| Daily Clippings for July 2, 2009
1. Payrolls Fall More Than Forecast, Unemployment Rises
2. Joblessness Hits 9.5%, Deflating Recovery Hopes
3. Deal may be just days away; Democrats drop tax plan
4. Board sets rate, date for IOUs
5. Counties, locals react with negative words
6. County could last roughly 3 months with no state cash
7. Rival states hope California's economic woes will send businesses their way
8. Budget battle lines forming over school funding
9. State's Renewable-Energy Focus Risks Power Shortages
10. Plan To Slash U.S. Health Costs May Be Tough Pill To Swallow
11. California's Residential Roof Color Rules Begin In January
12. Profitable California export?
13. Transportation secretary tours port, talks money
14. California: The National Petri Dish
15. Governor: Water Will Be Released To Farms
16. Jobs that Americans can't find
17. Schwarzenegger hopes IOUs sway budget debate
18. They don't live within our means
19. Citizens should come first - Publish grand jury reports
20. In new tactic, tankers move closer to the fight
I will take a break from these Clippings until July 14th.
We hope you have a fantastic Fourth of July… a national holiday that is not just barbecuing, fireworks, and fun times. There's an underlying historical meaning to it… the freedom we enjoy does not come free.
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Mike Reagan
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THE ECONOMY AND JOBS
Payrolls Fall More Than Forecast, Unemployment Rises
http://www.bloomberg.com/apps/news?pid=20601103&sid=ahfK709b4uds
Employers in the U.S. cut 467,000 jobs in June, the unemployment rate rose and hourly earnings stagnated, offering little evidence the Obama administration’s stimulus package is shoring up the labor market. The payroll decline was more than forecast and followed a 322,000 drop in May, according to Labor Department figures released today in Washington. The jobless rate jumped to 9.5 percent, the highest since August 1983, from 9.4 percent. Unemployment is projected to keep rising for the rest of the year just as the income boost from the stimulus package fades, undermining prospects for a sustained rebound in household purchases, analysts said. As companies from ... cut costs, the lack of jobs will restrain growth…. “We may get positive economic growth driven largely by federal spending, but people on the street will say, ‘Where are the jobs?’”… The number of Americans filing claims for unemployment benefits last week fell in line with forecasts, Labor also said, indicating firings remain elevated. Initial jobless claims dropped by 16,000 to 614,000 in the week ended June 27, from a revised 630,000 the week before. Revisions added 8,000 to payroll figures previously reported for May and April. A separate report today from the Commerce Department showed that orders placed at U.S. factories climbed for a third time in four months in May on rising demand for aircraft, machinery and computers…. The world’s largest economy has lost about 6.5 million jobs since the recession began in December 2007. That’s the biggest drop in any post-World War II economic slump. Today’s jobs report showed factory payrolls fell by 136,000 after decreasing 156,000 the prior month…. Unemployment will “remain painfully high for several more years,” Federal Reserve Bank of San Francisco President Janet Yellen said this week. “I expect that we will turn the growth corner sometime later this year, but I am not optimistic that the economy will spring back to normal any time soon.” Tax cuts and Social Security payments under the stimulus plan propped up incomes last quarter, supporting household purchases. Consumer spending rose in May as earnings climbed 1.4 percent, the most in a year. Still, the wealth destruction caused by the housing and stock-market slumps prompted Americans to rebuild nest eggs. The savings rate in May surged to a 15-year high…. Today’s report also showed the average work week fell to 33 hours, the lowest level since records began in 1964…. Workers’ average hourly wages held at $18.53 for a second month. Hourly earnings were 2.7 percent higher than June 2008, the smallest gain since September 2005….
