Government Unions Benefit from the Asset Bubble that Harms Workers

Earlier this month the California Policy Center released a study that provided additional evidence that the U.S. stock indexes are overvalued by approximately 50 percent, along with calculations showing the impact of a major downward correction on the solvency of California’s state and local government pension systems. Stocks are now at unsustainable bubble valuations.

Not covered in this study, but equally overvalued, are bonds, which pension systems misleadingly categorize as “fixed income” investments in their portfolio disclosures. CalPERS even went so far as to trumpet their success in earning a 9.29 percent return on “fixed income” investments in their most recent press release – a healthy return that offset losses elsewhere and allowed them to earn a marginally positive return of 0.61 percent last year. But “fixed income” investments usually refers to bonds, and bonds are also at unsustainable bubble valuations.

Here’s why bonds are overvalued today: Whenever new bonds are issued at lower fixed rates of interest than the bonds that were issued before them, then those older bonds that pay higher fixed rates of interest can be sold for more money than their original price. This is because on an open market, buyers will price a resold bond at a value calculated to equalize returns. When rates go down for new bonds, the prices for existing bonds go up. The problem is that back in the 1980s, bonds were being issued at rates as high as 16 percent, and today, they’re being issued at rates close to zero. After a 30 year ride, interest rate drops can no longer be used to elevate the value of bond portfolios.

At a macroeconomic level, every possible investment in the world is overvalued today, because central banks have lowered interest rates to zero in a desperate attempt to continue a decades long disease in which they have spent more than they’ve collected. Governments got to borrow money for next to nothing, and assets kept appreciating. But the binge is almost over, and unlike the savvy super-rich, pension funds can’t just take their winnings off the table.

New Bond Issues, Rates by Nation – June 2016 (red = negative)

Bond issue rates
Negative coupon bonds, a desperate experiment that isn’t going to end well.

This is all tedious drivel, however, if you are a unionized public employee in California. Your retirement security is guaranteed by “contract.” It’s the result of deals cut between union “negotiators” and the politicians they make or break. As a government employee in California, if you’ve worked 30 years, the average annual retirement benefit you can expect if you retire this year is worth over $70,000. To honor that expectation, CalPERS is already mid-way through their latest reassessment, a 50 percent increase to their collections from participating agencies. And if there is a 50 percent market correction (“fixed income” and equity), expect them to double or even triple their collections from taxpayers.

If you are a private citizen trying to prepare for retirement today after, say, 45 years of work and saving, good luck. Because there is no safe investment left in the world. And while you are likely to have to cope with, for example, suspended dividend payments on stocks that are down 50 percent, expect your taxes to go up in every imaginable category – sales, property, income, and hidden taxes embedded in your utility bills and phone bills. It will be “for the children” and “for public safety.” And if there’s a vote required to increase the tax, it will usually pass, because most voters don’t pay property tax, or income tax, or if they do, the taxes are indirectly assessed and invisible to them.

This is the oppressive hoax that government unions have perpetrated on the working families they claim they want to protect. They have exempted their own members, government workers, from the consequences of a corrupt financial system where they are leading partners. When governments spend more than they make and have to borrow money, central banks lower interest rates to make it easier to work the payments into the budget. At the same time, lower interest rates goose the value of stocks and bonds, helping the pension funds claim they can earn 7.5 percent per year. And when the house of cards collapses, taxpayers bail out the banks and the government pension funds.

The next time a spokesperson for a government union speaks disparagingly about Wall Street corruption, remember this: They are partners with Wall Street. They support overspending for their own compensation and benefits, creating deficits that have to be covered by taxes and borrowing. Their pension funds demand high returns, and the bankers comply, with rates that encourage borrowing and deny ordinary people the ability to save. Now that interest rates have hit zero and are even going negative in an exercise of monetary chicanery that has no rival in history, the end is near.

Public sector union leaders need to start remembering they represent public servants, not public overlords who are exempt from the reality that you can only spend as much as you earn. As it is, these union leaders are the overpaid mercenaries of capitalism at its most corrupt.

