Category Archives: Public Investment

Our Businesses Thrive On The Infrastructure We Built

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The key to California’s successful business environment are education and infrastructure.  It is not an accident that our semiconductor and computer and Internet industries, and biotechnology and pharmaceutical and genetic engineering and our other world-class competitive industries
developed in California instead of in “low
tax” states like Mississippi and Alabama.  These industries thrived here because of our well-educated people and our modern, well-maintained infrastructure. 

There has been a dramatic wealth-building return on our investment in education and infrastructure.  Investors could count on California as a good place to start and grow a business, and it has paid off.

But how much would it cost if businesses had to pay fair market value for use of the infrastructure that We, the People
built?  What would it cost if companies had to pay the full education cost every time they hire someone who was educated
at a California public school or state college or university? 

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What Are Tax Brackets?

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In 2009 California is going to have to confront and settle a number of budget issues that we have been putting off for decades. We have been putting off so many necessary decisions — deferring maintenance of our infrastructure, pushing pain into the future by borrowing, setting aside the needs of our people by cutting school, police, fire and other budgets, and practicing almost every form of avoidance of reality that we could find. 

Well, the karma is coming back on us, all the chickens have come home to roost, we are getting what we gave and we are going to pay for our sins.  (Please leave more cliches in the comments.)

The number one budget issues that has to be confronted is taxation.

So, let’s talk taxes, beginning with the basics.  I have found that many people don’t really understand how taxes work so I want to write a bit about that here.  One reason for the lack of understanding of taxes is that there has been quite a bit of deliberate misinformation.  By confusing people, the very wealthy and corporate interests have been able to trick people into letting them avoid paying their fair share.  Instead we either take on ourselves the bulk of the burden of paying for democracy, or just borrow and put that burden on our children.

One thing that I have found many people do not quite understand is the concept of tax brackets.

Tax brackets

A “progressive” tax is one where the tax rate increases as income increases.  A progressive tax structure consists of brackets.  You pay a certain tax rate on income up to the next bracket.  After that bracket is reached, a higher tax rate applies to income that is earned that is above that amount.  Let’s say that you pay 5% on income below $10,000 and 7% on income above $10,000.  So if you make exactly $10,000 of income the tax is $500.  At $10,100 the tax is still that $500 on the amount below $10,000 and $7 on the additional $100, for a total of $507.  The key point is that only the amount in the new bracket is taxed at the higher rate.

Many people believe that once you reach a higher bracket you pay the higher tax rate on all the income that falls below that bracket amount as well.  I have actually talked to people who think they need to “get their
income into a lower bracket” to avoid paying a higher tax rate, because
they think that a higher tax rate would apply to all of the income they
earned.

Using the example of the earlier paragraph, many people believe that you would pay $707, not $507, on income of $10,100, assuming that the entire $10,100 is taxed at a 7% rate because the total income is above $10,000.  This incorrect belief is one result of anti-tax arguments.  It is also the basis of many tax-avoidance schemes.  

So, to repeat:  If you enter a higher tax bracket, you only pay the higher tax rate on the amount of income you earn that is in the new tax bracket, not on all of your income.

Stimulate The California Economy And Balance The Budget

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California’s unemployment rate has soared to 8.2% — third highest in the United States!  We need to stimulate California’s economy.  We need a massive jobs and infrastructure investment program, rebuilding our roads and bridges and schools and making our buildings energy-efficient, and hiring more teachers and police and firefighters.  We can do this, while balancing the budget at the same time.

How can we do this?  We can raise taxes on big corporations and the wealthy and use the money to stimulate the economy and balance the budget and get things moving again.

Our economic system is not perfect, so over time income tends to concentrate at the top, which makes it harder for most people to get by.  People spend less and things slow down.  We are seeing this today — wealth has massively concentrated at the top, and the consumer is “tapped out.”  No one is buying cars and Christmas sales will be much lower. 

Taxes on the wealthy and corporations fix this by recirculating money that has bunched up at the top.  Taxes provide the resources that We, the People can then use to stimulate the economy and get it moving again.

The corporations will try to say that this tax increase will slow the
economy.  But this isn’t what has happened when this has been done in
the past.  Actually history shows that taxing the wealthiest and
corporations helps our economy.  This is not surprising when you realize that more people with more jobs and money to spend is a good thing in a consumer-driven economy. 

There is a problem, though.  In California we have a rule that we cannot pass any tax with less than a two-thirds vote.  A little over half the people voted to impose this two-thirds requirement — and now 100% of us are hobbled for doing what we need to do to fix the economy.  Instead of stimulating the economy we have to lay off teachers and firefighters and road workers, further worsening the recession, because cutting budgets is the only option available.  Even if 55% or 60% of us would rather hire people and stimulate the economy, we still can’t.