Joblessness Hits 9.5%, Deflating Recovery Hopes
http://www.nytimes.com/2009/07/03/business/economy/03jobs.html?bl&ex=1246766400&en=8550aaa276e4d846&ei=5087
The American economy lost 467,000 more jobs in June, and the unemployment rate edged up to 9.5 percent in a sobering indication that the longest recession since the 1930s had yet to release its hold…. “There’s nothing in here to show that the economy and the market are pulling out of the grip of recession.” The Labor Department’s monthly snapshot of employment, released Thursday, challenged visions of a recovery already taking root. The numbers intensify pressure on the Obama administration to show returns on programs aimed at improving national fortunes — not least its $787 billion stimulus plan. Some economists are now calling for another dose of government spending to stimulate the economy, though the White House maintains that enough money is in the pipeline already. “Not all the recovery money has been put to work yet,” said the labor secretary, Hilda L. Solis…. But Ms. Solis acknowledged that joblessness was already much worse than the administration projected in January when it created its stimulus spending bill, suggesting then that joblessness would peak at about 8 percent. Asked why the unemployment rate is already much higher, Ms. Solis noted that much of the stimulus money was moving slowly, with construction projects in particular requiring time-consuming government permits…. That explanation echoed criticism that some initially leveled at the spending package when it was debated in Congress: many of the projects would take too long to get going, creating too few jobs in the near term…. the jobs report injected the sense that paychecks are disappearing so swiftly that consumer spending is likely to be tight, limiting economic activity. The gloomy news caused the Standard & Poor’s 500-stock index to tumble more than 2 percent. Indeed, the report reinforced a consensus that high levels of unemployment are likely to afflict American life for many months and perhaps much longer. That will dump more jobless people into a weak job market, making it harder for those already unemployed to find work and pressing down wages and hours. After a May report that showed the pace of deterioration was moderating, some economists expressed hopes that an economic recovery might finally be emerging. But the June report tempered such thoughts…. The losses for June lifted net jobs shed since the beginning of the recession to 6.5 million — equal to the net job gain over the previous nine years. “This is the only recession since the Great Depression to wipe out all jobs growth from the previous business cycle,”…. xperts argued that employment was a more crucial source of spending power than in downturns past, given how many alternate sources of cash had been lost. Consumer spending amounts to 70 percent of overall American economic activity. In recent times, Americans found myriad ways to fuel spending even as incomes for many households stagnated, borrowing against the once-rising value of homes and tapping credit cards. Now, the paycheck has returned as the primary source of spending. Yet pay is eroding even for those who have jobs…. The so-called underemployment rate — which captures not only the jobless but also those working part time because their hours have been cut or they cannot find a full-time job — increased to 16.5 percent. Some economists contend that while unemployment remains high, millions of Americans will continue to watch their spending…. For another month, the average length of official unemployment increased, this time to 24.5 weeks — the highest level since the government began tracking such data in 1948. The unemployment rate, 9.5 percent, is the highest since 1983. Layoffs have slowed in recent months, but hiring has yet to pick up, meaning that jobless people face a more frustrating search….
TAXES AND SPENDING
Deal may be just days away; Democrats drop tax plan
http://www.sacbee.com/static/weblogs/capitolalertlatest/023594.html#more
Gov. Arnold Schwarzenegger and Senate President Pro Tem Darrell Steinberg said separately Thursday that they are optimistic a budget deal can be struck within several days. The tone of their comments marked a stark contrast to Capitol fighting over the last few weeks between Democrats and Republicans over bridging the state's $26.3 billion budget gap. Steinberg also said Democrats had given up any attempt to increase taxes on tobacco or establish an oil severance tax…. Steinberg said significant progress is being made behind closed doors, adding, "It's time that we get this done."… Steinberg said a controversial proposal to borrow $2 billion from cities and counties remains under discussion. "It's certainly an issue that remains in play as we add up the numbers and get to a package that represents a real solution to California's deficit problem," he said…. "It's just a matter of finding that common ground," added Schwarzenegger. "And I'm more than happy to compromise -- I always have been a man of compromise. But we've got to go and take care of the things so we don't have bigger budget problems in the out-years and kick that can down the alley." Key issues remaining involve how best to preserve the state's safety net while altering government operations in a way that improves efficiency or reduces long-term costs, he said. Schwarzenegger unveiled numerous proposals Saturday for changing government operations, including cutting pensions and health-care benefits for future state workers, reducing welfare grants by 6 percent, altering the application process for public assistance programs, and imposing additional anti-fraud measures on services that help frail adults live independently. Steinberg did not identify specific areas of agreement or dispute, but he said Democrats are "willing to negotiate the reforms, certainly." "Some of his ideas are fine, but it's never about all or nothing," Steinberg said. "It's always about the art of the possible."…
Board sets rate, date for IOUs
http://www.sacbee.com/capitolandcalifornia/story/1996369.html
State finance officials set a 3.75 percent interest rate and an Oct. 2 redemption date this morning for the IOUs that begin going out this afternoon, while legislators and the governor continue to wrestle with the state's budget problems. Wells Fargo, meanwhile, became the second large bank to announce it will accept the IOUs as cash until July 10. Bank of America had announced the same thing on Wednesday. Golden One Credit Union has also said it will take the IOUs, but announced no termination date for doing so. Just how long the rate and date for the IOUs are in effect, however, may be as uncertain…. Sheehy also split with Chiang and Lujano over the borrowing of about $3 billion from state special funds to its general operating fund. Such borrowing is routine, and usually for 90-day periods. The treasurer's office and controller wanted to make the period for 120 days, while the finance department wanted it only 90 days. In addition, Sheehy asked that $1.2 billion be set aside for use only to pay back state bondholders in the next two months. Department officials said it was sort of a "belt-and-suspenders" approach to make sure the state would continue its unblemished record of never defaulting on a bond. Unable to reach agreement, the matter was put off until next week….