*   *   *

Ed Ring is the president of the California Policy Center.

On California Farms’ Water Issues, Congress Needs Food for Thought

Row crops growing in California.

When it comes to water and agriculture, California is upside-down.

That’s what historian Carey McWilliams wrote in his 1949 book, “California: The Great Exception.” Most of the water is in the northern part, and most of the best land for farming is further south.

But this “contrariness of nature” worked to humanity’s advantage in two ways, McWilliams wrote, because it stimulated inventiveness and technological achievement, and because “the long dry season is an enormous agricultural asset.”

That assumes you agree that abundant food production is a good thing, a view that in recent years has become unfashionable in places like Venezuela, Zimbabwe and San Francisco.

Rep. Devin Nunes, R-Visalia, described a stunning meeting he had with representatives of the Natural Resources Defense Council and other environmental activists in the summer of 2002 about the future of the San Joaquin Valley. “Their goal was to remove 1.3 million acres of farmland from production,” he said. “From Merced all the way down to Bakersfield, and on the entire west side of the Valley as well as part of the east side, productive agriculture would end, and the land would return to some ideal state of nature.”

That plan was moved forward when the Central Valley Project Improvement Act was passed by Congress in 1992. Under the law, 260 billion gallons of water on the Valley’s west side had to be diverted away from human uses and out to the environment.

Then a series of lawsuits under the Endangered Species Act secured protected status for smelt in 2008 and salmon in 2009, and that was enough to force the virtual shutdown of two major pumping stations that moved water to the Central Valley. Another lawsuit resulted in the San Joaquin River Settlement, later enacted by Congress at a cost of more than $1 billion to taxpayers, which diverted more water away from the Central Valley in an attempt to create salmon runs.

Farmers struggled to get by with groundwater, but in 2014, new California regulations limited that, too.

In 1949, McWilliams observed that if the Central Valley were a state, it would rank fifth in the nation for agricultural production. Today it has poverty and unemployment rates that would be right at home in the Great Depression.

And that’s why members of Congress from the region have repeatedly introduced legislation to adjust federal law in ways that would allow water to be restored to the Central Valley. The legislation passed the House several times only to die in the Senate.

Last year, Rep. David Valadao, R-Bakersfield, introduced it again, calling it the Western Water and American Food Security Act of 2015. President Obama immediately threatened a veto, but in May, Valadao attached the bill as an amendment to an energy bill already passed by the Senate, and the House passed it. …

Click here to read the full story from the Daily News.

Ted Cruz is no Ronald Reagan at GOP Convention

At the 1976 GOP convention in Kansas City did Reagan endorse Ford? Yes.

In Cleveland last night did Cruz endorse Trump? No.

Here is what Reagan said as he shared the stage with Gerald Ford, addressing Ford and the nation directly: “We must go forth from here united, determined that what a great general said a few years ago is true: There is no substitute for victory, Mr. President.”

Teagan’s short speech in 1976 was an endorsement no matter how you parse it. In contrast Cruz didn’t unite with his comments last night, rather they almost insinuate a hope for defeat not victory. Cruz never uses the words “unite” or “victory” rather his words are about the process of deliberation and even then left unresolved. California Political Review’s Bill Saracino and I were both Reagan delegates and on the floor in Kansas City in 1976. We saw it.

Reagan, to cheers, helped Ford at the convention after the presidential nomination was resolved. Reagan praises Ford in his comments for having him speak. After Ford won, Reagan’s convention whips told us all to support Ford’s VP pick – Dole – and not participate in an insurgency for Jesse Helms, and that is how the entire Reagan delegation voted.

In contrast, Cruz, to boos, divided the convention. Both Bill Saracino and I made ourselves available to Craig Shirley in writing his books about Reagan, and I think I may be credited in one of them for that. But as Saracino has said On Facebook, we were there at the Kemper Arena, Nancy Reaganand there was no controversy at all over the way Reagan phrased his clue to his voters to unite and support Ford.

