Stolen Social Security number? The IRS doesn’t care

IRSThe IRS is giving away money to people who file tax returns with stolen Social Security numbers, and they intend to keep right on doing it.

That was the message from IRS Commissioner John Koskinen to the Senate Finance Committee during a recent hearing on cybersecurity failures and other problems at the Internal Revenue Service.

“These are cases in which someone uses someone else’s identity, their name or their Social Security number, to get a job illegally,” Sen. Dan Coats, a Republican from Indiana, explained.

The IRS knows but doesn’t care.

Sen. Coats was a bit frustrated. “The IRS continues to process tax returns with false W-2 information and issues refunds as if they were routine tax returns, saying, ‘That’s not really our job,’” he said.

Although the Social Security Administration notifies the IRS when a name does not match a Social Security number, these notifications are ignored. IRS employees are not allowed to tell the real holder of the Social Security number that someone is using their identity, and nobody alerts employers that they have submitted false W-2 information.

Last year, the IRS identified 200,000 new cases of employment-related identity theft.

Koskinen winked at the problem. Sometimes Social Security numbers are “borrowed from friends or acquaintances,” he said, “and people know they’ve been used. Other times they don’t.”

The priority for the IRS, Koskinen told the committee, is “collecting those taxes.”

That’s very misleading.

Millions of low-income people in America don’t owe any income taxes and pay little or nothing to the U.S. Treasury during the year, yet they still receive thousands of dollars in a “tax refund.”

That’s because over the last 40 years, Congress created a financial assistance program which is run through the Internal Revenue Service. For those who qualify, the Earned Income Tax Credit can be worth over $6,000, the child tax credit is worth $1,000 per child, and education credits are worth thousands more. These credits are fully or partially “refundable.”

Most people assume that everyone who receives a tax refund is simply getting back the money they overpaid during the year. Not so.

“Refundable” tax credits are paid out in a tax refund, even if no taxes at all were paid in. The money comes from the U.S. Treasury; in other words, from other taxpayers.

These annual “tax refunds” are routinely worth thousands of dollars, which is why you see storefront tax preparers pop up in low-income neighborhoods every January, why retailers like Walmart offer to cash tax refund checks for customers who don’t have bank accounts, and why there’s so much fraud — over $15 billion in fraudulent refunds for 2014 alone.

However, it’s perfectly legal for undocumented workers to claim the child tax credit and the education credit and to receive a taxpayer-subsidized tax refund.

The government knows who’s working illegally, because the IRS gives undocumented workers an Individual Taxpayer Identification Number, or ITIN, that can be used to file a tax return. An ITIN can’t be used to get a job, because employers aren’t supposed to hire unauthorized workers. Hence, stolen Social Security numbers on the W-2s of people who file their tax returns with ITINs.

The IRS, which will happily send you a threatening letter if you fail to report 12 cents in interest income, has no interest at all in enforcing the laws against working in the United States without legal authorization.

They just process the returns and send out the refunds.

They know they are sending money to people who filed false W-2 forms with somebody else’s Social Security number.

And now, so do you.

Can Senate Republicans Make CA More Affordable?

jean-fuller-15Senate Republicans packaged their best policy proposals on Tuesday, a series of bills aimed at helping veterans, seniors, homeowners and renters as well as parents and students.

Jean Fuller, the Senate Republican leader, pointed to California’s high rents, high poverty rate and high tax burden as ills helped by these bills — a “first step” in helping make the Golden State more affordable.

Fuller cited damning stats: CNBC ranked California the 5th most expensive state to live in the country in 2015, average monthly rent is 50 percent higher here than in the rest of the country40 percent of Californians are living at or near the poverty line and Californians have one of the highest tax burdens in the country.

And earlier this month, the American Legislative Exchange Council gave California one of the worst economic outlooks in the country.

“Senate Republicans united around a very positive agenda that gives voice to Californians being left behind by their own Capitol,” the Bakersfield Republican said.

“There is no question that California has become a very expensive place to live,” Fuller added.

Fuller did not explain how the proposals would be paid for (nor did her office provide an estimate of how much the package would cost). Instead, Fuller said the government should focus on the “most disabled” and the “most vulnerable populations” as a top priority, adding that state revenues have increased steadily over the last few years.

