The reasons range from district work, to disdain for Trump, to responding to Twitter polls. In all, more than 50 House Democrats are planning on skipping the event.

Minority Leader Nancy Pelosi will attend, however, out of a sense of “responsibility” and to honor the “peaceful transition of power.” The two remaining undecided Californians are: Senator Dianne Feinstein and Rep. Xavier Becerra of Los Angeles. Feinstein had a pacemaker installed last week, while Becerra is going through the confirmation process to become California’s next attorney general.

While critics are already panning the boycotts, attending the inauguration is not a requirement; skipping it in protest is uncommon but not unprecedented. Around 80 Democrats skipped the ceremony for Richard Nixon in 1973 to protest a military strike in North Vietnam. 

The only real requirement surrounding the inauguration is the oath of office being administered; everything else is a matter of “custom and tradition.” But that in itself creates a problem for Trump, said John J. Pitney, Jr., a Roy P. Crocker professor of politics at Claremont McKenna College. 

“Here is Trump’s problem. He proclaims that he is a disrupter and takes pride in flouting customs and traditions. … Accordingly, he and his defenders cannot turn around and fault the other side for flouting customs and traditions,” Pitney said. “If he wants a disruptive tenure, he’s going to get it, and he won’t like all of the results.”

Unfavorable opinions among voters of both Donald Trump and Hillary Clinton — the presumptive presidential candidates of the Republican and Democratic parties, respectively — create a do-or-die moment for Libertarians and the Green Party.

But the question is how high can they climb?

In California, probably not very high. But nationally, there’s a great opportunity to get a candidate’s name, party and message out there if they can reach 15 percent in the polls to make it to a debate. From there, ballot access is the main challenge.

The two main third-party candidates are Libertarian Gary Johnson, a former two-term governor of New Mexico, and Jill Stein, a Massachusetts physician and activist whose highest-held elected office was local, who will likely be the Green Party candidate.

Both were their parties’ nominees in 2012, but failed to gain any significant traction — Johnson won almost 1 percent of the popular vote and Stein won one-third of 1 percent. Neither won any states, which is still the biggest challenge for any third-party candidate (Johnson got 3.5 percent in New Mexico and outperformed Stein in Massachusetts). 

So why now?

It’s an open seat, so there won’t be a popular incumbent president, like Barack Obama was in 2012, to contend with.

Also, Americans widely dislike the two (presumptive) major party candidates outside of their core groups of supporters. According to the Real Clear Politics average, 61 percent of Americans see Trump — a Republican business and reality T.V. tycoon — unfavorably, while Clinton — the former first lady, former senator and former secretary of state — fares only slightly better at 55.5 percent unfavorable. “We have never had an election in which both major candidates were so unpopular — many people want to vote against Trump or Clinton without voting for the other,” said John J. Pitney, Jr., a Roy P. Crocker professor of politics at Claremont McKenna College. “The third party option gives them the chance to register their disapproval without giving support to a candidate that they also despise.”

More than an emotional victory

The immediate goals for Libertarians in 2016 are securing ballot access in states and appearing on stage at the debates. Being on the debate stage alongside major party candidates would greatly affect how Americans see a third-party candidate — a victory in itself.

“But of course, you want to win,” said Janine Kloss, the executive director of both the Sacramento County Libertarian Party and the state party.

Kloss — who is awaiting the results of her write-in campaign for a Sacramento-area Assembly seat where a Democrat ran unopposed — noted that this election has proven anything can happen.

“We have someone under FBI investigation and someone who woke up one morning and decided he wanted to be president,” Kloss said.

Third-party candidates of yore

To gain traction, third party candidates usually need a major party candidate to fall apart. In 2006, Joe Lieberman lost the Democratic nomination in his Senate re-election campaign, but won the general as an independent because the Republican candidate collapsed. Bernie Sanders won his two Senate races in Vermont running as an independent because there was no Democratic challenger.

Jesse “The Body” Ventura was an exception to the trend. In 1998, the former pro wrestler beat two relatively strong candidates from the major parties by a narrow margin, winning the Minnesota governorship with 37 percent of the vote.

“They can be factors in a race, but winning is a different story and threshold,” said Nathan L. Gonzales, publisher and editor of The Rothenberg & Gonzales Political Report. “Our country is polarized and primed for the two major parties.”

Spoiler Alert

Often, strong third-party runs play a spoiler role for candidates, as Republicans were worried Trump would do earlier this cycle when they asked him to sign a loyalty pledge. In 1912, Bull Moose Party candidate Teddy Roosevelt stole (a lot) of votes from Republican Howard Taft, paving the way for Democrat Woodrow Wilson to become president.

