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Wednesday, May 20, 2009

LPCA: Defeat of Propositions Signals Need for Real Budget Reform

PANORAMA CITY, Calif. — The Libertarian Party of California (LPC) applauds the defeat of ballot propositions 1A through 1E, and notes that to eliminate the perennial budget deficit, the state legislature must confront its addiction to spending.

"The Libertarian Party of California couldn't be more pleased that voters soundly rejected the proposed tax increase and phony budget solutions offered by Props. 1A through 1E," said Kevin Takenaga, the chair of the LPC. "These propositions, which were crafted in a backroom deal with no public input, offered phony solutions to real problems.

"The legislature has no choice now but to confront its addiction to spending. And the Libertarian Party of California has offered, and will continue to offer and support, policy suggestions that could save billions of dollars dedicated to wasteful and inefficient programs."

Government demonstrates every day that increased spending doesn't guarantee quality service. For example, test scores for students in government-funded schools are lower, on average, than for students who attend private schools, which spend less per capita than its public counterparts. In "The Money Myth: School Resources, Outcomes, and Equity," author and University of California professor W. Norton Grubb cites studies that find only a weak relationship between public school funding and educational outcomes.

Moreover, adjusting state employees' pay and benefits to average that of workers in private industry could save the state up to $40,000 per position and would go a long way towards eliminating the current budget deficit. The state budget could be further cut by reviewing each state department, division, bureau, board, and commission to determine whether the taxpayer-funded government service should be discontinued, merged with other departments, or charge user fees to cover its budget, or whether the service should be competitively bid out at less cost to taxpayers. Many such options were already offered by the California Performance Review Commission.

The legislature and governor can also find savings by rethinking its current punitive taxes on wages, enterprise, the sale of goods, and the value of buildings, and replacing them with voluntary user fees, pollution charges, and taxes on the land value generated by governmental public goods.

Spending relief could also come as a result of decriminalizing recreational drugs. Billions of dollars could be saved by eliminating enforcement of drug laws, including the arrest, prosecution and incarceration of nonviolent drug offenders.

"Libertarians don't just complain, but offer real solutions," Takenaga said. "Our sound advice is a far cry from the shell games, phony spending caps, and budget gimmicks that the Democrats and Republicans have tried for years to offer as budget reform. If they have proven anything, it's that their ideas don't work. It's time for a fresh approach. Libertarians believe in freedom and limited government, but we want the government we have to work efficiently and effectively. Unfortunately, that is a novel concept for the career politicians who control Sacramento, but it's one we hope voters will embrace as a real solution for California."

Sunday, May 10, 2009

Keep the Two-Thirds Rules On Sacramento

By Fred Foldvary

Imagine being very ill with an iatrogenic disease. "Iatrogenic" means a disease caused by the doctor. The doctors are giving you medicine that is slowly poisoning you, because they mistake it for food. Now you are getting ever sicker, and the doctors are debating about whether to increase the poison. Would you prefer that they decide with a two-thirds vote or a majority vote? I would want to make it more, not less, difficult to increase the poison, wouldn't you?

The same reasoning applies to the requirement in California for a two-thirds vote of each house of the legislature to pass budget bills and to approve tax increases. There is an attempt now to have the voters decide whether to lower the budget passage requirement to 55 percent. Whether you are in favor of the two-thirds rule depends on whether you believe that an increase in taxes and spending is economic nutrition or whether it is economic poison.

Some sources of government revenue provide nutrition to the economy, while others are poison, shrinking production, making enterprise flee, and driving transactions underground. Pollution charges are beneficial, for instance, because they reduce pollution while providing revenue. Public revenue from land value is efficient, because land does not shrink, flee, or hide. Tapping the land value is also equitable, because public works increase land value, so tapping that value pays back value received. Private communities such as homeowner associations get their funds that way, from fees and assessments based on benefits, rather than extracting money just because it is there.