“If the priorities are carefully weighed, I think we do have enough money, especially when we’ve had extra resources come in in the last couple of years,” Fuller said.

Package of Bills

The 11 bills center on tax breaks and proposals focused on encouraging access to work, education and homeownership.

Access to work: One bill restores MediCal coverage for one free pair of eyeglasses every other year for those who fail the DMV vision test. Another bill provides $100 standard allowance for CalWORKs welfare-to-work participants, as well as an allowance for education costs.

Education: One bill provides a tax deduction for college expenses, while another creates a sales and use tax holiday for school supply purchases. A third bill would create a tax deduction for education savings accounts.

Homeownership: There’s a renters tax credit, a bill to eliminate property tax inflation for senior and disabled veterans, and one that would do that same for senior citizens. There’s two proposals giving a property tax exemption for disabled veterans. And there’s a proposal to encourage a homeownership savings accounts that would help first-time homebuyers with a down payment.

Navigating the Senate

Unveiling an agenda at a press conference, however, is far easier than carrying the bills through the Legislature for a Republican caucus with virtually no power. They face a Sisyphean task of getting the bills through a Democratically-controlled Legislature, where they are a mere seat away from irrelevancy — below the dreaded one-third threshold.

According to Bill Whalen, a research fellow at the Hoover Institution at Stanford University, Republicans in the Legislature face three legislative options. The first is to have an idea embraced by Democrats, which could carry the bill to the governor’s desk. The other two are either the bill is dead on arrival or it gets a hearing and then fizzles out.

“There’s three outcomes, two of which are negative,” said Whalen, who served as chief speechwriter and director of public affairs for former Republican Gov. Pete Wilson.

After voters amended the Constitution in 2010 to require only majority approval of the state budget (as opposed to two-thirds), Republicans lost a yearly opportunity to leverage legislation as their numbers in both chambers are only slightly above one-third.

“For a few weeks anyway, Republicans had a lot of relevance in the process,” Whalen said, adding that now Republicans’ leverage is now mostly reserved for Constitutional amendments.

This article was originally published by CalWatchdog.com

Trump Foreign Policy Debate: CPR’s Lacy vs LA Times’ Hiltzak; Fiorina VP; CNN VIDEO

In this video from CNN International, California Political Review publisher Jim Lacy debates the Los Angeles Times’ Michael Hiltzak on Presidential candidate Donald Trump’s recent foreign policy speech, and discuss Senator Ted Cruz’s announcement of Carly Fiorina as his Vice-Presidential running mate.

Conservative Free Speech Survives Attack by AG Harris

Photo courtesy of Steve Rhodes, flickr

Photo courtesy of Steve Rhodes, flickr

California Attorney General Kamala Harris, in an attempt to burnish her credentials as the liberal successor to Senator Barbara Boxer, has continued the Left’s long tradition of harassment of private citizens when their political views are not aligned with the progressive agenda. Since 2013, Ms. Harris has demanded that national nonprofits turn over their IRS Form 990 Schedule B lists, which gives the names and addresses of donors who contribute $5,000 or more per year. This assault on free speech and democracy was thwarted last Thursday, when a federal judge issued a permanent injunction against Ms. Harris’ order that the Americans for Prosperity Foundation, a well-known nonprofit dedicated to free market principles, turn over its list of major donors or stop soliciting contributions in California.

Under current law, nonprofits like the AFP Foundation, are required to file the Form 990 Schedule B identifying major donors with the IRS. The IRS, in turn, is supposed to keep that form confidential. Anyone familiar with the machinations of President Obama’s politicized IRS and the actions of Lois Lerner are well aware of how seriously the IRS considers the confidentiality of private citizens. These nonprofits are also required to register with the state of California, but never before have they been required to submit the IRS forms in California. The AFP Foundation, along with numerous other nonprofit groups, challenged Ms. Harris’ demands in court, and won a significant victory for the First Amendment principles of free speech and free association.

