Liberals Have It Easy: Why It Feels So Good To Be A Liberal

I am not an unsympathetic person by nature. The sufferings of others, especially when caused by market or government forces beyond their control, deeply trouble me. As they should. So why is it that I have such a hard time empathizing with the self-styled 99 percent, especially as they are portrayed in two new books highly sympathetic about the recent Occupy and Wisconsin civil unrest?

Occupy!: Scenes from Occupied America by Carla Blumenkranz, Keith Gessen, Mark Greif, and Sarah Leonard, and Uprising: How Wisconsin Renewed the Politics of Protest from Madison to Wall Street by John Nichols, both offer loving snapshots of a movement that its adherents thought would change the world. Instead, the movement appears to have sputtered and died. But the stories told about the founders are highly revealing, and often wildly, if unintentionally, entertaining.

The emotional tone of Occupy! is a sense of great wonder and excitement over the fact that so many different kinds of people have come together to protest, well, so many different kinds of problems in so many different kinds of ways. As the book lets slip, most of the leaders of the Occupy movement, which claims to draw individuals from every race, creed, and age group, are young, white males. Power to the same old people, alas. But at least everybody’s having fun.

The book consists of a series of short, personal observations on Occupy, many of which begin pretty much the same way: I was downtown, trying to find the thing, and then all of a sudden, there it was, and it was really exciting. Okay. Whatever floats your boat. A few hundred strangers in a park coming together to protest everything? Sure, why not? The problem that the authors repeatedly detail is that no one can quite agree on what exactly to protest, or what precise remedy should take place. It’s hard enough trying to hold a meeting without those damned drum circles blasting everybody’s brains.

The funniest moment of Occupy! is when a group of Occupyers have transformed themselves into a working group on the issue of homelessness, and they’re trying to put together some sort of plan or document or program to handle the subject…when all of a sudden, an actual homeless man wanders into their midst, and then embarrasses them by asking them for money.

Beautiful. Liberal guilt meets unapologetic panhandling. All of a sudden the homeless don’t look too attractive when one of them is trying to reach into your wallet or purse. How inconvenient!  At least that seems to be the lesson that the author took from that highly unexpected and undesirable encounter.

Meanwhile, about 900 miles to the west, John Nichols, editor of The Nation and therefore someone who ought to know better, finds himself reliving not the 1960s but the Pete Seeger 1930s as so-called progressives take on Governor Scott Walker and occupy the statehouse.

Nichols never met a long sentence he didn’t like. Try this on for size:

“Sometimes on a very cold, very windy Monday night in February, a few blocks from a state capitol where crooked politicians are conniving to take away the essential rights of working people, sometimes in a cavernous room packed with high school and college students, a band takes a stage from one side of an epic tipping point and leaves on another, having bent the arc of history in a moment so fast, so furious, so unexpected that it is too easy to tell yourself you are just imagining all of this.”

Got that? Good. What Nichols does, as he bends the arc of sentence structure until backwards reels the mind, is to suggest that a failed movement to dispatch a Republican governor is somehow a model for progressive actions across the country. There’s only one problem. Last time I checked, the governor of Wisconsin was still…Scott Walker. So let me make sure I’ve got this straight, John. You’re saying that a failed attempt to unseat a governor is the model for all progressive actions across the country?

Or did I miss something, as I tried to unpack all those fifty- and sixty-word sentences?

The reason for defenestrating Walker is his commitment to removing collective bargaining rights from state workers.  In reality, the people who least need collective bargaining are state workers.  They have every protection under the sun.  How easy it to fire a drunken high school principal or trigger-happy police officer?  State workers need to feel the same pain as the rest of us during a recession.  They should be no more exempt than anyone else from layoffs or pay cuts or any of the things that happen when the money isn’t there.

If you want to organize migrant workers picking fruit for a few bucks an hour, go for it.  Hospital workers who have no job security and no protection against bad bosses, you’ve got my blessing.  But the people who work in the DMV?  What are you protecting them from, paper cuts?

Another entertaining feature of both books share is the tendency of liberals to eat their own.  The mainstream media is never friendly enough to the Occupiers or the sit-in people in Wisconsin.  There’s never enough coverage and it’s never the right coverage.  And as for Obama?  A bum.  He never lifts a finger, according to the authors.  Only the most liberal President in anyone’s lifetime, but he isn’t liberal enough for the left.

The two books, Occupy and Wisconsin, reinforce the belief that conservatives deal in facts while liberals traffic in feelings.  It may feel terrific to use a Porto-potty in Zucotti Park (as long as real homeless people are denied access to them).  It may be a wonderful experience to see a musician drive a crowd into a frenzy over a political issue.  But fuzzy thinking leads to poor results.  Wall Street and Corporate America are utterly unmoved by Occupy.  And Walker still runs Wisconsin.  The left remains a few facts short of a load.  But it must feel so good to focus on feelings, not facts.

(New York Times best selling author Michael Levin runs, which provides ghostwritten social media (Twitter, Facebook, blogging, YouTube, etc.) for its clients.)

Los Angeles on the Brink of Bankruptcy: Parasitic Unions, Irresponsible Leaders, and Interminable Spending

When the nation’s second largest city teeters on the verge of bankruptcy, local elected officials – and especially taxpayers elsewhere – ought to take it as a wake-up call and ponder the evident public policy blunders that laid the groundwork for such an unnecessary scenario.

