By John Seiler

He’s no longer in office, but the greatest congressman in American history still is telling like it is. Here’s Ron Paul on the fraud “fiscal cliff” deal imposed on us by the scamsters of both parties in Congress:

“While there was much hand-wringing over the “draconian” cuts that would be imposed by sequestration, in fact sequestration does not cut spending at all. Under the sequestration plan, government spending will increase by 1.6 trillion over the next eight years. Congress calls this a cut because without sequestration spending will increase by 1.7 trillion over the same time frame. Either way it is an increase in spending.

“Yet even these minuscule cuts in the ‘projected rate of spending’ were too much for Washington politicians to bear. The last minute ‘deal’ was the worst of both worlds: higher taxes on nearly all Americans now and a promise to revisit these modest reductions in spending growth two months down the road. We were here before, when in 2011 Republicans demanded these automatic modest decreases in government growth down the road in exchange for a massive increase in the debt ceiling. As the time drew closer, both parties clamored to avoid even these modest moves.

“Make no mistake: the spending addiction is a bipartisan problem. It is generally believed that one party refuses to accept any reductions in military spending while the other party refuses to accept any serious reductions in domestic welfare programs. In fact, both parties support increases in both military and domestic welfare spending. The two parties may disagree on some details of what kind of military or domestic welfare spending they favor, but they do agree that they both need to increase. This is what is called “bipartisanship” in Washington….

“While the media played up the drama of the down-to-the-wire negotiations, there was never any real chance that a deal would not be worked out. It was just drama. That is how Washington operates. As it happened, a small handful of Congressional and Administration leaders gathered in the dark of the night behind closed doors to hammer out a deal that would be shoved down the throats of Members whose constituents had been told repeatedly that the world would end if this miniscule decrease in the rate of government spending was allowed to go through.

“While many on both sides express satisfaction that this deal only increases taxes on the ‘rich,’ most Americans will see more of their paycheck going to Washington because of the deal. The Tax Policy Center has estimated that 77 percent of Americans would see higher taxes because of the elimination of the payroll tax cut.”

That explains why Establishment Republicans so opposed Ron Paul in the GOP primaries a year ago: the Establishment wanted to keep the spending scams going, at the expense of taxpayers. Ron Paul would have stopped the scams. So he was stopped in favor of the Republican Establishment functionary Romney, who “lost” to Democratic Establishment functionary Obama.

Read the rest of Ron Paul’s analysis here.

By John Seiler

Throughout the whole phony “fiscal cliff” crisis Democrats kept saying the “rich” had to “pay their fair share” so the middle-class wouldn’t get a tax increase. Republicans insisted that they were against all tax increases.

Both Democrats and Republicans then sold most of us out by jacking up taxes on 77 percent of Americans to make sure pork-barrel funding went to Hollywood and other special interests. Now you know why Hollywood honchos and actors supported Obama: They got a tax break.

Now, get this. Reports the Mail online:

“Middle-class workers will take a bigger hit to their income proportionately than those earning between $200,000 and $500,000 under the new fiscal cliff deal, according to the nonpartisan Tax Policy Center. 

“Earners in the latter group will pay an average 1.3 percent more – or an additional $2,711 – in taxes this year, while workers making between $30,000 and $200,000 will see their paychecks shrink by as much as 1.7 percent – or up to $1,784 – the D.C.-based think tank reported. 

“Overall, nearly 80 percent of households will pay more money to the federal government as a result of the fiscal cliff deal.”

It wasn’t a “fiscal cliff deal” but a plain old ripoff. The whole months-long drama about the “fiscal cliff” was just a misdirection as they prepared to rob us again.

Why do we put up with it?

By John Seiler

Congress and President Obama just worked out a deal for massive tax increases that will slam Californians. The federal tax hikes hit even the middle class, whose payroll taxes will rise 2 percentage points.

The federal wallop comes on top of the $6 billion of Proposition 30 tax increases voters passed two months ago. The tax increases almost certainly will spark a new recession and increase unemployment.