U.S. District Court Judge Manuel L. Real, in his 12-page ruling, stated that “setting aside the Attorney General failure to establish a substantial relationship between her demand for AFP’s Schedule B and a compelling government interest, AFP would independently prevail… because it has proven that disclosing its Schedule B to the Attorney General would create a burden on its First Amendment rights.” In other words, notwithstanding Ms. Harris’ inability to adequately explain why the government needs these records, the resultant chilling effect on free speech that the records demand would ensure, were enough to convince the judge that a permanent injunction against the Attorney General’s order was necessary to protect AFP’s First Amendment rights.

Ms. Harris’ office maintained that the information was required for compliance with California tax law. However, California law already provides the power to obtain donor information via subpoena – in the event that the nonprofit is being investigated for wrongdoing. Nowhere in Ms. Harris’ demands for this donor information was there an indication that any wrongdoing occurred; rather Ms. Harris was advancing the Democrats’ tactic of publicly outing political opponents so that they can be subject to intimidation and retaliation by government officials and the liberal media, to the point where renouncing their views or shrinking away from the public debate are the only available options.

Not so long ago, dissent was considered “the highest form of patriotism.” Now, Democrats are no longer satisfied with personal attacks in the vein of comparing climate change skeptics to Holocaust deniers, or forcing the resignation of business executives for holding unfashionable social views (regardless of their adoption of corporate policies that run counter to those personal views). The latest strategy is to criminalize dissent – witness the actions of New York Attorney General Eric Schneiderman, joined by other Democratic attorneys general, who is attempting to coerce certain energy firms to submit to the current climate change consensus through the threat of investigations and possible fraud and racketeering charges. In another time (and under Republican administrations), the use of prosecutorial powers as a political cudgel would send liberals into convulsions of rage, intoning about dark, Nixonian tactics or vague insinuations of the impending theocracy.

Now, while these maneuvers by Democratic attorneys general will likely not end in prosecution for those energy firms, they do fall in line with what Ms. Harris is attempting here in California, specifically an attempt to suppress and silence their political opponents. That is why the decision last week in federal court was so important to not only AFP, but to the preservation of a free and robust political debate in California and across America. Private citizens should be emboldened to participate in public policy debates, and if their preferred method of civic engagement is a financial donation to an organization with the time and resources to advance certain policies, then those citizens should be able to exercise that right without fear of retribution from government officials.

Kamala Harris will no doubt continue to attempt to curtail the First Amendment should she succeed Barbara Boxer in the Senate – that is where Harry Reid spends his time trying to police political speech, when he is not busy getting into, and losing, fights with exercise equipment. But last Thursday’s decision should serve as a reminder to Ms. Harris that politicians should strive to protect the First Amendment rights of the citizens that they serve, not attempt to intimidate them into silence. Hopefully, AFP and other civic-minded organizations will use this resounding victory to continue to remind her and others of that fact.

Alexander Tomescu is an associate attorney at Wewer & Lacy, LLP, focusing in the practice of election and campaign law.

3 Bills in Legislature That Will Actually Benefit Californians

CA-legislatureThose who value liberty, good government and a reasonable level of taxation have a lot to complain about if they are citizens of California. Not only do we have one of the highest tax burdens in America, we rate very poorly in term of efficient and effective governance as well as transparency. Those of us who point out the state’s shortcomings are labeled as contrarian, “declinists” or pessimists by state politicians, including our governor.

And let’s not forget about corruption. Just a couple of years ago, the California Senate actually had a higher arrest rate than the general population of California. Because of all the negative press, it is no wonder that that the public believes that most of what the California Legislature does is self-serving.

Although there is more than sufficient justification to criticize California’s political system (and especially its Legislature), for the sake of fairness, we should take special notice when our politicians do the right thing. For example, every so often bills are introduced that cut against the stereotype by providing genuine benefit to average folks.

Interestingly, although the California Legislature is fairly left-leaning, sometimes opportunities present themselves for a taxpayer group like Howard Jarvis Taxpayers Association to work with legislators from both sides of the aisle to do good for average citizens. This year, HJTA has sponsored three separate legislative proposals in 2016 that have been well received in the Capitol.

The first, Assembly Bill 1891, would provide property tax relief for seniors. Currently, seniors over the age of 65 in most school districts can file for an exemption from education parcel taxes. However, many school districts require an application for exemption to be filed every year. AB1891 simply states that seniors only need to fill out the opt-out paperwork one time to be permanently exempt from paying a parcel tax.

