Another economic dip coming?

hobos

JUNE 21, 2010

By JOHN SEILER

Here’s something Meg Whitman and Jerry Brown should be debating.

As the California budget is haggled over by the governor, Legislature and the powerful government unions, one thing everyone assumes is that the California economy will gradually improve. That it will keep lifting its head out from the mire of the 2007-09 recession. Gov. Arnold Schwarzenegger’s May Revise of his fiscal 2010-11 budget proposal observes that “there continue to be signs the economy is slowly improving.” And:

The national and California economies improved between the Governor’s [January] Budget and the May Revision. … In fact, the good signs are coming at an increasing rate, especially in the national economy….

Based on better than expected indicators that have been released since the Governor’s Budget forecast, most notably GDP growth in the final quarter of 2009 that was much stronger than anticipated, the outlook for the national and state economies is more positive, but remains cautious.

But the proposal does caution that, “Despite these positive developments, the recovery remains fragile.”

However, what if even these cautious statements are not cautious enough? When working on a budget, a prudent family or business takes into account the possibility of economic calamity. Such a family or business saves a decent amount of money in a “rainy day” fund. And even in modestly bad times, it sharply cuts expenditures well below income to insure that debt is not accrued that will severely damage, or even bankrupt, the family or business.

In recent decades, California has never taken such precautions. Even when times were good and the tax money was rolling in, as during the dot-com boom of the late 1990s or the real estate-boom of the mid-2000s, instead of saving some money for use during a recession, virtually all the surplus tax money collected was spent on increasing the budgets of state agencies and pension spiking. No “rainy day” fund ever was funded.

Because there will be no cushion should the second half of a “double dip” recession hit within the next year or too, it’s worth contemplating what will happen.

Recession Part Two in 2011?

Some of our best economists are warning that 2011 well could bring a renewed recession. Even if they are proved wrong – as everyone hopes will be the case – prudent budget crafting should take into account their warnings.

Because most of President Bush’s 2003 tax cuts expire in 2011, economist Arthur Laffer is forecasting a major recession. Laffer is the head of Laffer Associates. Formerly located in San Diego, it recently relocated to Nashville, Tenn., to escape California’s high taxes. In particular, the 10.55 top California income tax rate compares badly with Tennessee’s 0 percent. Laffer helped craft Proposition 13, the 1978 property tax cut measure in California, and President Reagan’s tax cuts – both of which formed the foundation of  30 years of California prosperity.

In the June 6 Wall Street Journal, Laffer wrote:

On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush’s tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.

But hasn’t the economy been growing since the middle of 2009, when the recession ended? Yes. But the reason is that taxpayers, anticipating getting hit with the 2011 tax increases, are squeezing as much economic growth and profit into the months before then.

Here’s the scary part. Laffer explained:

Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.

In a discussion with me, Laffer also used an analogy to a sale, which I’ll adopt for our purposes. Suppose a store offers a 25 percent-off sale for the July 4 weekend, which is coming up. Predictably, sales and profits will rise that weekend. But the day after the sale ends, sales and profits will be lower than usual.

For a government, lower income by businesses and citizens means a recession. And it means a lower tax base, leading to fewer taxes collected – and a bigger state budget deficit.

California tax cuts

It’s true that Gov. Schwarzenegger’s record $13 billion in tax increases of 2009 expires next year – assuming he and the Legislature don’t extend the tax increases another year to close this year’s $19 billion budget deficit.

But even assuming the tax reductions go into effect in California, they won’t be big enough to discourage people and businesses from leaving for tax havens such as Texas. Consider:

In 2011, the top federal income tax rate will zooms from 35 percent to 39.6 percent. For a Californian in the top tax bracket, that means tax rates of:

In 2010: 45.55 percent (35 percent federal plus 10.55 percent state) – current marginal tax rate.

In 2011: 49.9 percent (39.6 percent federal plus 10.3 percent state) – marginal tax rate next year, in 2011, a 4.45 percentage-point increase.

In 2011 – moving out of California: 39.6 percent (39.6 percent federal plus 0 percent state) –  marginal tax rate if you move to Washington, Texas, or some other state with no state income tax.  That’s a 5.95 percentage-point overall tax cut, even after the federal tax increase.

