Creekside Chat

Comments too controversial for the San Francisco Chronicle comment section

2011-12-08T13:33:00.001-08:00

The following comments were apparently too controversial for the San Francisco Chronicle comment section.

The President's Kansas speech was filled with popular platitudes and pandering ideals. It's really too bad that this President doesn't live up to his proclaimed ideals.

The President said, "I believe that this country succeeds when everyone gets a fair shot, when everyone does their fair share, when everyone plays by the same rules." Who doesn't agree with this? However, let's delve a bit deeper.

The President often rails against those "corporate-jet flying" "millionaires and billionaires" who don't pay their "fair share." Never once has he defined what he means by "fair share." Here in California, the 2% of "millionaires and billionaires" making $300,000 or more pay over 50% of all state income taxes, single-handedly fund quarter of the entire General Fund, and pay an effective tax rate eight time higher than the majority of Californians. I wish the President could actual define what their "fair share" should be. I'm nowhere close to making $300,000 but I see the mistake in eating the Golden Goose for dinner.

It's particularly ironic that the President proposes that "everyone plays by the same rules." Later in the speech, the President proclaimed, "Inequality also distorts our democracy. It gives an outsized voice to the few who can afford high-priced lobbyists and unlimited campaign contributions, and it runs the risk of selling out our democracy to the highest bidder."

How very ironic. The President is essentially saying "Do as I say, not as I do." Never mind that the President is THE largest recipient of campaign cash from the securities and investment industry.

Let's look at a few of the President's advisors and partners.

Jeffrey Immelt, President Obama's Jobs Czar. CEO of General Electric, who paid zero federal income taxes despite billions in revenue and after receiving a federal bailout. If you have the money for Washington lobbyists, you can reap huge returns on your investment through crony capitalism. This is essentially GE's strategy. It beats actually having to innovate and take the risks of developing a product that people actually want. However, if you earn your money the old-fashioned way by competing in the free-market, you are subject to the full impact of the world's highest corporate taxes.

Jon Corzine, President Obama's Wall Street financier on Wall Street and trusted economic advisor. Former New Jersey Senator and Governor. Former CEO of Goldman-Sachs. Former CEO of MF Global, who cannot account for $1,200,000,000 in client money. Naturally, the President criticized previous Administrations whose "Regulators who were supposed to warn us about the dangers of all this, but looked the other way or didn't have the authority to look at all." Apparently the President missed the giant plank stuck in his own Administration's eye. I'll bet we all feel safer after the so-called Dodd-Frank financial reform bill, right? Our "too-big-to-fail" banks are even bigger and MORE consolidated.

How about something closer to home. Anybody remember Solyndra? You cannot miss the giant sign off 880. Here's a "green jobs" program that created a lot of "green" for some of President Obama's major contributors. There's George Kaiser, a billionaire from Oklahoma who raised up to $100,000 for the President and visited the White House on at least four occasions. The Solyndra loan guarantee was unusual in that it put the investors before taxpayers in case of bankruptcy. Oops, there goes another $535 million dollars.

Obviously, the President is against free-market capitalism because he and his cronies benefit so much from crony capitalism.

I'm sorry, but actions speak much louder than words. The President is a PHONEY! Don't be fooled by his pretty words and useless rhetoric.

Transcript of the President's speech

THE PRESIDENT: Well, I want to start by thanking a fewfolks who’ve joined us today. We’ve got the mayor of Osawatomie, PhilDudley is here. (Applause.) We have your superintendent Gary Frenchin the house. (Applause.) And we have the principal of OsawatomieHigh, Doug Chisam. (Applause.) And I have brought your formergovernor, who is doing now an outstanding job as Secretary of Health and HumanServices – Kathleen Sebelius isin the house. (Applause.) We love Kathleen.

Well, it is greatto be back in the state of Tex — (laughter) — state of Kansas. I wasgiving Bill Self a hard time, he was here a while back. As many of youknow, I have roots here. (Applause.) I’m sure you’re all familiarwith the Obamas of Osawatomie. (Laughter.) Actually, I like to saythat I got my name from my father, but I got my accent — and my values — frommy mother. (Applause.) She was born in Wichita. (Applause.) Her mother grew up in Augusta. Her father was from ElDorado. So my Kansas roots run deep.