HJTA is also the co-sponsor of Assembly Constitutional Amendment 6, by Assemblywoman Cheryl Brown. Among its numerous positive provisions, ACA 6 will provide property tax savings for seniors in their retirement years. The law today allows married seniors over the age of 55 to transfer the Proposition 13 base value of their home to a property of equal or lesser value in the same county once in retirement. As good as this law is, it needs to be expanded. For instance, if a spouse were to divorce and remarry, that property owner would not be able to use their base value transfer exemption. Property owners are also out of luck if they do a base value transfer, then decide to move again a few years later. They would be forced to pay the full market value property taxes on a new home. ACA 6 allows for married couples to transfer their base value twice. This will provide couples increased flexibility to sell their home to move closer to children or grandchildren. If approved out of the Legislature, ACA 6 will go to the statewide ballot for voters to approve in November.

Assemblyman James Gallagher has introduced the third HJTA sponsored bill, AB2801. This bill increases transparency for purposes of Proposition 218 protests. Approved by voters in 1996, Proposition 218 allows for water, sewer and refuse rate increases to be approved or rejected via a written protest process. Protests can either be mailed in, or announced at the public hearing. AB2801 simply requires that protests will be retained for two years so taxpayers can review them after the hearing.

As may be apparent, these three bills do not reflect huge policy shifts, such as a large tax cut or a complete reorganization of state government. However, they do make California a better place for homeowners and taxpayers. And for that we can be grateful.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

Originally published by the Howard Jarvis Taxpayers Association

Well-being of Fish Valued Over CA’s Economy and Quality of Life

Lake Shasta Water ReservoirBefore raising our glasses to toast this winter’s abundant El Niño rainfall, here’s a sobering thought: Because of deliberate efforts to protect fish by limiting water storage, about half the rain falling on California will wash into the ocean, instead of being stored for the dry, hot summer to come. As for the water now filling the state’s reservoirs, billions of gallons will be flushed down rivers and out to sea in efforts to protect fish, rather than being used to irrigate food crops or provide water for thirsty communities when the drought resumes. Lawsuits and bad policy decisions have created a situation in which the well-being of fish is seemingly valued more than our economy or quality of life. But it doesn’t need to be this way.

Despite steady population increases and a growing need for water, California has removed about 30 dams to improve fish habitat since 1979, costing the state over a hundred billion gallons in lost storage capacity. Moreover, we’ve failed to build new water storage projects to replace that lost capacity, and are now paying a high price for our short-sightedness. Had the Sites Reservoir been built in western Colusa County when first proposed in the 1980’s, it would be filled with about 650 billion gallons of water. Other stalled projects would be capturing billions of gallons of water as well.

Meanwhile, despite declining storage capacity, trillions of gallons of water have been flushed through California rivers in recent years to protect fish. In the Sacramento–San Joaquin River Delta alone, more than 1.4 trillion gallons of water have been redirected out to sea since 2008 in a failing effort to save the endangered Delta Smelt — water that once flowed to Central Valley farms, the San Francisco Bay area, and Southern California. Although biologists now say the smelt will soon be extinct, federal officials have announced that water will continue being flushed through the delta, despite the devastating social and economic impact on valley farms and communities, where unemployment is now twice the statewide average largely because of forced water cutbacks. As a result, nearly a million acres of the most fertile farmland in the world have been taken out of production, orchards are being bulldozed, and fields that once grew food and provided jobs lie fallow. State officials recently announced that more water will be delivered to the valley this year, but it will still be less than half of what’s needed.

California shouldn’t have to choose between fish or families. With additional water storage and responsible reform of federal environmental laws, we can protect both.

We should move forward with a plan by the Federal Bureau of Reclamation to raise the height of Shasta Dam in Northern California, which would increase water storage by 14 percent, providing enough water for about 550,000 people a year, while boosting the number of endangered salmon in the Sacramento River by allowing the regular release of cold water needed by the fish. We should also expedite construction of the Temperance Flat Dam along the San Joaquin River, expand the San Luis Reservoir, and build the Sites Reservoir, all of which would dramatically increase California’s water storage capacity, making it possible to provide water for farms, municipalities and environmental protection, while allowing us to bank water for future droughts.