The California legislature has chosen to poison the economy with punitive taxes on wages, enterprise, the sale of goods, and the value of buildings. These taxes impose what economists call an excess burden, also called a "deadweight loss." By decreasing gains and increasing costs and prices, such taxes reduce production, exchange, income, and growth. The two-thirds requirement to increase taxes or to spend the loot is therefore a wise defense against increasing the economic poison.

The two-thirds budget rule also helps to limit excessive borrowing. When politicians say that a bond measure will not raise taxes, they are deceiving us, since government spending eventually is paid for by taxes. As we have seen this year, large budget deficits create pressure to increase taxes. To spend is to tax, so if the people make it easier for government to spend, they are also making it easier for government to eventually impose more bad taxes.

If I were a member of a voluntary club, I would not want a two-thirds rule for adopting the club budget, since majority rule would be reasonable, and anyone who didn't like that could quit the club. But government is imposed on people and takes its revenues by force, so the people need protection from being inflicted with ever more poison. Taxpayers also need protection from those who seek to impose greater spending requirements on the state or on local government.

If the state constitution prohibited punitive taxation and instead embraced a libertarian position by requiring public revenues to come from voluntary user fees, pollution charges, and the land value generated by governmental public goods, then a majority vote to spend that money would be reasonable. But as long as the state chiefs insist on cannibalizing the economy with punitive taxes, we need that two-thirds rule to stop them from imposing greater ruin on the economy.

California is not alone in requiring super-majorities to enact budgets. Rhode Island also requires a two-thirds vote, and Arkansas requires a three-fourths vote for some of its spending. Several other states require super-majorities to pass budgets or increase taxes in particular circumstances, such as when spending would exceed an upper limit.

Budget battles can be avoided by adopting a constitutional rule that if a balanced budget is not adopted by the closing date, the previous year's budget is automatically extended, and if the budget is in deficit, all spending categories are cut by the same proportion to balance the budget. The fact that the state has not adopted this rule implies that the people and legislature prefer budget battles to automatic extensions and cuts.

The people voted in the two-thirds rules, which implies that the people sought to protect themselves from unwise taxing and spending. Eliminating the two-thirds rules without simultaneously stopping the economic poison would just encourage further iatrogenic economic damage. 

Friday, May 8, 2009

Upcoming Fresno Rally To Repeal Prop 8

Excerpted from the Sacramento Bee:

The next skirmish in the battle over same-sex marriage will be in Fresno, where supporters plan a large rally to kick off a campaign they hope will change minds -- and votes. Their goal: to undo Proposition 8. [...]
Supporters of same-sex marriage plan to rally on the Saturday after the state Supreme Court rules on Prop. 8's legality. The high court has until June 3 to rule. That ruling is widely expected to affirm the will of the voters. But supporters of same-sex marriage -- buoyed by decisions in Iowa, Maine and three other states to allow such marriages -- said they plan to put an initiative on the November 2010 ballot to legalize the practice in California. [...]
The rally is being called "Meet In The Middle For Equality." Actress Charlize Theron is expected to attend, and organizers predict the rally could attract up to 3,000 people from throughout California.

Anti-H8 TV Ads Next Week

Excerpted from the Sacramento Bee:

Seeking to win more acceptance in "Middle America" for gay marriage, activists are starting TV ads Monday in California featuring same-sex couples and their families. [...]
California's Supreme Court ruled in May 2008 that gay couples had a constitutional right to wed. But Proposition 8 changed the state's constitution to declare marriage as between only a man and woman.
In April, Iowa and Vermont legalized gay marriage, and this week Maine brought the number of states sanctioning same-sex marriages to five. New Hampshire's governor has a bill on his desk, and New York is considering a law.
California's high court is expected to rule by June 6 on a challenge to Proposition 8. Many legal analysts believe the court will side with the voters' right to adopt the measure. [...]