Prominent segregationist George Wallace — the southern Democratic governor of Alabama who in 1968 ran as an American Independent — took a substantial amount of Electoral College votes from Hubert Humphrey in 1968 to help Richard M. Nixon become president.

Nixon actually had enough electoral votes to beat Humphrey without Wallace’s help, but Wallace still played a prominent role. And in a it’s-a-small-world way, Humphrey’s son was the Democratic-Farm-Labor candidate who lost the gubernatorial race to Ventura in Minnesota.

And Ross Perot, a Texas business man who ran twice as an independent, largely helped Bill Clinton, a Democrat, win the presidency from Republican George H.W. Bush in 1992 and then retain the presidency in 1996 against Republican Bob Dole.
In those races, Roosevelt received 27.4 percent of the popular vote, Wallace received 13.5 percent, and Perot received 18.9 percent and 8.4 percent. Roosevelt and Wallace won several states a piece, Perot won none.

“If more states allocated their Electoral College votes on some sort of proportional grounds, something Perot pushed for, then a third party ticket would be plausible,” said Mark Petracca, chair of the Department of Political Science at UC Irvine. “Right now only Maine and Nebraska have such an allocation scheme.”

“When you set aside the class-warfare rhetoric that Democrats so enjoy, the drivers of income inequality are plain. The first is rarely acknowledged. It’s the increasing tendency of highly educated professionals to marry each other. Doctors used to marry nurses. Now they marry other doctors, concentrating family wealth.

“The second is that the modern economy places an ever-higher premium on job skills, and yet we don’t have a public education system that responds to this fact. In 2013, how is it possible that a year or more of computer science isn’t a universal high school graduation requirement?

“It’s not just information-technology jobs going unfilled because of a mismatch between what schools teach and what employers need. In many skilled-job categories — welders, critical-care nurses, electrical linemen, special-education teachers, geotechnical engineers, respiratory therapists — unemployment is practically zero.

“So long as we have an absurdly complex tax code in which the amount that the very wealthy pay depends on the skill of their tax attorneys, the Occupy argument that the U.S. is rigged to help the rich will resonate with some. But this doesn’t address the disconnect between what our schools teach and what our economy needs.”

Liberal think tank: Higher job skills more rewarded than ever

Now the most venerable liberal think tank of all — the Brookings Institution, the one a Nixon aide wanted to firebomb — has released a study of big-city income inequality that makes some of the same points. This is from the L.A. Times’ write-up of the study:

“Los Angeles has one of the highest levels of income inequality in the nation, but that’s due in part to a relatively strong local economy that’s stoking the fortunes of higher-income people, according to a new study.

“Of the 50 largest U.S. cities, L.A. has the ninth-highest level of income disparity, according to the analysis by Brookings Institution, a Washington think tank. …

“Inequality has become a flash point nationwide as the wealth of top earners surges while the middle and lower classes grapple with stubborn income stagnation. Politicians have clashed loudly on what’s driving the dichotomy, and what steps, if any, should be taken to reverse it.

“The study found, however, that rising inequality may simply be an unavoidable byproduct of robust local economies that plump the incomes of coveted workers.

“Fast-growing industries with highly paid employees — such as technology, finance and entertainment — tend to cluster in large metropolitan areas, said Alan Berube, a Brookings researcher who specializes in inequality. And the ongoing gentrification of many cities, such as in downtown Los Angeles, is drawing wealthier people.

“At the same time, big cities also draw large numbers of low-income people seeking lower-skilled jobs.”

Needed: a much smarter and more focused education system

Joel Kotkin, the shrewd Los Angeles Democratic futurist, points to the best approach to income inequality in his piece last week in New Geography:

“A pro-growth program today could take several forms that defy the narrow logic of both left and right. We can encourage the growth of high-wage, blue-collar industries such as construction, energy and manufacturing. We can also reform taxes so that the burdens fall less on employers and employees, as opposed to those who simply profit from asset inflation. And rather than impose huge tuitions on students who might not  finish with a degree that offers employment opportunities, let’s place new emphasis on practical skills training for both the new generation and those being left behind in this ‘recovery.'”

The problem facing this approach in California, alas, is that the state’s education status quo has fierce guardians. They don’t want sweeping change because it would cost many CTA and CFT members their jobs.

And given that the CTA and CFT are by far the most powerful forces in the state, this is an immense problem for those who want to do something more constructive about income inequality than tampering at the margins with pseudo-solutions like raising the minimum wage.