These and other water storage and delivery projects have been blocked for years by environmental groups suing under the Endangered Species Act, a well-intentioned federal law that is being increasingly misused to derail energy, housing, transportation, and other infrastructure projects. The law needs to be reformed.

“We’re at the point now where almost any species cannot have its population affected by man,” says Victor Davis Hanson of Stanford’s Hoover Institution, “and that’s an impossible mission to achieve.”

The act needs to be better balanced so human and economic benefits become part of the equation when considering the merits of a particular project that could impact an obscure newt or spider. As the act is currently written, the environment is sacrosanct, and the needs of people and the economy are not considered. They should be.

Board Member, National Alliance for Environmental Reform and former President of the California Manufacturers and Technology Association

Originally published by Fox and Hounds Daily

CalPERS Could Get Hands on Billions in Private-Sector Retirement Funds

Calpers headquarters is seen in Sacramento, California, October 21, 2009. REUTERS/Max Whittaker

Instead of addressing the estimated $600 billion in unfunded liabilities in California’s beleaguered public-employee pension system, Democrats in Sacramento have instead decided to “solve” a growing pension crisis in the private sector. In 2012, Governor Jerry Brown signed a measure that created an investment board and authorized a “feasibility study” of various options for a state-backed private-pension system. That study came out last month, and the legislature is now vetting bills that would put its recommendations into action.

The plans under consideration would mandate participation in the new state-run retirement system for firms with five or more workers, though the workers themselves could opt out. Employers that don’t comply would face fines and other penalties. They would automatically deduct 3 percent to 5 percent of each employee’s earnings (the exact percentage is not yet determined) and deposit the money in an IRA, likely managed by the California Public Employees’ Retirement System (CalPERS)—the same union-controlled government entity that uses its investment muscle to promote liberal causes. Unlike the public-employee pension plans (or even Social Security), however, the envisioned private-pension system is a 401(k)-style, defined-contribution plan. It could not accumulate unfunded liabilities, at least in its current design.

After winning assurances that firms won’t be liable for any losses, the state’s business community has stayed mostly neutral on the scheme. A state senate analysis in support of the bill points to a genuine problem. “Today, due to inadequate retirement savings, nearly 50 percent of middle-income California workers will face living in or near poverty during their senior years,” it says. Social Security is inadequate, and more than 7 million private-sector workers “do not have access to a retirement savings plan through their jobs.”

The obvious rebuttals: workers do have access to such plans in the private sector, and it’s not the government’s job to create such a program. Low-income earners might not be thrilled to see their paychecks decline by 5 percent if the new proposal takes effect. Additionally, employers would face unexpected costs and red tape. The plan would almost certainly lead private employers with their own pension programs to dump their workers onto the new state system. And a government-administered pension system would likely crowd out private companies that manage and sell 401(k) investments.

The state’s public-sector unions backed Brown’s bill. As it turns out, union-friendly politicians hatched the private-sector pension plan a few years ago as a way to deflect attention from the public system’s massive unfunded liabilities. The idea was to give private-sector workers some modest benefit as a way to dampen public support for pension reforms.

Union members’ pensions are enormous. Public-safety officials in California typically receive the “3 percent at 50” formula, which means they (and their spouses) are guaranteed 3 percent of their income multiplied by the number of years worked, available at age 50, which translates to 90 percent of their final years’ pay after 30 years. And that’s before myriad pension-spiking gimmicks. Other public employees often receive formulas that guarantee 80 percent or more of their final pay, which is quite generous. The state’s $100,000 Pension Club is expanding rapidly for precisely that reason. Recently, the San Jose Mercury News reported on Alameda County’s top bureaucrat retiring with a $500,000 annual pension.

Should California go ahead and put the new system into place, and see positive results, expect political pressure to build to expand it into a bigger program—one that could eventually put taxpayers on the hook. Would you trust this crowd to solve any pension crisis?