Proposition 8 campaign manager Frank Schubert called the TV ads "well produced" and a departure from what the gay movement did to try to defeat Proposition 8. Those ads didn't feature gay couples boldly, as these do.

Rider: To Understand Prop 1A, Revisit Props 57-58

Email from Richard Rider, San Diego Tax Fighters:

In today’s SAN DIEGO UNION-TRIBUNE, there are “pro and con” op-eds concerning the propositions in the upcoming 19 May election. Steve Poizner is spot on with his analysis, pointing out that Prop 1A is simply a repeat of the 2004 Prop 57-58 con job.

Prop 1A the same deal (complete with a $16 billion tax increase), with the same proponents, and will provide the same failed result at huge expense. I had a hand in opposing Prop 58, and the parallel is eerie.

At the request of then-state legislator Tom McClintock, in 2004 I wrote the ballot argument against Prop 58, the California "Balanced Budget Act." That last word in the title should have tipped off the voters, but didn't.

Prop 58 was indeed an act – a magic act. Complete with disappearing promises and illusionary savings. No budget was balanced, and no spending was reined in by the measure.

All we taxpayers got was a $15 billion state bond that built absolutely nothing (it was all spent on state budget operating costs) – a bond which – with interest – translated into a huge annual outlay for 30 years.

BACKGROUND: Governor Schwarzenegger wanted $15 billion worth of state municipal bonds issued to pay California’s state OPERATING expenses -- largely inflated public employee salaries and pensions. This was Prop 57.

The pitch was, “give us the money, and we’ll solve California’s budget problems through reforms.” The problem for Schwarzenegger was that this use of tax free municipal bonds was prohibited by the CA Constitution – bond proceeds were limited to infrastructure spending.

Hence Prop 58 was needed to overturn this longstanding taxpayer protection. To make this palatable, the governor claimed he arranged a trade-off – the $15 billion in exchange for new, supposedly solid budget reforms included in Prop 58.

In our opposition arguments, we made clear that there were loopholes galore in Prop 58 – that this would NOT solve our budget woes. Opponents castigated us for our concerns, and assured all that this was the real deal. As it turned out, we were absolutely clairvoyant, and the proponents were dead wrong.

It’s worth going back to read the actual Prop 58 ballot arguments – and to see who signed them. To see all four arguments, go to:


The most interesting of the four arguments is the rebuttal by Prop 58 proponents to our opposition argument. Here is that argument by the proponents:

REBUTTAL to Argument against Proposition 58

Don't be fooled by the opponents. The California Taxpayers Association supports the California Balanced Budget Act.

Proposition 58 WILL REQUIRE A BALANCED BUDGET for the first time. State government spending in California is out of control. Over the past three years, state spending has significantly exceeded state revenues.

Under Proposition 58, the Governor and the California State Legislature must ENACT a BALANCED BUDGET. It will CLOSE A LOOPHOLE that was used to create the huge deficit.

Governor Schwarzenegger's California Economic Recovery Plan includes both Propositions 57 and 58. Combined, the two measures will allow California to refinance its debt and prevent such a situation from EVER HAPPENING AGAIN. We should not be allowed to SPEND MORE MONEY THAN WE HAVE.

Proposition 58 requires the Legislature to enact a balanced budget and if circumstances change after they pass the budget, the Governor is required to call them into special session to make mid-year changes to the budget, so that we end the year with A BALANCED BUDGET. And Proposition 58 prohibits the Legislature from acting on any new legislation until the budget is balanced again.

Proposition 58 does not change the Gann Spending Limit. It is still the law, the BALANCED BUDGET ACT provides a new tool in the fight against overspending.

Proposition 58 prohibits borrowing for future deficits. Proposition 58 requires building a reserve of at least $8 billion. Please support the California Recovery Plan and vote YES ON PROPOSITIONS 57 and 58.

RIDER COMMENT: It’s really stunning to read just how ignorant, misinformed and perhaps dishonest these proponents were. At the very least, their credibility is ruined.