If you’re a candidate whose authenticity is open to question because of extreme, always self-serving shifts in your views, you really, really, really don’t want to be caught in an, er, obvious fib. So one would think that union-bashing Republican turned noble, above-the-fray independent turned tax-and-fee-hiking union Democrat Nathan Fletcher would be careful about factual claims about the past in his quest to be elected mayor of San Diego in the Nov. 19 special election made necessary by Bob Filner’s resignation.

One would be wrong. San Diego political circles were mildly abuzz earlier this week when it was noticed that Fletcher sometimes claimed to be the first member of his family to graduate from college while at other times claimed to be the first member of his family to go to college.

But both claims were, er, obvious fibs. One San Diego Twitterite pointed out that Fletcher’s grandfather, a former Las Vegas city manager, was a  UC Berkeley graduate; others noted his mom appeared to have attended California Baptist College; I also got in on the Twitter fun by noting that his mom’s mom was a trained nurse who almost certainly took college-level classes of some type.

First in family — if you don’t count mom, dad, grandma, grandad

Finally, Fletcher has set the record straight — at least he did if his account to a U-T San Diego reporter can be trusted.

” … Fletcher’s mother briefly attended the same college he did — California Baptist University in Riverside. Also, Fletcher’s father went to the University of Oregon for four years and his grandfather graduated from the University of California Berkeley in 1937.

“Fletcher had used the statement about being the first in the family to go to college to establish his working-class credentials, often when talking about his jobs as a janitor and forklift operator. He’s now an executive at Fortune 500 company Qualcomm. … 

“Fletcher issued a statement Tuesday night, saying, ‘Growing up, I was a good student, and my mom always talked about how proud she would be for me to be the first in our family to go to college. As I’ve now learned, she did in fact attend college for one semester. If you asked my mom, she’d tell you I was the first to go to college.’”

It depends on what the meaning of ‘family’ is

Fletcher said his biological father didn’t count because he didn’t know him. Left unexplained was why his grandfather, the one-time Las Vegas city manager, didn’t count.

All this brings to mind two men who held the job Fletcher thinks he ultimately deserves: U.S. president.

Bill Clinton famously said when asked indirectly if he had perjured himself that it depends on “what the meaning of ‘is’ is.” Fletcher seems to have his own meaning for “family.”

Then there’s Richard Nixon. 2013 is the 40th anniversary of one of the most famous attempts at spinning dishonesty in modern U.S. politics: White House press secretary Ron Ziegler’s infamous declaration about the unfolding Wategate scandal that his most recent statement outlining Nixon’s and the White House’s knowledge of the scandal “is the operative statement. The others are inoperative.”

Nathan Fletcher would normally like to be in same conversation as two U.S. presidents. But maybe not in this circumstance.

By Chriss Street

The  “Misery Index” is inflation plus the unemployment rate. For example, today the U.S. unemployment rate is 7.9 percent and inflation is 1.7 percent. So the “Misery Index” (rounding off) is 10 points.

Anything above 10 points is considered a tough time for the economy.

This measure of national pain peaked at 21 points in 1980, the last year of the disastrous administration of President Jimmy Carter, then trended lower under the next four presidents: Ronald Reagan, George H.W. Bush, Bill Clinton and George W. Bush.

But the downward trend was broken in President Obama’s first administration due to $5.3 trillion of deficit spending; $3 trillion in expanded bank lending and $1.3 trillion in Quantitative Easing by the Federal Reserve Board as economic stimulus; and rising commodity inflation.

However, a major counter-trend was housing, as home prices crashed beginning in 2007. Because housing actually dropped in price over the last four years, the Consumer Price Index measure of inflation has been substantially understated. That has been especially the case in California, the epicenter of the housing crash.

Misery rising

With housing now leading energy, food and health care inflation, consumer purchasing power is shrinking and employers will be laying off workers as sales drop.  The Misery Index during President Obama’s first term rose only to 10 points. And in California, with an unemployment rate 2 percentage points above the national average, the Misery Index rose to 12 points.

But with deficit-spending continuing and a recession looming, the Misery Index is about to soar.

The last time America engaged in this type of government “stimulus” followed President Lyndon Baines Johnson’s 1964 declaration of the War on Poverty.  What began with the passage of the Medicare expansion of Social Security and the Elementary and Secondary Education Act morphed over the next 16 years through the Johnson, Nixon, Ford and Carter administrations into a smorgasbord of bloated social spending for powerful political and corporate cronies.