You can see Reagan’s entire speech here: http://www.nationalcenter.org/ReaganConvention1976.html. Reagan will be remembered for being a “class act” in 1976. No way that can be said about selfish Ted Cruz.

Tell Me Again Why We Need Higher Taxes?

taxesThis November, California voters will face a slew of tax and bond proposals at both the state and local levels. Each of those ballot measures will be supported by the usual pleas from those who benefit from higher taxes – especially well-funded labor organizations.

Special interests will complain about the “cuts” to vital public programs in education, transportation, health care, etc., that they have suffered in the past. But the problem they have is that they run head long into the facts – facts which show California government is now more flush with cash than at any other time in its more than 160 year history.

The California state budget projects spending of $122.6 billion of general fund dollars which is over 5 percent higher than last year and a stunning 42 percent more than when Brown took office in 2011.

As we get closer to the November election, this column will present a host of reasons why most tax increases should be rejected. We do this in full knowledge that our opponents, with tens of millions of dollars in campaign funds, will drown out any competing messages of fiscal responsibility, protections for homeowners and a healthy economic climate to ensure that California remains competitive for businesses both large and small.

For now, let’s focus on property taxes as that is of special concern to many California voters, especially homeowners. The state controller just announced that property taxes are surging in California – up over $3 billion from the previous year. The long-standing urban myth that Proposition 13 has decimated local governments has, once again, been proven false by the data. In short, California is not a low property tax state. Per capita property tax collections in the Golden State are significantly higher than the national average and that has been true for many years now.

This is just one fact of many that voters should consider when confronted with tax hike proposals on the ballot. And this is especially true when local governments are seeking higher property tax levies in the form of “parcel taxes” – property taxes imposed in excess of Proposition 13’s one percent limit.

There are dozens of other reasons to reject tax increases this November including California’s penchant for pursuing massive boondoggle projects and the fact that most tax increases will not be used for new programs or higher levels of service, but rather to shore up failing pension funds.

It is our hope that Californians will not be swayed by the false claims that higher taxes are necessary. If voters are paying attention at all, they will quickly come to that same conclusion.

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.

MADD-Backed Ignition Interlock Mandate Wrong for California

Drunk driving2After nearly a decade of activists working to pass a law mandating installation of ignition interlock devices (IID’s) in the cars of anyone convicted of a DUI, success appeared imminent — until a couple weeks ago.

Senate Bill 1046 has been positively flying through the Assembly — enjoying the kind of unanimous support reserved for feel-good legislation pushed by a group no one wants to oppose.

It’s almost as if Mothers Against Drunk Driving (MADD) and its allies in the Assembly hoped they could outrun the facts.

But last month, the California Department of Motor Vehicles released its “Specific Deterrent Evaluation of the Ignition Interlock Pilot Program in California,” which studied the efficacy of the interlock mandate in four California counties: Alameda, Los Angeles, Sacramento and Tulare. Much to the dismay of advocates, the DMV report did not advocate in favor of expanding the pilot program statewide.

The bottom line of the DMV report: Those who installed the devices had an increased risk of crash or fatal injury compared to those who did not.

That’s right: Instead of making the roads safer, a statewide ignition interlock mandate for all offenders would likely make drivers less safe.

It makes sense if you think about it. IID’s require the driver to not only blow into them when they start the car, but also undergo a “rolling retest” which occurs at random to ensure the driver didn’t simply have someone else blow into the device to start the car. But picking up the device when it beeps to complete a long breath test is a massive distraction — not unlike texting and driving.

But there are some in California who don’t want a small detail like public safety to get in the way of a feel-good agenda. MADD, along with the bill’s author State Senator Jerry Hill, are already looking for ways to discredit the DMV’s impartial findings.

Yet this is the second year in a row that the DMV evaluated the pilot program and refused to recommend expanding it. In 2015, the five-year pilot program was extended for an additional 18 months after the DMV found that “the IID pilot program was not associated with a reduction in the number of first-time and repeat DUI convictions in the pilot counties.”