Now, note who signed this rebuttal. These are ostensibly all Republicans, I believe. And note particularly the third signer.

State of California

BILL HAUCK, Chairman
California Constitution Revision Commission

California Chamber of Commerce

The California Chamber of Commerce – and indeed, the California Taxpayers Association – have been wrong far more than they’ve been right on taxes and bonds. Contrary to what people would expect, they FAVOR most bonds and tax increases – as long as big business is not heavily hammered by such taxes. And the Prop 1A tax increases are strikingly REgressive in nature – which the fat cats love.

The CA Chamber of Commerce is a Big Government proponent, intent on currying favor with politicians for special interest legislation and government construction contracts. Based on the above dishonest/inaccurate/condescending ballot argument, this outfit is not to be trusted in such fiscal matters.

The parallels between Prop 57-58 and Prop 1A are obvious. Both entail empty, loophole-filled promises at the cost of many billions of dollars.

Bakersfield MJ Dispensary Raided

Excerpted from KGET.com:

Kern Sheriff’s deputies and agents from the Drug Enforcement Agency were searching a medical marijuana store in east Bakersfield Wednesday afternoon. The search warrant was being serviced at the Green Cross Compassionate Medical Marijuana Co-operative [...]

The use of marijuana for medical purposes is permitted under California law, but prohibited under federal law. President Barack Obama ordered the federal government to give precedence to local law and not raid the shops.

Sheriff Donny Youngblood said his office will not interfere with the operation of non-profit medical co-operatives run by patients for patients. But, he said, dispensaries that sell marijuana for a profit should be expected to be treated like other drug dealers.

HJT: Governor’s Threats to Fire Protection Are Outrageous Extortion

Email from HJTA:

On May 5, just two weeks before the May 19th Special Election, Governor Schwarzenegger has threatened California’s vital fire protection services unless the voters approve the package of “reforms” placed before voters by the Legislature and the Governor. His threats were immediately blasted by opponents of Proposition 1A as scare tactics.

“Right on cue, our Hollywood Governor is trotting out the firefighters and threatening Californians with burning homes unless he gets his way,” said Jon Coupal, President of the Howard Jarvis Taxpayers Association. “Voters can absolutely be assured that, next week, he and the California Teachers Association will be threatening public education and school closures.”

But these threats, which Coupal labeled as “simple extortion,” should not be taken seriously. First, the Governor’s own Director of Finance recently testified that the passage of Proposition 1A, the lynchpin of the so-called “reform” package would have absolutely no impact on either the current fiscal year or fiscal year 2009-10. Second, the California Legislature has had numerous opportunities to achieve cost savings in other programs which would allow vital public safety to be protected. But Coupal noted that “our political leadership last week couldn’t even bring itself to eliminate the Integrated Waste Management Board last week to save millions of dollars. Voters should not tolerate having public safety being held hostage until the Governor and Legislature start acting to eliminate waste, fraud and abuse.”

Coupal also noted that, after polling showed the Yes campaign in serious trouble, its messaging changed dramatically. “Two weeks ago, it was all about needed budget reform. Now its about blood in the streets. But voters are tired of being manipulated and opposition to the $16 billion in higher taxes remains very strong.”

According to Coupal, “in short, these threats are little more than the reflective acts of a desperate campaign.”

Proposition 1A is opposed by No New Taxes Committee, a Project of Howard Jarvis Taxpayers Association, FPPC No. 922117. For more information on Proposition 1A, go to www.NoProposition1A.com.

HJT: Proponents Give Best Reasons To Reject Prop 1A

In true David versus Goliath fashion, the opponents of Proposition 1A are the underdogs in the political battle which will culminate on May 19th. There is little doubt that they will be outspent by a margin of at least 15 to 1. And they face a well organized campaign machine financed by the two giants of California politics: the California Teachers Association and Governor Schwarzenegger's California Dream Team.