Los Angeles’ potential bankruptcy and $238 million budget shortfall were predictable and preventable. So predictable in fact that former Los Angeles Mayor Richard Riordan warned of the looming crisis in a Wall Street Journal editorial in 2010. Now he says bankruptcy may be just a year away.

What underscores this municipal catastrophe is the undue influence of public employee unions on city expenditures, irresponsible decisions by elected leaders and unsustainable benefit structures practically germane to the government sector.

When reporting the projected budget gap for the 2012-13 fiscal year, L.A.’s chief administrative officer, Miguel Santana, noted that the budget shortfall is likely to be much greater – $427 million – by 2014-15, if drastic action is not taken.

Ominous as the projections are, they understate the forthcoming structural challenges in L.A.

A study released earlier this month by the Stanford Institute for Economic Policy Research estimated that each of the city’s three independent pension funds are unfunded by billions of dollars: the City of Los Angeles Fire and Police Pension System is $9.25 billion unfunded; the Los Angeles City Employees’ Retirement System is $11.32 billion unfunded; and the City of Los Angeles Water and Power Employees’ Retirement System is $6.59 billion unfunded. To put the numbers in context, L.A.’s 2011-12 operating budget is $6.87 billion, according to the city.

Stanford’s study also found that “pension costs increased from 8.5 percent of total city expenditures in 1999 to 13.7 percent in 2011.” For fiscal year 2011-12, estimated pension costs look to be “15.4 percent of city expenditures.” That means public employee retirement costs continue to crowd out other city budgetary priorities and perhaps serve as a precursor to insolvency.

Considering these trends, the city of Los Angeles could be facing the start of bankruptcy “as early as next year,” Riordan argues. “What will likely trigger bankruptcy is when Wall Street stops buying bonds from [the city of] LA,” he said. “Someone will wake up and say, ‘They aren’t going to have enough money to pay off my bonds,’ and that will be that.”

“If you predict ahead three or four years,” Riordan argues, the city will have to “close parks, libraries and cut police and fire services,” similar to what has happened in the cities of Stockton and Vallejo.

What helped to cause many of these problems is the political might of public employee unions and the willingness of elected officials to kowtow to their whims. Riordan made the point more bluntly when he said the unions basically control the L.A. City Council.

For example, “A compensation package negotiated in 2007 irresponsibly guaranteed many city workers more than 25 percent in pay hikes over five years,” according to a Los Angeles Times editorial.

Even now, as the city faces crisis, “most employees represented by the Coalition of Los Angeles City Unions are scheduled for 11 percent increases in compensation over the coming two years,” the Times reported.Given that in February the unemployment rate in the City of Angels was 13.3 percent, according to the U.S. Department of Labor Statistics, it should be unthinkable to even consider raises for public workers.

City officials have suggested offsetting budget shortfalls partially by asking workers to forgo these raises but the union bosses are crying foul. Councilwoman Jan Perry, via phone, said the raise issue will come down to a simple question for the unions: “Do you want to save jobs for more people or raises for fewer people?” If the union is unwilling to give up the raises, layoffs appear eminent, diminishing the city’s workforce.

“Whether people have the political will or not,” Perry said, “the numbers are the numbers, right there in front of them.”

Of course, layoffs will not be enough. City workers will have to assume more costs for their own health care and, at the very least, a new, less-generous pension plan has to be created for new employees.

“A new pension tier for people not even hired is completely reasonable to pursue,” Perry argued.

The unions will have to be part of, if not the catalysts for, serious reform or they will be the biggest losers. Either unions make major concessions or the city will have to raise taxes to astronomical levels, Riordan argued.

“Can you imagine L.A. quadrupling their taxes? Everyone would flee the city and the state. Somewhere along the line the unions have to take action because their people are the one’s who will be hurt.”

Cities and municipalities throughout California and elsewhere ought to take note of L.A.’s follies before shortfalls overwhelm their coffers, too. Riordan contends: “LA is better off than a lot of cities but it is not well enough off to prevent bankruptcy.”

If that is the case, California has a bumpier road ahead.

(Brian Calle is a columnist and editorial writer for the Orange County Register and editor of Originally posted on his blog, Uncommon Ground.)

San Diego’s Carl DeMaio puts pension reform center stage

In 1978, Howard Jarvis launched the U.S. anti-tax movement in California with Proposition 13, which capped annual increases in property taxes and kept people from being forced from their homes during real-estate bubbles. A generation later, the Golden State could be on the brink of launching another populist movement, one driven by anger over government compensation practices. A key battleground is San Diego. In June, voters will decide on Proposition B, the Comprehensive Pension Reform Initiative. It would end defined-benefit pensions for all new city hires except for police officers, instead providing pensions similar to 401(k)s. It would prevent pay sweeteners from being added to base salary when calculating pensions, and it would require city workers to pay a bigger share of their pension costs. Finally, Prop. B would mandate a five-year salary freeze.

Prop. B’s chief author is San Diego city councilman Carl DeMaio, a Republican former management consultant and leading candidate for mayor. DeMaio, 37, doesn’t just want to end costly defined-benefit pensions for public employees, a position he shares with former Republican and newly Independent Nathan Fletcher, one of his rivals in the race. He’s also a vigorous advocate of “managed competition,” in which public-employee groups bid against private providers on the provision of government services. San Diego’s version of managed competition—which DeMaio would like to expand upon—so far has driven down the cost of municipal fleet maintenance, street sweeping, and printing. “Managed comp” carries the promise of extending to government—at last—the productivity revolution that has transformed the private sector over the past 30 years. Even with total U.S. employment at historically low levels, the gross domestic product has never been higher. It’s been nearly a decade since the McKinsey consulting group reported that “the opportunity to improve government productivity is huge . . . [with] three classic management tools . . . organizational redesign, strategic procurement and operational redesign.”

