Prop 30: California's Magic Elixir

Patent Medicine - the magic potions of a century ago. They offered a cure for all ailments. Some worked better than others. A few have survived into today’s world (You can look them up). Patent medicines, usually containing a large percent of alcohol and occasionally ancient herbs or cocaine, could alleviate mild aches and pains.

Patent medicine was also known as snake oil.

Governor Jerry Brown is pushing the tax increasing Prop 30 as his magic elixir to solve the state’s budget problems. It is estimated to raise $6 billion annually. It is being pushed as a magic cure-all. It will prevent draconian cuts to the University of California, the California State University system, community colleges, K-12 education, and the list goes on. In theory 89% of the tax revenues will go to K-12 and 11% to community colleges.

Governor Brown is peddling snake oil. If he were selling securities, it would be out a bucket shop, committing securities fraud.

Let’s do the math. As of September, California incurred a $18 billion cash deficit in its $93 billion general fund. Even with the new math, $6 billion does not solve a $18 billion deficit.

The truth is that most of the tax receipts will go into plugging the even greater teacher pension deficit, and little, if any, will reach the classroom. The state's public employee pension deficit is estimated between $250-500 billion. Prop 30 is a shell game.

More facts: Prop 30 backers have raised $48.8 million. The list of donors says it all. The California Teachers Association has kicked in $7,139,080, followed by SEIU with $6,471,858, and the American Federation of Teachers' $3,858,700. The California Nurses Association contributed $1,003,669.

The second reality is that Massachusetts under Governor Dukakis, Michigan under Governor Granholm (who fled Michigan for Berkeley when she left office two years ago), and California under Governors Schwarzenegger and Brown have proven you cannot tax your way into prosperity.

The third fact is that California already has the highest sales tax and the second highest state personal income tax in the nation, along with the lowest debt rating.

Fourth, California’s high taxes and regulations have already resulted in an exodus from the once Golden State. The Manhattan Institute recently published a highly informative report “The Great California Exodus: A Closer Look.”

$14.7 billion in annual income moved out of California to Texas, Arizona, and Nevada. An average of 225,000 Californians per year left the state. 2,500 employers and 109,000 jobs moved out in the past 4 years.

The economic base of the state continues to shrink while 2 million Californians remain unemployed.

These are the new tax rates under Prop 30. Governor Brown’s new math starts the tax on millionaires on an annual income of $250,000. He said $250,000/year for 4 years equals a million dollars. At $250,000 the new tax rate on personal income will be 10.3%. It climbs to 11.3% at $300,000, jumps to 12.3% at $500,00, and then reaches 13.3% at $1 million.

This increase is “temporary” in that it is last only 7 seven years.

The new taxes are also to be applied retroactively to January 1, 2012.

President Obama talks about raising taxes on the top 1%. Governor Brown is more ambitious that the President. The Governor is looking to the top 3% for his pot of gold at the end of the rainbow. He will reap “fool’s gold.”

The top 3.9% of California taxpayers already pay 54.5% of the state’s personal income tax receipts.

We can anticipate, based on history, that high earners will increasingly leave the state, or reduce their taxable revenue. Prop 30 will not raise the anticipated revenues, but it will reduce economic activity in the state.

We can also anticipate, based on the recent history of the California Legislature, that it will appropriate every cent, and perhaps more, of the projected $6 billion annually even when it doesn’t materialize.

The sales tax, the highly regressive sales tax, will go up a quarter percent to 7.5% from 7.25% for a temporary 4 years.

California will now have, by a wide margin, the nation’s highest income and sales tax while the business climate is ranked the third worse in the nation – hardly a viable plan for an economic recovery.

And yet the political leaders of the essentially one party state either don’t understand or refuse to confront these facts.

Not only is the public employee union apparatus fighting for Prop 30, but they are also spending a small fortune to defeat Prop 32, which will forbid the automatic deduction of union dues for public employees, and Molly’s Munger’s competing Prop 38, which will also raise income taxes.

Assuming Prop 30 passes, what will the unions and the legislature do next year when it fails to produce the anticipated tax revenues?

More snake oil?

The Democrats Contempt for Republicans

What is it about Vice President Gore, President Obama, and Vice President Biden?