The resulting build-up of inflationary pressures and job destruction drove the Misery Index from an average of 7 points under Johnson to 16 points under Carter.  The Industrial Heartland of Midwest America was transformed into the Rust Belt. The inflation, especially to home prices, sparked the 1978 tax revolt in California when voters enacted Proposition 13, limiting property tax increases to a maximum of 2 percent a year.

The tax revolt continued in 1980 as disillusioned voters swept Ronald Reagan into office with a tough-love mandate that steadily drove down inflation over the next 28 years.

President Obama successfully advocated for a huge expansion of deficit spending on education and healthcare as an economic stimulus.  The Congressional Budget Office projects that, when he leaves office in 2017, over his eight years in office his administration will have engaged in $7.5 trillion in deficit-spending and the national debt will almost have doubled.

Obama’s formula of deficit spending and money printing stimulus is being copied by governments around the world.  The McKinsey Global Instiutute Commodity Price Index for food, raw material, metals and energy prices has risen over the last four years to historic highs, and continues to climb. 

During the same period in the United States, the price of a gallon of gasoline rose by 132 percent and has continued to rise for the last 33 days in a row.  Over the last two years, the accelerating costs of food rose by 8.1 percent.

Raging inflation has not been reported by the media, because the Consumer Price Index over-weights the cost of housing as 41 percent of the Index.  The Obama Administration’s Misery Index is only up to 10 points, because housing costs actually fell by 3 percent.

New housing bubble

But cheap money from the Federal Reserve is beginning to fuel a new housing bubble.  The year-end CoreLogic Residential Property Report found: “December marked 10 consecutive months of year-over-year home price improvements, and the strongest growth since the height of the last housing boom more than six years ago.” CoreLogic predicts home price will rise by 8.6 percent this year.

That’s great for California homeowners happy to see lost equity be restored. But it’s not so happy for new homeowners or renters.

The last Federal Reserve Board Open Market Committee minutes demonstrate that several members are concerned that if the Fed had to push up interest rates by selling some of its bonds to stop inflation, there might be “significant capital losses” that “distort financial markets.”

Few Americans are aware that the Fed’s massive bond purchases not only drove interest rates down, but also pushed up the value of the Fed’s bond holdings.  The U.S. Treasury made an “$88.9 billion  Portfolio Profit” last year from the Fed.

If the Fed needs to push up interest rates by selling bonds, the U.S. Treasury will suffer hundreds of billions of dollars of “Portfolio Losses” and the financial market will panic.

With inflation about to force the Fed to raise rates, the Misery Index is about to soar well above 10 points. And it will be even higher in high-unemployment California.

CHRISS STREET & PAUL PRESTON
Present “The American Exceptionalism Radio Talk Show”
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Click here to listen:  http://www.ustream.tv/channel/american-eceptionalism-news

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By Joseph Perkins

As the California economy continues slowly to recover from the collapse of its once-thriving housing sector, the banking industry is trying to close its books on the financial disaster.

This week, Bank of America agreed to pay Fannie Mae $11.6 billion to settle a claim that its subsidiary, Countrywide Financial, sold questionable mortgage-backed securities to the government mortgage agency.

Meanwhile, BofA, San Francisco-based Wells Fargo and eight other large banks agreed this week to pay $8.5 billion among them to settle alleged foreclosure abuses, the Federal Reserve and Comptroller of the Currency announced.

The settlements were viewed, in some quarters, as overdue punishment for the banking industry, which, supposedly, did much to create the so-called housing bubble and, when the bubble inevitably burst, did much to foment the foreclosure crisis.

Nearly 4 million borrowers whose homes were foreclosed upon in 2009 or 2010, including several hundred thousand California residents, actually will receive compensation of as much as $125,000 under the bank settlement with the Fed and Comptroller.

Well, I do not begrudge those who unfairly have been turned out of their homes financial reparations from the banks, although I do not think that applies to the vast majority of foreclosures here in the Golden State.

My problem is that responsibility for the housing crash has been heaped almost entirely on the banks when the government — both at the federal and state levels — had far more to do with it.

Indeed, once upon a time, it was possible for the average-earning California family to afford the median-priced California home. But that all changed in the 1970s, when home prices here increased by nearly 90 percent over the decade, in real terms, far outpacing the increase in family incomes.

While a host of factors contributed to the run up in California home prices, the biggest, by far, was the enactment of far-reaching environmental laws by both Washington and Sacramento.