Kamala Harris’ Attack on Freedom of Opinion Stymied

Atty. Gen. Kamala Harris urges funds for tracking prescription drugsAt Overlawyered, I’ve repeatedly covered California Attorney General Kamala Harris’s audacious demand for the donor lists of nonprofits that carry on activities in California, a step likely to lead to both private and public retaliation against individuals and groups revealed to have donated to unpopular or controversial causes. So this is good news: a federal district judge in California has ruled that her crusade violates the Constitutional rights of one such group, Americans for Prosperity Foundation.

As the WSJ notes in an editorial, U.S. District Judge Manuel Real “declared her disclosure requirement an unconstitutional burden on First Amendment rights,” finding that there was scant evidence the disclosures were necessary to prevent charitable fraud, and that, contrary to assurances, her office had “systematically failed to maintain the confidentiality” of nonprofits’ donor lists, some 1,400 of which Harris’s office had in fact published online. As for retaliation against donors, “although the Attorney General correctly points out that such abuses are not as violent or pervasive as those encountered in NAACP v. Alabama or other cases from [the civil rights] era,” he wrote, “this Court is not prepared to wait until an AFP opponent carries out one of the numerous death threats made against its members.”

An ally of the plaintiff’s bar and unions as well as a candidate for U.S. Senate, Harris recently surfaced as a key player in the alliance of state attorneys general intent on using criminal investigatory powers to probe so-called climate denial at non-profit research and advocacy groups as well as at energy companies like ExxonMobil. That makes at least two episodes in which Harris personally has signaled interest in novel, aggressive steps to pry open the internal workings of private advocacy organizations that take positions opposed to hers.

It’s hard not to see an ongoing pattern here. Aside from the climate subpoenas, which are widely predicted to expand beyond the Competitive Enterprise Institute to other advocacy groups, powerful politicians have been demanding that the Securities and Exchange Commission use its regulatory powers to turn up pressure against advocacy by shareholder-held businesses, and in particular to investigate what they say on issues of regulation and policy – invariably, when they take the opposite side from the politicians’ own views. Earlier this month I covered such a ploy by Sen. Elizabeth Warren (D-Mass.), and New York City official Letitia James recently tried something similar with Sturm Ruger, demanding that the SEC punish the gunmaker for not being more cooperative with the demands of various gun control advocates.

The pattern here is that the formidable power of law enforcement and regulatory discretion is being openly enlisted to identify, flush out, and punish what remains of dissenting opinion in the business community itself as well as among uncooperative nonprofits. Recall that in 2010 Health and Human Services Secretary Kathleen Sebelius vowed “zero tolerance” for health insurers spreading supposed “misinformation” about ObamaCare, in particular by blaming its provisions for rate increases, no small threat from an official wielding immense regulatory discretion over those insurers.

The WSJ’s Kim Strassel had a great column the other day asking why so few business leaders are willing to speak out against coercive and destructive economic measures. Given the amount of effort that goes into identifying and retaliating against dissenting pro-capitalism opinion these days, should we really be surprised?

This piece was originally published by the Cato Institute

Quick and Dramatic Consequences of Minimum Wage Hike

Minimum wage fight for 15Confronted with an impending hike to $15 in the California minimum wage, businesses, labor advocates and political analysts have all begun to shift strategies and tactics. Given current trends, the combined impact could be a smaller, more unionized workforce — that doesn’t always see the benefits wage activists have promised.

The consequences will be quick and could be dramatic. “Most state raises over the past decade, when there have been any, ranged from 1 percent to 3 percent annually. The law Gov. Jerry Brown signed will increase bottom-rung pay roughly 10 percent per year starting in January,” as the Sacramento Bee reported.

Manufacturing flight

One immediate result of the hikes has already appeared in Southern California, where the garment industry faces an especially rough road. Sung Won Sohn, former director of apparel company Forever 21 and economist at Cal State Channel Islands, told the Los Angeles Times a veritable “exodus has begun,” with manufacturers already tempted to shift garment production overseas to retreat from the Golden State still further. “The garment industry is gradually shrinking and that trend will likely continue.”