All three showed rudeness to, and contempt for, their debating opponents. They reflect the disdain many elitists have for Republicans and especially conservatives. Intellectual superiority is an escape mechanism for the elitists. Many in the media fuel these biases.

President Eisenhower was not particularly sharp. Doopy Dwight twice defeated the intellectual Adlai Stevenson. Senator Barry Goldwater was a crazy war monger. President Nixon was sleezy. President Ford, with a Yale law degree, was both stupid and a klutz, destroyed by Saturday Night Live. President Reagan was a stupid, trigger-happy cowboy. Vice President Quayle, President George W. Bush (with Harvard and Yale degrees), and Governor Sarah Palin were intellectually challenged. Governor Palin also received the full Saturday Night Live treatment. Senator Dole was a dolt.

Vice President Gore helped elect Governor George W. Bush President in the 2000 debate when he repeatedly audibly, and obnoxiously sighed during Governor Bush’s remarks and then at one point strolled over from his lectern and virtually stood in the Governor’s face.

President Obama stood off to the side looking bored and unprepared, broken up by a number of smirks directed at Governor Romney.

Vice President Biden, when he wasn’t smirking, interrupted Congressman Ryan between 80-100 times. The twice plagiarist is not that smart.

Why?

The answer becomes obvious. They hold their Republican opponents in contempt. Vice President Gore considered himself intellectually superior to Governor Bush, but won’t release his Vanderbilt transcripts. Senator Kerry also considered President Bush inferior, but then the Senator’s Yale transcript was released. The Senator wasn’t so bright afterall. Vice President Gore and Senator Kerry weren’t alone in their disdain for President Bush, The acerbic Texas Governor Richards called him “shrub.” They all lost to him. The Democratic intelligentsia considers President Bush stupid. Wasn’t Karl Rove Bush’s brain – at least in their minds?

President Obama possesses an inflated opinion of himself, supported in his hubris by many in the media. He is always, in his mind, the most brilliant person in the room. He has no need to keep up with the daily intelligence briefings because he already knows it all in his mind. He didn’t feel a need to prepare for the first debate. He is also consumed by the brilliance of his rhetoric.

Contempt, disdain, and rudeness do not solve the nation's problems.

The Worst So Far This Election Cycle

This election cycle has given rise to highly objectionable remarks, incredibly inane comments and behavior. That not new in American elections. Caustic, malicious charges appeared in the elections after George Washington retired as president, but today's technology, the rise of the video camera, and cell phone cameras and videos, the cable channels, and the internet ensures a stupid remark will be recorded and then released to the public.

Prominent and lesser candidates have watched their words used against them. In or out of context, their words have been damming.

Both President Obama and Governor Romney have seen comments in private campaign speeches to contributors leaked to the public. Other candidates suffer from blooperistis and simply cannot control the words they utter. Vice President Biden, for example, is a walking gaffe machine. Senator Harry Reid is a disgrace as Senate Majority Leader. Some remarks are uttered in a state of emotional rage. Some speakers just get carried away and go too far.

Here are some of the classics

     “You didn’t make it.” President Obama

      “I like to fire people.” Governor Romney

       “They’re going to put you’all back in chains.” Vice President Joe Biden

       “He’s (Romney) coming to a state where there are a lot of members of the LDS Church. They understand that he is not the face of Mormonism.” Senate majority Leader Harry Reid

       “She’s no lady.” Congressman Allen West, speaking of Democratic National Chair Congresswoman Debbie Wasserman Schultz

      “If it’s a legitimate rape, the female body has ways to try to shut that whole thing down.” Congressman Todd Akins

       “All that stuff I was taught about evolution, embryology, Big Bang theory, all that is lies straight from the pit of hell.” Georgia Congressman Paul C. Broun, M.D. 

       “It makes her a slut, right? It makes her a prostitute.” Rush Limbaugh on Sandra Fluke

     “Either Mitt Romney, through his own words and his signature, was misrepresenting his position at Bain to the SEC, which is a felony, or, he was misrepresenting his position at Bain to the American people to avoid responsibility for some of the consequences of his investments.” Stephanie Cutter,

     “Yeah, we want to get a look at those tax returns because I believe we will discover that the man has not paid a nickel in United States federal income tax. That’s right, we have a felon running for President.”

