In politics there are no coincidences. You see one piece of legislation and you wonder why, in a straight line, on the “merits” of the issue. Then you see another piece of legislation and you finally get the whole story. For instance last week the California Political News and Views did a story about the new Brown budget. He was changing the formula for children in poverty—so more would qualify for the free lunch program. Jerry added one million children to the poverty line. That was bad enough. Now we know why. http://www.capoliticalreview.com/capoliticalnewsandviews/gov-brown-proposes-change-in-tallying-of-low-income-students-for-funding-formula/

Democrat Darrell Steinberg has a bill to create transitional kindergarten, but since we do not have $1.5 billion a year for the full program, he has the assistance for just those government considers in “poverty”. That is currently 234,000 children. But, with the new definition, hundreds of thousands more children will qualify—many illegal aliens.

“The Sacramento Democrat said his scaled-back plan would cost an additional $378 million. It would offer preschool to 4-year-olds whose families qualify for free and reduced lunch – about 234,000 children, Steinberg said.

“Every low-income child in California would have access to full-day, full-year quality preschool if (at least) one parent works,” Steinberg said during a budget subcommittee hearing Thursday.

Children whose parents are poor but don’t work would get a half-day of preschool under the plan, Steinberg said.”

California Dems Not-So-Universal Preschool Plan

Governing Magazine, 5/23/14

Senate leader Darrell Steinberg unveiled a modified version of his plan to offer free preschool to California 4-year-olds on Thursday, slashing the cost of the program to the state by more than two-thirds by focusing on children from the poorest families.

Steinberg’s earlier plan would have provided preschool to all 4-year-olds regardless of family income and cost the state about $1.5 billion once fully rolled out. But Gov. Jerry Brown showed no interest in expanding state spending that much and left Steinberg’s plan out of his budget proposals.

The Sacramento Democrat said his scaled-back plan would cost an additional $378 million. It would offer preschool to 4-year-olds whose families qualify for free and reduced lunch – about 234,000 children, Steinberg said.

“Every low-income child in California would have access to full-day, full-year quality preschool if (at least) one parent works,” Steinberg said during a budget subcommittee hearing Thursday.

Children whose parents are poor but don’t work would get a half-day of preschool under the plan, Steinberg said.

“Too many kids – especially low-income kids – are starting school far behind. And it’s not right,” Steinberg said. “This is an opportunity to do something assertive about it.”

Brown’s Department of Finance spokesman, H.D. Palmer, pointed to a Standard & Poor’s report issued Thursday that praised Brown’s May budget revision and warned the Legislature against spending more than the governor suggested.

View Full Story from The Sacramento Bee

 

We were told that we must pass Prop. 30–$6 billion a year in new taxes for seven years—for “the children”. Now we know, for sure, that was a lie. The reason Guv Brown wanted to stick his hand deeper in your pockets is to keep the CalSTRS system from collapsing on his watch. Most of the tax has gone to pay increases for State employees and so school districts would be able to take the money and pay increased CalSTRS contributions—money never to be seen in the classroom.

“California school districts, which owe almost $80 billion for general-obligation debt, will pay 70 percent of the $5.3 billion annual cost of Brown’s plan. Next fiscal year, the expense will absorb $347 million of the funding growth schools are guaranteed by law, or 13 percent, and the share won’t peak until 2020.

“The pain districts had to go through to survive to get where they are today is still at epic proportions,” said Steven Ladd, superintendent of Elk Grove Unified School District, with 62,000 students outside Sacramento.”

Your Prop. 30 money “in action.” Angry yet?

Brown Pinches Schools With California Teacher Pension Fix

By Michael B. Marois, Bloomberg, 5/22/14

California is flush with cash amid a recovering economy, and pinched public schools are starting to collect money from a tax increase championed by Governor Jerry Brown.

Yet the state’s superintendents may still have some lean days ahead, after going through years of cost-cutting brought on by the recession. They will see their responsibility for teacher pensions double within seven years under a plan the 76-year-old Democrat proposed to prop up the underfunded California State Teachers’ Retirement System.

California school districts, which owe almost $80 billion for general-obligation debt, will pay 70 percent of the $5.3 billion annual cost of Brown’s plan. Next fiscal year, the expense will absorb $347 million of the funding growth schools are guaranteed by law, or 13 percent, and the share won’t peak until 2020.

“The pain districts had to go through to survive to get where they are today is still at epic proportions,” said Steven Ladd, superintendent of Elk Grove Unified School District, with 62,000 students outside Sacramento.

The state’s fifth-largest district, Elk Grove cut expenses by $110 million in the past five years. The higher contribution rates that the governor recommends will add to payroll and benefits costs that already exceed $400 million a year, out of a $583 million budget.

Hopeful Districts

“School districts were hopeful that there might be some additional funding to offset some of those needs,” Ladd said.

California’s $183 billion teacher’s pension is the second-biggest public retirement fund in the U.S. The fund has $74 billion less than it needs to pay promised benefits after investment losses from the recession that ended in 2009. At current funding levels, the fund projects it will run out of money in three decades, at which point taxpayers will be on the hook to pay those benefits. The expense equaled 10 percent of the state’s almost $97 billion general fund last year.

Brown and lawmakers are under pressure to erase a gap that is growing by $22 million a day and accounts for 22 percent of the state’s long-term liabilities, including health-care costs and budget loans. The governor, with the help of teacher unions, raised taxes temporarily in 2012 to generate about $7 billion annually, promising that the money would head off cuts to schools.

Teachers’ Needs

School districts will see their annual contribution to the pension fund double to 19.1 percent of payrolls from 8.25 percent. That’s $3.7 billion more each year by 2020, in addition to the $2.2 billion they are already paying.

“This is what it takes to educate our kids,” Brown told reporters May 13. “The pension has to be paid for.”

Brown is willing to let school districts ease into the higher rates over seven years. He says that economic projections show that constitutionally guaranteed funding for public schools will rise an estimated $11 billion by 2018.

Fitch Ratings said this month that the cost of Brown’s teacher pension plan could pressure school budgets if the economy slumps after the temporary sales and income-tax increases expire by 2018, especially if new spending mandates exceed revenue growth or crowd out other expenditures.

“It seems like we had shored things up and were moving forward and the districts were finally getting their houses in order,” said Kelly Wine, executive vice president at RH Investment Corp., a bond-trading company in Encino, California. “This sounds like it’s going to be quite a hit.”