My grandparentsserved during World War II. He was a soldier in Patton’s Army; she was a worker on a bomber assemblyline. And together, they shared the optimism of a nation that triumphedover the Great Depression and over fascism. They believed in an Americawhere hard work paid off, and responsibility was rewarded, and anyone couldmake it if they tried — no matter who you were, no matter where you came from,no matter how you started out. (Applause.)

And these valuesgave rise to the largest middle class and the strongest economy that the worldhas ever known. It was here in America that the most productive workers,the most innovative companies turned out the best products on Earth. Andyou know what? Every American shared in that pride and in that success —from those in the executive suites to those in middle management to those onthe factory floor. (Applause.) So you could have some confidencethat if you gave it your all, you’d take enough home to raise your family andsend your kids to school and have your health care covered, put a little awayfor retirement.

Today we arestill home to the world’s most productive workers. We’re still home tothe world’s most innovative companies. But for most Americans, the basicbargain that made this country great has eroded. Long before therecession hit, hard work stopped paying off for too many people. Fewerand fewer of the folks who contributed to the success of our economy actuallybenefited from that success. Those at the very top grew wealthier fromtheir incomes and their investments — wealthier than ever before. Buteverybody else struggled with costs that were growing and paychecks thatweren’t — and too many families found themselves racking up more and more debtjust to keep up.

Now, for manyyears, credit cards and home equity loans papered over this harshreality. But in 2008, the house of cards collapsed. We all know thestory by now: Mortgages sold to people who couldn’t afford them, or evensometimes understand them. Banks and investors allowed to keep packagingthe risk and selling it off. Huge bets — and huge bonuses — made withother people’s money on the line. Regulators who were supposed to warn usabout the dangers of all this, but looked the other way or didn’t have theauthority to look at all.

It waswrong. It combined the breathtaking greed of a few with irresponsibilityall across the system. And it plunged our economy and the world into acrisis from which we’re still fighting to recover. It claimed the jobsand the homes and the basic security of millions of people — innocent,hardworking Americans who had met their responsibilities but were still leftholding the bag.

And ever since,there’s been a raging debate over the best way to restore growth andprosperity, restore balance, restore fairness. Throughout the country,it’s sparked protests and political movements — from the tea party to thepeople who’ve been occupying the streets of New York and other cities. It’s left Washington in a near-constant state of gridlock. It’s been thetopic of heated and sometimes colorful discussion among the men and womenrunning for president.

(Laughter.)

But, Osawatomie,this is not just another political debate. This is the defining issue of ourtime. This is a make-or-break moment for the middle class, and for allthose who are fighting to get into the middle class. Because what’s atstake is whether this will be a country where working people can earn enough toraise a family, build a modest savings, own a home, secure their retirement.

Now, in the midstof this debate, there are some who seem to be suffering from a kind ofcollective amnesia. After all that’s happened, after the worst economic crisis,the worst financial crisis since the Great Depression, they want to return tothe same practices that got us into this mess. In fact, they want to goback to the same policies that stacked the deck against middle-class Americansfor way too many years. And their philosophy is simple: We arebetter off when everybody is left to fend for themselves and play by their ownrules.

I am here to saythey are wrong. (Applause.) I’m here in Kansas to reaffirm my deepconviction that we’re greater together than we are on our own. I believethat this country succeeds when everyone gets a fair shot, when everyone doestheir fair share, when everyone plays by the same rules. (Applause.) These aren’t Democratic values or Republican values. These aren’t 1 percent values or 99 percent values. They’re Americanvalues. And we have to reclaim them. (Applause.)

You see, thisisn’t the first time America has faced this choice. At the turn of thelast century, when a nation of farmers was transitioning to become the world’sindustrial giant, we had to decide: Would we settle for a country wheremost of the new railroads and factories were being controlled by a few giantmonopolies that kept prices high and wages low? Would we allow ourcitizens and even our children to work ungodly hours in conditions that wereunsafe and unsanitary? Would we restrict education to the privilegedfew? Because there were people who thought massive inequality andexploitation of people was just the price you pay for progress.