So we need to change this rule.  We need to be able to pass taxes on the corporations and the rich, and get the economy moving again. 

Denver Convention, Transportation and Democracy – The Sheer Distance

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One problem that many people attending this convention are forced to deal with is the sheer distance between events. First, getting from the airport into town is a very expensive cab ride with few other choices.
I was immediately struck that there is no light rail system out to the airport! I don’t understand how a major airport near a major city could have been planned and built without incorporating light rail from the start. Of course, this was all done in the unfortunate oil/car-dominated era that we are all working to end…
In town convention events are vast distances apart. Even inside the security perimeter itself things are far apart. It is a long walk in the sun to get from the Pepsi Center to the Tivoli, where the Starz Green Room is. It is a very long walk from the Big Tent to the Starz Green Room. Etc.
Getting my official convention credentials this morning meant taking a cab for miles, to a hotel in another part of town. (Long lines, waiting, waiting…) And then there were no cabs available to take me back. Miles and miles… There was a free city “16th street mall” shuttle that helped part of the way.
So this is a problem with this convention. Having things far apart might be OK if there was some way to get from one place to another. You can’t have a car here but everything seems to require that you do.
And of course in the larger picture this is the problem with the way America has built up its housing/mall/freeway infrastructure. You have to have a car, period, or you cannot participate in the modern America except in a few larger cities that have well-thought-out transportation. This requirement that you have a car imposes a certain cost on people. But there are plenty of people who can’t meet those costs and are forced to drop out of participation. So look what happened in New Orleans when Katrina hit. Many people simply could not evacuate because they did not have their own cars, and there was no real transportation available otherwise.
America has created distances between people, classes, and even physical distance requirements that work against us in the long run. This kind of approach, where you can’t participate if you can’t afford your own car is anti-democracy. In the case of this convention, it was just dumb.

Where’s the Budget? Who Is Obstructing?

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One more attempt to get a state budget in place collapsed — blocked by the Republicans because it included tax increases. Republicans insist that the budget be balanced with billions and billions of dollars in cuts in our schools and fire protection and the other things most of us want our state to do.
I would bet that most of California’s public doesn’t know what is going on with our budget. They only know that there isn’t one, and that this is causing problems. It makes people angry, and causes them to lose faith in government.
People know that government employees are being forced to take pay cuts, and many are being laid off. But they really do not know why.
Yesterday’s budget vote was 45-30. The public doesn’t understand that this means that there were forty-five votes FOR the budget and only thirty votes against, and this is why it failed. They don’t understand that because it does not make sense. But because of a trick that the Republicans were able to play on the public the rules are that it takes a two-thirds vote to pass a budget. So an overwhelming vote of 45-30 FOR the budget means that the budget does NOT pass!
Every Republican in the state has taken a vow not to raise taxes on wealthy corporations or massively wealthy individuals. They won’t vote to require people who buy yachts or private jets to pay the same sales taxes that the rest of us pay when we buy cars. They refuse to ask oil companies to pay fees when they take our oil out of the ground and sell it to us. (Maybe they understand that such a vote will dry up their campaign funding…)
News stories about the latest budget collapse:
San Jose News:

Although the $105.2 billion budget blueprint garnered a majority vote, 45-30, it fell short of the two-thirds supermajority that California’s constitution requires to pass a budget.
. . . The vote “shows clearly that we’re not going to vote for taxes,” said Assembly Republican leader Mike Villines, R-Fresno.

Wall Street Journal:

“We’re fundamentally saying ‘no tax increases,'” said Mike Villines, the Assembly Republican leader.