Debt Burden

California schools owe about $77.4 billion on general-obligation debt, data compiled by Bloomberg show. They have voter approval to issue another $37.5 billion according to the California Debt and Investment Advisory Commission, a unit of the treasurer’s office.

With benchmark municipal interest rates at 11-month lows, investors can find extra yield on the school bonds.

General obligations issued by Long Beach Unified School District and maturing in August 2029 have traded this year with an average yield about 1.7 percentage points above benchmark munis, data compiled by Bloomberg show. Moody’s Investors Service rates the tax-free bonds Aa2, third highest.

Unlike other government workers and employees of private companies, teachers don’t pay into or collect social security benefits when they retire. The average teacher pension in California is about $47,000 a year, according to Calstrs, as the pension fund is known.

Pain Distribution

Teachers share the pain under Brown’s plan. Along with other school employees, they would contribute 10.25 percent of their paycheck within three years, instead of the current 8 percent. The state would boost its contribution to 6.3 percent from 3 percent by July 2016. California also will continue to pay an additional 2.5 percent annually for inflation protection.

“The frustration is really understandable,” said Bob Blattner, a Sacramento-based consultant who helps districts with their finances. “For five years, the education system has been starving and now when they finally get to the front of the line, somebody elbows their way in front.”

Calstrs administers pension and health-care benefits for almost 870,000 people, or about 2 percent of state residents.

Payout Plan

Employees and school districts each paid a little more than $2 billion into the fund last fiscal year, while the state shelled out $1.3 billion. The fund paid out about $11.5 billion in benefits last year.

Unlike the California Public Employees’ Retirement System, which at $291 billion is the nation’s biggest, the teachers fund’s governing board isn’t permitted to raise contribution rates when investment returns sag. Only lawmakers can do that. The rate hasn’t changed for employees since 1972, and for school districts in more than two decades.

“We are concerned about the size of the increase,” said Dennis Meyers, assistant executive director of government relations for the California School Boards Association. “Districts were expecting to invest in programs, invest in kids and close achievement gaps and this added cost does nothing to do that.”

 

What does a single payer system look like? It looks like England, where the medical profession allows patients to die without water or food—and do not tell the families they are doing this. It is the English system where patients wait years for surgery—many dying prior to the procedure. Now we know the Veterans Administration is exactly what it looks like in the United States. Millions of veterans, not paying for the service, wait months for an appointment, administrators hiding the fact vets die waiting to see a doctor.

There is no accountability in the system. While the grossest of actions have occurred under the anti-military Obama regime, this is how the system has worked for decades. If you want to wait months to make an appointment, then more months to have the appointment, you will love single payer.

“VA officers in San Antonio and Austin, Texas, have been accused of similar efforts to hide long waits. And in Pittsburgh, VA officials are accused of covering up the death of several patients after the water in a VA hospital became infected with bacteria. The officials reportedly tried to hide the information not only from patients and superiors, but even from hospital staff.”

How VA Hospitals Are a Government-run Disaster

By Michael D. Tanner, Cato.org, 5/15/14

The news is shocking: Patients dying on the waiting list for government-provided healthcare. But this is not a report from Canada or the British National Health Service. It’s right here in America, in the health system administered by the Department of Veterans Affairs.

The problems first surfaced in Phoenix, where the wait to receive care at VA facilities had grown so long that 1,400 to 1,600 sick veterans were forced to wait months to see a doctor. As many as 40 veterans reportedly died because they couldn’t get the care they needed. VA administrators tried to cover up the problems by establishing secret waiting lists and falsifying reports.

The scandal has now spread to other veteran facilities. VA employees at an outpatient clinic in Fort Collins, Colo., falsified appointment records to hide the fact that as many as 6,300 veterans treated at the outpatient clinic waited months to be seen for treatment. In Wyoming, whistleblowers have accused officials of manipulating records to hide wait times.

VA officers in San Antonio and Austin, Texas, have been accused of similar efforts to hide long waits. And in Pittsburgh, VA officials are accused of covering up the death of several patients after the water in a VA hospital became infected with bacteria. The officials reportedly tried to hide the information not only from patients and superiors, but even from hospital staff.

Earlier this month, the American Legion called for Secretary of Veterans Affairs Eric Shinseki to resign. No doubt Gen. Shinseki was asleep at the switch. But the problem goes well beyond an incompetent cabinet secretary or a few corrupt local bureaucrats.

Nobel Prize-winning economist and New York Times columnist Paul Krugman has long touted the VA system as the epitome of government-run healthcare. “Exhibit A for the advantages of government provision [of healthcare] is the veterans administration, which runs its own hospitals and clinics, and provides some of the best-quality healthcare in America at far lower cost than the private sector,” Krugman claims.

And he is right … at least about the VA being exhibit A for government healthcare.

Like all single-payer health systems around the world, the VA controls costs by imposing a “global budget” — a limit to how much it can spend on care. Thus year-to-year funding varies according to the whims of Congress, not according to what consumers want or are willing to spend.

With tens of thousands of wounded soldiers returning from the wars in Iraq and Afghanistan, the demand for care is rising dramatically. Enrollment in VA services has increased by 13% from 2007 to 2012. Despite a 76% increase in expenditures ($24 billion) over that period, the program still suffers from chronic budget problems. In fact, the Congressional Budget Office estimates that it would require as much as a 75% increase in inflation-adjusted funding for the VA to treat all veterans.

When resources can’t meet demand in a given year, the VA does what other single-payer systems do: It rations.

Even accessing the system can be a major problem. Currently, the case-processing backlog exceeds 344,000 claims. Although the VA says it has a policy of processing claims within 125 days, it actually takes an average of 160 days for a veteran to gain access to his health benefits. Moreover, the VA itself estimates that it has at least a 9% error rate in processing claims. Outside groups claim the error rate is much higher.

Appealing a VA decision can be an even more arduous process. A veteran who takes an appeal through all available administrative steps faces an average wait of 1,598 days, according to VA figures for 2013.

Moreover, because funding decisions are determined through the political process rather than by patient preference, the money is often misallocated. VA hospitals with low utilization rates are built or kept open not out of need, but because they reside in the districts of powerful congressional committee leaders. At the same time, other hospitals without political clout are overflowing.

The same issues beset other government-run health-care programs.