Since proponents of expanding interlock mandates in California can’t point to empirical evidence that the law would have a net positive effect on traffic safety, they instead fall back on the fact that 26 other states have passed similar laws. What they don’t mention is how poorly the laws are working in those states.

According to the National Highway Traffic Safety Association fewer than 20 percent of those ordered to get an interlock actually have them installed. The reason is that laws like the one proposed in California are an unfunded mandate, meaning there’s no money to ensure that offenders actually comply with the law.

That’s why ignition interlock mandates for all offenders is such misguided public policy. Over 70 percent of alcohol-related fatalities are caused by high-BAC and repeat offenders — hard-core alcohol abusers. California could save far more lives if it worked to reach 100 percent ignition interlock installation compliance among this target population, rather than expanding the mandate so widely that it is even more difficult to enforce.

But that wouldn’t serve MADD’s ultimate agenda of seeing alcohol-sensing technology installed in every car in America.

It may sound far-fetched, but MADD has long supported an ongoing federal program called DADSS (Driver Alcohol Detection System for Safety) which has developed technology that can read a driver’s blood alcohol concentration level through touch technology in the steering wheel or ignition button. A drivable prototype was unveiled last year and engineers aim to have it on the market in approximately five years.

Thus, MADD is pushing hard to expand current ignition interlock laws. The more the current technology is normalized, the easier it will be to sell its more sophisticated progeny to legislators and the public.

But just because the DMV report doesn’t serve MADD’s ultimate goal, doesn’t mean we should ignore the findings.

Facts are stubborn things. And the fact is, interlock mandates for first-offenders aren’t the drunk driving panacea MADD wants them to be.

Sarah Longwell is the managing director of the American Beverage Institute.

NeverTrump’s Nemesis: California Delegation to Republican Convention

U.S. Republican presidential candidate businessman Donald Trump speaks at a veteran's rally in Des Moines, Iowa January 28, 2016. REUTERS/Rick Wilking - RTX24HM9

CLEVELAND, Ohio — California was the state where Ted Cruz was going to make his last, decisive stand against Donald Trump for the Republican nomination. Instead, the California delegation to the Republican National Convention is Donald Trump’s doomsday weapon.

The state’s 172 delegates were almost entirely “hand-picked by Trump,” the Sacramento Bee reports. And the sheer size of the delegation — the convention’s largest — makes it an effective tool for Trump to use to stop any “NeverTrump” insurgency at the convention.

The California contingent has been housed far away from the convention site, 60 miles west of Cleveland, in the Lake Erie town of Sandusky. The venue: the Kalahari water park and resort, where the drought-conscious Californian delegation might enjoy the sight of precious fresh water being wasted in every direction. (Some were not so impressed by the atmosphere, reminiscent of  National Lampoon’s Vacation: “It reminds me of a bad Chevy Chase movie,” one delegate told the Bee.)

Yet the delegation will be seated in the front rows for the duration of the convention, because it will present the most visible and enthusiastic bloc of Trump supporters in the Quicken Loans Arena.

The San Francisco Chronicle elaborates:

The 172-member California delegation, the nation’s largest, is Trump’s designated enforcer.

“We are the backstop,” California Republican Party Chairman Jim Brulte — in Hawaiian shirt — told me near the Zanzibar.

“If you want to mess, bring it on,” Trump’s California state director, Tim Clark — in flip-flops and shorts — explained. “This delegation was built for a fight. If the Never Trumpers want to start something, they have to go through us.”

Some members of the delegation have been on the Trump train forever; some, like Republican National Committeeman Shaun Steel, once called Trump a “clown” but now feel he is the best, and the only, alternative to Hillary Clinton. And one delegate, billionaire Peter Thiel — who is not staying in Sandusky — has a prime time speaking slot on the last night of the convention, when Trump accepts the GOP nomination.

The delegation has come a long way from early April, when the Cruz campaign mockedTrump’s California operation, predicting that Trump would fail to find enough delegates in each of the state’s 53 congressional districts.