Because it is being sold as budget reform, Proposition 1A should be a slam dunk with voters. Indeed, in the last two weeks of the campaign, proponents will inundate the airwaves and voters' mailboxes with the message that the proposal will bring real reform to California's dysfunctional budget process by moderating spending in boom years.

In actuality, Prop. 1A won't work as advertised. Spending can be increased in any one year the amount the Legislature and the governor are willing to raise taxes.

And Prop. 1A is a tax increase. The taxes Sacramento politicians just approved that make Californians the heaviest burdened taxpayers in the nation, are scheduled to expire in two years. Prop. 1A extends these taxes for an additional two years. When caught ignoring the issue, backers are cued to respond that it is just a tax extension, but its actual impact is to more than double the amount in taxes Californians are scheduled to pay, an amount that could cost a typical family thousands of dollars.

Proposition 1A's complexity, both within itself and its impact on other pieces of the budget puzzle, has presented a challenge to its backers and an opportunity for its opponents. That complexity, coupled with the high level of cynicism and mistrust of political leadership, could very well sink the measure, not withstanding the tsunami of political ads we are about to hear in the next 15 days telling us that Prop 1A is more important that the Bill of Rights.

But in their effort to try to present a clear, simple message for Proposition 1A, its Goliath backers have given their David opponents some great rocks to put in their slings. Most notable was Governor Schwarzenegger's comment about Prop. 1A to Los Angeles Times columnist George Skelton, "It's already complicated as it is but the more you write about how complicated it is, the more complicated you make the complication." This ranks right up there with a famous presidential quote, "It depends on what the definition of 'is' is" -- also used to avoid being forthcoming.

Better yet, Steve Maviglio, former press secretary to Gov. Davis and spinmeister for the left, is more honest in his recent column, "Top 10 Reasons Why Progressives Should Support Prop 1A." Among his justifications for a yes vote are, "There are no restrictions on spending in typical years," "Increases annual spending by $1.5 billion," and "Allows for all revenues from new tax increases to be appropriated."

And therein lies the true challenge for the proponents. One major backer, the Governor, is claiming that Proposition 1A will bring real spending discipline to Sacramento. The other major backer, the teachers union, is claiming that Proposition 1A is no big deal as budget reform but is needed to make sure education spending can continue as if California still had a robust economy.

Complexity and inconsistency. David, it seems, has plenty of stones to hurl against Goliath.

Jon Coupal is President of the Howard Jarvis Taxpayers Association -- California's largest taxpayer organization -- which is dedicated to the protection of Proposition 13 and promoting taxpayers' rights.

Tuesday, May 5, 2009

ASA: Lynch Sentencing Delayed

From the Americans for Safe Access Newsletter:

U.S. District Judge Wants to Avoid Mandatory Five-Year Term

A federal judge has again postponed sentencing of a California man convicted of operating a city-licensed medical cannabis dispensary. ASA Chief Counsel Joe Elford was among those who appeared on behalf of Charles Lynch at the hearing.

The plight of Charles Lynch has become a focal point for the national debate over medical marijuana, with local officials, patients, and advocates pleading for leniency, while federal prosecutors demand a five-year prison sentence. Defense attorneys have asked that Lynch be sentenced to time already served - the four days he was held before posting bond.

"If I could find a way out, I would," U.S. District Judge George H. Wu said. He gave attorneys until June 2 to file new sentencing briefs.
The sentencing was first delayed after defense attorneys asked Judge Wu to take into consideration the new federal policy on medical marijuana. The judge asked for written clarification from the Department of Justice as to whether the changes would impact Lynch's sentencing, but prosecutors filed a brief saying that it would not.

At the latest sentencing hearing, prosecutors said Lynch was not legally entitled to distribute marijuana under state law because he was not a "primary caregiver" and that he profited from his business.