Take Medicaid. A study in the New England Journal of Medicine found that Medicaid recipients were six times more likely to be denied an appointment than people with private insurance. And according to a second study, when they do get an appointment, they wait an average of 42 days to see a doctor, twice as long as the privately insured.

In fact, Medicaid may not even be better than being uninsured altogether. The Oregon Health Insurance Exchange study, the first randomized controlled study of Medicaid outcomes, recently concluded that “Medicaid coverage generated no significant improvements in measured physical-health outcomes.”

Even Medicare, by far the most popular government-run healthcare program, has problems with access and quality. Studies have long shown that there is little correlation between Medicare spending and healthy outcomes. In fact, some of the regions where Medicare spends the most per patient have the poorest results.

As Harvard economists Katherine Baicker and Amitabh Chandra point out, higher Medicare spending “is not merely uncorrelated with the quality of care provided” but “negatively correlated with the use of effective care.”

Moreover, the Federal Trade Commission and Department of Justice have found that one “unintended consequence of [Medicare’s] administered pricing systems has been to make some hospital services extraordinarily lucrative and others unprofitable. As a result, some services are more available (and others less available) than they would be in a competitive market … which may or may not reflect consumers’ needs and preferences.”

As the federal government takes over more and more of the healthcare system, there should be a lesson for us. Simply promising more healthcare does not mean delivering more healthcare. And government healthcare systems have a very poor record of delivering what they promise.

 

One of the largest special interest groups in California are the attorneys. They donate large amounts of money. Could that be why the former Golden State is a lawyers heaven? Big payouts, easy to sue rules, laws written by the attorneys lobby. Another reason businesses leave California, the legislature has put honest firms under the gun of a lawsuit. Most suits do not go to trial—settled out of court, cheaper that way.

Now the attorneys have another bill to make it easier to pay for the expensive car and home, SB 1188. “California has consistently had one of the worst lawsuit climates in the nation, currently ranked at 47th for lawsuit fairness,” concluded the Institute for Legal Reform’s 2012 Lawsuit Climate Report. “The courts in Los Angeles rank as the country’s second worst for legal fairness, with San Francisco’s courts coming in at fourth worst.”

Unlikely to improve California’s litigious image is Senate Bill 1188, which would make it easier to file lawsuits over defective products with expired warranties. Currently, post-warranty product defect lawsuits must meet the threshold of the defect harming the health or safety of the plaintiff.”

SB1188 could expand product litigation
By Dave Roberts, Calwatchdog, 5/20/14 

“California has consistently had one of the worst lawsuit climates in the nation, currently ranked at 47th for lawsuit fairness,” concluded the Institute for Legal Reform’s 2012 Lawsuit Climate Report. “The courts in Los Angeles rank as the country’s second worst for legal fairness, with San Francisco’s courts coming in at fourth worst.”

Unlikely to improve California’s litigious image is Senate Bill 1188, which would make it easier to file lawsuits over defective products with expired warranties. Currently, post-warranty product defect lawsuits must meet the threshold of the defect harming the health or safety of the plaintiff.

SB1188 was approved by the Senate Judiciary Committee on May 6. Committee Chairwoman Sen. Hannah-Beth Jackson, D-Santa Barbara, introduced the bill to the committee, saying it merely codifies the original intent of the state’s Consumer Legal Remedies Act. Jackson said:

“The CLRA is a consumer protection statute designed to prevent unfair and deceptive business practices from taking hold in California’s marketplace. Among other things, the act prohibits sellers from making fraudulent claims about their goods and services, and from fraudulently withholding or omitting material information about a product from California consumers in the course of a transaction.

“Since 1970 this act has allowed Californians to hold merchants accountable when they commit fraud in the course of selling goods and services, and is one of the stronger consumer protection statutes in California law. Unfortunately for California’s consumers, however, the CLRA has been somewhat weakened in recent years through a handful of court decisions that have narrowed the act’s original scope.”

Federal court: Defect must affect health or safety

Federal courts limit product defect litigation to complaints that affect health and safety, she said. Since 2005, class-action lawsuits have to be filed in federal court, taking much of the product defect judicial review out of California’s more liberal interpretation of the CLRA.

“Because of the confusion in the courts, California consumers may not be able to rely on the CLRA to protect them from certain fraudulent practices not directly involving risk to health and safety,” said Jackson. “SB1188 addresses this confusion in the courts by codifying longstanding California law that the CLRA holds merchants accountable whenever they commit fraud by failing to disclose material facts about a product, when they knowingly conceal the existence of a material defect in a product – and regardless of whether the defect presents a safety hazard.”

Jackson said the bill defines a “material defect” as, “If a reasonable person would attach importance to its existence or non-existence in determining a choice of action in the transaction in question.”

She summed up the bill: “Essentially it will sort of revitalize a law that was passed in 1970 and has been sort of mucked up a little bit in recent years.”

Kristen Law Sagafi, representing the Consumer Attorneys of California (formerly called the California Trial Lawyers Association), told the committee that the CLRA has been essential in nearly every lawsuit she’s filed in the last 12 years “involving defective products ranging from roofing shingles to refrigerators to cars and personal electronics.”

Deliberate obsolescence

Sagafi provided a hypothetical example of the need for SB1188:

“Let’s say a consumer buys a product with a one-year warranty. This might be an appliance costing thousands of dollars, say a high-end refrigerator or washing machine. Under the current precedence, the manufacturer can sell that product knowing it will fail the day after the express warranty expires. Indeed, under current law the manufacturer could install some kind of chip that would cause the product to fail on day 366.

“Let’s say the product does fail the day after the warranty runs. As long as the product fails safely in a way that does not create a safety hazard, as the law currently stands, the consumer cannot state a consumer fraud claim under the CLRA. This interpretation of the statute is utterly at odds with the plain language of the statute, which says nothing about a safety requirement. And it also contradicts many years of interpretive case law in California.”

Richard Holober, executive director of the bill’s cosponsor, the Consumer Federation of California, cited thwarted litigation efforts under the current interpretation of the law:

“Consumers who bought certain Sony television sets that started to show spots, stains, haze, garish colors soon after the warranty expires, but not long after the purchase, were not able to bring a case, because, while the television was worthless, the worthless nature of the television did not threaten their life or limb.

“Purchasers of washing machines that were marketed by Sears Roebuck of being the highest quality, that malfunctioned after the warranty period but long before a reasonable person would say that its useful life had expired, were not able to bring a case when the electronic control panel of those washing machines malfunctioned, making the washing machine no longer of value to that consumer.”