Today, the delegation is strong, loyal, and — as even the East Bay Times observed — diverse, with youth, women, and minorities all represented amply.

Even the Chronicle acknowledged that the delegation’s vibe has changed. No longer is it made up of the “white-haired state senators” and “the political fanboys,” but grassroots activists like Rachel Casey, the woman who was infamously assaulted by anti-Trump demonstrators in full view of the media last month.

California was once among the states most skeptical of Trump. Today, in Cleveland, it is Trump’s most loyal.

Republicans hope that the rest of the party catches the same spirit.

Joel B. Pollak is Senior Editor-at-Large at Breitbart News. His new book, See No Evil: 19 Hard Truths the Left Can’t Handle, will be published by Regnery on July 25 and is available for pre-order through Amazon. Follow him on Twitter at @joelpollak.

This piece was originally published by Breitbart.com

Are Environmentalists Losing Influence in Legislature?

kevin de leon 2California environmentalists have long been one of the most powerful forces in the Legislature. But in 2015, the centerpiece of the green agenda — a provision in a broader measure that would have mandated a 50 percent reduction in gasoline use in the state by 2030 — stalled in the Legislature despite heavy prodding from Gov. Jerry Brown and appeals from then-Speaker Toni Atkins, D-San Diego, and Senate President Kevin de Leon, D-Los Angeles. The development was such a break from the norm that it won heavy coverage from The New York Times, which called it “a major setback for environmental advocates in California.”

Now there’s a fresh sign that environmentalists’ clout may be on the wane. De Leon has stunned green groups by endorsing a moderate incumbent — Assemblywoman Cheryl Brown, D-San Bernardino — who opposed the push for a sharp cut in gasoline use over another prominent Inland Empire Democrat, attorney Eloise Gomez Reyes. As Calwatchdog reported earlier this year, Brown was indirectly blasted by one of de Leon’s leadership team, Sen. Connie Leyva, D-Chino, who said she was backing Brown’s opponent because “she was a principled human being.”

In a strange twist, the document making the rounds in media circles showing de Leon’s endorsement of Brown contends that Leyva and all his fellow Senate Democratic leaders agree with him.

“I support Eloise Reyes. Period. Somehow the pro tem must have misunderstood my position, although I thought I was quite clear,” Leyva told The Los Angeles Times.

Whatever the logistical problems with de Leon’s endorsement, it amounts to a striking rejection of environmentalists’ argument that they know Brown’s district better than she does. This view was voiced again this week by one of Reyes’ consultants, Leo Briones, who told the Times, “Cheryl Brown can have every special interest and every Sacramento politician … but she still is a legislator that does not represent progressive values or her district when it comes to issues of working families, of consumers, of guns and public safety and the environment.”

Green official: Brown a ‘nice person,’ bad lawmaker

This argument was offered by a high-profile environmentalist in a January Sacramento Bee story that rubbed some minority lawmakers the wrong way:

“There’s no doubt Ms. Brown, who’s a very nice person, has not been representing her constituents when it comes to environmental issues, particularly clean-air issues,” Sierra Club California director Kathryn Phillips told the Bee. “She’s collected too much money from the oil industry and let that guide too many of her votes.”

As Calwatchdog reported then …

Phillips, who works out of Sacramento, is a white UC Berkeley graduate who used to work for the Environmental Defense Fund. Brown, who turns 72 next week, has been a fixture in the Inland Empire African-American political establishment for more than three decades. She co-founded a weekly publication that focuses on black issues in 1980 and has worked on a wide variety of African-American causes in western San Bernardino County.

Assemblyman Sebastian Ridley-Thomas, D-Los Angeles, told the Bee he didn’t care for how environmentalists were treating his fellow African-American lawmaker. “I think it’s a tone-deaf approach. … The environmental community, and the broader environmental coalition, needs to figure out whether or not it’s going to be a collaborator and … work with black California on policy, and shared political goals, or if it will be an adversary.”

Ridley-Thomas is a vocal supporter of de Leon’s efforts to have a Superfund-type cleanup of the Exide battery plant in Vernon.

