But you know what? It still sounds cool. As such, it’s not as surprising as it might be that McClatchy’s Washington bureau is reporting that even as the bullet-train project nears death in the nation’s largest state, private investors are excited about the possibility in the nation’s second-largest state and in what soon will be the nation’s third-largest state.

“WASHINGTON — When California Gov. Jerry Brown last week announced his bid for re-election, he renewed his push to build ‘the nation’s only high speed rail system.’

“But California has some competition in unlikely places.

“Both Texas and Florida have plans for systems that would connect their major population centers with fast trains. But unlike California’s plan, which relies heavily on government funding to start rolling, their efforts will be funded by the private sector.

“While the $68 billion California project has earned nearly universal opposition from Republicans, GOP elected officials are lining up behind the Florida and Texas proposals.

“Brown and President Barack Obama had both held up the California project as a model of the country’s infrastructure future. But with legal and political uncertainties clouding the effort, Florida and Texas could have their trains running years sooner.”

Lone Star State seems far ahead of Sunshine State

Texas’ proposal seems much more advanced than Florida’s.

By Chris Reed

There’s a double-whammy targeting the bullet train on the op-ed page of Friday’s U-T San Diego newspaper.

First House Majority Whip Kevin McCarthy, R-Bakersfield, tees off on the state’s assumption that federal dollars will cover most of the cost of the project.

“CHSRA’s reliance on additional dollars from a cash-strapped federal government nearly $17 trillion in debt is naive and misguided at best. As GAO correctly concluded, ‘HSIPR grant program has not received funding since 2010 and that the future funding proposals will likely be met with continued concern about the general level of federal spending, the largest block of expected money for the California project is uncertain.’

“And that’s not even the whole story. The plan still depends on $13 billion from private investment – not a single dollar of which has been committed. This is assuming the $68.4 billion price tag remains unchanged, which is questionable since GAO found that CHSRA’s project plan lacked detail about risk assessment and post-construction costs of running the rail, noting the omissions could lead to ‘increased risk of such things as cost overruns, missed deadlines, and unmet performance targets.’”

Think tank: Ridership numbers still grossly exaggerated

Then Reason Foundation’s Wendell Cox and Joseph Vranich take a close look at the rail authority’s number-crunching and find some huge problems.

“CHSRA claims that most train riders will be attracted from their cars. However, driving with the family or even driving alone will be less expensive than taking the train. In Europe, despite gasoline prices that hover between $8 and $9 per gallon, relatively small numbers of drivers choose high-speed rail over their cars. Based upon the international experience in luring drivers out of their cars and onto trains, we project that the California rail system’s ridership will fall 65 percent to 77 percent short of CHSRA’s claims.

“With far fewer passengers, and not enough ticket revenue, someone else will have to pay to keep the trains running – the taxpayers of California. It will likely cost taxpayers between $125 million and $375 million each year to cover the train’s operating losses.”

What a bekerja tanpa bagaimanakah.

That’s the Malay term for “boondoggle.”

By Wayne Lusvardi

Despite regionalization failing miserably in the European Union, California is proposing to adopt it as a tax-sharing policy for distributing state funds to local governments if voters approve Proposition 31 on the November ballot.

Prop. 31 is a combined new law and state constitutional amendment sponsored by the California Forward political action group.  Nicolas Berggruen, a European billionaire, is the biggest sponsor of California Forward with a $1 million donation to the pro-Prop. 31 Campaign.  Berggruen owns the IEC College of vocation schools in California and is a registered Democrat in Florida.  He founded the Council for the Future of Europe, which has proposed “fiscal federalism and coordinated economic policy” to rescue the European Union from its debts.

Regionalism Will SAP Revenues from Suburbs to Cities

Urbanologist Wendell Cox writes that “regionalism” is an emerging policy of the Obama administration, as described in Stanley Kurtz’s new book, “Spreading the Wealth: How Obama is Robbing the Suburbs to Pay for the Cities.” Kurtz is a social anthropologist from Harvard.