Litigation floodgates

Katherine Pettibone, legislative director of the Civil Justice Association of California, is concerned that SB1188 will result in a deluge of frivolous lawsuits. She said:

“We fear that this is going to open the floodgates. As courts have noted, all product failures at some point can be attributed to latent defects. Outside warranty periods, the courts have noted, average consumers would only expect the manufacturer to guarantee against unreasonable safety risk. So, many, many courts have now upheld this idea that if the product performs as warranted, then they have fulfilled their duty.

“We have all purchased products that went awry on us or made us absolutely crazy because we think, ‘Wow, it just broke and should have lasted longer.’ But that’s what the warranty period is. And I can buy an extended warranty to protect against that. At what stage does that thing that the manufacturer failed to identify lose the liability? Our products would have to reflect those costs.”

Pettibone said that if SB1188 passes, then iPhone owners whose expired warranty phones break after being dropped “would be able to sue under the concept, ‘I was not warned that if I dropped it on granite it would fracture.’ That probably is obvious to many of us, but I would be able to sue no matter how late that was after the warranty expired.”

She said that California’s Unfair Competition Act also provides protection for consumers from manufacturers fraudulently concealing defective products. Cases such as the consumer victory in Collins vs. eMachines, in which a manufacturer was successfully sued for concealing a defective computer chip, show that system is working, she said.

“So there are remedies when manufacturers are fraudulently concealing,” said Pettibone. “You cannot make misleading and fraudulent claims and get away with it when they know there is a defect.”

Should products last forever?

Jennifer Barrera, policy advocate for the California Chamber of Commerce, said the issue has already been settled judicially and shouldn’t be changed:

“We don’t believe there is confusion in the courts over whether or not you have a duty to disclose a material fact that is unrelated to safety. The weight of the authority is quite clear that a manufacturer’s failure to admit a material fact is limited to safety. After the warranty period expires, your duty to disclose something is only related to a safety issue.

“If you require a manufacture to forever basically warrant against a product that it will last a lifetime, then what is the point of a warranty? Because there would no longer be a point if you always had to guarantee that that product was going to last forever no matter if the defect was related to health and safety.

“And the court specifically said, ‘Failure of the product to last forever would become a defect. A manufacturer would no longer be able to issue warranties. And product defect litigation would become as widespread as manufacturing itself.’

“So we are concerned with the expansion of litigation. We believe that this bill is trying to get at the expansion of the CLRA that the courts have been unwilling to go to.”

Dropping an iPhone

Jackson disputed the hypothetical iPhone example.

“If Apple told you that it didn’t matter how hard you hit the thing and it would bounce off the floor, it would still work – and they knew that it wouldn’t, and they told you that it would – then you have a potential fraud case,” she said. “But if you have a warranty that says, ‘We will replace in case X, Y and Z happens,’ that’s a different story. It’s the fact that they make the claim or intentionally omit telling you something about the product.”

Sen. Ellen Corbett, D-East Bay, disputed that manufacturers would now have to guarantee their products forever.

“That’s not what this is about at all,” she said. “This is about omitting, forgetting to tell somebody something very important about the good and how it may operate. You’re trying to make sure that if somebody has intentionally left out something very important about a good, then that’s where someone would be able to have their recourse.”

The committee approved SB1188 on a party line 5-2 vote, with Democrats backing it and Republicans opposed. It next goes for consideration by the full Senate.

 

Why is California in a Depression? AB 32 promoted by the amateur Governor Arnold and his buddy Fabian Nunez, have pushed jobs and companies out of California. It has stopped development and raised the price of construction and maintaining facilities. It is costly, with no appreciable benefit, except to the attorneys that sue to close down jobs and politicians that scare people into believing the State will collapse in a fog of dirty air if cars, buildings and people are not outlawed.

Now another cost to the people. On January 1, 2015 gas for your car will go up 15 cents to pay for AB 32 enforcement and regulations. Why does California have the highest rate of poverty in the nation? Look at Arnold and AB 32 as the culprits.

“The price at the pump for state industry and consumers is expected to go up by as much as 15 cents a gallon in about six months, oil industry groups warned Friday, attributable to California’s bid to lower carbon emissions.

Calling their campaign “Fed Up at the Pump,” a coalition including consumers and other employers called on Gov. Jerry Brown not to enact the mandated hike on gas and diesel that would take effect Jan. 1, 2015.”

Big gas price hike coming, oil industry group warns

Gas prices don’t ever seem to go lower in California, but a new coalition is warning they could go up by another 15 cents a gallon on Jan. 1, thanks to regulations being implemented by the state under Assembly Bill 32.

Ben van der Meer, Sacramento Business Journal, 5/23/14

The price at the pump for state industry and consumers is expected to go up by as much as 15 cents a gallon in about six months, oil industry groups warned Friday, attributable to California’s bid to lower carbon emissions.

Calling their campaign “Fed Up at the Pump,” a coalition including consumers and other employers called on Gov. Jerry Brown not to enact the mandated hike on gas and diesel that would take effect Jan. 1, 2015.

“This could result in a $25 to $50 a month increase in fuel costs for many consumers,” said Scott Lipton, a spokesman for the campaign and a grassroots organizer for the California Independent Oil Marketers Association. “That’s a big hit to the people that can least afford it.”

According to Lipton, the fee stems from Assembly Bill 32, the 2006 legislation aimed at reducing California’s carbon footprint to 1990 levels as a blow against climate change. Under the legislation, the California Air Resources Board can implement “Fuels Under the Cap” regulation to raise money toward that effort. The campaign estimates the fee will raise $2 billion in its first year, but questions whether the money will be spent as it’s intended, noting some discussions have suggested it could be used for high-speed rail or affordable housing.

“Their goal, from when AB 32 was passed, was to make fossil fuel more expensive in the marketplace,” Lipton said. Because of the relatively slim profit margin for businesses, especially in the Central Valley where economic recovery has lagged, it’s likely the added cost will be passed onto customers, he said. “There will be a significant economic ripple to this.”

If the desired goal is to get consumers and industry to consume less fuel, there’s some evidence it’ll happen based on past price hikes. When a gallon of gas in California approached $4.50, the state saw moderate decreases in gas purchases and increases in transit use.

