The Governor's Lottery Scheme - Bottom of the Barrel?

July 02, 2008

Is California's lottery becoming just one more subsidy for the rich?

When We, the People of California agreed to have a state lottery it was to pay for extra education for our children on top of the existing education budget. It was not supposed to make up for other budget cuts for schools, it was supposed to be extra money to improve the educational system.

This has ... migrated. The lottery under the Governor's new borrowing plan may be fast becoming one more gimmick to avoid taxing the rich and big corporations. (Not to mention paying out millions upon millions in debt interest for years and years to those with the means to loan the state these billions.)

The California Budget Project has a new report, Borrowing Against the Future: Are Lottery Bonds the Best Way To Close the Budget Gap? (PDF file) It is well worth taking a look at. They say the numbers don't add up, the lottery can't deliver the needed revenue, the scheme makes it even harder to fix the budget in the future, will have a high interest rate, and has numerous other problems. On a conference call Tuesday with jean Ross, one of the report's authors, I also learned that the cost over time of borrowing this money will be between $41.5 and $50 billion -- way too high. The lottery is largely played by low-income people so efforts to drive up lottery purchases increases their burden and will likely come at a cost of other purchases, thereby sacrificing sales tax revenue to the state.

That there are so many things wrong with this latest borrowing scheme might be a good sign. It might, just might mean that the Republicans are scraping the very bottom of their barrel of anti-government and tax-avoidance gimmicks. After this wild scheme collapses maybe, just maybe they'll come to their senses.

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Democracy

Supreme Court Strikes Down "Millionaire's Amendment"

June 26, 2008

Nearly every Supreme Court ruling is 5-4 these days, with the far-right winning over the right. I guess they understand the need to dance with the wealthy corporatists that brung them. And I think they understand that this balance could change next year so they are rushing to establish as many far-right precedents as they can before that happens.

This one today is rich - literally. The Court ruled that allowing candidates to raise extra money if they face a self-financed millionaire violates the self-financed millionaire's freedom to use money to dominate all speech. Do you think I'm joking?

Supreme Court strikes down part of campaign finance law

The Supreme Court struck down on Thursday part of a U.S. campaign finance law that relaxes contribution limits for candidates facing wealthy, self-funded opponents, a ruling that could affect congressional elections in November.

By a 5-4 vote, the high court declared unconstitutional the provision known as the "millionaire's amendment" that Congress adopted out of concern that rich, self-financing candidates would have a competitive advantage.

Alito agreed with the arguments by [the rich candidate] that the law violated the constitutional free-speech rights of self-financed candidates, impermissibly burdening [rich candidate's] rights to spend his own money for campaign speech. [emphasis added]

Enabling the other candidate to raise as much money - from regular people - is "burdening" the rich guy. Wow.

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Environment

What Is A Revenue-Neutral Carbon Tax?

June 25, 2008

I'd like to talk about a "revenue-neutral" carbon tax.

Here is the idea: You tax carbon-based "fossil fuel" energy at the source: when oil or coal or gas is originally extracted and sold you tax it. Then you divide up that tax money equally and give it to each citizen.

Giving the entire tax back makes it "revenue-neutral" meaning exactly as much that is taxed is given back. This means that the net effect on the overall economy is neutral. But it promotes the use of renewable, non-polluting energy sources which overall has a very positive effect on the economy whether you worry about global warming or not. (A more energy-efficient economy means everyone spends less to get the same results.)

What would this mean to most Americans? A $200 per ton carbon tax would roughly mean a $9000 check to each American family each year. This check offsets any higher prices that might be caused by the tax. If you use less carbon-based energy you come out way ahead financially. If you use more you pay more. Economists say that 4/5 of us would come out ahead. Only the richest 1/5 would pay more. And THEY can pay less by CHOOSING to using less energy. (What would a $9,000 check mean for families in this economy?)

This creates a huge incentive for everyone to become more energy-efficient, which means your costs go down. If you are a business energy-efficiency means you increase profits. If you are a family it means you spend less on electricity and natural gas. it's the same idea as buying a Prius and then spending less on gasoline. But becoming energy-efficient means that those costs go away forever. If you install solar panels you never pay another electric bill. If you add insulation to your house your heating and cooling bills go down forever.

A carbon tax means that WE get that money, not the Middle East. It means that we have incentive to start building mass transit again. It means that research into alternative energy sources (killed by Republicans) gets started again.