“In the 1990s, as borders opened up, foreign competitors began snatching up business from Southland garment factories. Eventually, many big brands opted to leave the region in favor of cheaper locales. Guess Jeans, which epitomized a sexy California look, moved production to Mexico and South America. Just a few years ago, premium denim maker Hudson Jeans began shifting manufacturing to Mexico. Jeff Mirvis, owner of MGT Industries in Los Angeles, said outsourcing was necessary to keep up with low-cost rivals.”

The problem, particularly acute for business owners who can’t automate jobs as readily as, say, fast food restauranteurs, was encapsulated by Gov. Jerry Brown himself, who signed the $15 wage into law despite clear reservations about its economic wisdom. “Economically, minimum wages may not make sense,” he said, defending the law on moral and sociopolitical grounds. A high minimum wage, Brown claimed, “binds the community together and makes sure that parents can take care of their kids in a much more satisfactory way.”

Incentives in tension

According to critics of the change, the tension involved in using poor economic choices to encourage good moral ones has driven labor unions themselves toward a predictable, if hypocritical, shift in their own policy objectives. Many of the same unions that agitated for a higher wage “have been quietly — and often successfully — lobbying cities to let employers who hire union workers pay them less than the mandated minimum,” as Quartz observed. “Unions say it gives them the flexibility to negotiate packages for their workers that supplant wages with health insurance and other benefits.

“Critics say that it’s a shrewd move by unions to drive up membership dues and ensure that their workers are the cheapest in town. The exemption gives cost-conscious employers little choice but to hire union, and workers who want jobs little choice but to join their local.”

At the same time, however, workers who have been rallied to the $15 cause have been swiftly pressed into service for pro-unionization demonstrations. “The demand from the original strikes in 2012 was $15 and a union,” said Mary Kay Henry, international president of the SEIU, according to the Times. “Underpaid workers in California are now on a path to $15, but we think the way we can make these jobs good jobs […] is through a union.”

In an added twist, some economists defending the wage hikes have raised the question of whether subsequent job losses are a price worth paying. Gov. Brown, in fact, has referred favorably to that view. “We understand that this can be difficult,” he said, as the Washington Post recalled. “But the fact is that there’s a principle called the living family wage, which is a doctrine that has been around for a long time, since probably before the 1900s, which is that you can’t expect someone to work if the wages for that work can’t support a family.”

Will Gov. Brown Sign Bill Requiring Stricter Oversight of High-Speed Rail?

High speed railSometimes watching Governor Jerry Brown in action you often think of Forrest Gump’s box of chocolates: “You never know what you’re going to get.” A recent example: the Jerry Brown who holds a relatively tight reign on the budget in support of economic prudence dismisses economic theory for what he termed a moralistic stand when signing the minimum wage bill.

These thoughts swirl as the Assembly Transportation Committee unanimously passed AB2847 by Assemblyman Jim Patterson requiring stricter oversight on the costs and scope of the high-speed rail project.

Brown is the bullet train’s greatest advocate. He’s also been the state’s leading preacher within the government hierarchy on fiscal responsibility. If AB2847 clears committee and floor votes and ends up on the governor’s desk will he sign it?

The measure, following recommendations out of the Legislative Analyst’s Office, requires details on costs, schedules and scope of each segment of the train’s building progress, and, importantly, demands to know how the segment will be paid for.

The cost question is paramount because voters were told private funding was part of the formula for financing the rail project. No major private funder have stepped forward. In addition, an appeals court is considering a lawsuit over the legality of the cap-and-trade money, a large chunk of which is dedicated to the high-speed rail.

As Assemblyman Patterson notes, “The Rail Authority is tasked with the largest infrastructure project in modern times and is on track to spend billions upon billions of public resources.” We ought to know more detail about the project.

The Legislature appears to be bending to pubic concerns about the seemingly flimsy promises and financial quagmire that the train project could present.

With Brown’s signature on the minimum wage bill and his pronouncement that morality trumps economy, he could position himself similarly on the high-speed rail, although it’s hard to see how the bullet train is a lesson in morality.

It’s a bit ironic, I suppose, that given technological advancements over the last four decades, that what Brown was excoriated for in his first iteration as governor — a proposed state operated satellite, which earned him the sobriquet “Moonbeam” — might seem a more acceptable project today than his down-to-earth bullet train that could go nowhere.

Originally published by Fox and Hounds Daily