Indeed, with California native Richard Nixon in the White House, the Environmental Protection Agency was created in 1970 and that was followed by several laws: the National Environment Policy Act and the Clean Air Act in 1970, the Marine Mammal Protection Act in 1972, the Endangered Species Act in 1973 and the Safe Drinking Water Act in 1974.

Meanwhile, with Ronald Reagan occupying the governor’s office, the California Environmental Quality Act and the Porter-Cologne Water Control Act became law in 1970. And in 1972, voters established the California Coastal Commission, giving it vast powers to restrict housing development along the coast.

Environmental laws

Since the 1970s federal and state environmental laws have been used by anti-growth activists to Mau-Mau the state government, as well as local governments, to impose land-use restrictions that staunch home building (and related development, including schools, libraries, shopping centers, hospitals, churches, etc.).

With government declaring increasing amounts of land off limits to new home projects, land prices increased throughout the state exponentially, particularly in coastal areas.

As a result, the cost of building a home in California rose during the 1970s to the point that, by decade’s end, most families could not afford the state’s median-priced home. And by the end of the 1980s, only a quarter of families could afford the typical California family home. Things have only gotten worse since then.

Instead of addressing the root cause of housing unaffordability and declining homeownership — environmental laws that artificially inflate the price of housing in California compared to much of the rest of the country — the government concentrated instead on mortgage lending, not so gently encouraging banks to loosen their lending requirements to the point that almost anyone could qualify for a home.

BofA, Wells Fargo and other banks complied with the government’s dictate. And now they are left to pay the price.

By John Seiler

Sometimes I wonder if people can think anymore.

Today the L.A. Times ran an op-ed piece, “Why the poor favor Democrats.” Subheadline: “Data show unequivocally that minorities do better under Democratic administrations than under Republican ones.” It’s by Zoltan Hajnal, a poli sci prof at UC San Diego, and Jeremy D. Horowitz, a doctoral student at the school. They write:

“The data we analyzed show unequivocally that minorities fare better under Democratic administrations than under Republican ones. Census data tracking annual changes in income, poverty and unemployment over the last five decades tell a striking story about the relationship between the president’s party and minority well-being.

“Under Democratic presidents, the incomes of black families grew by an average of $895 a year, but only by $142 a year under Republicans. Across 26 years of Democratic leadership, unemployment among blacks declined by 7.9%; under 28 years of Republican presidencies, the rate increased by a net of 13.7%. Similarly, the black poverty rate fell by 23.6% under Democratic presidents and rose by 3% under Republicans.”

But they overlook two crucial things: First, it’s Congress, not the president, that passes budgets and other legislation. The president proposes, the Congress disposes, as the old line has it.

In the past 50 years, here’s what happened: In the early 1960s, Congress was controlled by Southern Democrats — the “Solid South.” After shedding segregationism, they later switched and became today’s Republican-controlled South.

Anyway, in the early 1960s, the most powerful Democrat on finances was Harry F. Bird, the chairman of the Senate Finance Committee. As Robert Caro recounts in the latest volume of his biography of Lyndon Johnson, “The Passage of Power,” in early 1964, just after President Kennedy was assassinated, new president LBJ was pushing for the Kennedy tax cuts, which dropped the top income tax rate from 91 percent to 70 percent.

“Old Harry,” as Byrd was called, balked until LBJ cut $5 billion in spending to effectively balance the budget. LBJ, who later became a massive spendthrift, agreed. The tax and spending cuts were passed — and the massive 1960s economic boom zoomed upward.

Caro’s book ends in early 1964. But in 1968, with his Great Society welfare waste and the Vietnam War costs escalating, LBJ pushed through a 10 percent income surtax. It slammed the economy in 1969 — when Richard Nixon was president. LBJ even forced Nixon to pledge not to end the surtax. Nixon also increased taxes on his own in 1969, at the behest of Sen. Teddy Kennedy. And in 1971, Nixon took America off the gold standard, raised taxes and imposed protectionism with his Nixon Shock.

The economy crashed in 1974 into the 1970s “malaise” economy of “stagflation” — stagnation plus inflation.

Then there was Bill Clinton, who increased taxes in 1993 — but not by much, and with bare majorities in each house of Congress, In 1994, Congress went Republican. It was this Congress that passed three capital gains tax cuts between 1996 and 2000, as well as welfare reform. To his credit, Clinton signed those bills. But the key, again, was Congress.

Only one good GOP prez

The second thing the poli sci experts failed to note was that, on growth economics, the Democrats have had two-and-a-half presidents who were pretty good: Kennedy, Johnson (until 1968) and Clinton. And they had two who were bad: Carter and Obama.