Theodore Roosevelt disagreed. He was the Republican son of a wealthy family. He praised what the titansof industry had done to create jobs and grow the economy. He believedthen what we know is true today, that the free market is the greatest force foreconomic progress in human history. It’s led to a prosperity and astandard of living unmatched by the rest of the world.

But Rooseveltalso knew that the free market has never been a free license to take whateveryou can from whomever you can. (Applause.) He understood the freemarket only works when there are rules of the road that ensure competition isfair and open and honest. And so he busted up monopolies, forcing thosecompanies to compete for consumers with better services and betterprices. And today, they still must. He fought to make surebusinesses couldn’t profit by exploiting children or selling food or medicinethat wasn’t safe. And today, they still can’t.

And in 1910,Teddy Roosevelt came here to Osawatomie and he laid out his vision for what hecalled a New Nationalism. “Our country,” he said, “…means nothing unlessit means the triumph of a real democracy…of an economic system under which eachman shall be guaranteed the opportunity to show the best that there is inhim.” (Applause.)

Now, for this,Roosevelt was called a radical. He was called a socialist — (laughter) —even a communist. But today, we are a richer nation and a strongerdemocracy because of what he fought for in his last campaign: aneight-hour work day and a minimum wage for women — (applause) — insurance forthe unemployed and for the elderly, and those with disabilities; politicalreform and a progressive income tax. (Applause.)

Today, over 100years later, our economy has gone through another transformation. Overthe last few decades, huge advances in technology have allowed businesses to domore with less, and it’s made it easier for them to set up shop and hireworkers anywhere they want in the world. And many of you know firsthandthe painful disruptions this has caused for a lot of Americans.

Factories wherepeople thought they would retire suddenly picked up and went overseas, whereworkers were cheaper. Steel mills that needed 100 — or 1,000 employeesare now able to do the same work with 100 employees, so layoffs too oftenbecame permanent, not just a temporary part of the business cycle. Andthese changes didn’t just affect blue-collar workers. If you were a bankteller or a phone operator or a travel agent, you saw many in your professionreplaced by ATMs and the Internet.

Today, evenhigher-skilled jobs, like accountants and middle management can be outsourcedto countries like China or India. And if you’re somebody whose job can be done cheaper by a computer or someonein another country, you don’t have a lot of leverage with your employer when itcomes to asking for better wages or better benefits, especially since fewerAmericans today are part of a union.

Now, just asthere was in Teddy Roosevelt’s time, there is a certain crowd in Washington who,for the last few decades, have said, let’s respond to this economic challengewith the same old tune. “The market will take care of everything,” theytell us. If we just cut more regulations and cut more taxes — especiallyfor the wealthy — our economy will grow stronger. Sure, they say, therewill be winners and losers. But if the winners do really well, then jobsand prosperity will eventually trickle down to everybody else. And, theyargue, even if prosperity doesn’t trickle down, well, that’s the price ofliberty.

Now, it’s asimple theory. And we have to admit, it’s one that speaks to our ruggedindividualism and our healthy skepticism of too much government. That’sin America’s DNA. And that theory fits well on a bumper sticker. (Laughter.) But here’s the problem: It doesn’t work. It hasnever worked. (Applause.) It didn’t work when it was tried in thedecade before the Great Depression. It’s not what led to the incrediblepostwar booms of the ‘50s and ‘60s. And it didn’t work when we tried itduring the last decade. (Applause.) I mean, understand, it’s not asif we haven’t tried this theory.

Remember in thoseyears, in 2001 and 2003, Congress passed two of the most expensive tax cuts forthe wealthy in history. And what did it get us? The slowest jobgrowth in half a century. Massive deficits that have made it much harderto pay for the investments that built this country and provided the basicsecurity that helped millions of Americans reach and stay in the middle class —things like education and infrastructure, science and technology, Medicare and SocialSecurity.