        “35 min – in, Biden is Det. Olivia Benson and Ryan is the perp-of-the-week.” Dan Zak, Washington Post reporter’s tweet on the VP Debate.

Just think, we still have 27 days to go.

A late addition to this blog is from Wednesday, October 17. Eva Longoria retweeted a message she received: "I have no idea why any woman/minority can vote for Romney. You have to be stupid to vote for such a racist/misogynistic tw*t." The missing letter is an "a." Eva originally blamed Twitter for the retweet, and then owned up to it.

Is Stephanie Cutter the Pit Bull of the Obama Campaign?

Question: Who is Stephanie Cutter? 

Answer: Apparently the Obama Campaign Pit Bull

We first heard of Stephanie Cutter when she implied Governor Romney committed a felony: “Either Mitt Romney, through his own words and his signature, was misrepresenting his position at Bain to the SEC, which is a felony, or, he was misrepresenting his position at Bain to the American people to avoid responsibility for some of the consequences of his investments.”

She is the Deputy Campaign Manager of the Obama-Biden Reelection Campaign

Stephanie graduated from Smith and Georgetown Law School.

She’s smart.

She worked for Senator Ted Kennedy, Senator Harry Reid, Senator John Kerry’s Presidential Campaign as the Communications Director, Tim Geithner, and Chief of Staff to Michelle Obama during the 2008 general election, before being appointed to the Obama Administration.

Stefanie Cutter is accomplished. She is highly respected in the upper echelons of the Democratic Party.

Her forte is communications.

She knows how to communicate. She's excelling with the detritus of the campaign.

The Vice Presidential candidate is traditionally the attack dog in presidential campaigns, as the presidential candidate soars about the muck. Vice President Biden is a good attack dog. He’s a born demagogue.

He’s not Stephanie Cutter though. She doesn’t gaffe.

The Obama campaign is different from tradition; everyone is slinging mud at Governor Romney. The attack is led by the President himself. Stephanie Cutter stands out, even more than her former boss, Senator Harry Reid. The Obama Campaign is attempting to prove that a totally negative campaign can win the White House.

Her remarks are startling. She can’t mean what she says? She can’t believe it, cam she?

Just the other day she said about the terrorist Benghazi killings: “Paul Ryan has politicized and made it a political circus all over this country of the terrible tragedy that happened in Libya.”

She continued about the Republican ticket: “The entire reason that this has become the, you know, political topic that it is because of Mitt Romney and Paul Ryan. It’s a big part of their stump speech, and it’s reckless and irresponsible what they’re doing.”

Her comment on Jim Lehrer, the moderator of the first debate: "I sometimes wondered if we even needed a moderator because we had Mitt Romney." 

Does she realize how outrageous her statements are, even in a campaign, which constantly plays false with the truth.

And then the answer is clear.

Stephanie Cutter is the pit bull of the Obama Campaign. Her role is to attack, attack, attack. Rather than being rebuked or sent to the woodshed, she’s sent out to hurl forth more absurd charges about the Governor and Congressman. She’s good at it, and it executes the playbook of the Obama campaign.

The more she becomes the issue, the more Fox News attacks her, the less that is said about the Obama economy. That’s the way David Axelrod and President Obama like it.

Hail to the Chief, but it’s still the economy stupid.

Reflections on the campaign Up to Now and Tomorrow's Debate

Proposition: A President, an Administration which consistently refuses to acknowledge Islamic terrorist attacks on the United States, whether it be by Major Nidal Malik Hasan at Ford Hood, the Times Square Bomber, or at Benghazi, does not deserve reelection.

Proposition: A President, an Administration which surbordinates national security to politics should not be reelected.

Proposition: A President, an Administration which leaks national security secrets for political purposes must not be reelected

Reality: Why The Obama Campaign is failing

       The President has not offered Americans a positive reason to vote for him. This is what the President offered the public during the Convention and first debate:

             1 billion dollars more for green energy

             100,000 math and science teachers

             Higher taxes on millionaires (starting at $250,000), oil companies, and private jets

              Reducing carbon output

This is Obama's campaign before and after the debate::

            He's not Romney

            Romney lied, lied, lied

            Romney outsources

            Romney is Bain Capital

            Romney will raise taxes on the middle class

            It's always someone else's fault

            It was worse than we thought when I took over

             Don't go back

             It's all Bush's fault

             Save Big Bird

             He was too nice in the debate

   President Obama has not offered positive reasons to vote for him

   And now for tomorrow's Vice President debate

    I will be on an airplane and hence miss the debate between the blowhard and the policy wonk.