Gov. Jerry Brown campaigned for his tax increase by appealing to envy. He insisted that the rich must “pay their fair share.” That never was defined. Is it half of income? Or 75 percent, as in France? Why not 100 percent?

And he didn’t care that federal taxes likely would go up, as indeed has happened.

Including the Obamacare and other tax increases, the top federal rate personal tax rate rises from 35 percent to 41 percent.

Add the new top California personal tax income tax rate of 13.5 percent, and the combined top rate here now comes in at 54.5 percent.

However, by moving to Nevada, Texas, Washington, Florida or another state with no state income tax, that rate drops to 41 percent (the federal rate alone), or a 25 percent decline. Plus other taxes would be lower. And real estate is a lot cheaper. Of course, California’s balmy climate also would be gone. But as the Rolling Stones scream on their 50th anniversary tour, “You Can’t Always Get What You Want.”

The Obama-Boehner “fiscal cliff” tax increases could sabotage Brown’s budget plans. In a few days the governor will release his new budget for fiscal 2013-14, which begins on July 1. It will project a strong, growing economy that will bring in oodles of new revenue, in particular from Prop. 30.

But tax increases usually bring economic decline.

Clinton’s 1993 tax increase

Before I cite some examples of decline, let me deal with the tax increase Democrats always bring up: Bill Clinton’s from 1993. The recent “fiscal cliff” tax increases were touted by Democrats as bringing back the top 39.6 percent rate Clinton and the Democratic Congress of 1993 imposed, a rise from 35 percent in 1992. That supposedly supplied the oomph in the economic growth for the rest of the 1990s.

President George H.W. Bush’s 1990 tax increase broke his “Read my lips, no new taxes!” solemn pledge he made at the 1988 GOP national convention. It helped get him elected over Michael Dukakis. The tax increase slammed the country into a recession that led to Bush losing to Clinton in 1993.

Tax policy sends messages. In this case, the message was: “All is hopeless. Not just Democrats, but Republicans favor tax increases. There’s no brake on looting the economy. Get out while you can.”

The 1993 Clinton tax increase was different. The key was this: It passed by just one vote in the U.S. Senate and one vote in the House of Representatives. The message was: “Even Democrats are reluctant to raise taxes, so there aren’t going to be any more. Get back to work making money.”

And that’s just what happened. We haven’t had any major federal tax increases until now.

But notice also what happened after the 1993 Clinton tax increase. In 1994, Democrats lost control of Congress. Republicans were in charge of both houses for the first time in 30 years. Message: “No way are taxes going up.”

Then, in 1996, Clinton agreed with the Republican-run Congress on a tax cut, dropping the top capital gains tax rate from 28 percent to 20 percent. That freed more capital to help fuel the dot-com boom of the late 1990s. Message: “Even a Democratic president wants tax cuts and jobs growth.”

Clinton was a master politician (still is). He actually followed his 1992 campaign slogan, “We must have the courage to change.” In his case, he dumped worn-out Democratic obsessions with envy and tax increases, supported tax cuts and was re-elected in 1996, beating Bob “Tax Collector for the Welfare State” Dole.

Tax increases

Now let’s look at the tax increases that have caused recessions.

In 1968, President Lyndon Johnson imposed a 10 percent income surtax to pay for the Vietnam War and his Great Society welfare programs — his “guns and butter” policy. The result: the 1969-70 recession.

In 1971, President Nixon imposed his infamous “Nixon Shock,” which raised taxes and tariffs and took America off the gold standard. The resulting inflation boosted the economy artificially through 1972, helping Nixon run up a 49-state landslide in the 1972 election. Then a deep recession hit in from 1973-75.

This began the the “stagflation” economy of the 1970s: stagnation plus inflation. Robust recovery began only when Ronald Reagan’s tax cuts dug in with full force in 1983. (Although the tax cuts were enacted in 1981, Reagan later admitted he made a mistake by delaying some of the cuts for two years, which also delayed the recovery.)