Prop. 31 will not result in new regionalized governments. Rather, it will end up in what Cox calls “fiscal regionalism” run by a committee.  The tax-sharing facets of Prop. 31 are:

1. “Granting counties, cities, and schools the authority to develop, through a public process, a Community Strategic Action Plan for advancing community priorities that they cannot achieve by themselves.”
2. “Granting local governments that approve an Action Plan the ability to identify state statutes or regulations that impede progress and a process for crafting a local rule for achieving a state requirement.”
3. “Providing some state funds as an incentive to local governments to develop Action Plans.”
4. “Implement the budget reforms herein using existing resources currently dedicated to the budget processes of the State and its political subdivisions without significant additional funds. Further, establish the Performance and Accountability Trust Fund from existing tax bases and revenues. No provision herein shall require an increase in any taxes or modification of any tax rate or base.”

According to Cox, regionalization strategies are “aimed at transferring tax funding from suburban local governments to larger core area governments.”  The Prop. 31 version of regionalization would not amalgamate city, county, special district and school district governments. Nor would it create new taxes. But it could authorize the state to withhold or divert taxes from local governments unless those governments adopted a “Strategic Action Plan” to distribute the revenues from the suburbs to the large urban cities.

In essence, a Strategic Action Plan, or SAP for short, would sap the wealth out of suburbs. SAPS might also sap the bond ratings from suburban communities.

Governor Would Become “Emergency” Czar

Probably one of the most controversial provisions of Prop. 31 would grant the governor the power to cut or eliminate any existing program during a “fiscal emergency.”  In essence, the governor could usurp local government decisions on where to spend state funds.

Budgets for local public schools, community colleges or cities could be cut at the whim of the governor and the funds diverted elsewhere.  The governor could conceivably use new emergency powers to divert state funds to his choice of regional Strategic Action Plans.

Why Democrats and Unions Oppose Prop. 31

Public unions have historically been concerned about granting the governor broader emergency powers.  On July 11, 1999, the Gov. Gray Davis administration called legislative committee chairpersons to inform them that the governor intended to direct the outcomes of selected funding bills without consulting their authors or the legislature.  The leaders of the legislature at that time — Assembly Speaker Antonio Villaraigosa, D-Los Angeles and Senate President Pro Tem John Burton, D-San Francisco — called Davis’ actions a “totally improper intrusion into the legislative process.” The concern was that Davis was going to kill a bill sought by labor unions to increase workers’ compensation benefits.

This explains why the Democratic Party is currently opposed to Prop. 31 giving the governor emergency powers over the budget. Also, any consolidation or revenue sharing arrangement of local governments might lead to the heads of local unions losing their jobs if absorbed into a larger union.

Why Republican Party Wrongly Endorses Prop. 31

Oddly, the California Republican Party supports Prop. 31. This is because Prop. 31 is being misleadingly advertised as a government budgetary efficiency measure.  But a two-year budget and performance budgeting do not need the approval of voters to be implemented.

Budget analyst John Decker in his book, “California in the Balance: Why Budgets Matter,” draws on an example from the Schwarzenegger administration to explain why a voter initiative is not needed for Prop. 31, except for the tax sharing provisions:

“Amid much fanfare the year after his election, Governor Schwarzenegger announced the results of a year long internal effort to find efficiencies in government known as the California Performance Review.  Though most of the recommendations made could be implemented administratively, few were actually taken in the form proposed.”

Local governments can form “joint powers authorities” in California without Prop. 31 and make their own decisions about revenue sharing.  In an email to this writer about Prop. 31, Wendell Cox stated: “State law permits Joint Powers Authorities and this is all that is needed.”

Tea Party Rightly Opposes Prop. 31 Despite Paranoia

The proponents of Prop. 31 may say that the Tea Party and those opposed to fiscal regionalism are over-reacting to its provisions.  But why are the proponents trying so hard to sell Prop. 31 as a budget reform and government performance measure with little mention of its tax-sharing provisions?

The East Bay Tea Party has more accurately perceived the dangers with Prop. 31 as the creation of a “super” layer of government that cannot be held accountable by local government elections.  Unfortunately, the paranoid Tea Party also fears that Prop. 31 would measure the “performance and accountability” of local governments by United Nations Agenda 21.

No doubt this sort of paranoia reflects the powerlessness and political marginalization of the Tea Party’s members in California. But such paranoia gives the opponents of the Tea Party reasons to discount them as “wing nuts” not to be taken seriously.