But Republicans had only one who was good: Reagan. His tax cuts and stable money boosted the economy for everybody. As our colleague Joseph Perkins detailed:

“But the reality is, the 1980s, with a conservative, free-market Republican in the White House, were a boom time for black America.

“Indeed, Andrew Brimmer, the Harvard-trained black economist, the former Federal Reserve Board member, estimated that total black business receipts increased from $12.4 billion in 1982 to $18.1 billion in 1987, translating into an annual average growth rate of 7.9 percent (compared to 5 percent for all U.S. businesses.

“The success of the black entrepreneurial class during the Reagan era was rivaled only by the gains of the black middle class.

“In fact, black social scientist Bart Landry estimated that that upwardly mobile cohort grew by a third under Reagan’s watch, from 3.6 million in 1980 to 4.8 million in 1988. His definition was based on employment in white-collar jobs as well as on income levels.

“All told, the middle class constituted more than 40 percent of black households by the end of Reagan’s presidency, which was larger than the size of black working class, or the black poor.

“The impressive growth of the black middle class during the 1980s was attributable in no small part to the explosive growth of jobs under Reagan, which benefited blacks disproportionately.

“Indeed, between 1982 and 1988, total black employment increased by 2 million, a staggering sum. That meant that blacks gained 15 percent of the new jobs created during that span, while accounting for only 11 percent of the working-age population.

“Meanwhile, the black jobless rate was cut by almost half between 1982 and 1988. Over the same span, the black employment rate – the percentage of working-age persons holding jobs – increased to record levels, from 49 percent to 56 percent.”

GOP duds

The other Republican presidents all were terrible. We’ve discussed Nixon. Ford continued Nixon’s high-tax, high-spending, anti-gold standard policies. In 1991, President George H.W. Bush broke his 1988 “Read my lips! No new taxes!” pledge, increased taxes, tanked the economy, and was replaced by Clinton.

George W. Bush was a complete disaster economically. Inheriting budget surpluses from Clinton, he went on a massive spending binge and bankrupted the country. His tax cuts, foolishly, were temporary — hence the battles over “extending the Bush tax cuts” that have brought contention and economic uncertainty to the economy. And Bush allowed Fed chairmen Greenspan and Bernanke to inflate the currency, while keeping interest rates close to zero — effectively destroying the savings of the middle class.

Meanwhile, after Republicans took over the U.S. House in 2011, they refused to insist on permanent tax cuts and an end to Obama’s own deficits, which have topped $1 trillion each of his four years in office.

Obviously the poor — and everyone else — are helped by sensible economic policies, and hurt by foolish ones. But the context is crucial.

As Bill Clinton said at this year’s Democratic National Convention: Do the math.

By John Seiler

It’s not just the recent economic and political nonsense by both parties that’s hurting the middle class. It’s more than four decades of it. A new study finds:

“The median net worth of American households has dropped to a 43-year low as the lower and middle classes appear poorer and less stable than they have been since 1969.

“According to a recent study by New York University economics professor Edward N. Wolff, median net worth is at the decades-low figure of $57,000 (in 2010 dollars). And as the numbers in his study reflect, the situation only appears worse when all the statistics are taken as a whole….

“Fully 85 percent of self-described middle-class adults say it is more difficult now than it was a decade ago for middle-class people to maintain their standard of living. Of those who feel this way, 62 percent say “a lot” of the blame lies with Congress, while 54 percent say the same about banks and financial institutions, 47 percent about large corporations, 44 percent about the Bush administration, 39 percent about foreign competition and 34 percent about the Obama administration.”

Typical of these polls, the real culprit was not fingered in the question: The U.S. Federal Reserve Board. In 1968, Richard Nixon — native of Orange County, Calif. — was elected to protect the “silent majority,” as he called it, a/k/a the middle class. In 1971, the fool took us off the gold standard.

Since then, the Federal Reserve Board has waged an unrelenting assault on the middle class by debasing the currency, with the dollar’s value dropping from $35 an ounce of gold in 1971 to $1,711 today. That’s a loss of 98 percent of its value.

In the 1970s, tax rates remained the same — meaning the middle-class was jammed up into higher-income tax brackets, where they remain. Reagan indexed the rates to inflation, but only as of 1985. It wasn’t retroactive.

So, in 2012 Mr. & Mrs. America  pay the high tax rates of millionaires of 1971.