Nor does DeMaio’s reform agenda stop there. Politicians often talk of tying government pay more closely to performance, starting with teachers. DeMaio, a Georgetown University graduate, wants to take the performance emphasis further and end the standard government pay practice in which most public employees receive automatic, annual “step” wage increases solely for accumulating years on the job. Many California school districts, including San Diego’s, now spend more than 90 percent of their operating budgets on compensation. Automatic raises also are a driving force behind the maddening practice of government “baseline budgeting,” in which taxpayers are told that every agency’s budget must go up by 6 percent or 8 percent each year, or else the agency’s budget is being “cut.” “Instead of automatic salary increases based on ‘time served,’ we should have targeted increases based on ‘performance achieved,’” DeMaio says.

Defenders of so-called step raises insist that the practice is necessary to stem employee turnover that would hinder government performance—a dubious argument. With the exception of law enforcement and some niche categories, no evidence exists of substantial market demand in any area of public employment. Public-sector compensation is so muchhigher than private-sector pay because of pay practices—including automatic raises negotiated by bureaucrats who often stand to benefit from the policies—and because of the political clout of public-employee unions.

If DeMaio has his way, these practices would end—first in his scenic city on the coast and then across California. The need for radical reform has never been clearer. The working-class city of Bell in Los Angeles County made headlines in 2010 when the Los Angeles Times uncovered how the city’s treasury had been looted by a handful of public employees who paid themselves enormous salaries. In an e-mail exchange with DeMaio, I suggested it was appropriate for Californians to think, “We are all Bell”—because government compensation practices that amount to legal looting are so widespread. DeMaio agreed. “California used to be the envy of the nation. People used to move to California for a second chance on life. Today California itself needs a second chance,” DeMaio wrote. “That’s exactly why I’m pursuing the reforms here in San Diego, so we can provide a model for how to fix the problems and get that second chance.”

DeMaio’s effort faces ferocious resistance. California is so beholden to union power that the head of the state Democratic Party actually endorsed a policy under which students suffering epileptic seizures couldn’t receive life-saving medicine unless union nurses dispensed it. From the unions’ perspective, DeMaio must be stopped. DeMaio and supporters gathered the signatures to place Prop. B on the June city ballot only after overcoming opposition efforts to intimidate signature-gatherers, including radio commercials warning that signing petitions would lead to identity theft. DeMaio, who is gay, also has faced baiting over his sexual orientation (a rich irony in gay-friendly California).

The union-allied state Public Employment Relations Board tried and failed to keep the ballot measure from being voted on; it vows to challenge its implementation if approved. The board contends that the initiative is an end run around legally mandated collective bargaining because current San Diego mayor Jerry Sanders was involved in crafting the measure’s language. But as San Diego City Attorney Jan Goldsmithnoted in February, “Never in the history of California has there ever been a requirement to negotiate with labor unions over terms of a citizens’ initiative placed on the ballot by voter signatures.” Plainly, the San Diego pension-reform effort has California’s union leadership worried. Whether Carl DeMaio becomes a twenty-first-century version of Howard Jarvis remains to be seen—but for now, in the Golden State, the young Republican has become the unions’ Public Enemy Number One.

(Chris Reed is an editorial writer for U-T San Diego (formerly the San Diego Union-Tribune) and proprietor of Originally posted on City Journal.)

Brown needs to cut moonbeams, not welfare

California Gov. Jerry “Moonbeam” Brown recently issued a phony challenge to the state legislature to “man up” and cut services out of the state budget to resolve a lingering $9 billion deficit.

Brown was telling the legislature to remove the proverbial wooden beam out of their eyes rather than take the moonbeam out of his own eye.

Brown knows that the services he wants the legislature to cut – welfare and Medi-Cal – are federally mandated.  Medi-Cal is California’s version of Medicaid, not Medi-Care. Thus, proposing to cut back such services would galvanize public pressure to save such services from the chopping block.  Brown dare not shine a moonbeam on his own pet programs and policies.

Los Angeles Times columnist George Skelton creates more phony drama about Brown’s challenge to the legislature to reduce the state budget on the purported backs of the poor.  Skelton scolds the governor for telling the legislature to “man up” by cutting back some health and welfare services from the state budget.  This just focuses more public attention on mostly pretend cuts to mandated services. The poor and the medically needy are always put on the visible chopping block instead of non-essential middle class welfare programs and policies.

Untouchable Luxury Public Goods

The remaining budget deficit could be solved by cutting or suspending the provision of luxury public goods, such as redundant:

Former University of California, Berkeley political scientist Aaron Wildavsky once wrote that such bureaucratic programs don’t just exist by hoodwinking the population with green ideology. Tax expenditures keep going up because more people benefit from the public distribution of jobs and wealth enhancements to private properties from such programs than benefit from private production.