California Forward Hides Tax Sharing Part of Prop. 31

California Forward is selling Prop. 31 to the public as “trustworthy, accountable for results, cost-effective, transparent, focused on results, cooperative, closer to the people, supportive of regional job generation, willing to listen, thrifty and prudent.” The touted provisions of Prop. 31 call for a “two-year budget cycle” and for “performance budgeting.” Prop. 31 is officially titled “The Government Performance and Accountability Act.

California Forward makes no mention in its filing or in its official ballot argument in favor of it that Prop. 31 will socialize state revenue sharing.  And the analysis of the California Legislative Analyst is so neutral and narrowly focused that it is does not help the public understand the importance of the tax-sharing aspects. The ballot arguments in favor and against Prop. 31 also ignore that it would socialize local government taxes by regions.

Commentariat Mislead About Prop. 31

It is amazing that California’s journalistic commentariat has, thus far, only been concerned that Prop. 31:

* Is a Trojan horse that would result in “tweaking” environmental regulations;

* Prescribes an “aspirin” instead of “surgery”;

* Is a “virtuous budget reform package that falls short;” but

* Would “restore our state to greatness.”

Wendell Cox is one of the few that has caught the magnitude of the problem of regionalism to our democratic form of government when he wrote, “[D]emocracy is a timeless value. If people lose control of their governments to special interests, then democracy is lost, though the word will still be invoked.”

In an email, Cox further wrote:

“In general, the idea of tax sharing is negative. This breaks the connection between local governments and taxpayers, as tax sharing governments are, by definition, not accountable to the taxpayers of jurisdiction with which they share taxes. Milton Friedman was right in saying something to the effect that people are more careful about with their own money than they are with other people’s money. This would be a very bad step for California, which already is suffering significant ill effects from insufficient fiscal responsibility.” 

Prop. 31 is Ripe for Abuse 

Safires’ Political Dictionary defines “tax sharing” as “collection of revenues by the (state) government, returned directly to the (local) governments without (state) control of expenditures.”  Prop. 31 would go beyond merely returning tax revenues to local governments without controls and conditions attached.  It would be prone to abuse for funding political cronies and political earmarks.

When former President Clinton proposed a form of revenue sharing in an economic stimulus bill, Republicans described it as political pork and successfully blocked it.  But in the California Legislature, the Republican Party no longer has any blocking power.  Prop. 31 would be prone to abuse because there are few checks and balances anymore in California’s new “Fusion Party.”

History indicates bureaucratic agencies have a way of not ending up as policy makers intended. There is no way of knowing whether Prop. 31 would end up as some form of “Tennessee Valley Authority” that would usurp local governments and would be self-perpetuating without any sunset provisions.

Voters on both sides of the political spectrum should be concerned about the implications of Prop. 31.

By John Seiler

The second most poweful politician in California is Senate President Pro Tem Darrell Steinberg, D-Sacramento; after Gov. Jerry Brown. Steinberg’s background is with labor unions. And he represents the state capitol — that is, state workers whose jobs, wealth, perks, pensions and power depend on having the biggest, highest-taxing, most-regulating and most-bullying government possible.

Today he detailed his political philosophy in a letter to the Wall Street Journal. He was responding to a Journal article attacking SB 375, the 2008 bill that he sponsored, and which then-Gov. Arnold Schwarzenegger signed into law. According to a summary by the Southern California Association of Governments, which implements much of the bill, SB 375:

“SB 375 (Steinberg) is California state law that became effective January 1, 2009. This new law requires California’s Air Resources Board (CARB) to develop regional reduction targets for greenhouse gas emissions (GHG), and prompts the creation of regional plans to reduce emissions from vehicle use throughout the state. California’s 18 Metropolitan Planning Organizations (MPOs) have been tasked with creating ‘Sustainable Community Strategies’ (SCS). The MPOs are required to develop the SCS through integrated land use and transportation planning and demonstrate an ability to attain the proposed reduction targets by 2020 and 2035.”

Steinberg began his letter:

“More unmitigated sprawl, more smog, more cars on our already congested freeways—is that tarnish what Californians really want to see for the future of the Golden State?”

What contempt he has for regular, middle-class families:

* By “More unmitigated sprawl” he means nice suburbs in which to raise families, instead of the high-rise projects he want to shove us into like ants.