Remember that inthose same years, thanks to some of the same folks who are now runningCongress, we had weak regulation, we had little oversight, and what did it getus? Insurance companies that jacked up people’s premiums with impunityand denied care to patients who were sick, mortgage lenders that trickedfamilies into buying homes they couldn’t afford, a financial sector whereirresponsibility and lack of basic oversight nearly destroyed our entireeconomy.

We simply cannotreturn to this brand of “you’re on your own” economics if we’re serious aboutrebuilding the middle class in this country. (Applause.) We knowthat it doesn’t result in a strong economy. It results in an economy thatinvests too little in its people and in its future. We know it doesn’tresult in a prosperity that trickles down. It results in a prosperitythat’s enjoyed by fewer and fewer of our citizens.

Look at thestatistics. In the last few decades, the average income of the top 1percent has gone up by more than 250 percent to $1.2 million per year. I’m not talking about millionaires, people who have a million dollars. I’m saying people who make a million dollars every single year. For thetop one hundredth of 1 percent, the average income is now $27 million peryear. The typical CEO who used to earn about 30 times more than his orher worker now earns 110 times more. And yet, over the last decade theincomes of most Americans have actually fallen by about 6 percent.

Now, this kind ofinequality — a level that we haven’t seen since the Great Depression — hurts usall. When middle-class families can no longer afford to buy the goods andservices that businesses are selling, when people are slipping out of themiddle class, it drags down the entire economy from top to bottom. America was built on the idea of broad-based prosperity, of strong consumersall across the country. That’s why a CEO like Henry Ford made ithis mission to pay his workers enough so that they could buy the cars hemade. It’s also why a recent study showed that countries with lessinequality tend to have stronger and steadier economic growth over the longrun.

Inequalityalso distorts our democracy. It gives an outsized voice to the few whocan afford high-priced lobbyists and unlimited campaign contributions, and itruns the risk of selling out our democracy to the highest bidder. (Applause.) It leaves everyone else rightly suspicious that the system inWashington is rigged against them, that our elected representatives aren’tlooking out for the interests of most Americans.

But there’s aneven more fundamental issue at stake. This kind of gaping inequalitygives lie to the promise that’s at the very heart of America: that thisis a place where you can make it if you try. We tell people — we tell ourkids — that in this country, even if you’re born with nothing, work hard andyou can get into the middle class. We tell them that your children willhave a chance to do even better than you do. That’s why immigrants fromaround the world historically have flocked to our shores.

And yet, over thelast few decades, the rungs on the ladder of opportunity have grown farther andfarther apart, and the middle class has shrunk. You know, a few yearsafter World War II, a child who was born into poverty had a slightly betterthan 50-50 chance of becoming middle class as an adult. By 1980, thatchance had fallen to around 40 percent. And if the trend of risinginequality over the last few decades continues, it’s estimated that a childborn today will only have a one-in-three chance of making it to the middleclass — 33 percent.

It’sheartbreaking enough that there are millions of working families in thiscountry who are now forced to take their children to food banks for a decentmeal. But the idea that those children might not have a chance to climbout of that situation and back into the middle class, no matter how hard theywork? That’s inexcusable. It is wrong. (Applause.) Itflies in the face of everything that we stand for. (Applause.)

Now, fortunately,that’s not a future that we have to accept, because there’s another view abouthow we build a strong middle class in this country — a view that’s truer to ourhistory, a vision that’s been embraced in the past by people of both partiesfor more than 200 years.

It’s not a viewthat we should somehow turn back technology or put up walls aroundAmerica. It’s not a view that says we should punish profit or success orpretend that government knows how to fix all of society’s problems. It isa view that says in America we are greater together — when everyone engages infair play and everybody gets a fair shot and everybody does their fair share. (Applause.)

So what does thatmean for restoring middle-class security in today’s economy? Well, itstarts by making sure that everyone in America gets a fair shot atsuccess. The truth is we’ll never be able to compete with other countrieswhen it comes to who’s best at letting their businesses pay the lowest wages,who’s best at busting unions, who’s best at letting companies pollute as muchas they want. That’s a race to the bottom that we can’t win, and weshouldn’t want to win that race. (Applause.) Those countries don’thave a strong middle class. They don’t have our standard of living.