What green power, cap and trade, affordable housing, eliminating coastal power plants, bullet trains and “waterless” water bonds all have in common is enriching the values of private properties and sometimes creating real estate speculation. These programs:

  • Replace old, obsolescent housing with new luxury low income housing;
  • Reduce air pollution by shifting it elsewhere;
  • Eliminate nuisance power plants by shifting them to remote areas;
  • Reduce the number of nuisance jet airplane flights and noise by shifting passengers to trains; and
  • Create open space buffers around upscale residential enclaves with so-called water bond funding.

The above luxury programs don’t really reduce pollution, create more water resources, reduce educational deficits in children from perchlorate, protect endangered species, create magical medical cures for cancer or paralysis or make housing more affordable. What they mainly do is shift those problems elsewhere or to where nobody lives.  Or such programs promise to eliminate some perceived threat to public health and property values — such as perchlorate in drinking water  – at a huge cost that could be done so cheaply by iodized salt in the human diet.

Why California is Dysfunctional

By enhancing private property values, bureaucracies bind middle class homeowners to their programs.  In the language or psychotherapy, private property owners become co-dependent on bureaucrats and labor unions for middle-class welfare.

This is why California is often described in terms of a dysfunctional family. What California needs is a Twelve-Step Program to recover from its addiction to overspending on non-essential middle-class welfare programs, not cutting programs for the poor or medically needy. One of the reasons California’s economy has been declining is that it over-invests in real estate compared to states like Texas.

The bureaucratic agencies that run the above-listed programs all preserve and protect the California Dream of home ownership.  If strong cultural values and economic interests did not desire these popular programs, they would not be so resilient to elimination or expenditure reductions.

This is what economist William Fischel describes in his book, “The Homevoter Hypothesis: How Home Values Influence Local Government Taxation, School Finance, and Land Use Policies.”

Voters are rational economic actors who perceive the benefits of luxury government programs and policies to their property and wealth interests.  It isn’t the super rich or the poor immigrant who are the only causes of the state budget deficit.

This is why California state government is dysfunctional. It is why we have a state water system with only a half-year of water storage.  By comparison, the Colorado River system has 4 to 10 years of water storage. Meanwhile, we have spent more than $18 billion on five water bonds that produced no new water storage reservoirs and have mainly funded open space acquisitions.

This is why the state unemployment fund is in hock to the federal government for more than $10 billion, but luxury “affordable housing” programs continue to be flush with cash.

This is why Medi-Cal is being threatened with budget cuts, but the voters have approved funding redundant stem cell research.

This is why self-serving bureaucrats are mandating costly cleanups of perchlorate from drinking water with no health benefits, but family welfare is to be cut back.  Voters should not worry, however. Residential property owners will not feel “toxic” substances threaten their home values.

California has a structural budget deficit because voters are “homevoters” who vote for mostly visual benefits that enhance their property wealth. California is running a permanent budget deficit because it is promising the middle class it will eliminate the side effects of modern technological society: pollution, cancer, noisy airports, dirty power plants, toxic substances, and all kinds of nuisances from their backyards. But mostly these are purely symbolic benefits. This is mostly why California government is broke and health and welfare services must go begging.

Pogo Principle: We Have Met the Enemy and They are Us!


Political scientist Aaron Wildavsky called this The Pogo Principle: “we have seen the enemy and they are us.”  Pogo is a character in a comic strip created by William Kelly.

It is hypocritical to threaten cutbacks to health and welfare programs for the poor and leave middle class welfare programs untouched.  It is likewise hypocritical for tax advocates to continue to want tax increases shifted to the despised “1 percent” of high-income earners — the millionaires’ tax — while leaving luxury government programs for the bulk of the middle class uncut.

It is hypocritical for an environmental governor such as Jerry Brown to dramatize the cutback of health and welfare programs while leaving middle class welfare programs untouched. Gov. Brown should take the “moonbeam” out of his own eye first before staging a media event about cutting programs for the poor.

We have met the enemy of health and welfare programs. It is not the “1 percent.”  It is not the Republicans. It is not the corporations or banks. It is not only the immigrants.  As the comic strip character Pogo accurately stated: “it is us.”

(is a political commentator and writes for CalWatchdog. Originally posted on CalWatchdog.)

Environmentalism proves to be costly under Obama

Sunday is Earth Day — it’s also Vladimir Ilyich Lenin’s birthday, the original reason for leftist celebrations on April 22nd — and environmentalists will celebrate by congratulating each other on their continuing efforts to save the planet.

We’ll again see and hear stories about man-made global warming, the way fossil fuels are destroying Mother Earth (even though they are a natural resource of the planet), and how the promise of solar and wind energy will save us all.

Problem is, the revelers will again overlook the ways their initiatives are destroying access to cheap energy, raising utility rates around the globe, and how their “green” initiatives are too costly to become mainstream any time in the foreseeable future.

Outside the United States, nations are coming to grips with the folly of replacing fossil fuel-based energy with wind and solar.

A study in Spain concluded that green energy subsidies eliminated 2.2 jobs for every one created.

Germany, which has spent $130 billion in taxpayer money on solar subsidies, has announced it is phasing out that effort over the next five years because it’s too expensive, unreliable, and has not produced the estimates of results that environmentalists predicted.

Danish economist Bjorn Lomborg, who believes in man-made global warming, told me that Germany has the second highest electric rates in Europe — three times the U.S. rates — and that its green efforts will have resulted in a global warming delay of a whopping 23 hours by the end of the century.

“By their bungling, they’ve actually managed to make more emissions and spend more money at the same time, which is just unbelievable,” said Lomborg.

