Archives for November 2012

Message to the GOP: Believe it or Not

From American Thinker:

Bill Whittle has been making the rounds with the observation that the Republican Party doesn’t believe its own message, and this is one of the main reasons we lost the election. The idea is that Republicans make a show of being conservative, but don’t demonstrate a true commitment to conservative values or our nation’s founding principles. I think he’s right. Bill Whittle is a very smart guy.


Lately, the Republicans have been doing everything they can to prove him right. The Republican leadership has long been shifting policies and positions to the left, and is now accelerating in that direction. We need a “bigger tent”, don’t you know, and the best way to get a “bigger tent” is to become more like the Democrats.

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Photo courtesy of DonkeyHotey, flickr

Obama demands $1.6 trillion tax boost, and an unlimited credit card

From The Daily Caller:

President Barack Obama has dramatically upped his demands in the fiscal crisis negotiations: He wants Congress to levy twice as much in extra taxes from Americans as he urged during the election campaign, give up its control over the nation’s debt limit, and fund an immediate $50 billion stimulus for his political priorities.

In exchange, Obama offered to consider — but not necessarily accept — GOP proposals for cutting $400 billion from Medicare and other programs strongly favored by off-year voters.

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House passes bill to cancel diversity visa lottery

From The Washington Times:

The House voted Friday to cancel the annual diversity visa lottery and give those immigration visas to high-tech foreign-born who earn advanced degrees from American universities, as Republicans powered through their chamber the first major immigration bill since the election.

The 245-139 vote was a test of the GOP’s plan to tackle immigration piecemeal, and while the bill passed, the strong opposition from Democrats suggests that Republicans’ strategy will face difficult hurdles.

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Photo courtesy of Rob Crawley, flickr

Morning Bell: 6 Fixes to America’s Fiscal Crisis

From The Morning Bell:

President Obama made his first offer to congressional Republicans yesterday in negotiations over the “fiscal cliff”—an economic catastrophe of tax hikes just a few weeks away.

The White House’s proposal? $1.6 trillion in tax increases, $50 billion in new stimulus spending, and a change that would make it easier to raise the debt limit—so that all this spending could continue.

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California high-speed rail Cheaper, slower

From The Economist:

THERE is an aphorism popular with mechanics, contractors and other members of the skilled trades. It goes like this: you can get it good and fast, but it won’t be cheap. You can get it cheap and fast, but it won’t be good. Or you can get it cheap and good, but it won’t be fast. The people in charge of California’s new high-speed rail project appear to have settled on the third option—they’re going to take a little longer to finish the project, but they’re going to save some money doing it. The “Fresno Bee reported on Saturday that the California High-Speed Rail Authority, which is managing the project, has pushed back the deadline for completion of the first segment, between Bakersfield and Madera in California’s San Joaquin Valley.

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Firefighters’ contract cuts future pensions

From The OC Register:

The City Council has approved a tentative labor contract with its firefighters that significantly reduces the pensions Anaheim will pay out to new employees hired after Jan. 1.

The three-year contract, approved 4-1 with Mayor Tom Tait dissenting, comes after more than seven months of negotiations.

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CA Businesses Enticed to Leave State

This year’s Black Friday and other miscellaneous holiday sales remind us that in order to entice customers and increase sales revenue, the method is simple: cut prices. Eager shoppers will line up in front of their favorite stores at wee hours of the morning just to land a good deal. People will even buy things from the comfort of their own homes: Online sales during this year’s Black Friday surpassed $1 billion for the first time. Consumers are ready to consume—they’re just waiting for an opportune moment to do so.

The approach should be the same for states and their governments trying to attract businesses. By cutting taxes and doing away with strangling regulations, businesses have real incentives to either stay in one state or move to another. The concept is simple: Make the business environment attractive, and companies and their profits will follow.

In response to California’s massive tax hikes and new CARB regulations being enacted come 2013, Arizona’s business leaders aim to prove that their state has more to offer California businesses. The Greater Phoenix Economic Council plans to fly in nearly 100 California CEOs for complimentary stays and tours of the metropolitan area. The Grand Canyon state beats our Golden State in every tax rate: State sales tax rounds off at 5.6 percent, while California’s sits at 7.5 percent. Arizona and California corporate tax rates are at 6.968 percent and 8.84 percent, respectively, and—get this—Arizona’s top income tax rate is 4.54 percent, compared with California’s whopping 12.3 percent, effective this year with the passage of Prop. 30.

Earlier this year, Spectrum Location Solutions reported 254 companies left California in 2011. That includes major tech companies, like Twitter, Adobe, eBay, and Oracle, which all packed up for Salt Lake City. In April, Apple announced construction of a $304 million campus in Austin, complete with the addition of 3,600 jobs. The headquarters for chain restaurants Claim Jumper and Bubba Gump Shrimp Co. were both moved to Austin as well. It’s had a huge effect on California’s tax revenues, which plunged by 22 percent, as reported by State Controller John Chiang in early 2012. Add to that our unfunded pension liability, bankrupt cities, poorly performing municipal bonds, and you have a recipe for disaster for any state.

It’s also impacted our unemployment rates. With so many businesses high-tailing it out of the state, there are fewer opportunities for able-bodied individuals to find work. One in two new graduates are either jobless or underemployed. California’s unemployment rate of 10.1 percent is above the 7.9 percent national average, and well above low tax rate states like North Dakota (3.1 percent) and Utah (5.5 percent). Even Arizona boasts a lower unemployment rate at 7.1 percent.