The race we wantto win, the race we can win is a race to the top — the race for good jobs thatpay well and offer middle-class security. Businesses will create thosejobs in countries with the highest-skilled, highest-educated workers, the mostadvanced transportation and communication, the strongest commitment to researchand technology.

The world isshifting to an innovation economy and nobody does innovation better thanAmerica. Nobody does it better. (Applause.) No one has bettercolleges. Nobody has better universities. Nobody has a greaterdiversity of talent and ingenuity. No one’s workers or entrepreneurs aremore driven or more daring. The things that have always been ourstrengths match up perfectly with the demands of the moment.

But we need tomeet the moment. We’ve got to up our game. We need to remember thatwe can only do that together. It starts by making education a nationalmission — a national mission. (Applause.) Government andbusinesses, parents and citizens. In this economy, a higher education isthe surest route to the middle class. The unemployment rate for Americanswith a college degree or more is about half the national average. Andtheir incomes are twice as high as those who don’t have a high schooldiploma. Which means we shouldn’t be laying off good teachers right now —we should be hiring them. (Applause.) We shouldn’t be expectingless of our schools –- we should be demanding more. (Applause.) Weshouldn’t be making it harder to afford college — we should be a country whereeveryone has a chance to go and doesn’t rack up $100,000 of debt just becausethey went. (Applause.)

In today’sinnovation economy, we also need a world-class commitment to science andresearch, the next generation of high-tech manufacturing. Our factoriesand our workers shouldn’t be idle. We should be giving people the chanceto get new skills and training at community colleges so they can learn how tomake wind turbines and semiconductors and high-powered batteries. And bythe way, if we don’t have an economy that’s built on bubbles and financialspeculation, our best and brightest won’t all gravitate towards careers inbanking and finance. (Applause.) Because if we want aneconomy that’s built to last, we need more of those young people in science andengineering. (Applause.) This country should not be known for baddebt and phony profits. We should be known for creating and selling productsall around the world that are stamped with three proud words: Made inAmerica. (Applause.)

Today,manufacturers and other companies are setting up shop in the places with thebest infrastructure to ship their products, move their workers, communicatewith the rest of the world. And that’s why the over 1 millionconstruction workers who lost their jobs when the housing market collapsed,they shouldn’t be sitting at home with nothing to do. They should berebuilding our roads and our bridges, laying down faster railroads andbroadband, modernizing our schools — (applause) — all the things othercountries are already doing to attract good jobs and businesses to theirshores.

Yes, business,and not government, will always be the primary generator of good jobs withincomes that lift people into the middle class and keep them there. Butas a nation, we’ve always come together, through our government, to help createthe conditions where both workers and businesses can succeed. (Applause.) And historically, that hasn’t been a partisan idea. FranklinRoosevelt worked with Democrats and Republicans to giveveterans of World War II — including my grandfather, Stanley Dunham — thechance to go to college on the G.I. Bill. It was a Republican President,Dwight Eisenhower, a proud son of Kansas — (applause) — who started theInterstate Highway System, and doubled down on science and research to stayahead of the Soviets.

Of course, thoseproductive investments cost money. They’re not free. And so we’vealso paid for these investments by asking everybody to do their fairshare. Look, if we had unlimited resources, no one would ever have to payany taxes and we would never have to cut any spending. But we don’t haveunlimited resources. And so we have to set priorities. If we want astrong middle class, then our tax code must reflect our values. We haveto make choices.

Today that choiceis very clear. To reduce our deficit, I’ve already signed nearly $1trillion of spending cuts into law and I’ve proposed trillions more, includingreforms that would lower the cost of Medicare and Medicaid. (Applause.)

But in order to structurallyclose the deficit, get our fiscal house in order, we have to decide what ourpriorities are. Now, most immediately, short term, we need to extend a payrolltax cut that’s set to expire at the end of this month. (Applause.) If we don’t do that, 160 million Americans, including most of the people here,will see their taxes go up by an average of $1,000 starting in January and itwould badly weaken our recovery. That’s the short term.