Counties, locals react with negative words
http://www.thereporter.com/ci_12739458
As the state prepares to begin issuing IOUs today, reaction was swift and negative from county government and small business leaders across the state and local region Wednesday. "California counties face $4.3 billion in cuts, deferrals, and IOUs under current budget proposals due to the Legislature's failure to enact corrective measures by the June 30 deadline -- a combination that will push some counties to the fiscal brink and will hinder their ability to provide vital services to residents," read a press release issued Wednesday afternoon by the California State Association of Counties. Solano County echoed the concerns. In a presentation this week to the Board of Supervisors, County Administrator Michael Johnson said the worst case scenario, should the state budget crisis continue, would place Solano in a negative cash flow of $7.2 million by Nov. 3. "The impact of the IOUs would hasten that cash flow crisis if it is put in place on top of the other scenarios,"…. "In all likelihood, counties will be forced to conserve cash by paring down services, such as libraries, parks, or road maintenance, or by issuing their own registered warrants to vendors and contractors in order to meet federal and state requirements for the provision of social services programs," the CSAC release noted…. Perhaps hardest hit by the IOUs will be small businesses that provide goods and services to the state, and taxpayers expecting state refunds….
County could last roughly 3 months with no state cash
http://www.timesheraldonline.com/ci_12739449?source=rss
If California starts issuing IOUs today as expected, Solano County could pay vendors and keep social programs funded for about three months, county officials said Wednesday. The state IOUs likely would cost Solano County about $7 million per month, but whether the Board of Supervisors would put up the cash following the issuance of the IOUs was under discussion late Wednesday night, said Patrick Duterte, the county's director of health and social services. "We could continue to do business as usual for three months, for sure," Duterte said. Under that scenario, the county would keep up temporarily with welfare and other payments for needy families. Facing $4.3 billion in cuts, deferrals and IOUs, a California county association says many counties will be unable to deliver health, public safety and other services. Duterte said Solano is in a better position than some because of its general fund reserves…. The issuance of state IOUs would hurt Solano County's ability to maintain a positive cash flow, spokesman Steve Pierce said. "An IOU is better than not getting paid at all, but it still puts the county in the position of having to figure out how to make ends meet," Pierce said. "The county is still not getting paid back for what the state contracted it to do in the first place." County officials, in the midst of budget hearings on their own spending plan, have not had time to analyze the budget impacts of the IOUs, Pierce said. County supervisors have a policy of not using reserves to fund state programs. California counties are required by state and federal law to provide social services and cannot issue IOUs to programs they contract with, according to the county association. It predicts IOUs and payment deferrals will result in library and road maintenance suffering.
BUSINESS AND LABOR
Rival states hope California's economic woes will send businesses their way
http://www.sacbee.com/politics/story/1994615.html?mi_rss=State%2520Politics
California's budget crisis is turning into a worldwide spectacle that could harm the state's business climate – and chase companies away. Rival states are revving up their economic-development efforts as global news outlets fixate on the $26.3 billion deficit and the IOUs the state is expected to issue today. California companies are making inquiries to out-of-state groups like the Economic Development Authority of Northern Nevada. Besides asking about tax rates and other expenses, many are worried about California's "general overall chaos, that uncertainty,"…. The recession is freezing many companies in place. But as the economy begins to stir, CEOs are starting to compare the costs of doing business in California vs. going elsewhere. Ardito said the volume of calls to her organization – from California and other states – has jumped 40 percent from a year ago…. firms looking to reach California consumers will do so from locations just outside the state…. Sacramento's budget problems are feeding the perception that California is a high-cost, overregulated, out-of-control place to do business…. Even if other states have problems, they're considered less scary than California's…. The budget is only part of the story. Recruitment consultants say businesses are frightened by a possible 24 percent hike in workers' compensation premiums, as recommended by a key advisory panel. Workers' comp expenses are a huge issue for many businesses. Insurance Commissioner Steve Poizner is to decide on the increase next week….