AND it means that we are putting less and less carbon into the air.

You can learn more at the Carbon Tax Center.

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Consumer Protection, Speak Out Now

Speak Out California Is Back Up And Running!

June 23, 2008

One day your website is yours, and the next day it is someone else's. Organizations, businesses and regular people are at the mercy of a confusing deregulated system.

A little over a week ago the Speak Out California website suddenly disappeared, and viewers instead saw a website full of advertisements.

We had no way of even knowing what had happened. It was just a surprise. One day typing "speakoutca.org" into a web browser took viewers to our website, the next day it took viewers to an ad site that someone else managed.

Some of us are more sophisticated and internet-savvy than most citizens so we were eventually able to track down some information. I'm not going into details here, except to say that no one at Speak Out California received any notice that this was going to happen. It took several days to even track down where the domain name (this is what internet addresses like speakoutca.org are called) had been registered, who had registered it, and contact info for the registrar. Then it took several more days to restore the domain name to us and get it working again.

Here's the thing: the only way we were able to get this name back and get the site operating again is because some of us are much more internet-connected than most people. Most people would have no idea where to even start to look for information and help solving a problem like this.

This is certainly not an uncommon problem. My wife had a business named Dancing Woman Designs with a website at dancingwomandesigns.com, and then one day she didn't. She received no notice, nothing. It was just there one day and gone the next and if she wanted it back it was going to cost her. It was going to cost her a lot. And so she doesn't have dancingwomandesigns.com anymore and that address takes you to an ad site. A whole business that took years to get going and build is history now. It was wiped out in a minute because someone was able to get the web name.

A larger business is more likely to have the resources to hire the necessary experts to fight something like this. But it can be an expensive proposition and it can take time.

This is the difference between regulation and deregulation. Regulations protect regular people. Deregulation enables and protects scammers, schemers, and cons. The Internet is largely unregulated and is full of scammers, schemers and cons. Most of the businesses and organizations on the internet are good, honest, credible and legitimate but regular people are also left completely at the mercy of numerous cons, scams, schemes and rip-offs and the burden is on us to find a way to tell the difference.

We got Speak Out California back up and running. It only took us a week and a little money. But we are sophisticated, internet-savvy and connected -- and lucky. Hmm ... maybe some new legislation is warranted.

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Consumer Protection

Does Arbitration Work For Citizens?

June 13, 2008

Does your credit card or bank loan agreement have an "arbitration clause?" More and more consumer-oriented contracts and "agreements" have clauses specifying that disputes must go to arbitration rather than our civil justice system. The justification for this is that arbitration saves the time and expense of working within our legal system. But here's the thing: the corporations choose the arbitrators and every arbitrator knows they will never, ever, ever, ever (ever) get another job if they rule against the corporations. Never.

And guess what: 98.8% of arbitrations end up in favor of the corporations. This is not a surprise.

The Progressive States Network's newsletter has a story about this today, Arbitration: "Set up to squeeze small sums of money out of desperately poor people",

The headline above is a quote from former West Virginia Supreme Court Justice Richard Neely, describing what his role was as an arbitrator at the National Arbitration Forum (NAF), a for-profit company hired to enforce mandatory arbitration clauses for credit card consumer loans. "NAF is nothing more than an arm of the collection industry hiding behind a veneer of impartiality," says Richard Neely.

In a devastating expose by BusinessWeek, Neely and other former arbitrators describe an arbitration system stacked completely against consumers-- a system where creditors win 99.8% of all disputes involving companies ranging from Bank of America to Sears to Citgroup. Arbitration clauses buried in the fine print of credit card offers means consumers lose the right to have disputes decided in an independent court and instead are forced into corporation-selected arbitration firms.

The BusinessWeek story mentioned in the Progressive States Network story is titled, Banks vs. Consumers (Guess Who Wins)

This story about credit card companies taking unfair advantage of consumers is one more attack on citizen rights to access our own legal system (one more of so many attacks). Think about what is happening here. First the big corporations fought against "regulations" which are the rules that We, the People set up requiring safe workplaces or environmental standards, or products that do not injure people, etc. Then when fewer regulations of course resulted in worker or consumer injuries or toxic spills or other harms the inured parties filed more lawsuits asking the companies to make good. So in response to these lawsuits the corporate-financed "tort reform" movement came along, working to limit the ability of citizens to be compensated for the results of corporate bad behavior. The result has been fewer regulations preventing harms and more restrictions on citizen access to courts where we can seek damages after we are harmed.