In the long term,we have to rethink our tax system more fundamentally. We have to askourselves: Do we want to make the investments we need in things likeeducation and research and high-tech manufacturing — all those things thathelped make us an economic superpower? Or do we want to keep in place thetax breaks for the wealthiest Americans in our country? Because we can’tafford to do both. That is not politics. That’s just math. (Laughter and applause.)

Now, so far, mostof my Republican friends in Washington have refused under any circumstance toask the wealthiest Americans to go to the same tax rate they were paying whenBill Clinton waspresident. So let’s just do a trip down memory lane here.

Keep in mind,when President Clinton first proposed these tax increases, folks in Congresspredicted they would kill jobs and lead to another recession. Instead,our economy created nearly 23 million jobs and we eliminated the deficit. (Applause.) Today, the wealthiest Americans are paying the lowest taxesin over half a century. This isn’t like in the early ‘50s, when the toptax rate was over 90 percent. This isn’t even like the early ‘80s, whenthe top tax rate was about 70 percent. Under President Clinton, the toprate was only about 39 percent. Today, thanks to loopholes and shelters,a quarter of all millionaires now pay lower tax rates than millions of you,millions of middle-class families. Some billionaires have a tax rate aslow as 1 percent. One percent.

That is theheight of unfairness. It is wrong. (Applause.) It’s wrongthat in the United States of America, a teacher or a nurse or a constructionworker, maybe earns $50,000 a year, should pay a higher tax rate than somebodyraking in $50 million. (Applause.) It’s wrong for Warren Buffett‘s secretaryto pay a higher tax rate than Warren Buffett. (Applause.) And bythe way, Warren Buffett agrees with me. (Laughter.) So do mostAmericans — Democrats, independents and Republicans. And I know that manyof our wealthiest citizens would agree to contribute a little more if it meantreducing the deficit and strengthening the economy that made their successpossible.

This isn’t aboutclass warfare. This is about the nation’s welfare. It’s aboutmaking choices that benefit not just the people who’ve done fantastically wellover the last few decades, but that benefits the middle class, and thosefighting to get into the middle class, and the economy as a whole.

Finally, a strongmiddle class can only exist in an economy where everyone plays by the samerules, from Wall Street to Main Street. (Applause.) As infuriatingas it was for all of us, we rescued our major banks from collapse, not onlybecause a full-blown financial meltdown would have sent us into a secondDepression, but because we need a strong, healthy financial sector in thiscountry.

But part of thedeal was that we wouldn’t go back to business as usual. And that’s whylast year we put in place new rules of the road that refocus the financialsector on what should be their core purpose: getting capital to theentrepreneurs with the best ideas, and financing millions of families who wantto buy a home or send their kids to college.

Now, we’re notall the way there yet, and the banks are fighting us every inch of theway. But already, some of these reforms are being implemented.

If you’re a bigbank or risky financial institution, you now have to write out a “living will”that details exactly how you’ll pay the bills if you fail, so that taxpayersare never again on the hook for Wall Street’s mistakes. (Applause.) There are also limits on the size of banks and new abilities for regulators todismantle a firm that is going under. The new law bans banks from makingrisky bets with their customers’ deposits, and it takes away big bonuses andpaydays from failed CEOs, while giving shareholders a say on executivesalaries.

This is the lawthat we passed. We are in the process of implementing it now. Allof this is being put in place as we speak. Now, unless you’re a financialinstitution whose business model is built on breaking the law, cheatingconsumers and making risky bets that could damage the entire economy, youshould have nothing to fear from these new rules.

Some of you mayknow, my grandmother worked as a banker for most of her life — worked her wayup, started as a secretary, ended up being a vice president of a bank. And I know from her, and I know from all the people that I’ve come in contactwith, that the vast majority of bankers and financial service professionals,they want to do right by their customers. They want to have rules inplace that don’t put them at a disadvantage for doing the right thing. And yet, Republicans in Congress are fighting as hard as they can to make surethat these rules aren’t enforced.