EDUCATION
Budget battle lines forming over school funding
http://www.sacbee.com/topstories/story/1997450.html
With California's budget gap growing by millions each day, Thursday marked a roller coaster of Capitol emotion that veered from optimism about prospects for a deal to eruption of a new fight over school funding. Bottom line: No agreement - and state finance officials estimate that the red ink grows by about $25 million per day for every day that goes by this month without a balanced budget in place…. battle lines were forming Thursday over a key element of Gov. Arnold Schwarzenegger's latest budget-balancing proposal - suspension of Proposition 98 to achieve $3 billion in savings this year. Steinberg, Assembly Speaker Karen Bass and school officials said that the governor's proposal would lower by $1.4 billion the base used to calculate future funding for public education…. The matter is complicated by complex formulas for determining school funding, which depend partly on state economic conditions, so there is disagreement over whether schools would be hurt long-term by the governor's proposal.
ENERGY AND UTILITIES
State's Renewable-Energy Focus Risks Power Shortages
http://online.wsj.com/article/SB124658578833590355.html
California officials are beginning to worry that the state's focus on transitioning to renewable-energy sources could lead to power shortages in the near term. The state has been so keen to develop renewables that relatively few conventional power generators, such as gas-fired plants, have been built lately. That risks a possible energy shortfall in certain places if the economy rebounds any time soon. California's utilities are barreling ahead to try to meet a state mandate to garner 33% of their power from renewable sources by 2020, and some officials are concerned the effort might push up electricity prices and crimp supplies. The state auditor warned this week that the electricity sector poses a "high risk" to the state economy. A staff report from the state energy commission also warns that California could find itself uncomfortably tight on power by 2011 if problems continue to pile up. Utilities complain that the ambitious renewable-energy mandates, combined with tougher environmental regulations on conventional plants, are compromising their ability to deliver adequate power…. The stresses being felt in California could be a harbinger of problems to come in other states. The federal Waxman-Markey climate-change bill, passed by the House of Representatives on June 26, would require states to obtain about 15% of their electricity from renewable sources by 2020. Currently, about 4% of U.S. electricity comes from renewables, excluding hydropower. California's 33% renewable-energy target is so ambitious that it is likely to miss the goal by five years or more, energy officials now concur. State energy agencies recently concluded it could cost $114 billion or more to meet the 33% mandate, more than double what it might have cost to achieve an earlier 20% requirement. Consumers will bear those costs, one way or another. Agencies also identified problems with constructing sufficient transmission capacity to move renewable-based energy to cities…. At the same time, new regulations are putting existing power plants under pressure. Last week, the state Water Resources Control Board issued a proposed policy that would clamp down on power plants that use something called "once-through cooling," which sucks water out of the ocean and rivers and discharges massive amounts of warmed water, harming some aquatic life. The policy would end the practice at 19 plants that produce as much as 15% of the state's electricity. That has the California Energy Commission worried electricity shortages might arise if older, marginal plants are shut down before there is replacement power is available….
HEALTH AND HUMAN SERVICES
Plan To Slash U.S. Health Costs May Be Tough Pill To Swallow
http://www.ibdeditorials.com/IBDArticles.aspx?id=331427761565425
When someone takes out a scalpel, it's usually going to hurt — a lot. Yet Peter Orszag, President Obama's budget director, claims the U.S. could slash $700 billion in annual medical costs without affecting quality. That would make it much easier to pay for sweeping health care reform, which is struggling on Capitol Hill over cost concerns…. The head of the Office of Management and Budget draws heavily on the Dartmouth Atlas of Health Care. The atlas has found that Medicare spending varies greatly across the U.S., yet higher spending regions have no better and, at times, worse outcomes than regions that spend less. For example, Miami spends 30% more than Minnesota, but patients aren't any healthier. Areas with coordinated care and more primary-care physicians tend to use fewer resources than those with more disjointed care and more specialists…. "The difference is in the utilization of services that are in the 'gray area' of medicine," said Amitabh Chandra, a public policy professor at Harvard who has worked closely with the Dartmouth Atlas. "These are services that don't lend themselves to clinical trials. Reasonable physicians will disagree over what the right rate of treatment is." Chandra cites CT scans and MRIs. "They are undoubtedly valuable, but there is an unlimited amount of patients you can perform these procedures on."… Even assuming that experts can identify best practices, can they impose their will? Doctors, hospitals, drugmakers and patients will all demand that their treatments, their choices, are approved. It will be hard to resist the media and political pressure when, say, a patient dies because Medicare did not permit a particular drug or test. Dr. Richard Cooper of the Wharton School says it is unwise to base policy on the Dartmouth Atlas, as Medicare is a poor measure of total health care spending. "Higher health care spending results in better health outcomes," Cooper said. "Dartmouth is measuring regional variation in sociodemographic characteristics, not health care spending."…
HOUSING AND “SMART GROWTH”
California's Residential Roof Color Rules Begin In January
http://www.kcra.com/money/19933815/detail.html
Starting in January, all new residential roofs in California's hottest zones must be light-colored. The rules are currently in place for all new flat-roof commercial buildings in California to help save on energy bills and cut down on global warming. Art Rosenfeld, an award-winning physicist who's an expert on energy, said white roofs cool cities. Eventually, asphalt in California may have similar rules with concrete to keep cities cooler and to reduce greenhouse gases. The light-colored residential roof plan is a 6-year phase, mostly involving areas of Southern California and Redding. Sacramento will start seeing color options for roofs at stores soon.