That view was refuted by ASA Chief Counsel Joe Elford, who briefed the court on the state legislature's clarification of the law and the new state Attorney General guidelines, which both contain provisions specific to the legal operation of cannabis dispensing collectives of the sort Lynch operated.

"It's time for the Obama Administration to act on its commitment to change federal medical marijuana policy," said ASA Chief Counsel Joe Elford. "It's disingenuous to accuse people of state law violations and then prosecute them under federal law, thereby denying them an adequate defense."

Lynch, 47, ran a medical marijuana dispensary in Morro Bay, California from 2006 to 2007 and with the blessing of the Morro Bay City Council, the local Chamber of Commerce, and other community leaders.

Before his medical marijuana dispensary was raided by DEA agents in March of 2007, Lynch had operated for 11 months without incident. After a federal trial that excluded evidence about state law and the patients he was helping, Lynch was convicted of violating federal drug laws last year.

Gay Marriage Electoral Strategy Aims At 2010

Excerpted from ABC News:
Same-sex marriage backers in California, anticipating a loss in court, are preparing to make their case at the ballot box in 2010 rather than waiting until 2012. [...]

While traditional turnout models might recommend waiting until 2012, recent gay marriage victories in Iowa, Vermont, and the District of Columbia have emboldened gay rights activists in California.
Advocates of same-sex marriage are also encouraged to try in 2010 rather than in 2012 because all three Democrats eyeing the governor's office -- Newsom, Attorney General Jerry Brown and Los Angeles Mayor Antonio Villaraigosa -- are active supporters of gay marriage, in contrast with President Obama, the Democrat who will likely top the party ticket in 2012. [...]

To address voter concerns about the impact that state-sanctioned gay marriage could have on religious institutions, the Courage Campaign is considering possible ballot language that would guarantee the right of any two unrelated consenting adults to marry, while simultaneously stating that churches have a right to decide for themselves whom to marry.

Monday, May 4, 2009

New Prop1A Commercial Misleads

From KQED.org:

With no fanfare, the main campaign in support of the six budget measures on the May 19 ballot has pivoted to a media blitz focused on just two measures... the two with the most state budget money riding on them, and the two that are most valuable to the campaign's biggest donors. [...]

"Without Props 1A and 1B," says [Firefighter] Judd (with just the perfect amount of soot dabbed on his forehead), "we have $16 billion in new [state budget] cuts coming."

That's a reasonable claim about Prop 1A, which extends a package of tax increases agreed to by the Legislature and Governor Schwarzenegger. But it's a misleading claim about Prop 1B; on the contrary, that measure would ostensibly spend some of the tax revenues brought in by passage of Prop 1A.

As we've reported, Prop 1B is a $9 billion payment to public schools on top of what they're already expecting over the next few years. So how does passage of Prop 1B help avoid budget cuts? [...]

Most observers would guess that the pivot is, in part, a realization that polling shows almost all of the measures on the ropes...

Court Rules Against Teacher For Creationism Snark

From SFgate:

A federal judge ruled that a public high school history teacher violated the First Amendment when he called creationism "religious, superstitious nonsense" during a classroom lecture. [...]

During the course of the litigation, the judge found that most of the statements cited in the court papers did not violate the First Amendment because they did not refer directly to religion or were appropriate in the context of the classroom lecture. [...]

[The judge dismissed all the other 19 statements the student complained about, including:]
  • "when you put on your Jesus glasses, you can't see the truth."
  • "Conservatives don't want women to avoid pregnancies — that's interfering with God's work"
  • "When you pray for divine intervention, you're hoping that the spaghetti monster will help you get what you want."
  • religion was "invented when the first con man met the first fool."

Assembly Delays Endorsing SEIU Contract

From The Sacramento Bee:

The Assembly today defeated a bill that aimed to put into state law the terms of the Schwarzenegger administration's contract agreement with members of the SEIU, Local 1000, California's largest state workers' union. [...]