The meaning for California

In my call to Dr. Laffer, I asked him about how the federal tax increases directly would affect California. “California is a part of the United States, and will be affected directly as a consequence,” he told me. “The higher tax rates will make California more vulnerable than most other states – although not all of them.”

As I noted in a previous CalWatchDog.com piece, a study Laffer conducted with the American Legislative Exchange Council (ALEC) included California in the category “States That Do Everything Wrong.” Other states in that category were New York, Michigan and New Jersey. Since then, rookie New Jersey Gov. Chris Christie has been cutting budget waste and taxes. So perhaps it will drop out of that dismal group.

“People don’t work to pay taxes,” Laffer continued. “They work for what they take home after paying taxes. States with the highest tax rates will be the most disadvantaged. California is right at the top of that pile. States with the most debt will be especially burdened.”

For his ALEC study, Laffer came up with the “Moving Van Effect,” gauging how many people were moving out of one state to another state. California saw 1.4 million leaving the state between 1999 and 2008, second worst after New York’s 1.7 million leaving.

Laffer said he expects California to maintain a high Moving Van Effect. “California economy is not where anyone wants to be if they care about economics.”

Still a great place…

I got more perspective from David Zetland, Wantrup Fellow in Natural Resource Economics and Political Economy at the University of California, Berkeley, and editor of the Aguanomics.com Web site on water policy. “As goes the nation, so goes California,” he told me of what would happen if the economy tanks in 2011. “Besides the obvious (lower tax revenues, higher unemployment), there will also be an Uh-oh effect – people will really dig in and cut back on spending, to make sure that they do not end up on the streets.”

As to whether a renewed recession would encourage more jobs to leave California, he replied, “Yes and no. Maybe the government will realize that reform is necessary. If there’s no change, then existing ‘hanging on’ businesses may call it quits or leave the state.”

As to how big the state budget deficit might get in another recession, he said it was difficult to speculate. But it could get “bigger, and maybe much bigger. Falling income taxes and rising expenses are an ugly pair. If you need a number, try $25 billion.”

He also doesn’t think a new recession would be a spur to more Californians leaving. The question, he said, is: “Will there be more jobs elsewhere, i.e., will other states recover faster? If not, and housing prices drop again, then they will either be trapped in houses (underwater) or able to afford cheaper houses. Moving is financially and emotionally costly, so people will not leave unless things are obviously better elsewhere. And others will fill their places. California is still a great place, government aside.”

John Seiler, an editorial writer with The Orange County Register for 19 years, is a reporter and analyst for CalWatchDog.com. His email: [email protected].

20 comments

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  1. StevefromSacto
    StevefromSacto 21 June, 2010, 10:02

    “As the California budget is haggled over by the governor, Legislature and the powerful government unions.”

    Yeah sure, John, and agribusiness, the oil companies, big pharma and the insurance industry are just sitting by and doing nothing. When are you going to stop with the Alice in Wonderland b.s. that only the unions have any power in California and that big business and the wealthy haven’t any?

    Reply this comment
  2. StevefromSacto
    StevefromSacto 21 June, 2010, 10:04

    This just in:

    State employees are not the budget culprits

    by George Skelton, Los Angeles Times

    It’s the summer budget-brawling season in Sacramento, a time for regurgitating old myths and simplistic solutions.

    One persistent myth about the perpetually bleeding state budget is that it’s all the fault of public employee unions.

    They are to blame for some things: bullying liberal allies they deem insufficiently subservient (Senate leader Darrell Steinberg [D-Sacramento] is the latest target); blocking reforms they feel threaten members (teacher unions are notorious); and driving up retirement benefits to unsustainable levels (CHP officers, prison guards and civil servants are all guilty).

    » Don’t miss a thing. Get breaking news alerts delivered to your inbox.

    But none of that really contributes to the $19-billion deficit projected for the state general fund.

    Another myth is that California government can cut its way out of the hole. Sometimes when government cuts spending, it actually costs money.

    In truth, California’s budget nightmare stems from a devil’s brew of sins: lack of discipline on both spending and tax-cutting in the past; an outdated and unreliable tax system too susceptible to economic booms and busts; the unhealthy dependence of local governments on Sacramento; and a dysfunctional state budgeting process that requires a gridlock-generating two-thirds majority vote.