PUBLIC SAFETY
Profitable California export?
http://www.fresnobee.com/opinion/story/1510899.html
In the depths of the worst recession since World War II, California may be giving birth to a new export industry. It's an export in which the Golden State appears to have important competitive advantages. And it may be recession-proof. The export is prison inmates. California has something of a head start in this market. The state already has sent 7,600 inmates to private prisons in Arizona, Tennessee, Mississippi and Oklahoma. But it hasn't yet sent inmates to public prisons in other states. As with other economic innovations, this idea required a visionary leader. Gov. Jennifer Granholm of recession-ravaged Michigan stepped up because she is being forced to shut several prisons. California's prison predicament is different. It has 168,000 inmates in a system built for half that number. A federal judicial panel has issued a tentative ruling calling for the release of as many as 55,000 of those inmates within three years…. An agreement wouldn't just ease California's prison overcrowding. It would also likely save the state money. Our per-inmate cost of $45,000 is the highest in the nation. Michigan's is $32,500 per year. Some of that difference would flow back to the general fund. Sending inmates to the Midwest would also be a stimulus plan of sorts, saving the jobs of some Michigan prison workers slated to be laid off. We don't think inmates should be the basis of a long-term export industry for California. Eventually, the state will have to align the number of inmates in its prisons with its capacity to provide them with housing and health care. But in the short run, sending inmates to Michigan could help both states. In a time of crisis in both states, this is a remedy that neither California or Michigan are in a position to refuse.
TRANSPORTATION
Transportation secretary tours port, talks money
http://www.mercurynews.com/breakingnews/ci_12743875
U.S. Transportation Secretary Ray LaHood and elected officials toured the Port of Oakland on Thursday and discussed the possibility of more federal money rolling on to its docks. LaHood met with a host of local, state and federal officials in discussing the port's place in the regional and national economies. LaHood stressed the ideas of all of the West Coast's ports working collaboratively to cut down on pollution and talked of creating a "port czar" position that would put together a collaborative plan for the nation's ports. LaHood also spoke about the possibility of securing for the Oakland port some federal Transportation Investment Generating Recovery Grant money. The $1.5 billion available in the so-called TIGER grants is available to local and state governments for a variety of transportation projects…. the port already has received nearly $24 million in federal stimulus money, but more will be needed to keep the port — with its more than $9.7 billion worth of U.S. exports — growing and becoming more environmentally friendly…. The key to creating more environmentally friendly ports, LaHood said, is to transport more goods by ship rather than trucks. He mentioned, in particular, the importance of a "marine highway" along the West Coast. "We will be putting a good deal of emphasis on the marine highway in order for us to get trucks off the road and get cleaner air," LaHood said.
WATER AND THE ENVIRONMENT
Governor: Water Will Be Released To Farms
http://www.kcra.com/news/19932581/detail.html
After months of debate, Gov. Arnold Schwarzenegger said up to 100,000 acre-feet of water will be released to Central Valley farms to help them in drought conditions. Thousands of farmers, farmworkers and their supporters rallied at Fresno City Hall on Wednesday, calling on federal officials to ease regulations that have cut water supplies to the nation's most prolific growing region. Farmers on the west side of Fresno County, the top-producing agriculture county in the U.S., will receive 10 percent of their federal water allocation this year as a result of cutbacks and drought that has led to idled land and layoffs. Growers, with the help of congressional delegates from the region, have asked officials to ease federal protections for threatened fish that have drastically reduced supplies pumped into the state's vast canal system. Federal agencies have ordered reduced pumping in the delta when the delta smelt are spawning in the area, leaving nearly empty the San Luis Reservoir that stores water for farmers and Southern California municipal users. According to the governor's office, the Department of Water Resources will accommodate the water release as a "water loan" from the State Water Project supplies to the federal Central Valley Project. However, the loan is conditioned on "repayment" of the water after this summer's irrigation season….