And China, supposedly the U.S. competitor in green energy development, gets “one-half of one-thousandth of one percent of their energy from solar panels,” said Lomborg.

“They just sell it to gullible Westerners to make a lot of money,” he said.

Lomborg has been on a longtime search for answers to global warming that make economic sense and says wind and solar are simply far too costly to continue pursuing.

He advocates using the money that’s wasted on these enterprises to finance scientific research into new technology like the creation of oil in ocean water from the growth of bacteria through photosynthesis.

“It’s about a world where it makes economic sense to use green energy,” said Lomborg, who argues that it’s time to spend more money on “smart research” and less on programs that now have a track record of inefficiency.

While the rest of the world has seemingly learned lessons from its waste of tax dollars sunshine and wind fantasies, the U.S. continues to pour money down the drain under President Barack Obama and his administration.

The last year’s news has been filled with tales of solar company failures despite government subsidies for these firms, many of whom are run by Obama campaign contributors.

Most recently, Reuters reported that wind energy jobs in the U.S. have been disappearing as well, showing a reduction of 10,000 jobs since 2009 while the oil and gas industry have created 75,000 jobs over the same time period.

While our nation continues to ring up unsustainable debt, its government continues to throw good money after bad without producing a legitimate cost/benefit analysis to explain the virtue of the spending on green energy.

Each item on the green agenda costs jobs, tens of thousands of them according to experts.

Logic would dictate a different approach especially with the realization that our reliance on fossil fuels will continue for the foreseeable future.

The environmental crowd may spend Earth Day enjoying back slaps over all it has done to the energy industry in the United States.

We should all take note of what they have done as well.

(Frank Beckmann is host of the “Frank Beckmann Show” on Detroit Radio. Originally posted on The Michigan View.)

Dem maneuver in Legislature could slam housing market

Democratic Leaders in the Legislature have figured out a clever way to bypass the legislative committee process, in order to ensure the results they want. This latest legislative trickery and rule manipulation created quite a stir at the state Capitol Thursday.

Earlier in the week, without warning, the Assembly Banking and Finance Committee, chaired by Assemblyman Mike Eng, D-Monterey Park, dropped three bills off the schedule. But these weren’t just any bills, they were the bills which make up the mortgage reform “Homeowner Bill of Rights” package, sponsored by Democratic Attorney General Kamala Harris.

Ostensibly, this bill package would reform California’s mortgage and real estate crisis.

However, after the Harris bill package dropped off the Assembly committee schedule, a related bill, AB 278 by Assemblyman Jerry Hill, D-San Mateo, popped up on the Senate floor Thursday, and was shoved through to passage, with only support from Democrats.

AB 278 is just a shill-bill dealing with unlicensed real estate agents. But it is being used fto trigger the necessary procedures required to create a Democratic-controlled conference committee to manage the outcome of the Attorney General’s bills.

Supporters of the conference committee option said that, because the Harris bill package was complex, the conference committee would provide lawmakers the opportunity to deal with the major policy changes.

But others are outraged and say that creating the legislative conference committee will allow the bill package to bypass the entire committee policy and finance process, as well as avoid scrutiny by the public.

Homeowners Bill of Rights

Harris is pushing lawmakers to pass the Homeowners Bill of Rights, patterned after President Barack Obama’s legislation of the same name. The legislation is supposed to protect homeowners facing foreclosure.

But bankers have objections.

Small banks and local credit unions did not cause the mortgage crisis — investment bankers did.

But that’s not stopping lawmakers from punishing all bankers, regardless of the ramifications.

A $25 billion national settlement agreement reached in February, struck among the Department of Justice, the Department of Housing and Urban Development, 49 state attorneys general and the country’s five largest mortgage loan servicers: Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., Wells Fargo & Company and Ally Financial Inc., according to Forbes.

The five biggest U.S. banks agreed to the deal, which would impose a ban on all banks from filing a foreclosure notice when a homeowner is in the middle of the loan modification process.

The national ban expires in three years, but Harris is pushing for California to keep the ban in place permanently.

Critics say that the bill package in the California Legislature may actually pave the way for more lawsuits, and slow any recent improvements in the already slow-to-recover housing market. With economists predicting another mortgage meltdown, the American economy could be in for an economic hurricane.

Opponents also say that the legislation would create expensive, new lending obligations, which would likely result in a much higher cost to borrow money, which could be an additional blow to the housing market.

However, instead of allowing Harris to defend her bills in the committee hearing, legislators bowed to pressure from above, and pulled the bills from the committee calendar.

Talk around the Capitol after the hearing episode was that the order to pull the bills came from the highest office in the state, and referred to a feud between Gov. Jerry Brown and Harris. But this has not been confirmed.

In the right corner…

Thursday’s maneuver did not go down without a fight. Sen. Sam Blakeslee, R-San Luis Obispo, urged Senators to oppose AB 278, and reminded colleagues that the Legislature had recently passed dozens of spot bills, weakening the legislative process. “This is not the historical norm,” Blakeslee said.

Spot bills are empty bills which do not yet contain language, but will be used at the end of the legislative session to pass laws legislators couldn’t get passed through the traditional committee process.

Blakeslee said that in the past, only the state’s 2010 water bond, the 2004 workers compensation reform, and electricity deregulation had been dealt with in conference committee, and only after already being vetted using the standard committee process.

A conference committee is traditionally used to work out the differences which committees could not.

“We are speaking about a bill on real estate,” Blakeslee said.