I’ll giveyou a specific example. For the first time in history, the reforms thatwe passed put in place a consumer watchdog who is charged with protectingeveryday Americans from being taken advantage of by mortgage lenders or paydaylenders or debt collectors. And the man we nominated for the post,Richard Cordray, is a former attorney general of Ohio who has the support ofmost attorney generals, both Democrat and Republican, throughout thecountry. Nobody claims he’s not qualified.

But the Republicansin the Senate refuse toconfirm him for the job; they refuse to let him do his job. Why? Does anybody here think that the problem that led to our financial crisis wastoo much oversight of mortgage lenders or debt collectors?

AUDIENCE: No!

THEPRESIDENT: Of course not. Every day we go without a consumerwatchdog is another day when a student, or a senior citizen, or a member of ourArmed Forces — because they are very vulnerable to some of this stuff — couldbe tricked into a loan that they can’t afford — something that happens all thetime. And the fact is that financial institutions have plenty oflobbyists looking out for their interests. Consumers deserve to havesomeone whose job it is to look out for them. (Applause.) And Iintend to make sure they do. (Applause.) And I want you to hear me,Kansas: I will veto any effort to delay or defund or dismantle the newrules that we put in place. (Applause.)

We shouldn’t beweakening oversight and accountability. We should be strengtheningoversight and accountability. I’ll give you another example. Toooften, we’ve seen Wall Street firms violating major anti-fraud laws because thepenalties are too weak and there’s no price for being a repeat offender. No more. I’ll be calling for legislation that makes those penalties countso that firms don’t see punishment for breaking the law as just the price of doingbusiness. (Applause.)

The fact is thiscrisis has left a huge deficit of trust between Main Street and WallStreet. And major banks that were rescued by the taxpayers have anobligation to go the extra mile in helping to close that deficit oftrust. At minimum, they should be remedying past mortgage abuses that ledto the financial crisis. They should be working to keep responsiblehomeowners in their home. We’re going to keep pushing them to providemore time for unemployed homeowners to look for work without having to worryabout immediately losing their house.

The big banksshould increase access to refinancing opportunities to borrowers who haven’tyet benefited from historically low interest rates. And the big banksshould recognize that precisely because these steps are in the interest ofmiddle-class families and the broader economy, it will also be in the banks’own long-term financial interest. What will be good for consumers overthe long term will be good for the banks. (Applause.)

Investing in thingslike education that give everybody a chance to succeed. A tax code thatmakes sure everybody pays their fair share. And laws that make sureeverybody follows the rules. That’s what will transform oureconomy. That’s what will grow our middle class again. In the end,rebuilding this economy based on fair play, a fair shot, and a fair share willrequire all of us to see that we have a stake in each other’s success. And it will require all of us to take some responsibility.

It will requireparents to get more involved in their children’s education. It willrequire students to study harder. (Applause.) It will require someworkers to start studying all over again. It will require greaterresponsibility from homeowners not to take out mortgages they can’tafford. They need to remember that if something seems too good to betrue, it probably is.

It will requirethose of us in public service to make government more efficient and moreeffective, more consumer-friendly, more responsive to people’s needs. That’s why we’re cutting programs that we don’t need to pay for those wedo. (Applause.) That’s why we’ve made hundreds of regulatoryreforms that will save businesses billions of dollars. That’s why we’renot just throwing money at education, we’re challenging schools to come up withthe most innovative reforms and the best results.
And it will require American business leaders to understand that theirobligations don’t just end with their shareholders. Andy Grove, thelegendary former CEO of Intel, put it best. He said, “There is another obligation I feel personally, given that everythingI’ve achieved in my career, and a lot of what Intel has achieved…were madepossible by a climate of democracy, an economic climate and investment climateprovided by the United States.”

This broaderobligation can take many forms. At a time when the cost of hiring workersin China is rising rapidly, it should mean more CEOs deciding that it’s time tobring jobs back to the United States — (applause) — not just because it’s goodfor business, but because it’s good for the country that made their businessand their personal success possible. (Applause.)

I think about theBig Three auto companies who, during recent negotiations, agreed to create morejobs and cars here in America, and then decided to give bonuses not just totheir executives, but to all their employees, so that everyone was invested inthe company’s success. (Applause.)