NATIONAL / STATE POLITICS
Jobs that Americans can't find
http://www.dailyrepublic.com/story.php?id=611.0
Blue-collar workers who voted for Barack Obama may want to reconsider their support in light of current unemployment trends. The president is re-opening a campaign for 'comprehensive immigration reform' (some call it amnesty) even as jobless rates keep rising. Legal and illegal immigrants have swelled America's labor force in the recent years. In fiscal 2008, 1.45 million new migrants were granted work permits. Combined with the influx of millions of undocumented workers, this excess supply became the equivalent of the housing bubble -- it was bound to burst. Since 2007, jobless rates have doubled. In the first quarter of this year, immigrant unemployment stood at 9.7 percent, the highest level since 1994, when data began to be collected on migrants. Overall unemployment topped 8.6 percent, also the highest in 15 years. The blue-collar sector has been hit especially hard. Some 31 million native-born and immigrant workers with a high-school degree or less are now jobless. Unemployment in this category is now a record 14.7 percent for immigrants and 19.5 percent for natives. Not surprisingly, northbound movement across America's southern border has slowed. Without prospects of a job, there's less incentive to come. But if the Obama administration and congressional Democrats enact yet another 'regularization' of undocumented workers, the U.S. workforce will artificially inflate -- further depressing wages…. A better course would be strictly enforcing existing immigration laws. 'If the United States chose to more vigorously enforce immigration laws over the next year and this resulted in 1 million or 2 million illegal workers deciding to leave, it could significantly improve the employment prospects of our poorest and least educated workers,' said Steven Camarota and Karen Jensenius of the Washington-based Center for Immigration Reform. That's a plan that might actually work for workers.
California: The National Petri Dish
http://blog.heritage.org/2009/07/02/california-the-national-petri-dish/
Supposedly, trends start in California and then spread to the rest of the country, a notion that seems to be confirmed by the latest economic news. In May, California’s unemployment rate hit 11.5 percent—the highest it has been since 1941. This morning we learn that unemployment for the entire country hit 9.5 percent in June—the highest rate in 26 years. Will the country close the economic-death-spiral gap with California? Very possibly it will, if the federal government continues to follow California’s example of crushing its economy with ever-increasing government spending, taxing, and regulating. The latest from California is that state lawmakers cannot reach agreement on a new budget for the fiscal year which began on July 1. That failure prompted Governor Arnold Schwarzenegger to declare a state of fiscal emergency and to order a third furlough day for state employees. The state’s comptroller is now preparing to send IOUs to 28,000 California taxpayers who are owed refunds. Central to the budget impasse is the problem of closing a budget deficit that by latest estimates has grown to $26.3 billion. Some experts think California’s deficit will top $40 billion next year. Because of these budget maladies, Standard & Poors has put the state on notice for a lowering of its credit rating, which is already the worst in the nation (tied with Louisiana). California has the fourth highest foreclosure rate in the country. Of the cities with unemployment rates exceeding 15 percent, nearly half are in California. California’s economy is imploding, and the causes are not very mysterious. While a national economic recession can be blamed for lower-than expected tax revenues, California has made things worse with policy choices that include spending every dime (and then some) as if there would never be a rainy day, and creating a poor business environment…. over the past decade, the state has nearly doubled its spending; and over the last 18 years, state spending has grown an average of 5.91 percent per year compared to yearly inflation plus population growth of just 4.38 percent. In other words California’s government has gotten bigger against any metric, and that has fed the demand for taxes. According to the Tax Foundation, California’s corporate tax rate is the eighth highest in the country; and overall Californians face the sixth highest state-local tax burden in the United States…. only three states have lower economic freedom scores than does California. The PRI index is a broad measure of how state governments impact their economies through tax, spending, and regulatory policies. The lesson from California should be that high taxes, high spending, and lots of regulations is not a model for economic growth, yet those are precisely the policies that President Obama and Congress are pursuing. Federal spending this year will be about 26 percent of gross domestic product, the highest level since World War II. And the long-term outlook is even worse if nothing is done to reform entitlements. Meanwhile, the House of Representatives has passed a global warming bill that will do nothing to stop global warming, but will cost the economy an average of $393 billion per year. Even here, California appears ahead of the curve, as the EPA has just approved a waiver that will allow California to impose its own tougher limits on carbon emissions from cars…. If you want a preview of where such policies are taking the country, look at California today.