Blakeslee explained that by avoiding the usual and legal committee process, the public would never hear the policy and financial debate surrounding the bills. He expressed his irritation that the Senate Banking and Finance committee, of which Blakeslee is the vice chairman, would never have a chance to weigh in on the bills.

“There’s not precedence in the use of the conference committee,” Blakeslee said. “I am standing in defense of the majority party. It raises serious questions about to what lengths this body will go to jam through legislation without the types of processes we have historically used.”

“These are regular policy issues. “We should not pervert our process to produce the desired outcome,” Blakeslee said.

“And to the minority party, do not surrender your constitutional power,” Blakeslee added.

Leadership weighs in

“To have hearings on policy is right,” said Senate Minority Leader Bob Huff, R-Diamond Bar. “To obfuscate is not.” Huff pointed out that the Senate Joint Rules require that all bills, other than budget bills, must be heard by policy committees of each house.

“We form a conference committee to find a meeting of the minds,” Huff said. “Without normal transparency, major policy issues here will be decided on in some smoke-filled back room. Trampling on the rules is a slippery slope.”

“Read your rules,” Senate President Pro Tem Darrell Steinberg, D-Sacramento replied. “Read your Senate rules. Because we pride ourselves on following the rules, and in this instance we have done so.”

“We’re not trying to hide anything,” said Sen. Juan Vargas, D-San Diego. “Important things can be done in the conference committee.”

Capitol staffers explained that the conference committee members, appointed by Assembly Speaker John A. Pérez, and Senate President Pro Tem Darrell Steinberg, will consist of six members in total, made up of one Republican and two Democrats from each house. Committee appointments will be announced next week.

(Katy Grimes is CalWatchdog’s news reporter and is a longtime political analyst, writer and journalist. Originally posted on CalWatchdog.)

San Jose’s pension initiative will be a national bellwether

San Jose union officials are celebrating a decision last week by the Sixth District Court of Appeals, which struck some city-drafted language from a June ballot measure designed to reduce pension benefits for newly hired city workers and require existing workers either to pay more for their current pension plan or switch to a lower-benefit plan. But the three-judge panel’s unanimous verdict will do little to affect the ultimate outcome of the pension measure and much to remind the public of the lengths to which the state’s public-sector unions will go to resist any reform—and keep voters from having a say.

“How much more taxpayer dollars will be wasted defending this flawed ballot measure?” asked Robert Sapien, president of the city’s firefighters’ union, in a plaintive cry ridiculous even by the low standards of political campaigns. Taxpayers had to pay to defend the measure because the unions kept challenging it in court. After four such attempts, virtually the entirety of the measure withstood judicial scrutiny.

The union “victory” amounted to legal nitpicking. The judges concluded that the word “reform” was too biased. “By combining this charged word with ‘pension’ in the title, all in capital letters,” the panel maintained, “the city council has implicitly characterized the existing pension system as defective, wrong or susceptible to abuse, thereby taking a biased position in the very titling of the measure itself.” That’s a bit dramatic. Seeking political advantage, cities do indeed add titles and summaries to ballot initiatives, but San Jose’s effort didn’t seem over the top here. And the titles on these measures are always printed in all capital letters, so it’s not as though the city’s drafters inserted the wordREFORM in the midst of lower-case text, the way overheated spam e-mailers send out those WAKE UP, AMERICA! blasts. People from every political persuasion trying to change a policy describe their efforts as “reform,” and the word has a rather benign and neutral meaning. Nevertheless, the ballot initiative’s new introductory title is “Pension Modification.” That, too, will appear in all caps.

The second part of the court’s objection—the inclusion of language stating that the measure is designed to “protect essential services”—is more understandable. The judges argued that such language belongs more appropriately in the ballot arguments in favor of the initiative. The city’s language is straightforward and truthful, however. City officialsare trying to protect services now in jeopardy in large part because of a 350 percent increase in pension costs over the past decade. Pensions now constitute more than 20 percent of San Jose’s general-fund budget. With these changes to its language, the initiative for pension reform—er,modification—will now go to the voters in June. In the heated world of San Jose pension-modification politics, every voter will surely know what’s at stake when voting for or against Measure B; only the most unaware city voters will have to rely upon the ballot wording to know their position on it.

For various reasons, San Jose is more of a pension bellwether than other California cities. Not only is San Jose the state’s third most populous city; it’s also run by a Democratic mayor who argues that pension costs run amok are endangering liberal programs. Most important, San Jose is confronting what the good-government Little Hoover Commissioncalls the “elephant in the room”—the pension benefits of current public workers. As the commission explains: “Adding a ‘second tier’ of lower pension benefits for new hires, for example, will not deliver savings for a generation, while pension costs are swelling now as Baby Boomers retire. . . . Public agencies must have the flexibility and authority to freeze accrued pension benefits for current workers, and make changes to pension formulas going forward to protect state and local public employees and the public good.” San Jose argues that its charter specifically allows it to address pensions for current employees; court decisions have prevented other cities from tackling these costs.

The court battle underscores an unavoidable California reality: union officials have the deepest pockets to challenge pension-reform measures in every jurisdiction every step of the way, and they’re determined to deny the public the chance to vote on pension-related measures. San Jose will be a closely watched case. The unions will challenge the measure in court if it passes, based on the changes-to-current-benefits argument—a longstanding precedent holding that the U.S. and California constitutions forbid the reduction of promised pensions. Pension-receiving judges will have the final word.