* “more smog” is a red herring. Smog from cars has dropped more than 95 percent in 50 years, and keeps declining as cars get cleaner.

* “more cars” means individual freedom of transporation, instead of being squeezed into uncomfortable buses or mass transit that takes three or four times the minutes to get someplace. In any case, cars are here to stay. SB 375 won’t change that much. And does Steinberg take mass transit?

* “already congrested freeways” are congested because, beginning with Gov. Jerry Brown’s “era of limits” administrations in the 1970s and early 1980s, the state has not built enough roads, instead wasting highway funds on mass transit, or general-fund pork. Moreover, the easy way to relive congestion is to privatize the freeways, which then would become toll roads charging more during rush hours.

Contradiction

Steinberg wrote:

“Wendell Cox, in his April 7 Cross Country [article in the WSJ]: “California Declares War on Suburbia,” indicates that’s a favorable path, while mischaracterizing the intent and impact of a bill I authored in 2008 that will provide California residents exactly what they want: more housing options, greater access to public transportation, shorter commute times and an average savings of $3,000 per household per year on transportation and energy costs.”

Ever hear of a government program that saved money? And notice the “will provide California residents exactly what they want.” But Steinberg contradicted himself in the very next paragraph:

“The California Sustainable Communities and Climate Protection Act (SB 375) is a rational approach that serves as a blueprint for other states on how to turn inevitable growth into smart growth. Its provisions provide regions with a thoughtful framework to minimize expanding development, relieve roadway congestion, provide housing and working alternatives to Californians confounded by gridlock, and improve air quality. That is why it earned the support of a broad coalition including the California Building Industry Association, the League of California Cities, the California State Association of Counties and environmental and affordable housing advocates.”

By “rational approach,” he didn’t mean you decide, rationally with your family, where and how you will live. He meant “rational” in the sense used by political philosopher Michael Oakeshott in a famous essay, “Rationalism in Politics.” In that sense, “rationalism” means an ideological scheme that is not based in reality. In one summary, “Oakeshott argues that the rationalist, in awarding theory primacy over practice, has gotten things exactly backwards: The theoretical understanding of some activity is always the child of practical know-how, and never its parent. In fact, he sees the dependence of theory on practice as being so unavoidable that not only is the rationalist incapable of skillful performances guided solely by theory, he is not even able to stick to his purported guidelines while performing poorly.”  

In housing, “rationalist” projects are the Cabrini Green housing projects in Chicago, which were supposed to bring nice living conditions for poor folks, but ended up being gang- and crime-infested, and were torn down. Another “rationalist” project is the whole city of Detroit, which has been run by Steinberg-like liberals for 60 years, has lost half its population and is a byword for urban disaster.

Consider again this sentence of Steinberg:

“Its provisions provide regions with a thoughtful framework to minimize expanding development, relieve roadway congestion, provide housing and working alternatives to Californians confounded by gridlock, and improve air quality.”

That’s pure, controlling, elitist “rationalism”:

* “minimize expanding development” means destroying your property rights to build a house where you wish, with your own money, after paying a market price to a willing seller.

* “relieve roadway congestion” doesn’t mean private toll roads, but slamming you into a crowded bus.

* “provide housing” means forcing you into Cabrini Green-style projects.

* “working alternatives” means government dictates not only where you live, but where you work. Assuming you even have a job in a state where Steinberg, Schwarzenegger, Gov. Jerry Brown and others have spent a decade destroying jobs.

He continued:

“That is why it earned the support of a broad coalition including the California Building Industry Association, the League of California Cities, the California State Association of Counties and environmental and affordable housing advocates.

But these supporting groups he listed are either a building association in tight with the government and eager to get political contracts in an ultra-politicized state, government entities or ideological activists wanting a piece of the manipulative action. Naturally “environmental…activists” would support SB 375, because it advances their goal of making the earth a nice nature preserve without any people.

And get this. He wrote:

“Housing choices and preferences are changing, and those who imply otherwise have their heads in the sand. Market research reported in this paper just last year reveals a shrinking market demand for single-family homes.”

Yes, that’s because people are broke from the anti-jobs policies impose by him and such Republicans as Schwarzenegger. You can’t live in a nice, single-family home home if you’re standing in an unemployment line.

Steinberg:

“Yes, SB 375 incentivizes higher densities, but it uses a carrot, not a stick.”