    The odds favor Congressman Ryan, who is intelligent, thoughtful, knowledgeable, articulate, and conveys a puckish charm. He runs the slight risk of coming across as a know-it-all.

    Vice President Biden's handlers must be sweating bricks in advance of the debate. The VEEP is a hail fellow well met with the forensics skills of a trial lawyer, but an undisciplined trial lawyer.

    If he simply parrots the Obama talking points, Congressman Ryan will make him look like a fool. If he wanders off script, he runs the risk of a major gaffe on national TV.

    Don't be surprised if Vice President Biden unleashes a personal attack on the Congressman.

    The Vice President is a proclaimed foreign policy expert. The simple approach, which Congressman Ryan should adopt, is to forcibly adopt the opposite position. He won't go wrong.

    We can assume he will be better prepared than President Obama a week ago.

    VP debates normally don't affect the outcome of the Presidential race. However, if, and this is a big if, Congressman Ryan decisively defeats the Vice President, then the Romney-Ryan momentum should accelerate.

   Let's ask this fundamental question: who would you prefer a heartbeat away from the Presidency? Vice President Biden or Congressman Ryan?

California's Gas Crisis

Gas at the pump rises overnight – 1 cent, 5 cents, 19 cents, 20 cents. Suddenly unleaded gas at the pump is up to $4.76, $ 4.80, $5.00 and even $5.50 in parts of Los Angeles.

How can that be?

Senator Feinstein, standing for reelection, has sought a FTC investigation. Senator Boxer is asking the Justice Department to investigate.

Of course, the politicians will jump in, but political hot air does not produce gas at the pump.

To quote Pogo “We have met the enemy and he is us.”

We are special in California. We do things our way. We don’t learn from the past. NIMBY, in the name of environmentalism, and political paralysis rule. Our state is following the path of many California cities to bankruptcy as the state’s infrastructure decays and the great higher education system is being starved for funds.

California is living on the edge.

We have high gas prices, high utility prices, high taxes, the third worse business climate, the lowest bond rating of any state, and gas a dollar higher than any other state.

Yes, we are special in California.

The electricity crisis a decade ago and today’s gas crisis are symptomatic of the state’s cascading failures.

California did not learn from the electricity blackouts a decade ago that if we increase demand, reduce supply, and lack reserve capacity, the basic law of supply and demand will result in shortages and high price increases. California narrowly escaped electrical blackouts in the recent heat waves. Once upon a time, not so long ago, utilities tried to keep a 15% reserve capacity above anticipated peak load.

Not in california for the last decade!

Four refineries have closed in California. The remaining refineries have not been allowed to increase capacity. ARCO (owned by BP), which prices its gas cheaper than the other oil companies, is pulling out of California.

The California market is isolated from the rest of the United States. No other state produces gas for California because of the special formulations required for air quality by the California Air Resources Board (CARB).

California has resisted the development of substantial offshore oil reserves.

Californians like to drive gas guzzling SUV’s and pickup trucks, which outsell the Prius, Minis, Versas, Smart Cars, and Fiat 600’s.

California not only has a gas tax and fees of 48.6 cents per gallon, the second highest in the country, but then adds a sales tax between 7.25 cents and 8.75 cents per gallon on the pump price. Thus the base price of gas in California is expensive even before shortages, external or internal, drive up the price.

A series of unfortunate events coalesced to create a temporary shortage.

Chevron’s refinery in Richmond, California shut down because of a fire, a power failure struck Exxon’s Torrance refinery for a few days, and the Kettleman-Los Medaros Pipeline in the Central Valley has been inoperative since mid-September because of organic chloride contamination.

The operating refineries were in the process of converting from summer gas to winter gas, which requires a different formulation. The winter blend normally goes on sale October 31 because it is gives off more unburnt hydrocarbons but is less polluting than in the summer.

Governor Brown has ordered CARB to permit the refineries to sell the winter blend immediately. The refineries should come back into production and prices drop.

Gas though remains on the edge in California. So do motorists.