On the plus side, reformers—call them “modifiers” if you like—have won the rhetorical battle. As cities careen toward bankruptcy, even Democratic officials now must contemplate pension reform.

(Steven Greenhut is vice president of journalism at the Franklin Center for Government and Public Integrity. Originally posted on City Journal.)

Ending Prop. 13 would slam small business

There is a big elephant in the room when it comes to a conversation about getting rid of Proposition 13, the 1978 tax limitation measure, by instituting a “split roll.” Under such a change, business property would be taxed at higher rates than residences.

The elephant in the room is that it is not big business that mainly would get socked with higher taxes, but the 857,167 small businesses, which represent 97 percent of the total of 878,129 businesses in California.

Those advocates for ending Prop. 13 for commercial properties say it is big business that is not paying its fair share of taxes.  But the owners of large commercial properties — shopping centers, recreational theme parks like Disneyland, and large Class A apartment complexes — would just pass higher rents through to tenants, who in turn would raise prices on goods and services.

Property owners would also pass through higher property taxes to tenants when leases are renegotiated. This is perhaps why the Dataquick real estate information service reports that in the First Quarter of 2012 “the only real positive seen in the retail sector is that the triple net or absolute net, single tenant, long corporate-backed leased property, with investment grade tenants continues to sell briskly.”

Owners of small businesses would have to suck up the higher taxes.  And it is those small commercial properties that have been most affected by the economic recession.


The proponents of Ballot Initiative No. 1560 to end Prop. 13 for commercial properties claim it would generate $4 billion in new tax revenues. That would be $4,555 per year added tax burden on average for the 857,167 small businesses in California. That would equate to an average increase of $455,000 in assessed value for each small commercial property.

According to data from a U.S. Small Business Administration study, 74 percent of all small business loans in California in 2010 — or 587,225 loans — were for $100,000 or less.

Eighty-three percent,

Of 659,617 loans made by Wells Fargo Bank as of June 2010, 547,727 were “micro loans” of less than $100,000. And the average micro loan averaged just $17,335.  Most of these “micro” loans were not loans backed by the Small Business Administration.  This indicates that a preponderance of small businesses with bank loans could not easily absorb an increase of property taxes of $4,555 per year.

Wells Fargo Bank Small Business Loan Data 2010

Total   Dollar Amount of Small Business Loans Total   Number of Loans Percent
Micro-business   loans($100,000   or less) $9,495,000,000
($17,335 average)
547,727 83%
Macro-business   loans($100,000   to $1 million) $29,300,000,000
($261,864 average)
111,890 17%
Total   All Small Business Lending $38,800,000,000 659,617 100%

And the actual added tax burden on small businesses is bound to be much higher than $4,555 per year. That is because about only about 20 percent of all commercial properties would actually have their taxes raised if Prop. 13 were ended.

Change of ownership

Most commercial properties have changed ownership since 1993 and have been reassessed at close to full market price.  The median sales year for most commercial properties is 1993.  It is those properties with old assessments frozen at pre-1993 base values that are going to end up paying the bulk of the $4 billion in added taxes per year.  And by and large, those properties with old assessments are small commercial properties with gross leases or owned by mom and pop business proprietors.

In a “gross lease,” the landowner pays the property taxes.  In a “net lease.” the tenant typically pays the property taxes.

Let’s assume 50 percent of all commercial properties are going to roughly end up paying 80 percent of the added taxes. Consequently, small business properties with old assessments roughly would have their taxes increased by $7,466 per year. Once again, small businesses with low profit margins easily eroded by economic adversity are not going to be able to easily absorb that magnitude of a tax increase.

Larger commercial properties with net leases typically have caps on the amount taxes and other expenses that can be passed through to the tenant. So the landowner, not the tenants, will be socked with more taxes on commercial properties.  Higher property taxes won’t be able to be passed through to commercial tenants until their lease is renewed for larger commercial properties.

The reason the public can’t seem to see the proverbial “elephant in the room” when it comes to ending Prop. 13 for commercial properties is that it is a midget elephant symbolic of a small businessperson. And for the little man, who speaks truth to those in power?

(Wayne Lusvardi is a political commentator and writes for CalWatchdog. Originally posted on CalWatchdog.)

GSA Scandal Reveals More Wasteful Spending

The General Services Administration is now in full scandal mode.  Revelations of a $800,000 Las Vegas conference, indefensible travel and more, including creating awards to evade restrictions on supplying food for meetings, led GSA Inspector General Brian Miller to open inquiries into “all sorts of improprieties including bribes, and possibly kickbacks,” and testify that “Every time we turned over a stone we found 50 more with all kinds of things crawling out.”

As is common in the long history of waste scandals in Washington, politicians responded with multiple hearings to provide forums to parade what effective public guardians they are, after the fact.  Of course, if their oversight was adequate before a scandal attracted public attention, long-running abuses would not have continued to become a scandal.

Unfortunately, the denunciation of such egregious and obvious abuses still misses much of the waste government spending imposes on citizens.

Many now in high dudgeon over waste are, too late, insisting that government should provide only services worth more than their cost to taxpayers.  However, even if effective actions followed up such words, which history demonstrates as unlikely in the extreme, that would be inadequate, because a dollar of government spending in fact costs Americans far more than a dollar.