Right. It uses a giant carrot to hit people over the head.

Steinberg:

“And while developers content with their standard formula for sprawl may hem and haw, the fact is that people who want single-family homes will always be able to find them.”

Yes, if they’re rich. That’s a point I have been making, as has Joel Kotkin.

Steinberg even said:

“The general belief that smart growth policies are driving California’s people and business investment to other states is just plain wrong. The numbers don’t lie. The National Venture Capital Association and PricewaterhouseCoopers recently reported that California gained $14.5 billion in venture capital last year. That’s more than half of the country’s $28 billion in venture capital investments and almost five times the amount of the second-ranked state of Massachusetts. And while people relocate for any number of reasons, California’s population has increased 10% from 2000 to 2010, according to the U.S. Census Bureau.”

That’s a bait and switch. We get so much venture capital because computer nerd geniuses keep coming to Silicon Valley with companies like Facebook; or start them there. But if your IQ is lower than 160, forget it. As Joseph Vranich has reported, businesses keep exiting California at record rates. That’s why the state unemployment rate rose in March, to 11 percent statewide.

As to the state’s population growth of 10 percent, that was the lowest decade-over-decade performance in the state’s history. As recently as the 1990s, growth was 25.7 percent. The growth the past decade mainly was from other countries. But now even that has ended, as Mexicans are fleeing unproductive California of Steinberg-Brown-Schwarzenegger for the booming, pro-growth Mexico of Presidente Felipe Calderon.

Steinberg concluded:

“California is a desirable place to live and our population will continue to grow. We’re diverse, innovative and our economy is good at producing high-wage jobs.”

Just not many of them.

California will not have the “smart growth” future Steinberg promises because it won’t have any growth at all.

By Wayne Lusvardi

Everyone knows that California has water wars.  But it also has land wars. And one of the biggest battles is the state’s land war against zoning for the suburban single family home. And a war against single-family homes is a war against suburban families.

California’s shift in housing policy from stand-alone, single-family homes to multifamily units — apartments and condominiums — is an attempt to correct forecasted demographic imbalances between the old and the young. But is the demographic imbalance of too few young adults to support the entitlements of the elderly merely a problem for centralized planners?

CA’s Land War on the Family

Demographer Wendell Cox has recently compiled persuasive statistics that California has “declared war” on the single-family detached home.

California is planning to compel cities to zone land in the San Francisco Bay area so that more than two-thirds of all new housing construction would be for multi-family housing.  In Southern California, central planning agencies want to require more than one half of all new housing to be located in very high density “public transit villages” (30 units per acre).   The typical density for single-family homes is 4 per acre–the equivalent of a city lot of about 7,500 to 10,000 square feet.

The reason behind such a shift in housing policy is the decline in the proportion of intact, self-sufficient families to support the elderly.

California Intact Families Have Declined   

Like the rest of the United States, the number of intact self-sufficient families in California has leveled off or declined over the past few decades.  The number of “Married Couple Families with Own Children” has declined by 121,260 families or 2.9 percent in California since 2000. (See Column F in the table below.)

Meanwhile, the percentage of single-family detached homes has declined in California by 0.3 percent relative to the population increase. (Column C in the table below.)

The proportion of the elderly has declined in California by 4.4 percent since 2000 (See Column E.)

But the number of young adults age 20 to 44 has also declined by 2.9 percent. (Column F.)

The ratio of all young adults to the elderly has declined from 4.1 young adults for every 1 elderly person in 2000 to 3.8 young adults foe every 1 senior in 2010 (Column I.)

The ratio of young intact families to the elderly has dropped from 2 to 1 in 2000 to 1.7 to 1 in 2010.  (Column H.)

However, the policy of emphasizing multifamily housing over single-family housing would run against the grain of historical housing preferences and open markets.

Most People Want to Live in Single Family Homes 

The National Association of Home Builders has tracked the historical ratio of newly built single-family and multi-family housing units.

In 1984 the trend in new housing construction was for about 2 single family detached homes to be built for every 1 apartment or condo unit. By 2010, that ratio rose to about 5 homes for every 1 apartment or condo unit.