Reagan’s tax cuts, although needed, mainly went to the wealthy. The middle class got tax cuts from the Gipper. But he also increased the FICA/Socialist Security tax as part of the Greenspan Commission in 1983. Those tax increases essentially repealed Reagan’s middle-class tax cuts.

And inflation is why the middle-class in California pays the staggeringly regressive state income tax rate of 9.3 percent, which in the 1960s only affected millionaires.

Greenspan later, of course, became the inflationist head of the Fed, his policies especially destroying the dollar when he panicked after the 9/11 attacks in 2001.

Today, President Obama, Democrats running the Senate and Republicans running the House don’t really care about the middle class. If they did, they would take retiring Rep. Ron Paul’s advice to “End the Fed.”

And they would roll back middle-class tax rates to 1971.

If you’re in the middle class, as I am, here’s your future:

By Chriss Street

“Only Nixon could go to China” is a political metaphor referring to the ability of a politician with an unassailable reputation among his supporters for staunchly representing and defending their values, to take actions that would draw vicious criticism and fierce opposition if taken by someone without those credentials.

With California’s financial condition in free fall, ultra-union friendly Gov. Jerry Brown demanded public-employee unions cut compensation by 10 percent.  If the People’s Republic of California is adopting fiscal responsibility, perhaps America can too.

For unions, Jerry Brown has been the governor who always kept on giving.  In 1977, he approved the Dills Act, collective bargaining for California government workers.  Last November, he signed SB 922, protecting “project labor agreements” that force non-union workers to apply for union membership, and pay dues, in order to work on public projects.

While predicting a $9.2 billion budget deficit in January, Brown sought to protect public service union jobs by cajoling private sector retailers to support a voter initiative to raise sales taxes.  As state tax revenue had fallen by $4.9 billion in February, Brown focused on raising $630,000 in contributions for his tax increase initiative from unions, Indian tribes and crony capitalists.  As revenue continuing to fall last month, Brown extended union contracts representing tens of thousands of workers that increased the state’s health benefits by 9.5 percent.

Brown’s good-old-boy support for his union brothers and sisters may have come to a screeching halt as California State Controller John Chaing published a devastating April Financial Statement showing monthly income, sales and corporate tax revenue came in 20.2 percent below the governor’s latest projections; and sales tax collections fell by an astounding 61 percent below last year.

Looking closer into the numbers, California missed the national economic recovery.  As U.S. Gross Domestic Product grew by 2.2 percent, California employment grew by only 1.3 percent.  Given that the workforce expands by 1.5 percent annually as more young people begin looking for jobs, this explains why California unemployment rose to 11 percent in March from 10.9 percent in February — as U.S. employment fell to 8 percent.  Chiang ominously stated:

“Without a timely, financeable budget plan, the State will be unable to access the working capital needed to pay its bills later this year.”

This is bureaucratic speak for: We are insolvent, our credit rating should be junk and we will default when we can’t borrow any more money!

Credit Rating

Standard & Poor’s, in a new credit report last week, warned that California lawmakers’ resistance to steep cuts in welfare and health care programs is to blame for failure to balance the state budget:

“As the most important month of the year for [income tax] collections, April receipts are not only failing to solve part of the state’s projected problem, they are deepening the estimated budget gap.”

With the state needing to borrow $20 billion in July to finance operations until collecting property payments in mid-December, this is S&P speak for: We will cut your rating.

California rolled over an $8.2 billion deficit from last year’s budget disaster and this year’s growing deficit has forced the state to increase borrow another $7.7 billion.

The state did cut $1.8 billion, or 8 percent, from operations; and school funding was flat this year. But spending on health and human services jumped by a stunning $3.7 billion, or 6.2 percent.

President Richard Nixon had a reputation as the leader of hardcore Republican anti-communists when he announced he was going to improve relations with China by personally visiting the country in 1972.  No Democrat at the time could have absorbed the political blowback of such a spectacular change in America’s foreign policy.  Over the next 40 years, America and China have become each other’s most important trading partners

Just as Richard Nixon was the strongest ally of anti-communists, Jerry Brown has been the strongest ally of public-sector unions.  Chief Executive Magazine’s survey of best and worst states for business ranks California dead last.  According to one CEO:

“The leadership of California has done everything in its power to kill manufacturing jobs in this state. As I stated at our annual meeting, if we could grow our crops in Reno, we’d move our plants tomorrow.”