As the tax deadline reminded us, taxes also impose substantial compliance costs on Americans. Ever-changing tax rates and rules, often too late for investors to adjust to, add substantial risks to every decision, reducing investments, because any choice can be undermined after the fact by future tax changes. The largest “surcharge,” however, is due to the distorting effects of taxes.  Taxes place a wedge between the value of goods and services provided to buyers and what sellers receive net of taxes.  That wedge reflects not just federal taxes, but state and local taxes and fees and regulations (whose costs, also often unpredictably changing, act like surtaxes), and those burdens eliminate many jointly productive transactions and the mutual gains they would have created.

Suppose someone faced a 40% combined marginal tax rate on added income, far below the rate for many, given that multiple tax and regulatory burdens are imposed on the same stream of income and the purchases they finance. Every arrangement that provided $100 of value to buyers but cost the seller more than the $60 left after government’s cut would be eliminated, along with the mutual gains they would have generated. The wealth creation destroyed imposes an additional huge cost from taxation.  And using borrowed funds instead of current taxes changes little (except making the costs less visible), since they will require added future taxes and the distortions they cause in addition to their current distortions.

The GSA is the latest example of political oversight failing to prevent even obvious waste, until scandal piques citizens’ interest enough to trigger “don’t blame me” hearings by politicians play-acting their dedication to efficient government.  But if all such blatant waste could be eliminated (which history reveals as a dim prospect), plenty would remain.  Even eliminating all government spending worth less than it costs(which would leave little  government spending in place) would not come close to eliminating all spending that unjustifiable as advancing Americans’ “general welfare,” because each dollar spent costs citizens far more than a dollar.

In President Obama’s inaugural address, he said his criterion for government activity is “whether it works.”  Then, he dramatically expanded government.  But as the scandal at the federal government’s supplies manager and landlord, which supports every agency and program, demonstrates, not only does government not work well enough to be expanded, it does not work well enough to be trusted to be honest and competent at what it already does.

(Gary Galles is a Professor of Economics at Pepperdine University in Malibu.)

Is Romney’s Mormon Faith Problematic?

Mitt Romney’s all but certain nomination has focused much attention on his relative strengths and weaknesses vis-à-vis Barry O and his wrecking crew, come November. Most of the commentary, including critiques, has been well put and on point. The criticisms by and large have been constructive, and I hope camp Romney takes them seriously.

One criticism though is usually whispered or discussed obliquely. That is the fact that Romney is a…gasp…Mormon.  Let’s examine this 800-pound gorilla in the room for a bit and hopefully dispose of it.

In the interests of full disclosure, I consider myself a fairly orthodox Roman Catholic.  I can’t even honestly employ the cliché that some of my best friends are Mormon. However, I know many Mormons and regard them as friends. I know a fair amount about the Mormon religion.

Frankly, I don’t understand all the fuss coming from a few of my fellow conservative Christians.

Are there parts of Mormonism I don’t understand or occasionally cause my eyes to roll?  Certainly, just as I’m sure there are parts of Catholicism that my friends don’t understand and cause their eyes to roll.  So what?

We’re not talking about an election to choose our national choirmaster, scripture reader or deliver homilies – though there’s nothing wrong with Presidents doing any of these. We’re talking about an election that will, because of likely Supreme Court vacancies the next four years, have a determinative impact (for UCLA grads among readers, that means it will decide what happens) on the future of basic American freedoms.

One candidate will most certainly curtail those freedoms, while the other can be reasonably expected to expand them. The anti-freedom candidate attended a Baptist church, while the pro-freedom candidate attended a Mormon Temple. When our freedoms’ future may hang in the balance, the candidates’ passion for preserving freedom needs to trumps where they sat on Sunday mornings.

I ask this question to those on the right who find Romney’s Mormonism a problem: do you suppose that Mitt Romney would have stayed in the church for 20 years if his pastor said things like “God damn America” and blamed America for 9/11?   Barry O. spent his formative years listening to an anti-American madman.  Mitt Romney spent those years listening to the Tabernacle choir sing “Battle Hymn of the Republic”.  This shouldn’t be a tough choice.

Let me put it on a more personal level, faithful readers.  Do you know any Mormons?  Do you like them?  Do you find them trustworthy?  Can you in your wildest dreams imagine a Mormon saying “God damn America” or that America deserved the savagery of 9/11?

Of course there are exceptions to every rule and I’m sure there are liberal Mormons. But as I told a Mormon friend the other day, anyone who is both a Democrat and a Mormon obviously doesn’t understand what either institution stands for. I would also point out to my fellow conservatives that the two states with the largest Mormon populations – Utah and Idaho – have voted for Democrat presidential candidates exactly once in the last 64 years. Hell, Utah even voted against FDR twice.

The ultimate bottom line as I said above is the Supreme Court.  The next President will most likely have two and perhaps three appointments. These appointments will be decisive in determining the majority outlook of the Court.  And that outlook will be decisive in determining whether we restore basic American freedoms or continue on Barry O’s path toward nanny state totalitarianism.

That being the case – and that most certainly is the case – I have no patience for anti-Mormon drivel coming from any conservative.

My favorite line in Barry Goldwater’s 1964 acceptance speech is this: “The good Lord raised this mighty republic to be the home of the brave and to flourish as the land of the free.” If we believe that, if we believe that this mighty republic was indeed raised up, in Ronald Reagan’s terms, by “the big fella upstairs”, then we have a duty to put the preservation of that republic above all other considerations.

(William E. Saracino is a member of California Political Review’s editorial board.)