney sayers point to opinion and fear mongering rather than FACTS? It’s almost as if people working for insurance companies are posting these articles… Naw, they’de never do that…would they?
Well, they do these things for profit; PacifiCare fined record $3.5 million Sacramento Bee, Jan. 30, 2008
“... • A Sacramento-area surgeon couldn’t schedule surgeries for more than six months because the insurer was slow to enter his contract in its computer system.
• More than 200 of Watson’s patients incorrectly received letters indicating that he was no longer in the insurer’s network of physicians. Watson lost about 25 percent of these patients but continued to see others without getting paid for about eight months.
• A consumer spent 11 months trying to get claims paid for his family, including an autistic child. His wife postponed EKG stress tests, fearing the family could be forced to pay for the procedures. Regulators contend PacifiCare never specified what information was needed to reconsider the denied claims…”
Health Net fined $1M over policy-cancellation probe Sacramento Business Journal, Friday, November 16, 2007
“...The state has been investigating health plans since 2005 amid questions about whether they illegally rescinded health policies without proving that those covered willfully misrepresented themselves on their applications. The questions have been highlighted by a lawsuit filed by a California breast cancer patient whose coverage was canceled by Health Net during her treatment…”.
“... State investigators asked on Oct. 17 and on Nov, 6 whether Health Net had compensation or bonus programs that were connected to rescinding coverage and were told it did not, according to DMHC. On Nov. 8, documents produced in connection with a lawsuit against Health Net proved that it had such policies…”
And that’s not all, folks, the for-profit-health-insurance-industry would steal the gold out of your teeth and and take the brass handles off your coffin if they could. Consider the following-
California court rules against insurer over policy cancellations By Amy Lynn Sorrel, AMNews staff. Jan. 21, 2008.
“...On Dec. 13, 2007, the California Dept. of Insurance levied a $12.6 million fine against Blue Shield for a host of violations regarding improper policy cancellations and claims processing. Duncan Ross, president of Blue Shield of California Life & Health Insurance Co., contested the allegations in a statement. He called them a “radical departure from the department’s longstanding interpretation of the law…”
Bear in mind, this is just a small sample of what they have been caught doing. The problem is far bigger than we can possibly see in one glimpse. It’s the nature of the beast. The mega-Health-Conglomerates, whether they are for-profit institutions or so-called non-profit HMO’s, are at odds with the system of providing health care to those who pay for it, the need to fund their institution, and/or providing profit to their numerous gluttonous shareholders. Kaiser-Permanente is a good example of an HMO/for-profit institution that does a lot of good work, interspersed with some really reprehensible behavior. From dumping patients on skid row (Kaiser Permanente is accused of leaving a homeless woman to wander on skid row. By Richard Winton and Cara Mia DiMassa, Times Staff Writers November 16, 2006 ), mismanaging their kidney transplant program Kaiser mismanages Kidney Program, gets 2M$ fine. htttp://www.mercurynews.com/mld/mercurynews/news/breaking_news/15245674.htm to allowing their facilities to fall into medical bedlam, Kaiser takes the cake, as noted below;
12/20/07 - A physician who sued Southern California Permanente Medical Group (Medical Group) and Kaiser Foundation Health Plan, Inc. (Kaiser) (collectively, defendants) based on claims that his employment was terminated in retaliation for “advocating medically appropriate care” was properly awarded $200,000, a California appeals court ruled in an opinion posted December 20.
“Kaiser-Bellflower’s policy was to keep patients waiting in the emergency room until they left without treatment,” the appeals court said. “Between 1999 and 2006, more than 5,000 patients were sent home without receiving medical screening exams.”
http://legalstuff.kaiserpapers.info/markwoodsvkaiserpermanente.html
The problem is not that hospitals do good work, obviously. We, as a society, accept that problem do arise, and that mistakes can and do happen. But when mismanagement becomes endemic, when patient care suffers because of the bottom line, when the very system in place is the problem, then it is time to change the entire system. It is interesting to note that one of our founding fathers, Benjamin Franklin, created numerous social institutions which we still use today. I can just imagine what he must be thinking right now…
“The post office is doing okay, but I wish they would pick up the pace. Both the fire department and the police are doing the best they can, given the resources they receive. I wish the people down there would wise up and give them the funding they need! The public library is my pride and joy, I am so glad they haven’t closed too many of them. But this insurance thing, I knew that was going to come back and bite me in the ass!”
There are those diehard capitalists who urge us to just stick with the system. They say that market forces are the only things needed to fix the problem, when people choose or don’t choose an insurance plan they are sending a message that is heard loud and clear. I say it is clear as mud, looked at through a pair of binoculars, from the wrong side, facing the wrong direction. People don’t know what they are buying. People have no way of evaluating one plan verses another. Furthermore, by making a person pick a specific plan that is supposed to “cover their needs” they are being asked to guess at what diseases or problems they might get in the future.
What we do know is this, the for-profit-health-insurance industry is not delivering what they promise. If they don’t deliver I say stop paying them. How’s that for market forces?
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» on 06.28.09 @ 02:21 PM
Illegals aliens, Government sponsored social servives, our failed welfare system that needs to end, high taxes, useless unions, over staffed and way over paid civil servants, and over regulations on business—we are bankrupt—
Get rid of it all and start over—
Wages start at $8.00 hr and up.
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