According to the California Energy Commission, the state’s net taxable gallons of gasoline declined every year for seven fiscal years, from 15.9 billion gallons in 2005-06 as prices began to top $3 a gallon to 14.4 billion in 2012-13. Through the first two months of 2014, however, the pace is ahead of what it was a year earlier, suggesting the streak will end.

“The question is, what’s that price point today? Is it $6 a gallon?” Lipton said. But for many workers at the bottom rung of industries such as agriculture, there’s no way to avoid paying more because there are relatively few alternatives, he said.

 

Comparing California to Texas is not a fair comparison. Texas has better schools, lower taxes, and better business climate, loves jobs and creates a family atmosphere. It is a State with low unemployment and a growing economy. More homes were built last year in Houston than in the whole State of California.

“The Toyota decision also reflects the continued erosion of California’s historic economic diversity, which provided both stability and a wide variety of jobs to the state’s workers. We have seen this in the collapse of our once-burgeoning fossil-fuel energy industry, capped this year by the announced departure from Los Angeles of the headquarters of Occidental Petroleum. Blessed with huge fossil fuel reserves, California once stood as one of the global centers of the energy industry.

Now, with the exception of Chevron, which is shifting more operations out of state, all the major oil companies are gone, converting California from a state of energy producers to energy consumers, and, in the process, sending billions of dollars to Texas, Canada and elsewhere for natural gas and oil that could have been produced here.”

Texas allows fracking and is rolling in jobs. California does not—cost of unleaded gas in California is as low as $3.81 in the Central Valley—and at $3.00 in most places in Texas!

California: Taking a Back Seat to Texas

Written by Joel Kotkin, City Watch LA,   5/23/14

SOCAL IN THE REARVIEW MIRROR-The most important news recently to hit Southern California did not involve the heinous Donald Sterling, but Toyota’s decision to pull its U.S. headquarters out of the Los Angeles region in favor of greater Dallas. This is part of an ongoing process of disinvestment in the LA region, particularly among industrially related companies, that could presage a further weakening of the state’s middle class economy.

The Toyota decision also reflects the continued erosion of California’s historic economic diversity, which provided both stability and a wide variety of jobs to the state’s workers. We have seen this in the collapse of our once-burgeoning fossil-fuel energy industry, capped this year by the announced departure from Los Angeles of the headquarters of Occidental Petroleum. Blessed with huge fossil fuel reserves, California once stood as one of the global centers of the energy industry.

Now, with the exception of Chevron, which is shifting more operations out of state, all the major oil companies are gone, converting California from a state of energy producers to energy consumers, and, in the process, sending billions of dollars to Texas, Canada and elsewhere for natural gas and oil that could have been produced here.

As did the oil industry, the auto industry, and, particularly, its Asian contingent, came to Southern California for good reasons. Some had to do with proximity to the largest port complex in North America, as well as the cultural comfort associated with the large Asian communities here. Back in the 1980s, the expansion of firms like Honda, Toyota and Nissan seemed to epitomize the unique appeal of the L.A. region – and California – to Asian companies. Today, only Honda retains its headquarters in Los Angeles (Nissan left in 2005), while Korean carmakers Hyundai and Kia make their U.S. homes in Orange County.

Retaining these last outposts will be critical, as Southern California struggles to retain its once-promising role as a true global city. With the exception of the entertainment industry – itself shifting more production out of town – our region is devolving toward marginality, largely as a tourist and celebrity haven.

Still, I’m concerned less about the region’s reputation than about the economic trajectory of its middle and working classes. The Toyota relocation from Torrance will eliminate 3,000 or more generally high-wage jobs, something that usually accompanies the presence of headquarters operations. It will cost the region, most particularly, the South Bay, an important corporate citizen, as, over time, the carmaker will likely shift its philanthropic emphasis toward Texas and its various manufacturing sectors.

Perhaps more disturbing are the fundamental reasons behind the Toyota move. According to Toyota’s U.S. chief, James Lentz, they weren’t even courted by Texas, which has fattened itself on California’s less-competitive business climate.

Some of Toyota’s reasoning is geographical. The port link is less essential now since close to three-quarters of Toyota’s vehicles sold in the U.S. are built here, up from 58 percent in 2008. At the same time, the growth of the “Third Coast” ports – Houston, Mobile, Ala., New Orleans and Tampa, Fla. – buoyed by the widening of the Panama Canal, makes it increasingly easy to ship components or cars in and out of the central U.S.

More troubling still is the logic, both on the part of Nissan and Toyota, linking headquarters operations – with their marketing, design and tech-oriented jobs – closer to their industrial facilities in the south and Midwest. Toyota, for example, has a large truck plant in San Antonio as well as auto assembly plants throughout the mid-South. Honda, now the last major Japanese carmaker with a Southern California headquarters, last year also moved a number of executives from Torrance to Columbus, Ohio, closer to the company’s prime Marysville, Ohio, production hub.

This pattern contradicts the notion, popular in both the Jerry Brown and Arnold Schwarzenegger administrations, that California’s massive loss of industrial jobs over the past decade can be offset by the creative industries, notably Hollywood and Silicon Valley. Since 2010, California has managed to miss out on a considerable industrial boom that has boosted economies from the Rust Belt states to the Great Plains and the Southeast. Los Angeles and Orange counties, the epicenter of the state’s industrial economy, have actually lost jobs. Since 2000, one-third of the state’s industrial employment base, 600,000 jobs, has disappeared, a rate of loss 13 percent worse than the rest of the country.

But, the prevailing notion in California’s ruling circles seems to be, if you have Google and Facebook, who needs dirty, energy-consuming factories or corporate operations filled with middle managers? Silicon Valley crony capitalists and urban developers who support our political class, and are willing participants in various subsidized green energy schemes, have little interest in traditional manufacturing, regardless the damage inflicted on blue-collar workers, whom progressives are happy to subsidize (and thus gain their unending support) outside the labor force or keep severely underemployed.

The deindustrialization of California was one reason behind the withdrawal of both Nissan and Toyota. Each automaker has established strong manufacturing operations in the mid-South and wanted to integrate technology, production, sales, marketing and design as a way to keep an edge in the competitive global industry. An area that seems determined to let its industrial base wither is not likely to attract companies whose basic business is building things.

What is too rarely understood is the link between production skills and high-end jobs. The Toyota jobs that are leaving L.A. County are largely white-collar and skilled. Toyota engineers will be headed to Texas, and many also to Michigan, where, despite the travails of the past few decades, the engineering base is already very deep – roughly twice as strong per capita as formerly engineer-rich Los Angeles.