Originally published by CalWatchdog.com

Black Lives Matter — 3 Things We’ve Learned; and 1 Thing We Still Don’t Know

0811-riotThe Black Lives Matter movement has raged for nearly two years. In its better moments, it has provoked soul-searching by sincere Americans who want to understand each other, and who want the law to be enforced fairly as well as effectively.

In its worst moments — such as the one we are enduring now — Black Lives Matter has inspired violence, terrorized police, driven up crime and divided Americans.

Overall, the experience has produced three basic lessons — and raised one lingering question.

1. Lesson 1: Race does not actually matter in police shootings. A black Harvard economics professor has published a new study that reveals that there is no evidence of racial bias when police use deadly force. “On the most extreme use of force – officer-involved shootings — we find no racial differences in either the raw data or when contextual factors are taken into account,” the study concludes.

The study also reports that blacks and Hispanics are 50% more likely to experience somekind of force in their interactions with police (see below). But the claim that the police are killing black people has no basis in fact.

There is anecdotal evidence to support the Harvard study’s hard numbers. Fresno police recently shot and killed an unarmed white teenager, Dylan Noble. The police “body cam” videos of the shooting are painful to watch. It is not clear that they had to use deadly force against him. But it is also likely that they had some reason to, after he appeared to be holding a long object in one of his hands; seemed to reach behind his back, or to his waist; and walked towards officers who already had their guns drawn.

The common denominator in most of these sad events is not race, but often the unpredictable behavior of the victims.

2. Lesson 2: Racism is still a part of black Americans’ everyday experience. Though there is no racial bias in shootings, minorities do experience different treatment by police.

On Wednesday, Sen. Tim Scott (R-NC), a Tea Party conservative and the first black Senator from the South since Reconstruction, gave eloquent voice to that sentiment, describing how he had once been stopped by Capitol police. They did not believe the black man standing at the entrance to the building was a U.S. Senator.

“[T]he officer looked at me, a little attitude and said, ‘The pin, I know. You, I don’t. Show me your ID’,” he recalled.

That is not to say that black people are the only people who experience racism. Nor does it mean that America’s institutions are fundamentally corrupt. The idea of “systemic racism,” which has become a Hillary Clinton talking point, is an absurd contrivance that presumes all white people to be guilty, and is used to bully people — including liberals — into conformity with the radical left.

But as even former New York mayor Rudy Giuliani noted, as he called Black Lives Matter “inherently racist,” the perception of racism creates its own reality. And there is a basis for that perception, as the Harvard study notes.

3. Lesson 3: Police, like most people, want to do the right thing. One of the striking, but overlooked, common features of the Alton Sterling shooting in Baton Rouge, the Philando Castile shooting in Minnesota, and the Dylan Noble shooting in Fresno is that the police showed a genuine concern for the people they had shot, once the confrontations were over.

Police called paramedics right away, for example, after Sterling had been shot. And in the body cam video of the Noble shooting, one officer is heard literally pleading with the young man to raise his hands so he would not have to shoot again.

There are rare exceptions, of course. In the Tamir Rice shooting in 2014, where a police officer shot and killed a boy in a park armed with a toy gun, officers struggled to provide first aid.

There are some bad cops, and terrible mistakes by good cops. But police want to solve the problem — without placing public safety at risk.

The point is there is room for debate about how to improve police tactics, and rebuild trust. Airbnb founder Joe Gebbia recently noted that strangers who normally might not trust each other change their minds with just a little more information. As Giuliani sad, we “have to try to understand each other.”

Question: Do black people realize that white people have the same problems? It can be humiliating to be “profiled,” but police make snap judgments about people all the time. In some situations, they have to do so. And sometimes, the decisions are unjust and unfair.

But it is not a uniquely black experience. Breitbart News’ Lee Stranahan was arrested last weekend while covering Black Lives Matter protests, and wrote: “I did nothing to break the law. I was not obstructing traffic … the police came directly at me. I do not know why I was targeted.” Once arrested, he made an effort to be cooperative, and observed that despite being one of the only white detainees, he was treated equally, “no better or worse than any other polite prisoner.”