    Based on my e-mail, many people believe that the way for Sacramento to make ends meet is to cut state employees’ salaries by, say, 10%. Well, in the last year, most have been cut by 14% through furloughs. And the state still has a $19-billion projected deficit.

    For the fiscal year starting July 1, Gov. Arnold Schwarzenegger is proposing to cut salaries by 5%, require workers to contribute an additional 5% of pay to retirement and cut the workforce by 5%. That would save a mere $1.8 billion.

    Even if Schwarzenegger could fire every state employee under his control — roughly 230,000 — it still wouldn’t balance the books.

    “Fire every prison guard, every CHP officer, everyone who works at the DMV, everyone who works for the state parks system … and you’re still not there,” notes H.D. Palmer, spokesman for the state Finance Department.

    That’s because roughly 70% of the state general fund flows out to local governments and schools, one of the unintended consequences of Proposition 13, which slashed the property tax 32 years ago.

    And those pension costs? The governor has budgeted $3.8 billion in state contributions for the next fiscal year. But only $2.1 billion of that would burden the bleeding $83-billion general fund. The rest would come from self-sustaining special funds.

    So even if employee pensions didn’t cost the state a cent — an impossibility — the savings would fill only 11% of the general fund deficit hole.

    Pressured by politicians and a private sector with pension envy, four public employee unions last week reached agreement with the Schwarzenegger administration on some retirement rollbacks for future hires.

    The unions represent about 10% of the governor’s workforce, including firefighters, Highway Patrol officers, health and welfare personnel and psychiatric technicians.

    The pacts return pensions for future employees to roughly the levels that existed before then-Gov. Gray Davis and the Democratic Legislature boosted benefits substantially in 1999. And that rollback is long overdue.

    But the grand savings? All of $72 million a year. And only $43 million of that helps the general fund.

    The state gain from the union agreements derives from increases in employee contributions, a workforce cut and one unpaid day off a month. The actual pension rollbacks will help future generations balance the state books, but they’ll be of no use to current budget-writers.

    The administration also is negotiating with other unions that represent most of the remaining employees. If the same deal is cut for all workers, it would hardly be a budget-balancer — filling only about 6% of the hole.

    So lawmakers need to whack away at spending. But some cuts result in no savings or actually increase costs — if not for the state, for local governments.

    If Schwarzenegger, for example, succeeds in his effort to close down the state’s main welfare program — a $1.2-billion savings — that “clearly would have a significant impact on the counties,” Palmer concedes.

    That’s because counties legally must provide the safety net of last resort for the poor with their general assistance programs. Dan Carson, deputy legislative analyst, estimates there’d be a cost shift to the counties of “at least $1 billion” if the Legislature accepted Schwarzenegger’s proposal. Which it won’t.

    Schwarzenegger also is trying to cut spending on In-Home Supportive Services by $750 million. But that could force many frail, elderly people into much more expensive nursing homes. This would significantly jack up Medi-Cal costs.

    The governor has proposed scrapping the state’s adult day healthcare program to save $135 million. It serves mostly disabled, chronically ill or elderly poor, some with dementia. This could propel many into emergency room care or even nursing homes and wind up costing the state more.

    “These are folks who are at risk and are right there on the edge,” says Dr. Rafael Amezcua, medical director for AltaMed Health Services, a major provider under the program.

    Palmer rationalizes: “We’ve got to close a $19-billion gap. And to do that without raising taxes, there’s going to be some collateral effects.”

    Effects such as more misery for a lot of people — and maybe even higher costs for the state.

    There’s much denial about the true causes of California’s fiscal fiasco. And until the real culprits are confronted, the Legislature will keep passing unbalanced, gimmicky budgets rooted in the rhetoric of myth.

    Reply this comment
  3. John Seiler
    John Seiler 21 June, 2010, 11:53

    “pension envy.” Wrong. I don’t envy the govenrment worker’s Lucullan pensions. I just don’t want to be robbed into penury to pay for them!

    Reply this comment
  4. StevefromSacto
    StevefromSacto 21 June, 2010, 15:07

    Lucullan? Wow, even though it’s generally used in conjunction with food, that’s quite the synonym!

    The issue, as I pointed out to “tough love” is that while some pension benefits, like for certain safety employees, might be extravagant, many are not. I have no quarrel with ratcheting back on some of the really high pensions or stopping pension spiking. But I think it’s wrong to equate the file clerk with DMV with Lucullan pension benefits.