Reagan did increase some taxes. But overall, he dropped the top income tax rate from 70 percent to 28 percent by 1986, a major accomplishment.

The Reagan Prosperity ended with the 1990 Bush tax increases, discussed earlier in this article. In California, the Bush recession was made worse by Gov. Pete Wilson increasing taxes $7 billion a year in 1991. Doing so, instead of increasing state revenues, actually decreased them by $2 billion to $40 billion a year. Economic recovery here was delayed until the taxes ended in 1995.

The early 2000s recession probably was caused not by direct tax increases, but by the Federal Reserve Board of Alan Greenspan imposing deflation, as Jude Wanniski described it at the time. That didn’t last long, as the Fed under Greenspan inflated the dollar after 9/11.

The 2007 recession and 2008 economic collapse were caused by tax increases only in the sense that the 2001 and 2003 Bush tax cuts were not permanent, causing uncertainty in the late 2000s. Other factors were larger, including new Fed Chairman Ben Bernake continuing Greenspan’s inflationary policies. Those policies included ultra-low interest rates which, along with too-easy lending rules, caused the housing boom-bust.

The ‘message’ of tax increases 2013

Will the new tax increases be different? Will they continue prosperity instead of sparking a new recession?

Let’s return to the important concept of how polices send “messages.” The message now is: “The Republican leadership, and many GOP senators and representatives, think tax increases are OK. The Republicans no longer have the guts to stand up to the demands for tax increases by Obama and other Democrats. So even more tax increases are likely.”

In California, the “message” is: “Voters just passed two tax-increase initiatives and put supermajorities in charge of both houses of the Legislature. There is no brake on taxing and spending except Brown, who pushed through the tax increases. And if he vetoes a tax increase, the supermajority could override him.”

At both the federal and state level, the “message” is that the appeal to envy works. The call for the “rich to pay their fair share” resonated.

But “the rich” are the entrepreneurs and business owners and jobs creators. Take more money from them, and they have less to invest in business and jobs creation. To avoid paying their unfair share — and in many cases just to survive — “the rich” will leave California and even the United States.

Many of “the rich” are family businesses that now could pay the increased death tax. Which means that when the older generation dies, the younger generation will have to sell the company to pay the death tax, destroying the family ownership that is essential to the success of many such companies.

Within the next few months we’ll see how hard the tax increases have sapped the economy. If history is any guide, it’s going to be bad. The reduced economic activity could end up reducing revenues to all levels of government, ironically making the fiscal and debt crises worse.

By Katy Grimes

I hope you don’t need $1,635, because that is what the average tax increase will be on the majority of Americans.

According to the Congressional Budget Office, 80 percent of American households with incomes between $50,000 and $200,000 will be out more than $1,600 next year. And that’s just the starter.

The much hyped last-minute fiscal cliff deal negotiated Jan. 1 between Vice President Biden, Senate Minority Leader Mitch McConnell, R-Kentucky, and President Barack Obama, cuts only $15 billion in spending but increases tax revenues by $620 billion. The 41:1 ratio of tax increases to spending cuts is no deal for Americans.

The tax increase is primarily due to the expiration of a payroll tax cut, according to the Tax Policy Center in Washington.

While the bill, known as the American Taxpayer Relief Act of 2012, will protect millions of middle-class taxpayers from tax increases set to take effect this month, it will increase tax rates on wages and investments for households making more than $450,000 a year.

This is the first time in more than 20 years that a huge tax increase has been approved with GOP support.

The measure, which addressed the tax increases while holding off sequestration cuts and the debt ceiling, passed with the support of 85 Republicans, including the Speaker who took the unusual measure of casting a vote, and 172 Democrats.

The Deal adds to the deficit

The smelly Senate deal to avoid the “fiscal cliff” will add approximately  $4 trillion to the deficit, according to new  the CBO, and achieves minimal deficit reduction in the early years.

“For a family making median income, they’ll notice an additional $3,500 dollar income tax increase,” Fox News reported. “27 million Americans will be subject to the alternative minimum tax, and additionally, the death tax will increase to 55 percent for estates of $1 million and over.”