Given that high taxes and onerous regulatory enforcement were championed by Brown in California and then spread out across the nation, Brown is best positioned to unwind these job killers.  When Jerry Brown told state employee union leaders his next budget would include a 10% cuts in state worker compensation, there has been little opposition.  Perhaps California’s financial distress may require Jerry Brown to be America’s pro-business governor.

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By JOHN SEILER

Yesterday Democrat Janice Hahn beat Republican Craig Huey to fill the 36th Congressional District, a severely gerrymandered district covering much of Southwest Los Angeles. But her victory total, getting just 55 percent, was a severe drop from the 69 percent Jane Harmon won during the 2008 election that swept fellow Democrat Barack Obama into the White House.

As the map at right shows (click for a bigger version), the 36th has long, narrow patches connecting heavily Democratic districts. Democrats have an 18-point registration advantage there, making a Republican win nearly impossible.

The seat was vacated earlier this year by Jane Harmon, who became the head of the Woodrow Wilson International Center for Scholars. In 2009, Harman had come under investigation for alleged ethical breaches, but no action was taken against her.

Despite the Democratic registration advantage and the gerrymandering, Hahn won by only 55 percent to 45 percent. Her victory number was the lowest victory number since Harman won with 48 percent in 2000. That was before the severe 2001 California state gerrymandering that led to the passage of Proposition 20 last year, which established the Citizen Redistricting Commission currently working on the redistricting following the 2010 U.S. Census.

Despite her ethical difficulties, last November Harmon garnered 60 percent of the vote, and a whopping 69 percent in 2008. After the 2000 redistricting, in the gerrymandered 36th Harman never got less than 60 percent.

Tea Party Power

So Huey’s showing, although not a victory, demonstrated both the power of the Tea Party activists who supercharged his campaign and the dissatisfaction with the national economic policies of Obama and his fellow Democrats. It does not bode well for the Democrats next year.

National unemployment rose from 9.1 percent in May to 9.2 percent in June. And California’s rate was 11.7 percent in May, a number likely to rise when June figures for the state are released next week.

Part of Hahn’s problem was her mixed message on the economy. Her Web site explained in a section “Economy and Jobs”: “In Congress, Janice will fight to create new jobs, expand clean energy technologies and ensure that local small business owners get the help and opportunities they need to flourish in a global economy.” (Bold face in original.)

And her Web site even had a special section, “Green Jobs Plan,” which read: “Seeing solutions to a lingering recession and a local unemployment rate of more than 12 percent, Los Angeles City Councilwoman Janice Hahn today announced her plan to create 25,000 green jobs.” No date was given for “today.” The specifics of the plan were laid out in a separate .pdf.

But those standing for months in unemployment lines don’t care about “green” jobs. They just want jobs, period — green, red, brown, black, blue, white, yellow, anything. They want to work and get off unemployment insurance and food stamps.

Hahn campaigned as if she were Arnold Schwarzenegger in 2006, running during  the phony real estate boom on a green platform based on AB 32, the Global Warming Solutions Act of 2006, which he had just signed into law. California’s unemployment rate in 2006 was 4.9 percent, less than half what it is now.

Obviously, national economic policy is the most important factor affecting California. But despite all the promises of a green jobs bonanza, AB 32 has not sparked a jobs recovery. Neither has Obama’s national green jobs program.

Obama Re-Election in Question

Check out the above numbers again. From 2008, Obama’s big victory, to yesterday’s election the Democratic candidate’s vote dropped from 69 percent to 55 percent — a 14-point drop.

In 2008, Obama won California handily, with 61 percent of the vote. But if he loses 14 percentage points of that, he would get only 47 percent and lose to the Republican nominee. The last Republican presidential candidate to win California was the first President Bush in 1988, a vice president riding on the high popularity of incumbent President Reagan, a Californian.

That’s unlikely to happen in 2012. Obama almost certainly will win. But as the 36th District’s results show, the election should much closer than was the 2008 election.

Moreover, in 2008 Obama won with 53 percent of the vote at the national level. If he drops 14 percentage points nationally, in 2012 he would get just 39 percent — a total wipeout. That’s on the level of the 41 percent Democrat Walter Mondale got in 1984 against Reagan; or the 38 percent Democrat George McGovern got in 1972 against Republican Richard Nixon, a California native.

Obama is unlikely to drop quite that far into the electoral abyss. But Hahn’s relatively poor showing yesterday in the 36th District shows that he and other Democrats are going to have a tough time in 2012. He won in 2008 on promises of fixing an economy broken by the Republican Bush administration. But the economy only has gotten worse.

Unlike in the November 2010 election, yesterday’s election again made California a bellwether for the nation.