I didn't even bring up the corporate-conservative movement to install their own business-friendly judges in the courts.

But even those erosions of our access to justice has not been enough for the greedy corporations. Now there is arbitration: clauses that show up in contracts and agreements that remove your ability to take a dispute to the courts at all! And the judges in these courts are dependent on the corporations for their livlihood!

Deregulation, tort reform and now arbitration that is rigged against the consumer. Drip, drip, drip. One after another the big corporations are eroding the rights of citizens.

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The Budget

Cut That OTHER Spending!

June 11, 2008

For decades people have been hearing that government "spends too much." They have been hearing that it's spending cuts that we need, not tax increases. They've been hearing that most of the government's money is spent on "waste, fraud and abuse." They've been hearing that it mostly goes to welfare, for people who won't work and sit around all day. They've been hearing that taxes are too high, the highest in the world, the liberals who run the world only want to tax and spend, etc. And no one has been reaching the public with the facts.

And after decades of this here is a surprise: people think the government spends too much, that we need spending cuts not taxes, that the money goes to waste, fraud and abuse -- and welfare and stuff like that. Who would have thought?

But ask for specifics like, "What specifically would you cut and by how much?" and you'll get a blank stare. Try that question on a conservative politician some time and you'll get the same blank stare. (Usually accompanied by an exercise commonly known as "the run-around.")

OK, occasionally when an elected official is faced with no choice but to cut or raise taxes you'll get an answer. We saw this recently when the Governor spelled out drastic cuts in schools and other government services -- the actual stuff that our taxes pay for. The public didn't like that one bit. They want that "other" spending to be cut instead. (Of course, the Governor also came up with that weird scheme to borrow from next year's lottery revenue. So what happens next year when we have to pay the bills and don't even have the lottery revenue because that went to this year's budget??? What do we borrow on then?)

Things might be changing. The public might slowly be coming around to understanding that taxes really do need to be raised -- at least as far as a temporary sales tax increase. The Public Policy Institute of California recently released the results of a survey titled Californians and Their Government. (The full PDF is here.) According to the summary,

Solid majorities of residents (58%) and likely voters (62%) oppose the governor’s plan to raise revenue by borrowing from future lottery earnings, but majorities of residents (54%) and likely voters (57%) favor a temporary increase in the state sales tax if the lottery plan fails.

And, according to the press release,

The potential temporary sales tax increase is the only tax increase included in the governor’s revised budget. Asked whether they believe tax increases should be part of his plan, residents are split (48% yes, 46% no), although the percentage favoring tax increases has risen sharply since December (30%). [emphasis added]

Of course, this doesn't get the budget solved. It's a start but as for real-world solutions today, the public still isn't ready to face facts. This may be because no one has dared explain that there isn't really some "other" spending yet to be cut. Also from the press release:

Californians fail budget math quiz — Page 12
When asked which area gets the biggest share of state spending, only 20 percent of residents correctly identified K-12 education. Asked where the biggest chunk of revenue comes from, only 32 percent give the correct answer: personal income tax.

Let me leave you with a few suggestions for helping solve the budget mess:

Proposition 13, an initiative that was sold as keeping little old ladies on fixed incomes in their homes, cut both residential and commercial property taxes. How about bringing commercial property taxes back to market rates?

Oil companies don't pay a "severance fee" when they pump our oil out of the ground to sell back to us. How about they pay for the oil before they sell it back to us?

How about we ask the wealthy to pay sales taxes - the same sales taxes that the rest of us have to pay - when they buy yachts and airplanes? And how about we ask the wealthy to pay their fair share of other taxes as well?

If you are talking to friends and family about the budget, point out that when Governor Schwarzenegger -- who solved previous budget problems by borrowing -- tried to balance the budget without raising any taxes he had to cut schools, health care, parks and much more, and still find ways to borrow. He is a Republican, not a "tax and spend" liberal, so if there were ways to cut "other" spending he would have done that.

There is no other spending to cut because it takes money to rin a government and provide the services we want and need. "The line at the DMV" is an example because if you cut DMV spending the line you hate just gets longer.

Take a look at the Next 10 site and consider how you would revise the budget.

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