This link between manufacturing and higher-end technical jobs is rarely appreciated among our political class. As President Clinton’s Board of Economic Advisors Chairman Laura D’Andrea Tyson points out, manufacturing is only about 11 percent of gross domestic product, but it employs the majority of the nation’s scientists and engineers, and accounts for 68 percent of business research and development spending, which, in turn, accounts for about 70 percent of total R&D spending.

Of course, neither Jerry Brown nor any other reigning political figure would cavalierly dismiss manufacturing jobs, or even those at a major port. Yet, as we move toward ever-higher energy prices – likely aggravated by California’s “cap and trade” regime against global warming – industrial firms seem increasingly reluctant, at least without massive subsidies, to move to or expand in California.

And, contrary to arguments offered in Sacramento, and reflected in much of the media, there are never going to be enough “green” jobs to make up the difference.

Indeed, even Elon Musk, head of electric-car maker Tesla, though a primary beneficiary of California crony capitalism, is not considering the state for a proposed $5 billion battery plant, which would employ upward of 6,500.

In its nonresponse to the Toyota move, the Governor’s Office stressed the state’s role as the epicenter of the “new electric, zero-emission and self-driving” vehicle industry. Nevertheless, even as devout a “green” company as Tesla will likely locate its battery factory in Nevada, Arizona, New Mexico or Texas. California, reports greentechmedia.com “didn’t make the short list because of the potential for regulatory and environmental delays.”

For a state that has built its future vision on “green” industry, this is both ironic and tragic. It may not bother the Legislature, whose welfare state is now being propped up by windfall tech profits, but it leaves many localities outside the Silicon Valley exposed to more job and company losses. Think of Torrance Mayor Frank Scotto, who concedes the struggle to keep companies around is becoming ever more difficult. “A company can easily see where it would benefit by relocating someplace else,” Scotto said.

Even so, it is unlikely that Toyota’s leaving will impact the state’s leftward political trajectory. After all, if the New York Times regularly describes the California economy – fattened by stock market and real estate gains of the very rich – as “booming,” why should Gov. Brown, about to run for re-election, say otherwise, proclaiming to anyone who will listen that “California is back.”

True, California may not be in a Depression, as some conservatives contend, but it’s hardly accurate to proclaim the Golden State as back from the brink. But, if having among the country’s highest unemployment rates, the worst poverty levels, based on living costs, and being home to one-third of all U.S. welfare recipients can’t persuade the gentry about California’s true condition, Toyota’s move certainly won’t.

 

Why do we have kids with eating disorders? Maybe it is because Michelle Obama is running around the country (in jet planes) telling kids they are fat, lazy and eat the “wrong” food. Or maybe because Washington has a program and too many local government school district use it. The program is run as if children are owned by the State. Now we have young, fit girls, in New York, thinking they are fat. This is how an eating disorder starts. Does your school district have this program? If so, stop it.

“”My daughter is thin; she knows she doesn’t have a weight problem, but that night, I caught her grabbing the skin near her waist, and she asked me, ‘is this what they were talking about?”‘ Laura Bruiji Williams, the girl’s mom, told FoxNews.com. “It was awful to see.”

Gwendolyn along with her classmates, were handed a “Fitnessgram” sealed with a sticker at her public school in Brooklyn. The class was told not to open the letters, issued by the New York City Department of Education, but like most of her friends, she couldn’t resist and read it.”

A Fat Cat.

New York mom fuming after daughter gets school letter calling her overweight

By Edmund DeMarche, Fox News, 5/23/14

A New York City mom was fit to be tied Wednesday after her 4-foot-1, 66-pound daughter came home from school with a note calling her fat.

Eight-year-old Gwendolyn Williams is anything but fat, but her mom worries that the school’s note, citing her body mass index, has left her daughter confused about her body.

“My daughter is thin; she knows she doesn’t have a weight problem, but that night, I caught her grabbing the skin near her waist, and she asked me, ‘is this what they were talking about?”‘ Laura Bruiji Williams, the girl’s mom, told FoxNews.com. “It was awful to see.”

Gwendolyn along with her classmates, were handed a “Fitnessgram” sealed with a sticker at her public school in Brooklyn. The class was told not to open the letters, issued by the New York City Department of Education, but like most of her friends, she couldn’t resist and read it.

“Some of her friends found out they were obese,” her mom said. “They were crying.”

The New York Post first reported that Williams approached the school’s principal to complain about the letter. The principal was sympathetic, but reiterated that students were given the instructions not to read the letter.

The so-called “Fitnessgrams” are issued annually in New York City by the department. They are intended to assess students from grades K-12 to help support lifelong health, according to the department’s website. About 870,000 students each year take home these reports.

“With body image such an issue, it’s amazing to me that these letters weren’t mailed to parents,” she said. “What kid’s not going to open that?”

The BMI report value in assessing health has been criticized.

“My organization and others believe that BMI report cards have no place coming from schools and can be more harmful than helpful,” Chevese Turner of the Binge Eating Disorder Association, told The Post.

If you are a Veterans Administration patient you could wait 8-10 months to get an appointment, then another 8-10 months to have the appointment. In Phoenix, 40 people have been identified as having died during this process. Get, ready for the MediCaid and MediCal patients to also be dying, waiting for appointments. Though there will be 3,000,000 new patients, there are less than 50% of California doctors are even willing to participate.

These three million NEW patients will find not a single new doctor—in fact, many less doctors. Imagine the wait time for appointments for three million people. California is going to quickly be a Third World health care State. Most will beg to go to the VA for health care!

“For one, almost one third of those new enrollees don’t have their cards yet.  Medi-Cal has a backlog of 900,000 applications, and while it is slowly overcoming processing problems, it also has a steady stream of new applications so the backlog is barely receding.

Second, many health care providers for lower-income residents are beginning to kick up the scope of practice of front-line health workers – nurses, physician assistants, and pharmacists—to help ease the pressure on physicians.  Individuals with chronic diseases such as diabetes may in fact be better off with regular visits to a pharmacist than waiting for months to see an M.D.”

Photo courtesy of RambergMediaImages, flickr

Can 3 million newly insured fit into current system?

By Roger Smith, Center for Health Reporting, 5/21/14

California’s resounding success in enrolling residents in Obamacare health insurance policies and expanded Medi-Cal coverage—a total of nearly 3 million people—is bumping up against the next Big Question: can these new enrollees use their insurance cards to find adequate care?