This was long past the period when the Baby Boomers were making families.  So the boom in single-family home construction was not entirely driven by the Baby Boomers.  Thus, California’s shift to more multifamily housing is not all related to a decline in Baby Boomers buying houses.  It has more to do with Baby Boomers retiring.

But what would this shift from two-thirds single family housing to two-thirds multifamily housing construction do to California’s economy?

California’s Family Economy and Obamacare

As pointed out by many prominent economists, the U.S. economy is dependent on the relative proportion of young self-sufficient families to the elderly.  Intact, self-sufficient families produce young people who eventually take out mortgages and small business loans.  In doing so, they provide the elderly with an interest rate return on their savings and pension investments.  This intergenerational cycle of exchange of loans for interest rates is what makes the market economy work.

However, if there are not enough intact self-sufficient families to produce the next generation of homebuyers and small businesspersons then the economy stagnates.  This is what has happened since about 1970.   This is why jobs have declined in the United States and California (other than THE artificial jobs created during the Housing Bubble of the mid-2000s before it burst).

There is a demographic imbalance of too few two-parent/two-child self-sufficient households to pay the elderly a return on their savings.

Thus, Obamacare has surfaced as a way to compel young adults to buy health insurance so that the elderly can have their health care subsidized.  The average premium for individual health care insurance was $4,940 per year in 2010.  Obamacare is estimated to increase health insurance premiums by up to 30 percent, to $6,422.  Young adults could elect to pay a fine of up to $695 by 2016 instead of buying health insurance.  But then this would be nothing but a ruse for a new tax.

The elderly have six times the health care costs of the young.  Obamacare would put a cap on the amount of health care costs of the elderly at 3 times what insurers charge young adults.

This is why California says it is going to move ahead with its own version of Obamacare, even if this june the U.S. Supreme Court throws out the individual mandate to buy insurance.

And for California to bring this about, it also must shift housing policy from building single-family homes to building mostly multifamily homes for young adults.  It must build a demographic base of young people to support health care for the elderly, because there are not enough young intact families to do so anymore.

Obamacare Bakes Stagnation Into the Economic Cake

Let’s assume the U.S. Supreme Court validates the “individual mandate” of Obamacare, or declares it a matter for each state to decide. Obamacare would replace the existing intergenerational voluntary exchange system with a system of forced taxation of the young. What this will do is bake stagnation into the economic cake.

Young adults were never previously required to carry health insurance. To come up with about $6,000 per year for health insurance will mean fewer young adults will have money to buy cars or homes or start their own businesses.  The intergenerational cycle of the market economy would waffle out of balance even more.  Buying houses and cars and other big-ticket consumer items would decline. There would be less disposable income.

Home ownership historically has defined entry into the middle class.  By limiting homeownership opportunities, there may be less socio-economic mobility for the young.   The young would become nothing more than the modern equivalent of “tenant farmers” for taxes.

What centralized land planning offers is limited options of where to live. And it would freeze out Californians from the opportunity of home ownership.  Obamacare, coupled with California’s centralized land planning, will limit housing options for most people to apartments or condominiums.

With Obamacare will come an even greater decline of the bourgeoisie family that is essential to a market economy. What makes economically productive families is not government policies or planning but social capital.  Government central planners and regulatory czars can’t generate the kind of social capital needed to produce economically enterprising families.

Central Planning Has Failed

Should we leave housing and health care up to central planners, or devise more market-based solutions to address the problem?  As shown with the Housing Bubble, central planning often has eventual catastrophic unintended consequences.  Economist Guy Sorman notes that centralized planning hasn’t worked anywhere it has been tried.

The Housing Bubble policy of  “easy money” mortgages tried to create artificial jobs and put renters into ownership housing to correct this demographic imbalance.  This ruined the financial and banking systems, caused a bank panic in 2008, and diluted the value of the dollar.  It has also decimated government and school district budgets and pension plans.  Central planning has a bad track record.

What is behind the states’ new housing policies is California Senate Bill SB 375, the anti-urban sprawl bill signed into law by then-Gov. Arnold Schwarzenegger in 2008.  Together with California’s version of Obamacare, it would limit future housing and health care cost options, especially for younger families.  Californians need to know that state anti-urban sprawl legislation and likely state health care insurance mandates will limit their freedom of choice and resign California to nearly permanent economic stagnation.

California’s Family and Housing Economy 2000 and 2010