But instead of lowering taxes, Sacramento seems intent on making even easier to raise taxes in California. State Sen. Mark Leno will be introducing legislation on Monday to lower the threshold for school parcel taxes from two-thirds to 55 percent. Raising taxes in the name of education–sounds familiar, doesn’t it?

Governor Brown should take a cue from major retailers and start making California a more attractive location for businesses to grow and thrive. He’s promised not to raise taxes without constituent consent, but he’s proven a willingness to influence voters by holding public services hostage, as he did with Prop. 30. It’s obvious that the state’s problem is in expenditures, not revenue. But the concept behind raising revenue is just as simple. Just like the whopping revenues that Black Friday sales bring in, a lower tax rate and fewer regulations will bring more businesses, and in the aggregate, more revenue.

(Josephine Djuhana is Assistant Editor for the California Political Review.)

Chapman Forecast: More Sluggish Growth for CA

Chapman University’s 35th annual economic forecast projects more sluggish growth for California in 2013. It was presented Wednesday in Costa Mesa before about 1,500 business and community leaders by Chapman President Jim Doti, also an economist; and Esmael Adibi, director of the school’s A. Gary Anderson Center for Economic Research.

According to Chapman, California’s unemployment rate of 10.1 percent in October remains higher than the U.S. rate of 7.9 percent because the state lost jobs faster during the Great Recession; then created jobs more slowly during the recovery. My analysis is that the state was severely crippled by Gov. Arnold’s Schwarzenegger’s policies of tax increases, wild spending increases and regulatory excess, especially AB 32, the Global Warming Solutions Act of 2006.

Note that the only time California exceeded national growth was during the late 1990s, when we had a “comparative advantage,” according to Chapman, because of the dot-com boom.

However, in recent quarters California once again actually has been creating jobs faster than the national average. Chapman attributes this to growth in the fields of leisure and hospitality; professional and business; and health care. (The following chart includes Orange County data.)

That certainly is positive. But Chapman notes that employment in California still remains below what it was before the Great Recession hit in late 2007. By contrast, after previous recessions, by this point in the recovery period all lost jobs had been replaced.

Another positive point is that exports from California to foreign countries have risen sharply during the three years of the recovery. There is great global demand not just for the magical devices from Silicon Valley, but for the medical devices whose industry is centered in Irvine, the fantasy entertainment conjured up by Hollywood, and the goods and services of many other industries.

Note how, since the depths of the recession in 2009, merchandise exports have risen from $28.7 billion in the second quarter of 2009 to $42.1 billion in the second quarter of 2012. That’s a 47 percent increase in just three years; although of course it comes off the recessionary trough.

Chapman’s survey of California manufacturers also shows increasing growth.

It may seem that the state is overcoming  its reputation for over-regulation, such as AB 32, and high taxes. But despite this encouraging growth, as mentioned above the state still hasn’t recovered all the jobs lost during the recession, let alone exceeded them with robust expansion. Moreover, the last chart shows the manufacturers’ sentiments actually turning downward, to 58 percent positive in the fourth quarter of 2012, compared to 61.1 percent positive in the third quarter. (Anything above 50 percent positive indicates future growth.)

Another positive element is that consumer sentiment in California remains as sunny as a day at the beach. It’s at its highest level since before the Great Recession.

Despite the many positive indicators, payroll job growth remains sluggish. During the horrible year of 2009, California actually lost a stunning 6 percent of its jobs. Another 1.1 percent were lost in 2010.

Since then, job growth has been only 0.9 percent in 2011 and 1.7 percent in 2012. The projection for 2013 also is anorexic, at just 1.6 percent.

The job numbers are 238,000 jobs created in 2012 and 234,000 in 2013.

California Payroll Job Growth

Fiscal Cliff and California

California, of course, is part of the United States. Chapman anticipates that the “fiscal cliff” crisis will be resolved with some tax increases of about $150 billion, combined with $50 billion in spending cuts. This will produce national economic growth of 2.1 percent in 2013, down a little from 2.3 percent in 2012.

Both numbers are sluggish, indicating that there’s going to be no radiant boom to propel the United States and California into economic nirvana.

That means the Proposition 30 and Proposition 39 tax increases, as well as the tightening regulatory environment under AB 32, will take their toll on the state, with no relief from an economic boom such as was enjoyed a decade ago.

Chapman warns that the European economic crisis could cripple the global economy, slowing growth across the United States, including California. Golden State exports, the lifeblood of our prosperity, could suffer.

(John Seiler is the Managing Editor for CalWatchdog. Originally posted on CalWatchdog.)

Abbas Demands Palestinian State with 1967 Borders to UN

California named worst-run state in the nation

From Hot Air:

First the best-run, according to Wall Street 24/7′s annual ranking: North Dakota, Wyoming, Nebraska, and Utah, with Iowa rounding out the Top 5.

They have in common low amounts of debt per capita, low unemployment rates, business-friendly tax structures, and several of them are home to hydraulic fracturing and other energy booms. There’s also a high correlation between a well-run state and a high percentage of residents with high-school diplomas. And one more thing. What is it? Ah, yes, they all have Republican governors. I’m sure it’s just a coincidence. What does a governor have to do with running a state’s affairs, after all?

The worst-run: California, Rhode Island, Illinois, Arizona and New Jersey, making the bottom five home to two Democratic governors, two Republicans, and one Lincoln Chafee.

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