It stands to reason that you can’t stuff 3 million new people into an existing system and expect everyone to get the same level of attention. But a panel discussion by top health policy experts Tuesday offered some clues as to why a stampede to doctors’ offices may not be imminent.

For one, almost one third of those new enrollees don’t have their cards yet.  Medi-Cal has a backlog of 900,000 applications, and while it is slowly overcoming processing problems, it also has a steady stream of new applications so the backlog is barely receding.

Second, many health care providers for lower-income residents are beginning to kick up the scope of practice of front-line health workers – nurses, physician assistants, and pharmacists—to help ease the pressure on physicians.  Individuals with chronic diseases such as diabetes may in fact be better off with regular visits to a pharmacist than waiting for months to see an M.D.

The panelists at a Public Policy Institute of California forum–California Health and Human Services Secretary Diana Dooley,  California HealthCare Foundation president Sandra Hernández,, and Los Angeles County Health Director Mitchell Katz–all agreed that access to care is the next challenge as health reform continues its roll out.

They seemed to indicate that as the pressures on providers increase, the definition of “care” will change.

“We want care that brings health,” Katz said. By that he meant that high-cost medicine needs to be supplanted as the gold standard of care by a regime of lower cost preventative measures to keep people out of hospitals.

“Cost is the elephant in the room,” said Dooley.  Her department has pushed Medi-Cal into managed care arrangements, replacing fee-for-service payments with per-capita contracts that make providers responsible for patient health.

Those contracts mean patients have much less choice of doctors and hospitals, which can also translate into an access squeeze.

But that’s probably unavoidable, when millions who were shut out of health insurance are now getting it.

“The system won’t be able to function as it did in the past,” Dooley said.

 

Firms are leaving California as fast as possible. Now we find that one of the first technology companies in Silicon Valley is about to fire between 11-16,000 workers. They are no longer needed, so says Meg Whitman, the CEO of the company.

“On the conference call, CEO Meg Whitman stressed that the new cuts came not because the company was worried about being able to sustain its profit growth through the next year, but rather because she saw more opportunities to make cuts without hurting HP’s ability to compete. The savings from the cuts will let the company invest more in new technologies, she said.”

Technology is killing technology workers. Yet at the same time Whitman has asked Congress to expand the H1B visa program so more foreigners can come into the U.S., take American jobs and lower wages. On who’s side is Whitman—Americans or foreigners?

Hewlett-Packard to cut additional 11,000 to 16,000 jobs, stock falls on earnings report

Jon Xavier, Silicon Valley Business Journal, 5/22/14

Hewlett-Packard Co. will cut an additional 11,000 to 16,000 jobs as the company pursues its restructuring under CEO Meg Whitman. That brings the total planned cuts to between 40,000 and 50,000 positions, which would equal roughly 15 percent of its global workforce.

According to HP, the restructuring will be mostly complete by the end of this year. It expects to hit about 41,000 job cuts by the end of 2014, with the rest coming by the end of 2015. HP expects to take a $500 million charge related to the cuts, with another $200 million charge coming in the second half of the year. The cuts are expected to result in incremental savings of 2 to 3 cents per share over the rest of the year.

On the conference call, CEO Meg Whitman stressed that the new cuts came not because the company was worried about being able to sustain its profit growth through the next year, but rather because she saw more opportunities to make cuts without hurting HP’s ability to compete. The savings from the cuts will let the company invest more in new technologies, she said.

“The cuts have nothing to do with our confidence in the business. It has to do with having a better understanding of the opportunities we have to make the company better,” Whitman said. “I’ve done a few turnarounds now — obviously nothing this big — but it’s always the case that you see more opportunities the deeper you get into the business.”

Whitman said that there will not be more cuts at the corporate level once the company’s restructuring program is complete.

The news came as part of the Palo Alto company’s fiscal second-quarter earnings, released today. Earnings barely met expectations, with revenue falling slightly faster than anticipated and profit staying right in line with expectations.

HP announced profits of 88 cents per share on revenue of $27.3 billion, in line with analyst estimates of profits of 88 cents per share on revenue of $27.41 billion. That’s about a 1 percent revenue drop over second quarter 2013, when it announced earnings of $27.6 billion. Profits, however, have continued to grow. The EPS number was up about 1 percent year-over-year. And profits came in at about $1.3 billion according to standard accounting, up about 18 percent year over year.

The earnings announcement hit before the markets closed, which gave the Street a few precious minutes to sell furiously before closing up for the day. The stock almost immediately fell 2.7 percent, and closed down 2.46 percent at $31.72.

You might be wondering why the sell-off was so quick and brutal, as layoffs often lift stock prices. The answer is that CEO Meg Whitman is tasked with turning the company around, so investors want to see growth, or at least a slowing decline. Simply, when you’re banking on a company making a turnaround, earnings that are “good enough” just aren’t good enough. HP has managed to beat expectations for the past three quarters, so merely coming in close to the mark this time around is a troubling sign for the strength of the recovery.

 

We talk about health care, pensions, choo choo trains, debt and taxes…lots of issues. Some issues keep coming back like a boomerang. Lawyers suing deep pockets is one of those “you will never get over” it will always be with us. Tort reform works in Texas. In California it is just the opposite—lawyers run the show, just the fear of attorneys raises the cost of products and services.

The bottom line is that people act and then refuse to take responsibility. Many see a lawsuit as winning the lottery. We are taught that poverty, joblessness, not being rich is not our fault, and it is always the fault of society. Obama said, “You did not build that”. He told us we are not responsible for good or bad. So why not sue?

“Currently, there are the hundreds of cases concerning labeling and marketing disputes, many of them about the term “all natural.”   Some speculate that the focus will shift eventually to “food addiction,” a theory pioneered by former FDA Commissioner David Kessler.  He posits that if certain fats, sugars, and salt were “addictive,” and companies nonetheless proceeded to market products containing those nutrients, the consumer class action bar could attempt discovery in hoping to find company documents that validate Kessler’s addiction theory.  Are they fantasizing that the food companies knew of the addictive properties and suppressed the information?”