    And even if you were to slash all pension benefits, it would not have a major impact on the state budget, contrary to the “rhetoric of myth.” That’s what Skelton was trying to say.

    Reply this comment
  5. John Seiler
    John Seiler 21 June, 2010, 16:35

    Well, we’ll see.

    The point of the article was that rough times are ahead. Save your money now.

    Reply this comment
  6. John Seiler
    John Seiler 21 June, 2010, 18:13

    And this, StevefromSacto: My article warned that we ought to be ready for another economic downturn. So, what if it happens?

    What if the DOW drops back down to 8,000, where it was recently? What if housing prices lose their recent gains? Then California’s tax receipts from capital gains go back to near zero. Income tax and sales tax receipts also drop.

    And CalPERS and CalSTIRS’ funds drop, causing a bigger funding gap that has to be made up for by taxpayers.

    So the budget deficit, instead of being $19 billion, rises to $40 billion.

    The state’s credit rating drops to junk-bond status, meaning the cost of loans rises, cutting more out of the budget.

    Then all this lasts several years.

    Then what? Then state pensions, pay, programs, everything is cut — all of it. You couldn’t raise taxes enough, no matter what you did, to make up for such a long-term economic stagnation.

    As with Europe, in America the welfare state is going broke. I long predicted this would happen once the baby boomers began retiring, which happens in 2011. They didn’t have enough kids to pay for all of the system, so the system is breaking.

    I suggest a reading of Sartre’s play, “No Exit.” In it, he coined his best-known phrase: “Hell is other people.”

    Actually, Hell is a California budget.

    Reply this comment
  7. EastBayLarry
    EastBayLarry 22 June, 2010, 06:52

    Let’s not forget the costs of over regulation.
    You want businesses go start or grow in California and generate tax income? Then scale back on the abusive regulatory environment.
    Especially repeal AB32!

    Reply this comment
  8. Tyler
    Tyler 22 June, 2010, 10:30

    Why is stevefromsacto always on the side of unions & politicians? Every time there is any negative news about how screwed up our current system is, he gets all offended and acts like it isnt true. Every time there is another story about the hack politicians & unions teaming up to screw the taxpayers instead of making cuts that should have been made years ago, Steve jumps in and basically says the taxpayers deserve to be screwed. I would be willing to bet that he is either a public employee or he works in politics.

    Steve, can you explain why the union pension funds can raid the general tax fund to make up for their horrible/corrupt investing methods? If they cannot handle money properly, they should be held accountable, they shouldnt get a bailout every time they screw up. Taxpayers are forced to give up more of their money so the unions do not have to suffer the consequences of their actions, and that is complete crap.

    Nobody in the private sector is getting money put back into their 401K to make up for the money they lost. How about the public employees start having to deal with the same reality that the rest of us live with. They can invest their own money for retirement and if they are smart about it, they will have plenty of money, if they make bad decisions, they will have to keep working until they save enough. There is no reason why their financial wellbeing should be any more important than the rest of ours.

    Reply this comment
  9. StevefromSacto
    StevefromSacto 22 June, 2010, 17:04

    Hack politicians and unions, eh? That’s always a prequel to a nice, reasonable argument…NOT.

    The current problem with the pension fund is due to the fact that the stock market crashed. Remember that? It damn near destroyed our 401(k)s and it really hurt CalPERS and CalSTRS too. Stop with the crap about “horrible/ corrupt” investing method. Unitl it tanked in 2008, CalPERS had gone from $160 billion to $225 billion in assets in less than five years. I don’t give a damn how smart you are, everyone took a bath in 2008-09. To blame it on the unions is a joke.

    Read an interesting piece the other day that said that the real reason that businesses are fighting against public pensions is not because they oppose spending tax money on them, but rather because they want to keep private pensions and benefits low. That makes a lot of sense to me.

    If you spent as much time trying to get the private sector to improve benefits for workers, instead of attacking them for the public sector, we’d all be a helluva lot better off.

    You tough love, and the other right wing clones remind me of that wonderful comment by 18th century Scottish playright Andrew Lang: “He uses statistics as a drunken man uses lamp-posts… for support rather than illumination.”