They will require workers to take pay cuts and layoffs. They will cut our school budgets. They will cut transportation, the DMV, road repair, law enforcement, prisons, fire protection. But they will not ask wealthy corporations or extremely wealthy individuals to pitch in.
And here is why: by and large California’s public doesn’t know this. They are not being informed that this is entirely because a small minority of Republicans refuse to represent the public’s interests, choosing to represent the wealthy corporations and wealthiest few people.
In fact, the public likely believes that it is the Democrats who are keeping the budget from being passed. If you Google the word Democrat with the word obstruction and you get about 600,000 results. This is a national result, but it reflects the same strategy in use in California. Republicans spent years accusing Democrats of being “obstructionist” when they were not, as a strategy to pressure them to pass Republican-/corporate-oriented bills. Now, after blocking almost everything that the nation’s Congress is doing, the Republicans are campaigning saying that the Democrats in Congress aren’t passing anything! Meanwhile a new Drum Major Institute polls shows that 72% of middle-class Americans can’t name a single bill passed by Congress in the last two years that benefited them or their families! (Minimum wage increase, stimulus package, college more affordable, SCHIP…)
Less than two in five (38%) middle-class respondents to the Drum Major Institute’s new poll say they live comfortably. One-third (34%) say they meet their basic expenses each month with just a little left over for extras, while one-quarter (26%) of middle-class adults would say they just meet their basic expenses (17%) or have trouble meeting their basic expenses each month (9%). And, economy and jobs tops their concerns. They are pessimistic about the direction of the economy. They think it’s more likely that Brangelina will celebrate their 25th anniversary than gas prices returning to $3 a gallon.
But they do not understand WHY. They don’t make the connection between the corporate-controlled Republican party and what is happening to the country.
How do Republicans get away with this? How are they able to get the public to think so many things that are not true? The Republicans have a vast “noise machine” that tells the public things that are not true. (Remember how they were able to convince so many people that Iraq had attacked us on 9/11?) It costs a lot of money to have a noise machine like this, but they get the money from the very corporations and wealthy individuals whose interests they are representing. So it works for them.
Plain and simple, they are bale to reach the public and tell them stuff, and get the public to believe it. The use of overwhelming repetition is the tactic. I use the word “stuff” here with meaning: it’s just stuff they want the public to believe, with no grounding in reality. They do it, and here we are. Nationally the debt is approaching TEN TRILLION DOLLARS and they are still able to get the public to think taxes are bad. In California they are able to force layoffs and school cuts while refusing to make the ultra-rich pay even the same taxes the rest of us pay.
Please leave comments with suggestions on how to fight this.

Job Killers — Or Just More Fear?

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The California Chamber of Commerce has released its annual list of what it calls “job-killer bills.”
Why is it that the Chamber’s job-killer bills hit-list seems to only target Democrats? Not a single targeted bill belongs to a Republican. “Bad bills”, like those designed to protect public health, climate concerns or consumer rights legislation, are all authored by Democrats. The chamber has always been a lobbying organization, but it has gotten so bad that the Chamber seems to have devolved into little more than just one more fear-mongering Republican Party front group.
The “job killers” on this list are any laws that protect consumers, reduce energy use, require worker protections or anything else that might hinder a very few corporate executives from reeling in another several-hundred-million dollars a year. The jobs that are “killed” are those of lobbyists for the energy industry.
The first group on the “job killer” list is bills that ask for any kind of energy or water conservation or environmental standards for new housing construction. For example, AB 1085. The bill describes itself as undating,

“building design and construction standards and energy conservation standards for new residential and nonresidential buildings to reduce wasteful, uneconomic, inefficient, or unnecessary consumption of energy.”

But the Chamber’s job-killer list says this

Substantially increases the cost of housing and development in California by implementing significant energy efficiency measures

Now, think about this — if it costs less to heat and cool your house, this saves you money. If you want to add energy-saving technology like solar electric or water-heating on your house this creates good jobs. Maybe Exxon won’t benefit as much from this as the new, upcoming solar industry, but heck, the solar companies aren’t coughing up the big bucks and providing the good jobs to the Chamber of Commerce’s lobbyists!
The next group of “job killers” is “workplace mandates” like paid sick leave for employees, disability pay for on-the-job injuries or providing California’s citizens with health insurance.
Ah yes, the money businesses pay out to provide sick leave and disability pay for those pesky employees “kills jobs.” They could hire so many more people if they didn’t have to actually pay them and keep them from getting injured! This is one of the oldest arguments in the books. Slaves are always cheaper. But why do we have an economy if not to provide US with good jobs and other benefits? Do we have an economy so a very few corporate CEOs get all the money and benefits, or do we have an economy so the people can also get good pay and benefits and safe working conditions? The evidence (this, for example) is clear that good wages and benefits do not hurt jobs or the economy.
Then there are “economic development barriers” like asking online retailers to collect the same sales taxes that you local business owner collects, asking the wealthy to help pay for our schools, raising fire standards in high-risk fire areas and protecting our environment. I guess the online retailers must be paying the Chamber more this year than the retailers who have to actually rent storefronts and pay wages in your town. I can’t think of any other reason why SOME retailers should collect sales taxes and others should be exempt. Doesn’t this change the playing field waaayyy in favor of online retailers and harm the prospects of businesses that actually set up in our local communities? God forbid we ask them to help pay for our schools and police and fire protection!
This “job killer: list is nothing more than the use of fear to scare us into allowing a few rich corporations to have their way. By saying that protecting workers or the environment might “cost jobs” they are trying to make us afraid to ask these big corporations to live up to their responsibilities to our communities. How long will we let these lobbyists make us afraid?

Will California’s leader lead in 2008?