There has been so much rhetoric lately about “systemic racism,” after years of Occupy-inspired agitprop about inequality, that black people could be forgiven for ascribing the ordinary mishaps and challenges of life, wrongly, to racism.

Do enough black people know that most white people — even among the “wealthy” — struggle to pay the bills, wrestle with addiction, and have run-ins with the cops?

We have let our leaders politicize the everyday. We should try talking to each other, without them.

Joel B. Pollak is Senior Editor-at-Large at Breitbart News. His new book, See No Evil: 19 Hard Truths the Left Can’t Handle, will be published by Regnery on July 25 and is available for pre-order through Amazon. Follow him on Twitter at @joelpollak.

This piece was originally published by Breitbart California

CARB Threatens Greenhouse Gas Law Extention

carbon-tax-1The California Air Resources Board set a match to controversy this week suggesting that the board could push the cap-and-trade deadline for funding greenhouse gas reduction programs past its 2020 end date by executive fiat.

That’s not the way the law works, many Republicans cried, and they are backed up by an opinion from the Legislative Counsel’s Office.

According to the opinion, “The act does not authorize the governor or the ARB to establish a greenhouse gas emissions that is below 1990 level and that would be applicable after 2020.”

Republican Senate Minority Leader Jean Fuller called the ARB proposal “illegal” and admonished the executive branch, “Californians deserve better than a government that acts as if they are above the law.”

Many in the business community feel fixes are needed to the current program before any extension is contemplated. Dorothy Rothrock, president of the California Manufacturers and Technology Association said in a release following the ARB announcement, “Manufacturing investments and jobs have lagged other states in the US over the past six years by a large margin. Future climate policies must recognize this reality and be designed to protect California’s manufacturing jobs and economy.”

The cap-and-trade policy ARB wants to extend is subject to court action already, as business interests, including the California Chamber of Commerce, brought suit claiming the cap-and-trade formula is actually a tax requiring a two-thirds vote of the legislature. The law establishing cap-and-trade, AB 32 of 2006, was established by majority vote. While a lower court brushed aside the business complaint an appellate court is now considering the matter. Observers watching court action say there is a chance the lower court decision could be reversed.

There is another way for the legislature and the governor to extend the cap-and-trade end date and lower the greenhouse gases goal below 1990 levels. Pass legislation.

That is exactly what some in the legislature are trying to do with SB 32, that would extend the law lowering the acceptable greenhouse gas level 40% below 1990 levels by 2030.

The court case, however, raises doubt about whether the SB 32 needs a simple majority vote or a two-thirds vote.

In a Flash Report column yesterday, state Senator Andy Vidak said attempts are being made by Democratic leaders in the legislature to secure enough Republican votes to allow SB 32 to pass by two-thirds. If true, that is a strong indication that the Democrats are concerned the court will side with the CalChamber over the tax issue and brand cap-and-trade an illegal tax.

Yet, the politics over changing the greenhouse gases law do not stop there. Another consideration is one posed by L.A. Times columnist George Skelton who suggested California voters in November, reacting negatively to a Trump candidacy, might defeat Republican officeholders thus securing a two-thirds vote in both houses of the legislature for the Democrats.

In that case, the strategy for the Democrats just might be to bide their time. Then again, you might conclude that the politics don’t stop at that point, even with a two-thirds Democratic majority, because the politics of energy and its cost have split the Democratic caucus in the past and could do so again.

ditor of Fox & Hounds and President of the Small Business Action Committee.

This piece was originally published by Fox and Hounds Daily

Populist Unity Can Overcome the Establishment’s Supermajority

Back in 2012, the California Policy Center published an article entitled “The Forgotten 33%,” which included a graphic entitled “American Voter Breakdown 2012.” It depicted the U.S. electorate as comprised of 46% who pay zero net taxes, 20% who work for the government and are net tax consumers, the 1% “super rich,” and the “forgotten 33%,” who work in the private sector and earn enough to be positive net taxpayers.