    Reply this comment
  10. EastBayLarry
    EastBayLarry 23 June, 2010, 05:43

    StevefromSacto: I think the point Tyler is trying to make is way should CalPERS, et al fare any better than the rest of us at the expense of tax payers? Don’t forget us taxpayers were hurt as much or more as any union pension plans were.

    Reply this comment
  11. StevefromSacto
    StevefromSacto 23 June, 2010, 09:14

    Larry, that’s the perfect definition of what George Skelton called “pension envy” (see above).

    Reply this comment
  12. Tyler
    Tyler 23 June, 2010, 10:23

    The reason why CalPERS & Calsters was able to grow at such ridiculous rates is because they are able to make risky investments that reasonable people would never even consider, because if the bottom drops out of it, Calpers & Calsters can just go to the general fund and get their money back, they dont have to figure in the worst case scenario when making investment decisions. The rest of the world has to consider RISK when they make investments. The reason why they were so devestated when the market crashed is because they had a disproportionate amount of their holdings in crap investment products.

    And no, there is no pension envy going on here, I have no problem with people being able to retire without being forced to live on cat food and cereal. I do have a problem with the fact that tax payers are being forced to pay for it twice. We pay for it initially, then the fund managers funnel the money to the highest bidder, the money gets lost because the investments are crap, then the tax payers have to pay again to make up for the lost money. To make the situation even worse, the pension funds are drained even more by the pension spiking & BS disability scams that run rampant through our public employee unions.

    Since when does using common sense constitute someone being a “Right Wing Clone?” If I see something wrong & unethical I will point it out. As far as I can tell, that should be something that everyone does, no matter if your on the right or the left.

    Also, how long have you been holding on to that quote, just waiting for an opportunity to use it? You must have been really itching to get that one out because it was really forced. It was not relevant and did not even fit the context of the situation. I did not use any statistics to start with, so how did I use any statistics for support? Nice try though. Too bad you had to waste a cute quote when it wouldnt be appriciated. Better luck next time.

    Reply this comment
  13. StevefromSacto
    StevefromSacto 23 June, 2010, 12:13

    I guess CalPERS and CalStrs can’t win. When they lose money you complain. When they make money, you also complain about how they do it.

    I agree that everyone should point out things that are wrong and unethical. But unfortunately, you and many others on this “impartial” web site would have us believe that the only people who ever do anything wrong or unethical are public employees, unions, and Democrats. Not a word about corporate tax breaks, or preferential treatment of the oil companies, or PG&E spending $40 million of our money (rate payers) to try to wipe out competition in the energy field.

    Reply this comment
  14. Tyler
    Tyler 23 June, 2010, 12:45

    Let me clarify this since it seems a little hard for you to comprehend. I wouldnt care how or where Calpers or Calsters invested their money if they were the ones who had to deal with the consequences of their actions, however, when they come and grab more tax money to make up for their failed investments, you better believe I have a problem with it. There is no reason why Calpers & Calsters should receive any money from our taxes because their investments didnt work out well. Can you seriously sit there and say that you believe the taxpayers should be on the hook for the money lost by Calpers & Calsters? Even though it was those unions who decided where that investent money went. They decided to put that money in a bad investment, why should they not have to deal with the consequences of their actions?

    I have no problems with individual union workers, I have a problem with the way the unions are run and the way that they abuse bothe their own members and the taxpayers. I also have a problem with abuses by private companies. I believe that companies should be held accountable for any laws they break or damage they cause. I am not familiar with the corporate tax structure in general, so it is not something I can really comment on, other than the fact that if those corporations are taxed exessivly by our government, they will simply relocate to a state or country that is not as abusive, and the thing that you forget is that it is those businesses that create the wealth in our state & country. The public employee unions do not create anything that adds value to society(other than a few depts that provide neccessary services like public safety like Law enforcement & fire), they consume the tax dollars paid by those companies & people who actually create valuable goods & services. If you lose all of those businesses, you will have nobody to pay taxes that pays the salary & benefits of all of the public employees, so those corporate tax breaks benefit the unions as well.

    And im not sure if you noticed, but those corporate tax breaks and the preferential treatment of oil companies are both GOVERNMENT actions, so once again, it is the corrupt culture in our government that you have a problem with. So it looks like we finally found something we can agree on! I feel so close to you Steve!!!