Briefing Report: Obesity – Personal Responsibility vs Trial Lawyers’ Pursuit of Deep Pockets

California Republican State Senate Caucus, 5/22/14 http://cssrc.us/content/briefing-report-obesity-personal-responsibility-vs-trial-lawyers-pursuit-deep-pockets

A short time ago an article discussed a scheme to make the food business bear the costs of obesity.  Twenty years ago the villain was “big tobacco.”  Now cleverly it is “big food.” Think of the “Stay Puft Marshmallow” man in “Ghostbusters.” There are trial lawyers trying to induce states to make the food industry pay for soaring obesity-related health care costs.  The 1990s tobacco litigation allegedly sought to recoup states’ healthcare costs for treating the diseases consequent from using tobacco products. That litigation resulted in hundreds of billions of dollars in settlements with 46 states, a ban on cigarette marketing to young people and the Food and Drug Administration stepping in to regulate tobacco products.  It is easy to expect that childhood obesity will garner similar focus and sympathy.  But can the trial lawyers work their magic again?  Will they find their next truckload of gold at the end of the rainbow?

A firm of trial lawyers sent proposals to Attorneys General from California to Mississippi explaining how suing “big food” could help their states close budget gaps as billions in Medicaid expenditures eat a growing share of tax revenues (no pun intended). Getting a piece of the huge costs of Medicaid would be a boon to cash-strapped states.  What they propose is simple, transparent and beguiling — find some industry with large financial assets, tag that industry with “responsibility” for a portion of a state’s total Medicaid costs and get a piece of that back to help close the budget shortfalls.

Some observe that the central argument is that food and beverage companies have contributed to the nation’s obesity crisis, and they should pay for the costs of that portion. They are presumably responsible because their practices and products lead people to eat too much.  Eating too much causes obesity in some.  A significant group of people in each state has their medical care subsidized by the state. Thus, Medicaid costs are too high because of the food companies.  Therefore, food companies need to bear some part of those costs. Got that?

The pitching law firm has allied with a number of well-known obesity and diabetes researchers.  One medical advocate believes litigation should zero in on diabetes.   The diseases related to obesity are expensive, among them diabetes and cardiovascular problems.   The claim is made that about 75 percent of all the packaged foods in U.S. supermarkets contain added sugars; and therefore policy should change.  The battle cry has sounded. To the ramparts – fighting peoples’ struggle with food companies!  Remember the good old days of the battle against tobacco!

However, what is missing is that the food companies, unlike the tobacco industry, have not asserted that eating too much food is not harmful.  Besides, unlike tobacco, there are good and healthy ways to consume food.  After all, tobacco companies lied about the health effects of their products for decades.  No such denial exists for food.

Currently, there are the hundreds of cases concerning labeling and marketing disputes, many of them about the term “all natural.”   Some speculate that the focus will shift eventually to “food addiction,” a theory pioneered by former FDA Commissioner David Kessler.  He posits that if certain fats, sugars, and salt were “addictive,” and companies nonetheless proceeded to market products containing those nutrients, the consumer class action bar could attempt discovery in hoping to find company documents that validate Kessler’s addiction theory.  Are they fantasizing that the food companies knew of the addictive properties and suppressed the information? Do these medical advocates and lawyers dream every night of finding the company scientist willing to expose a food industry fraud as dramatic and corrupt as that uncovered by  Russell Crowe’s character in the 1999 movie “The Insider?”

The proposal is for the trial lawyers to represent states in the battle against the food business as they did against tobacco in the 1990s. They will stand ready to bear costs of the litigation, to some extent, but hope to participate in the attorneys’ fees that billions of dollars of recoveries would create. The proposal is questionable because it would rely on a contingency fee agreement, which allows a private firm to do legal work for attorneys general offices in exchange for a cut of the settlement. It’s an increasingly common practice because it allows AG offices to reward the trial bar and tackle expensive litigation without taking as much risk.  The ongoing lead paint litigation followed the tobacco stratagem, for example.  The Chamber of Commerce Institute for Legal Reform objects to these arrangements as “[p]ay-to-play relationships between [plaintiff’s attorneys and attorneys general] that exchange campaign contributions for lucrative government lawsuit contracts mean the food industry has a big target on its back.”

Will children be the focus? Sure!  Consider for a moment that childhood obesity rates remain high. Overall, obesity among our nation’s young people, aged 2 to 19 years, has not changed significantly since 2003-2004 and remains at about 17 percent.  One physician observes that looking at the risk factors for obesity, including poor eating habits and inactivity, provides lots of other people to blame.

1] Kids are less active today because they spend far more time in sedentary activities in front of the TV than any other generation. Perhaps we should blame television and video game producer and the TV networks. 2] Fast food is still a good target, with high calorie and high fat super-sized meals. 3] Drinking a lot of soft drinks and sugary “fruit” drinks are also linked to obesity, so maybe we can blame Coca Cola and Pepsi. 4] Super-sizing portions didn’t start at McDonald’s. Didn’t that all start with the mega drinks or Big Gulps at 7-Eleven? 5] Schools, which allow students to buy snacks and soft drinks from vending machines and don’t always require physical education classes, might also be partly to blame. 6] Doctors, who don’t do enough to encourage breastfeeding, which can decrease a child’s risk of becoming overweight later in life, and who don’t educate parents about healthy lifestyles might also be partly to blame. And the list goes on and on.

According to a survey of parents by ACNielsen: 1] only 1% of parents blamed manufacturers 2] 7% blamed advertising on TV, etc 3] 9% blamed the child and 4] 10% blamed fast food companies.  Even recently, two thirds of parents blamed themselves. After all, parents are the only ones that have control over all of these things, especially with younger kids. A parent’s role is to guide healthy food choices, both at home and when eating out. Parents can limit TV watching and time spent playing video games, and should encourage kids to be more active. In spite of the obvious behavioral factors, there are many experts who “know better.”  They seek to put the blame on food companies concluding that food marketing is responsible.  The results of many studies addressing links between food marketing and children’s preferences, requests, consumption, and adiposity finds that the preponderance of evidence supports their assumptions.

Who is to blame?  A newly released movie “Fed Up” goes so far as to call for the demonization of the snacks industry.  This movie has great credentials: 1] it is narrated by Katie Couric and 2] one of its producers worked on Al Gore’s “An Inconvenient Truth.”  A reviewer of that film observes “Fed Up’s” ultimate, if not fatal, weakness: “The movie seems to acquit consumers of any culpability in our health crisis. There’s a reason it’s called junk food, and unlike the air we breathe, we pay handsomely to ingest it. And although most of the parents of the kids are also overweight, there’s little reflection on parental roles in kids’ expanding waistlines.”