The point of the article, then and now, was that people with an intrinsic preference for big government comprise a super-majority of voters in America. But something has changed since 2012…

AMERICAN VOTER BREAKDOWN 2016

Tax paying chart

The emergence of Donald Trump and Bernie Sanders as serious contenders to become president of the U.S. reflects a growing awareness among voters in all of the above categories that things can and should be better. The 33% who constitute America’s beleaguered taxpayers were angry four years ago, and this time around they’re furious. Their ire is the most easily explained: Now more than ever, they work long hours for less wages or lower profits, all while being told by the establishment press, by mainstream academia, and by left-wing politicians that they’re “privileged,” and still aren’t paying their “fair share.” If they’re white, they’re told their success is the undeserved result of their color, when in fact they’ve been the recipients of institutionalized reverse discrimination for nearly two generations. And no matter what their ethnicity, they confront soaring prices for housing, health care, and college tuition for their children.

The 33% who work and make enough to pay taxes are angry. And they should be. But what about the 46% who pay no net taxes?

The anger of the 46% takes various forms, nearly all of it justified. Many of them work, but qualify for the earned income tax credit and subsidized health care, which makes them net tax consumers. Many of them would like to work harder, but the only jobs available are part-time with unpredictable schedules which makes it impossible for them to work two jobs. Many of them would like to get a better education, but they are the products of failing schools where teacher tenure is more important than student achievement. And if they’re people of color and haven’t yet been successful, they’re perpetually told by the establishment press, by mainstream academia, and by left-wing politicians that they are victims of discrimination and their failures are not their responsibility – fueling additional anger.

And what of the 20% who work for the government? They are, for the most part, ensured decent health care and a secure retirement. But they are the targets of relentless propaganda from their unions, who have waged a multi-decade campaign to convince them they are underpaid, underappreciated and overworked. Many of them succumb to this nonsense. Others, and more than a few, are disgruntled for the opposite reason – they resent working for a unionized government where merit means less than seniority, and innovation is a threat.

But why are taxes consuming the 33%? Why are opportunities for good jobs and education being denied the 46%? And why does government get bigger every year but deliver less?

There’s a simple answer. Government unions. Especially at the state and local level, government unions have destroyed our public schools and driven our public institutions to the brink of bankruptcy. These government unions perpetually lobby for higher taxes, bigger government – more employees with more pay and benefits, more job killing regulations, and more programs ostensibly intended to help the less fortunate – regardless of their cost or actual effectiveness. The government union agenda is to increase their power and influence – a goal that has no connection with the public interest.

Government unions control state and local politicians, who in turn control every scrap of legislation sought after by big business. They encourage and enable cronyism. Their union controlled pension funds and their union backed government bond underwriting make them the biggest players on Wall Street. They ARE the “establishment” that has gotten everyone so agitated this time around.

Donald Trump, for all his hapless gaffes and hideous vitriol, is far too intelligent to identify government unions as the root cause of most of the problems in America. Unions make or break Trump’s development projects. And even if Trump did attack the government unions, he’d risk confusing voters, who by and large still don’t make a distinction between public and private sector unions.

Bernie Sanders, despite his belated attempts to pander to the African American left by challenging police organizations, is unwilling or unable to make the distinction between police personnel, whom we are lucky to have among us, and police unions that protect bad cops and intimidate politicians. And even if Sanders did take on the police unions, he would never take on the teachers unions – despite the fact they’ve practically destroyed public education in America.

Populist anger in America today is justified, and there is a unifying target for the anger – the “establishment” as represented by government unions and their clients; monopolistic corporations, America’s overbuilt financial sector, and the extreme environmentalist lobby that provides a phony moral cover for their iniquitous schemes. If public sector unions were illegal, this entire corrupt establishment would be threatened as never before. As it is, this awakening national dissent has seismic power, diffused in all directions, turning only on itself.

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Ed Ring is the president of the California Policy Center.