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As the post-mortems continue to characterize the year just past and prognosticators speculate on what will be the year to come, it is clear that California is in for a bumpy ride over the next several months, if not years. With a projected $14 Billion short-fall (with many estimating the number may reach much higher), there is no question that the times call for some courageous leadership. But in today’s political world, where cynics and superficial pundits abound, it is difficult for real leadership to emerge and be given the space to articulate and implement that necessary vision, courage and know-how to make the necessary changes we desperately seek and need.
Commentators proclaim that little was accomplished in the year past—no major health care reform, no real water policy emerged to deal with our state’s chronic but moving toward acute problem, little real movement to develop a massive but necessary investment in transportation infrastructure, including our roads, bridges, ports or public transit, sewer systems, schools, etc. The bottom line is: we haven’t seriously or effectively addressed these needs. Our massive prison system is crumbling under its own weight, while federal judges determine whether we are complying with basic legal and human rights while we warehouse more and more people and spend greater and more scarce resources in doing so.
There are many who study our state’s political institutions and systems and declare the state ungovernable, observing that we are too dependent on special interests who fund campaigns; suffer from public initiatives generated from out-of-state business or ideological interests who are using our state as a guinea-pig; a tax system that is arcane and heavily-weighted in one direction or another. Also factored in is simply the massiveness of our state, with one out of every eight Americans living within our borders. So where is the leadership to deal with all this?

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Yes, but how do they do it with a straight face?

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The fact that the U.S. EPA refused to grant California a waiver so we can initiate our own air emissions standards is really no surprise to anyone who has watched this administration ignore science, our legal system, common sense and the Constitution. Whether waterboarding, abstinence only education, refusing to fund “No Child Left Behind”, illegally issuing wire taps without court order, or refusing to honor validly issued subpoena from Congress (to name only a very few of this administration’s scofflaw attitude), it is the audacity and mendacity that is so astonishing. It makes one wonder whether the right-wing extremist P.R. firms have a class in how to lie with a straight face, perhaps calling it something like “How stupid do we think the American people really are?”
The chutzpah is endless—with the President today in his own press conference exemplifying it with astonishing ease. But the lack of embarassment or apology is what really takes the cake. And when EPA Administrator Stephen Johnson claimed that the reason for the waiver denials is that and I quote here: “The Bush administration is moving forward with a clear national solution, not a confusing patchwork of state rules.” , that really takes the cake.
A clear national solution??? Nothing clear about said solution. Nothing national about it. And in fact, no solution identified either. Besides which, Bush doesn’t even believe in global warming. Is it a “national solution” of denial or just plain old deception that this administration is trying to foist on a not-so-unsuspecting public?

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Random Thoughts for a mid-December Day

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With the holidays coming (and going) fast and furiously, there is little time for deep reflection. Holiday card lists needing to be updated, cards ordered, written and sent, presents to be purchased so that the economy can stay afloat (while teetering nonetheless), end-of-year commitments met, etc. But the political machinations do not stop, the news is filled with portends of difficult days ahead and questions just seem to rise from the frenzy of the “holiday season”
So here are a few of my random thoughts and ruminations. Comments, observations and explanations are welcomed:
The Budget mess:
Why is it we knee-jerk into across-the-board program cuts before asking whether the programs we’ve been funding have been successful? We have the Governor calling for huge cuts from every agency and program to address the fiscal down-turn of the state caused by questionable business practices and inadequate oversight (think the sub-prime market fiasco and our state’s funding mechanisms). Yet there is no effort to call for accountability or analysis of whether programs and agencies have met their goals or achieved what we expect them to be doing on behalf of the people. In other words, no measurements of what they’re doing, why they’re doing it and whether it’s working at all. Just a simplistic and likely destructive directive to cut, period.
Of course, if the goal is to emasculate the system, this is the way to go. Where we’ve made progress, let’s stop it in its tracks; where we’ve got too much in one area and not enough in another, why bother to try to become more efficient and more effective? But doesn’t it make better sense to redistribute, reorganize or simply terminate programs that aren’t working?
Wouldn’t this also be a good time to call for a complete review and potential overhaul of our funding system in California? Why is it when the national economy tanks, it hits our state’s fiscal health the hardest? Could it be we are too heavily dependent on a tax base that focuses on the good times and doesn’t have consistency to cushion the state when the economy slows?
The “Holidays”.
When did “giving” turn into “spending”? What happened to the holiday spirit when we measured progress by spreading good cheer and good will instead of credit card debt and plastic gift cards to just about any commercial enterprise on the planet?

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The Line at the DMV

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Two previous posts explored the outline of the California state budget, and the process by which the budget is developed and passed into law. But these overviews don’t directly touch most Californians in their daily lives. To begin to connect the budget and the budget process with the concerns of regular Californians let’s look at one department that almost every adult in California encounters regularly: the dreaded Department of Motor Vehicles, commonly known as the DMV.
According to the DMV website, the department:

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