The extension of lower tax rates for taxpayers, and the addition of only a patch to the insidious Alternative Minimum Tax would add more than $3.6 trillion to the deficit over the next decade, the CBO said.

Other individual, business and energy tax extenders will add another $76 billion to the deficit.

The latest extension of unemployment benefits will cost $30 billion.

The “doc fix”, a one-year payment patch for physicians who treat Medicare patients, would add $25 billion to the deficit through fiscal 2022.

Pork-laden deal

One of the most egregious aspects of this bad deal is how much pork was stuffed into the bill.

* Perks for Hollywood: special expensing rules for certain film and TV productions

* special tax-exempt financing for New York Liberty Zone, an area around the site of the World Trade Center.

* extension of American Samoa economic development credit

* Green energy — nearly a dozen provisions in the bill would extend green credits and green incentives for plug-in electric vehicles, energy-efficient appliances, biodiesel and renewable diesel, and other alternative energy initiatives.

* The legislation also would kill the part of Obama’s 2010 Affordable Care Act designed to let millions of elderly and disabled people get help at home rather than be placed in institutional care, which tends to be more expensive.

Democrats acknowledge that the insurance initiative known as the Community Living Assistance Services and Support program, or CLASS, is financially flawed but they had argued it should be fixed rather than ended.

The House voted to repeal that provision 11 months ago.

* No $8 per gallon milk: the “dairy cliff” was avoided. Measures to prevent a steep increase in milk prices were averted.

I can hardly wait.

See the Final Vote Results

By Katy Grimes

The Obama administration has a lot riding on California’s implementation of Obamacare, also known as the Patient Protection and Affordable Care Act. How the state implements the new insurance exchanges, and whether or not it is done successfully, will be an important test of nationalized health care.

But a state-run health exchange puts the burden onto the state and the expense ultimately on the taxpayers. The state loses the authority and flexibility needed to best meet the needs of its people… Which is why more than 30 states have told the Obama government that they will not create state-run health exchanges, leaving the Obama administration to build and operate online health insurance markets for more than 30 states. This is an unexpected problem, unanticipated by the federal government when Obamacare was passed in 2010.

But this isn’t a problem for Democratically controlled California government, which will do just about anything for a federal grant.

Politics and health care

Don’t discount the politics involved. The California Democratic Party is clearly hoping that this latest government expansion works. Then again, Democrats think the DMV works.

However, if people don’t enroll, the state stands to lose billions in federal dollars.  Many warn that if this happens, all insurance premiums will rise in California.

The state expects to enroll more than 2 million additional residents in Medi-Cal, the state’s version of Medicaid, and sign up another 2.5 million for subsidized private insurance.

Medi-Cal pays for health care services for individuals receiving welfare.

Marketing and PR on the backs of taxpayers

And California, on the brink of insolvency, plans to spend nearly $90 million in 2013 on marketing and “raising public awareness” about the exchange. The state hired eight public relations firms to come up with the marketing plan using traditional advertising, grass-roots efforts at churches, schools and cultural events, and will even enlist the help of Hollywood in movie theaters and popular television shows.

Implementing this extensive, expensive marketing plan will take a great deal of coordination. But never fear, the state is here, and the state knows how to market to itself.

“In addition, as required, the plan’s elements for outreach include consideration of core principles and opportunities for seamless coordination with public coverage programs and the Project Sponsors: The California Health Benefit Exchange, the California Department of Health Care Services (DHCS) and the Managed Risk Medical Insurance Board (MRMIB) as well as the programs they administer: Medi-Cal, Healthy Families, Access for Infants and Mothers program, Pre-Existing Condition Insurance Plan, Major Risk Medical Insurance Program and other state health insurance programs. The California Office of Patient Advocate will also be providing outreach, education and consumer assistance,” the marketing team plan says.

Expanding subsidized health care – who pays?

The overall goal is to provide health insurance to a “projected” 5 million “uninsured residents” – half of which will qualify for low-income subsidies.