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  15. StevefromSacto
    StevefromSacto 23 June, 2010, 15:44

    But you haven’t said squat about the excesses of the corporations and the oil companies, Tyler, old buddy. It’s anti-union and anti-government all the time.

    Reply this comment
  16. Tyler
    Tyler 24 June, 2010, 09:21

    What is wrong with companies making money? Many of those companies are publicly traded and many unions just happen to be shareholders, so those companies are obligated to operate in a manner that will maximize profits. Those companies also have an obligation to operate in a responsible & legal manner and those who dont should suffer the consequences.

    Do you think companies should just stop making money once they hit a certain amount of profits? They are simply meeting the demand of the market, which is the cornerstone of our society, so I see no problem with corporations making money, no matter if they are Oil companies, Solar panel companies, Electric Car Makers, etc.

    I am not always anti-union & anti-government, I am against those institutions that are overrun with corruption and abuse. Our government has been over stepping its boundaries in many aspects of our lives and neglecting the primary responsibilities that a government in in place for, all in a corrupt & abusive manner. The unions of so called “Public Servants” only care about obtaining overinflated contracts that are economically unreasonable, they couldnt care less about serving the public. They do not care that those contracts are continuously leading to the decline of quality of our schools and all other aspects of society. They contribute to campaigns and call in favors to get these contracts pushed through and everyone can see whats going on, its no secret. I suppose since you benefit from all of that corruption/deal making/calling in favors, you are going to try to defend it and deflect attention to a different unrelated subject like you do on every subject.

    Reply this comment
  17. StevefromSacto
    StevefromSacto 24 June, 2010, 20:03

    But you ONLY talk about government as an “institution that is overrun with corruption and abuse.”

    No mention of the corporate and financial excesses that led to the latest recession. Bernie Madoff was just making money; nothing wrong with that.

    And one more time, Tyler, I AM NOT A PUBLIC EMPLOYEE AND I DO NOT “BENEFIT FROM CORRUPTION/DEAL MAKING/CALLING IN FAVORS. I am just damn sick and tired of working Californians getting blamed for everything while corporate interests get to run free.

    Reply this comment
  18. Tyler
    Tyler 25 June, 2010, 09:24

    If there is so much of the corporate corruption taking place, then what are all of these government oversight agencies for? Isnt it their job to make sure none of that is going on? If the employees in those agencies were competant, a lot of these problems could have been avoided, but all they did was give everyone a false sense of security.

    Bernie Madoff Played off of peoples greed, and if the SEC had done its job, he would have never been able to do what he did.

    You cannot blame the economic collapse entirely on the corporations because there were government regulations, personal stupidity, & personal greed that played a role in it as well. When the government started telling institutions who they had to lend to, that gave some morons the idea to just throw their traditional lending standards out the window. They started giving home loans to people that had no business buying a home, and that happened because of a combination of corporate greed, government regulation, and poor decicion making by individuals.

    You wouldnt happen to be in the public relations business would you Steve?

    Reply this comment
  19. larry gilbert
    larry gilbert 25 June, 2010, 14:57

    John. Thanks for your words of encouragement.

    Reply this comment
  20. Dexter60
    Dexter60 25 June, 2010, 16:55

    John::
    We cannot learn anything by substituting one myth for another:

    “Even if Schwarzenegger could fire every state employee under his control — roughly 230,000 — it still wouldn’t balance the books.
    That’s because roughly 70% of the state general fund flows out to local governments and schools, one of the unintended consequences of Proposition 13, which slashed the property tax 32 years ago.”
    So, to go deeper then.
    Public employee unions? over-priced governance? selective law enforcement? where should we stop?

    BTW –
    Prop 13 did not create the problem of overspending, buying votes with taxpayer money and installing a welfare state on the backs of the few.
    Soak the rich (say corporations) is an indicator of economic ignorance.
    We no longer have a governance with the consent of the law-abiding governed but merely by the demands of the beneficiaries who have no concerns for the law beyond what it serves up to them.
    Laws are written that rig the game and these laws, we are told, cannot be changed — so to find out, when the money is really all gone, even the debts are worthless aren’t they.
    At once to notice over 500,000 government workers in California will be out of a job.
    Basic but painful budget simplification.
    How’s the Hope and Change thing working for you?
    Have a nice day.

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