Schwarzenegger hopes IOUs sway budget debate
http://www.sacbee.com/topstories/story/1994666.html
If the stigma of issuing IOUs triggers a budget deal in the coming days, Gov. Arnold Schwarzenegger might find redemption in his strategy of quashing a stopgap solution that would have avoided those non-cash payments. But if no budget deal emerges soon, Schwarzenegger will have helped saddle the state with a lower credit rating and have nothing to show for it. As a negotiating strategy, Schwarzenegger is counting on public pressure to mount against the Legislature as California issues IOUs today for only the second time since the Great Depression. The Republican governor could have backed legislation to avert IOUs this week, but he demanded that lawmakers solve the entire budget problem, which grew Wednesday to $26.3 billion. The state plans to begin paying local governments, businesses and taxpayers with IOUs – formally called registered warrants…. Schwarzenegger wanted a full budget deal, and part of his calculation was likely that IOUs ramp up the stakes and force lawmakers to reach that goal sooner. Without IOUs, he figured lawmakers might have delayed compromise on the rest of the package, costing the state in a different way. "If he had signed the stopgap measures, the Legislature would have gone home for Fourth of July weekend and come back when the threat of IOUs came up again,"…. Schwarzenegger's refusal to agree to a stopgap plan sent lawmakers a signal of his distrust…. Senate President Pro Tem Darrell Steinberg, D-Sacramento…. and Assembly Speaker Karen Bass, D–Los Angeles, essentially asked Schwarzenegger to trust them. They promised the governor on Tuesday that they would work with him in the next two months on his proposals to change state government permanently if he'd back their stopgap plan. Their concern was not only triggering the IOUs, but also losing the opportunity to cut the 2008-09 education budget…. The governor showed little love for Democrats on Wednesday, either. He said they wasted the month of June…. Schwarzenegger said. "I mean, how do they explain this to the California people, that in the midst of the biggest budget crisis we are having a debate about cow tails?"… But it's not clear that IOUs are sufficient to force lawmakers to close a deal, said Joe Mathews, Irvine senior fellow at the New America Foundation. He said Schwarzenegger and legislative leaders are mostly lame ducks. And legislators of both parties can dig in their heels because they are protecting the constituents they were elected to represent. He said federal intervention of some sort may be necessary….
They don't live within our means
http://www.ocregister.com/articles/taxes-evans-california-2481269-ants-new
Several years ago, the last time California government was "going off a cliff," I wrote a column entitled "Taxpayer Ants and Government Grasshoppers." It was inspired by the wonderful old Disney cartoon about industrious ants working hard and putting away provisions for the future and a lazy grasshopper who refused to do the same. When winter came, and the grasshopper faced death from starvation and exposure, the ants took pity and provided him food and shelter. The grasshopper then repented his ways…. This was a Hollywood ending. In Sacramento, where our ruling elite fail to learn lessons, the endings are different. Sacramento is filled with a new crop of cash-eating locusts, and they are no better than their predecessors. They show no remorse or regret for their overspending and no sympathy for the taxpayer ants who are struggling to get by and are wondering if they will make it through the winter of our declining economy. To add insult to injury, the grasshopper chorus now sings a new song, led by Assemblywoman Noreen Evans, D-Santa Rosa. "This mantra out there, 'Live within our means,' while it sounds really nice, while it sounds really simple and it sounds really responsible, it's meaningless," she said…. Evans' statement is breathtaking for its arrogance. For California families and businesses, the idea that one has to "live within their means" is common sense, and those who do not follow it find themselves in bankruptcy. Evans demonstrates yet again how disconnected our liberal political leadership is from ordinary citizens…. will she next suggest, "Let them eat cake?" The Legislature approved large tax increases in February that make California taxes the highest, in many categories, in the nation…. Still, the majority of lawmakers believe that isn't nearly enough and are now seeking to raise additional taxes and fees. Evans justifies calls for new revenue by saying that it is for the "needy." However, if she is so concerned about the least amongst us, why did she and most of her colleagues approve the February tax package that includes new sales taxes, higher car taxes and a $200 cut in the tax deduction for dependent children? These taxes fall disproportionately hard on low- and middle-income Californians. And why did these same tax-and-spend lawmakers, who use children and the poor as human shields to defend raising taxes, approve Proposition 1A for the May special election ballot, which would have perpetuated these highly regressive taxes for an additional two years? Apparently, to Evans and her crew, government employee unions are the truly needy. Although California has the highest-paid public employees in the nation, the majority in the Legislature has worked diligently to protect them…. Meanwhile private-sector workers are seeing their savings evaporate and are compelled to work longer to provide for their own retirement as well as for employees of government. Nearly a dozen of every 100 California workers is unemployed, and many of those still working struggle to hang on to their homes and jobs. This year, the ants are beyond providing another bailout to Sacramento. If the grasshoppers don't change their tune soon, we'll all suffer a very, very chilly winter.