Who is uninsured in California? According to the California Healthcare Exchange, 47 percent are Latinos, 33 percent are whites, 21 percent are African Americans, 12 percent are Asian, and 3 percent are “other.”  And of these uninsured or “eligible,” 2.6 million qualify for subsidies, and 2.7 million don’t qualify for subsidies but will now have “guaranteed coverage.”

If this still doesn’t look like a giant government expansion, I have some lovely swamp land to sell you. It is clearly not based on need. If the government really cared about insuring uninsured Americans, a gap insurance policy would have been created to insure the legitimate 10 million estimated uninsured Americans.

Instead, the Obama administration saw an opportunity to grossly expand government, and jumped on it. While other states ran from creating the exchanges, California’s liberal politicians jumped in as well.

We are already falling off the fiscal cliff, while the state’s Democrats are forming committees to decide how to spend the new tax revenue. California’s real debt is $617 billion – the highest in the entire country.

The real national unemployment rate would be closer to 11 percent if it weren’t for all of the people who have stopped looking for work and completely dropped out of the labor force. And the really real unemployment rate is a separate government number called the “U-6,” rarely reported by the media, which provides an accurate look at how many people are really unemployed.

According to the U-6, California has a 20.3 percent real unemployment rate.

Twenty-three million Americans are struggling to look for any work, nearly one in six are living in poverty, and 47 million people are dependent on food stamps to feed themselves and their families.

California’s real debt is 10 times what Brown and the state Democrats report. Facing insolvency and continually expanding state government, Californians are probably facing a more than just downgrade of medical benefits.

While other states are refusing to expand Medicare or implement the Obamacare health exchanges, California has sold out to the federal government program, and more importantly, the money.  It’s just about the money.

By Katy Grimes

If you really want to cut through all of the media noise about the ‘”Fiscal Cliff,” Rep. Tom McClintock, R-CA4, does this succinctly in a speech on Wednesday.

In a nutshell, McClintock explains: “In their blind pursuit of an ‘eat the rich’ ideology, Mr. Obama and his acolytes are imposing a policy that would utterly devastate hundreds of thousands of middle class families who depend on the jobs these small businesses provide. 

And for what? To wring enough money to fund Mr. Obama’s spending spree for a grand total of eight days. It’s telling that three-fourths of the new taxes he has proposed would be used to finance the new spending that he has also proposed.”

The following is the floor speech by McClintock, who once again schools Congress and the President on the reality of the fiscal cliff, where we are headed, who will really be hurt, and what needs to happen.

House Chamber, Washington, D.C. 
December 12, 2012

Mr. Speaker:

To understand the federal budget mess and the so-called fiscal cliff, it’s important to remember three numbers: 39, 37 and 64. 

Thirty nine percent is the combined increase of inflation and population over the last ten years. Thirty nine percent. 

Thirty seven percent is the increase in revenues during the same period. That’s despite the recession and tax cuts. Not quite keeping place, but pretty close.

Sixty four is what’s killing us. Sixty four percent is the increase in federal spending in that period. That’s nearly twice the rate of inflation and population over the last ten years. 

The spending side of the fiscal cliff is the so-called sequester: automatic cuts in federal spending. To hear some tell it, these cuts will mean the end of western civilization. 

Hardly. After a 64 percent increase in expenditures this decade, the sequester doesn’t actually cut spending at all: it simply limits spending growth next year to about a half a percent. 

I opposed the budget deal that created the sequester last year because it fell woefully short of what Standard and Poors clearly warned was necessary to preserve the nation’s triple-A credit rating. Sadly, that fear was born out. But now, the sequester is all we have. 

It’s true that defense takes the brunt of it, but does our defense spending today really need to be higher – inflation adjusted — than it was at the height of the Vietnam War, when we faced down the Soviet Union and had 500,000 combat troops in the field? 

The sequester isn’t stepping off a cliff – it’s taking one step back from the cliff. 