Niello appears to be using Republican clout to offer the governor some leverage - holding out on the contract approval as long as possible so that the SEIU doesn't mount a major attack-ad campaign on propositions he favors, such as 1A.

Sunday, May 3, 2009

George Will: CA's Problem is Moderation; Arnold Best Governor Nevada Ever Had

By George Will:

If, since 1990, state spending increases had been held to the inflation rate plus population growth, the state would have a $15 billion surplus instead of a $42 billion budget deficit [...]

Proposition 1A would create a complicated -- hence probably porous -- spending cap, and a rainy day fund. Realists, however, do not trust the Legislature to obey the law, which may be why some public employees unions cynically support 1A. Another May 19 proposition, opaquely titled the "Lottery Modernization Act," would authorize borrowing $5 billion from future hypothetical lottery receipts. The title is a measure of the political class' meretriciousness.

If voters pass 1A's hypothetical restraint on government spending, their reward will be two extra years (another $16 billion) of actual income, sales and vehicle tax increases. The increases were supposed to be for just two years. Voters are being warned that if they reject the propositions, there might have to be $14 billion in spending cuts. (Note the $15 billion number four paragraphs above.) Even teachers might be laid off. California teachers -- the nation's highest paid, with salaries about 25 percent above the national average -- are emblematic of the grip government employees unions have on the state, where 57 percent of government workers are unionized (the national average is 37 percent). [...]

But what actually ails California is centrist evasions. The state's crisis has been caused by "moderation," understood as splitting the difference between extreme liberalism and hyperliberalism, a "reasonableness" that merely moderates the speed at which the ever-expanding public sector suffocates the private sector. California has become liberalism's laboratory, in which the case for fiscal conservatism is being confirmed.

Weintraub: Anti-Tax Activists Miss The Point Of Prop 1A

From The Sacramento Bee:

Niello says he was surprised when he heard that the Democrats finally were going to agree to the spending limit, because they had been fighting the concept for years.

"I didn't think they would go there," he said. But they did go there, after they saw it was their only route to even a temporary tax hike.

But there was a hitch. The spending limit, being a constitutional amendment, would have to go on the ballot. Republicans feared a double-cross. They worried that the Democrats, after agreeing to the budget deal, would try to kill the spending limit when it went to the voters. So Republicans agreed to vote for only half the taxes up front, and linked the second two years of tax hikes to passage of the spending limit by the voters on May 19.

Without that linkage, Niello says, "all the public employee unions would have opposed the spending cap" in the special election.

Instead, the unions are split, and the most vociferous opposition is coming from the right. And in a strange twist, the anti-tax groups are taking aim at the link between the spending limit and the extension of the taxes, the very linkage that Republicans used as leverage to force the Democrats into supporting a spending limit.

If the opposition succeeds and Proposition 1A is defeated, Californians will still get higher taxes for at least two years, but no spending reform. If Republican lawmakers had offered that deal to the Democrats in February, the majority party would have accepted it in a nanosecond.

Fiscal conservatives think they will be able to win voter approval, eventually, for a much tougher spending limit than the one contained in Proposition 1A. But for now their strategy has a puzzling theme to it: The anti-tax groups are simultaneously criticizing Niello and the other Republicans for voting for tax hikes while those same groups are working for an outcome that would kill the part of the package that Republicans demanded in exchange for their votes on those taxes.

SacBee Analyzes The Special Interest Deals Behind The Budget Propositions

From The Sacramento Bee:

For the teachers union, the list of ballot measures includes a separate measure to ensure repayment of deep cuts to schools and protections for top-priority programs. The California Teachers Association has contributed $7 million to the passage of Propositions 1A and 1B. [...]

Lawmakers also linked Proposition 1A to Proposition 1B, which will take effect only if the first measure also passes.

Proposition 1B, which would require paying an additional $9.3 billion to schools in the future to compensate for current budget cuts, was designed to keep the California Teachers Association from bankrolling a campaign against 1A.