LOCAL POLITICS
Citizens should come first - Publish grand jury reports
http://www.thereporter.com/opinion/ci_12739465
Given the drastic budget cuts being made by Solano County Supervisors right now, it may seem petty to complain about Tuesday's decision to stop printing grand jury reports. But it is precisely because the amount of money being saved is so petty -- $12,000 -- that this decision should be reconsidered. This isn't the first time supervisors have tried to kill off the printed version of the grand jury report. But past arguments came when the county was flush, which made the accusations of former grand jurors and citizen watchdogs -- that the county was merely trying to hide potentially embarrassing criticism -- credible. This time, the county is trying to slash $136 million from its previous budget, so the need to cut all expenses provides better camouflage. Yet, one wonders: Why is it OK to spend $50,000 on the county's State Fair exhibit if Solano can't afford $12,000 to keep its own citizens informed about the workings of government? Yes, the grand jury reports are available online. And, no, the county has no legal obligation to print them. But Solano has a long track record of publishing the reports and distributing them via the county's newspapers, which still reach half of the households in the county. And just to be clear, the objection here has nothing to do with newspapers losing revenue. The bulk of the money the county spends on this report covers the cost of printing -- ink, paper, etc. Distribution fees are minuscule -- less than $1,000 for The Reporter…. Back in 2006, supervisors changed the printed reports, holding off on publication until the agencies had a chance to respond. It took a little longer, but in the end, citizens were better served by being able to see both the grand jury findings and the agency answers. It also served agencies well. They now had a chance to put out their side of the story. That won't automatically happen online, since citizens will have to keep checking the Web site to see if responses have shown up. The grand jury's findings will still make it into newspapers -- as news. But unless agencies are prepared to respond on the day those findings are made public -- and most aren't -- the story will remain mostly one-sided. That $12,000 publication has been an effective public relations tool for the public agencies and Solano's citizens….
DEFENSE
In new tactic, tankers move closer to the fight
http://www.airforcetimes.com/news/2009/07/airforce_afcent_tankers_070209/
In the dark of night and light of day, miles above Iraq and Afghanistan, Air Force tankers are refueling a growing number of combat missions. The tankers, in a major change of tactics, are now moving closer to the fight…. In the past, tankers set up refueling orbits, and the fighters and bombers came to them. But with the tankers facing minimal anti-aircraft missile threat, and fighters and bombers needing to remain on station, tankers are more frequently bringing fuel to the attack planes…. The change in tactics requires more coordination to make sure the tankers don’t intrude on other military operations and commercial air lanes, Dixon said. Three Air Force expeditionary squadrons handle the refueling missions, flying sorties from bases in the Persian Gulf region and Manas Air Base, Kyrgyzstan, not only for Air Force fighters but for Navy and Marine jets as well. The Navy and Marines Corps do not have their own large jet tankers, so about one-third of the tankers’ fuel goes to their fighters…. Most days, tankers fly from 50 to 55 sorties and pump out 3 million or more pounds of fuel to around 250 aircraft, Air Force statistics show. The workhorse of the refueling fleet, the KC-135 Stratotanker, flies about 75 percent of the missions and KC-10 Extenders fly the rest, according to Air Mobility Command figures. Some foreign militaries, such as the French, also fly tanker missions to support their Afghanistan operations. Fighters are the tankers’ primary customers. Jets such as the F-16 Fighting Falcon, F-15E Strike Eagle and A-10 Thunderbolt need to refuel about every 90 minutes, while large aircraft like the B-1B Lancer can linger for several hours before needing gas. Transports such as the C-130 Hercules and C-17 Globemaster typically are refueled on the ground, not in the air…. During the summer, taking off from runways where the temperatures can exceed 100 degrees means taking off with less fuel, shortening sorties by about two hours. A typical refueling sortie lasts about eight hours for KC-10s and six hours for KC-135s, Dixon said. Cooler temperatures allow the planes to carry more fuel. The long sorties and frequent flights mean aircrews pile up dozens of hours every week. Air Force medical flight restrictions limit pilots to logging 150 hours a month, a ceiling many airmen reach…. A typical deployment for active-duty crew members runs about two months; however, many crews will make at least two deployments annually, making tanker aircrews among the most-deployed aviators. |