The tax increases, however, are a different matter. Without intervention, the federal tax burden will balloon 21 percent at the stroke of midnight on New Year’s Eve, taking somewhere between two and three thousand dollars from an average family. This summer, the House passed legislation to protect our nation from such a calamity, but Mr. Obama vowed to veto it and the Senate blocked it. 

Instead, Mr. Obama tells us that he will veto any plan that keeps taxes from going up on those very wealthy folks making over $200,000, who, he says, need to pay their fair share. 

(I suppose fairness is in the eye of the beholder. The top one percent earns 17 percent of all income but pays 37 percent of all income taxes. But that’s beside the point). 

The fine point of it is that a lot of those very wealthy folks making over $200,000 aren’t very wealthy and they aren’t even folks: they’re 1.3 million struggling small businesses filing under sub-chapter S. Our small businesses produce two-thirds of the new jobs in our economy. 

This battle IS very much FOR the middle class. The Congressional Budget Office estimates that Mr. Obama’s tax increase on the so-called wealthy will actually throw some 200,000 middle and working class families into unemployment. Two hundred thousand. And that’s the optimistic estimate. An independent analysis by Ernst and Young puts that figure at closer to 700,000 lost jobs. 

That’s because the President’s taxes would slam 84 percent of net small business income – that’s precisely the income used to support and expand the labor force. 

In their blind pursuit of an “eat the rich” ideology, Mr. Obama and his acolytes are imposing a policy that would utterly devastate hundreds of thousands of middle class families who depend on the jobs these small businesses provide. 

And for what? To wring enough money to fund Mr. Obama’s spending spree for a grand total of eight days. It’s telling that three-fourths of the new taxes he has proposed would be used to finance the new spending that he has also proposed. 

Republicans don’t want to see taxes go up on anyone, period. We don’t want to see this government willfully throw hundreds of thousands of Americans out of work by this policy. 

The President obviously believes that in the 11th hour, Republicans will have no choice but ultimately to protect as many taxpayers as we possibly can, since the only alternative will be tax increases on everyone, including the job creators. He may be right. 

But that would mean a bleak and bitter new year for all those families who will watch helplessly as their jobs evaporate before their eyes. 

Let us pray the President has a change of heart before setting this calamity in motion.

Cross posted on the Flash Report

By John Seiler

Just after I wrote an article yesterday on millionaires avoiding taxes, I met a guy I hadn’t seen in four years. He told me about a friend of his who owns a small factory in Long Beach. The factory does well, and the friend gets a $3 million annual salary.

The friend is leaving California because of the Proposition 30 tax increase, and taking his factory and jobs with him to Texas. By leaving, his top state tax rate on the $2 million of income above $1 million will drop from 13.3 percent to 0 percent. On that alone, he will save $266,000 a year. Other tax savings mean about $300,000 a year just in taxes for his income.

For that, he can take a lot of vacations in California — or Cancun, or Monaco, or Tahiti.

His business also will pay much lower taxes and replace California’s anti-business regulatory climate with Texas’ pro-business climate.

That’s just an anecdote. But CNBC just reported:

“Companies are racing the clock to hand out billions in special dividends before year end—and some of them are taking on debt to do it.

“The latest is Costco, which announced a $7-a-share payout to stockholders Wednesday and is issuing bonds to pay for the $3 billion dividend.

“Fearing a tripling of dividend tax rates next year, companies have found one-time payouts and early payments of quarterly dividends as a way to beat some of the impact of the ‘Fiscal Cliff’.”

Backing Obama

Yet Costco’s executives were big supporters of President Obama’s re-election! In September, Costco co-founder Jim Sinegal spoke at the Democratic National Convention and said Obama was better than Romney for business. He said:

“Business needs a president who has covered businesses’ backs. A president who understands what the private sector needs to succeed. A president who takes the long view and makes the tough decisions. And that’s why I am here tonight supporting President Obama, a president making an economy built to last. See, in order for companies like Costco to invest, grow, hire and flourish, the conditions have to be right. That requires something from all of us.”