Saturday, May 2, 2009

PayPal's Libertarian Thiel Pins Hope On Technology

From The Education of a Libertarian:

As one fast-forwards to 2009, the prospects for a libertarian politics appear grim indeed. Exhibit A is a financial crisis caused by too much debt and leverage, facilitated by a government that insured against all sorts of moral hazards — and we know that the response to this crisis involves way more debt and leverage, and way more government. Those who have argued for free markets have been screaming into a hurricane. The events of recent months shatter any remaining hopes of politically minded libertarians. For those of us who are libertarian in 2009, our education culminates with the knowledge that the broader education of the body politic has become a fool’s errand.

Indeed, even more pessimistically, the trend has been going the wrong way for a long time. To return to finance, the last economic depression in the United States that did not result in massive government intervention was the collapse of 1920–21. It was sharp but short, and entailed the sort of Schumpeterian “creative destruction” that could lead to a real boom. The decade that followed — the roaring 1920s — was so strong that historians have forgotten the depression that started it. The 1920s were the last decade in American history during which one could be genuinely optimistic about politics. Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women — two constituencies that are notoriously tough for libertarians — have rendered the notion of “capitalist democracy” into an oxymoron.

In the face of these realities, one would despair if one limited one’s horizon to the world of politics. I do not despair because I no longer believe that politics encompasses all possible futures of our world. In our time, the great task for libertarians is to find an escape from politics in all its forms — from the totalitarian and fundamentalist catastrophes to the unthinking demos that guides so-called “social democracy.”

The critical question then becomes one of means, of how to escape not via politics but beyond it. Because there are no truly free places left in our world, I suspect that the mode for escape must involve some sort of new and hitherto untried process that leads us to some undiscovered country; and for this reason I have focused my efforts on new technologies that may create a new space for freedom. Let me briefly speak to three such technological frontiers:

Continued at The Education of a Libertarian

HJTA on Prop 1A: Lessons From CA History

From http://www.hjta.org/california-commentary/no-looking-back:

The fact is, once a spending limit actually comes into effect, the political pressure to spend "excess revenue" is enormous. Indeed, this is precisely what happened to the Gann Spending Limit.

No one understands this better than Bill Leonard, currently serving as a member of the Board of Equalization. He recently wrote a short piece in his "Leonard Letter" which reviewed the history of the undoing of the Gann Limit. Leonard notes that "in 1987's growing economy, state revenues exploded and for the first time the state had more cash than the Gann Limit permitted to be spent on programs.In a wise bit of foresight, the Gann Limit already laid out that the default action for a surplus of revenue over the limit was a rebate to every California taxpayer. Governor Deukmejian offered the Democrat legislature a plan to spend the extra revenue on infrastructure, but they balked and in the end every California taxpayer received a modest rebate check."

Believing that they were entitled to every last dime of taxpayer revenue, the tax and spend lobby's reaction to the rebates was swift. They proposed Prop. 98 which guaranteed that K-14 spending be maintained at a certain percentage of the general fund. That measure barely passed with 50.7% of the vote.

But, according to Leonard, by 1990 Governor Deukmejian "found it impossible to comply with both the Gann Limit and the Prop. 98 guarantee, so he and the legislature worked out a comprehensive ballot measure that loosened the Gann Limit formula to make it harder to ever reach the limit, while making the Prop. 98 guarantee more flexible so that it would stay around 40% of the General Fund under all circumstances, as well as increasing the gasoline tax for purposes of transportation construction. This became Proposition 111 and the voters approved it in 1990."

Leonard's point here is important: "The lesson for the future isthat if the spending limits of Proposition 1A of 2009 pass, they can and will be undone by the voters, too." Thus, the question is whether a speculative budget reform -- one which allows its limits to be increased to reflect higher taxes -- and one which does nothing to control the appetite of the spending lobby is worth $16 billion in higher taxes.

For most taxpayers, the answer is clearly no.