Well, Jim, shouldn’t that “something from all of us” be higher taxes on your dividends in 2013 instead of lower taxes on them in 2012?

Shouldn’t you instead be saying now, “Thank you, Mr. President, for increasing our taxes! And we’ll wait till next year on our dividends so our investors pay the maximum for you. We love you sooooooo much! XOXOXOXOXO. Costco.”

But he didn’t. Hypocritically, Costco actually put shareholder interest above political position. Millions of companies and tens of millions of people are doing the same thing, whether they supported Obama, Romney, libertarian Gary Johnson or nobody.

For California, that also means next year’s tax intake is going to be a lot less than Gov. Jerry Brown and other tax increasers expect, even from their beloved Prop. 30.

We may find that Jan. 1 not only is a “fiscal cliff” for the federal government. But for federal, state and local governments it will be — to coin a phrase — a “revenue cliff.”

By Joseph Perkins

California Reps. Zoe Lofgren, D-San Jose, and Ken Calvert, R-Corona, ought to meet up for coffee while they’re back in the Nation’s Capital for Congress’ post-election lame duck session.

The chairs of state’s Democratic and Republican congressional delegations, respectively, should set partisan differences aside — if only for a brief, shining moment — and draw up a list of issues vitally important to their home state, on which both delegations can work together.

If Lofgren and Calvert asked me — and, for some reason, neither has returned my phone calls — I would suggest the following:

The fiscal cliff. Insist that their fellow lawmakers use the lame duck session to reach a bipartisan agreement that prevents the federal government from plunging over the dreaded cliff, otherwise more than $500 billion in federal tax increases, along with more than $100 billion in across-the-board spending cuts, will take effect this coming New Year’s Day.

If Congress fails to make a deal, no state will be more adversely affected than California, which would fall back into recession, plunging the state government into another budget crisis, as a report last week by the state Legislative Analyst’s Office warned.

“We examined one possible recession scenario,” the LAO stated, ominously, “in which state revenues were about $11 billion lower than in our forecast for 2012-13 and 2013-14 combined.”

Military funding.  Accept reductions in defense spending as the Obama administration winds down military operations in both Iraq and Afghanistan, but oppose the draconian cuts slated to take effect through automatic sequestration.

More than 10 percent of federal defense dollars are spent in California, according to a study by Bloomberg Government. That amounts to a $57 billion a year boost to the state economy.

Sharp reductions in defense outlays will be a shock to the state economy, hurting California companies that have long contracted with the Pentagon, causing more than 135,000 defense-related job losses throughout the state, according to a report by the George Mason University Center for Regional Analysis. 

Immigration Reform. Take leadership on Capital Hill in creating a pathway to earned legalization for undocumented immigrants, including the estimated 3 million here in California.

Now is a good time to do something, inasmuch as illegal immigration is down a third since President Obama was elected four years ago, with net migration from Mexico estimated at zero, according to The Wall Street Journal.

As to deterring future illegal immigration, the best way is by making it less daunting for those seeking opportunity — work, education, business — to come legally.

How about a reinvention of the Bracero program, which lasted from the early 1940s to the mid-1960s, which allowed Mexican laborers to enter the United States legally to perform temporary contract work (usually in the agricultural sector) before returning to their native country?

Electrical Grid. Urge lawmakers to take steps to modernize and expand the nation’s electrical grid. The California Independent System Operator, which manages the flow of electricity across the high-voltage, long-distance power lines that make up 80 percent of California’s power grid, depends on the national grid to deliver atoms from out of state to meet the California demand of 30 million business and residential users.

As it is, much of the nation’s grid was built more than a half-century ago. Today it is a patchwork system that ultimately will break down, warned a report by the American Society of Civil Engineers, unless $673 billion is invested in the grid between now and 2020.

That massive investment needn’t be borne entirely by taxpayers. Curt Hebert Jr., former chair of the Federal Energy Regulation Commission, says there is plenty of private capital available for investment in electrical infrastructure. That is, if the feds give them sufficient incentives to invest.