I think about acompany based in Warroad, Minnesota. It’s called Marvin Windows andDoors. During the recession, Marvin’s competitors closed dozens ofplants, let hundreds of workers go. But Marvin’s did not lay off a singleone of their 4,000 or so employees — not one. In fact, they’ve only laidoff workers once in over a hundred years. Mr. Marvin’s grandfather evenkept his eight employees during the Great Depression.

Now, at Marvin’swhen times get tough, the workers agree to give up some perks and some pay, andso do the owners. As one owner said, “You can’t grow if you’re cuttingyour lifeblood — and that’s the skills and experience your workforcedelivers.” (Applause.) For the CEO of Marvin’s, it’s about thecommunity. He said, “These are people we went to school with. We goto church with them. We see them in the same restaurants. Indeed, alot of us have married local girls and boys. We could be anywhere, but weare in Warroad.”

That’s how Americawas built. That’s why we’re the greatest nation on Earth. That’swhat our greatest companies understand. Our success has never just beenabout survival of the fittest. It’s about building a nation where we’reall better off. We pull together. We pitch in. We do ourpart. We believe that hard work will pay off, that responsibility will berewarded, and that our children will inherit a nation where those values liveon. (Applause.)

And it is thatbelief that rallied thousands of Americans to Osawatomie — (applause) — maybeeven some of your ancestors — on a rain-soaked day more than a centuryago. By train, by wagon, on buggy, bicycle, on foot, they came to hearthe vision of a man who loved this country and was determined to perfect it.

“We are allAmericans,” Teddy Roosevelt told them that day. “Our common interests are asbroad as the continent.” In the final years of his life, Roosevelt took thatsame message all across this country, from tiny Osawatomie to the heart of NewYork City, believing that no matter where he went, no matter who he was talkingto, everybody would benefit from a country in which everyone gets a fairchance. (Applause.)

And well into ourthird century as a nation, we have grown and we’ve changed in many ways sinceRoosevelt’s time. The world is faster and the playing field is larger andthe challenges are more complex. But what hasn’t changed — what can neverchange — are the values that got us this far. We still have a stake ineach other’s success. We still believe that this should be a place whereyou can make it if you try. And we still believe, in the words of the manwho called for a New Nationalism all those years ago, “The fundamental rule ofour national life,” he said, “the rule which underlies all others — is that, onthe whole, and in the long run, we shall go up or down together.” And Ibelieve America is on the way up. (Applause.)

Thank you. God bless you. God bless the United States of America.

Examining Governor Jerry Brown's Proposed Tax Increases

2011-12-06T13:48:00.001-08:00

It looks like California Governor Jerry Brown is out with his proposed "fix" for California's budget shortfall. Turning to his exhaustive play book of--how shall I say this politely?--one play, the Governor proposes tax hikes. Wow! How originally brilliant! I would never have thought of THAT!

First, some background information. California already has the nation's second-highest marginal tax rate--second only to Oregon and Hawaii, tied for first at 11%.

To fix the multi-billion dollar shortfall, Governor Brown proposes creating new state tax brackets and to increase taxes on those brackets by up to 21.5%. The Governor's proposal would add the following new brackets. The dollar brackets shown are for single tax filers; brackets for married filing jointly are doubled.

Tax rates for those making less than $250,000 remain the same. California would keep it's current 9.3% rate for those making more than $47,000.
Income between $250,000 and $300,000 are taxed at 10.3%, which is the same rate currently charged for those making more than $1,000,000.
Income between $300,000 and $500,000 are taxed at 10.8%.
Income between $500,000 and $1,000,000 are taxed at 11.3%, which exceeds the highest marginal tax rate from any other state in the nation.
Thanks to California's Proposition 63, those earning more than $1,000,000 are charged an extra 1% to fund mental health services--proving I guess that you must be INSANE to be a millionaire and have your tax residence in California.
Unlike the federal government and many of its economic competitors, California treats capital gains exactly like ordinary income and taxes capital gains at the maximum applicable tax rate. This means that California's budget greatly depends on stock market and real-estate returns on upper-income taxpayers. The result is a watershed of revenue in good times and a drought during downturns.

The following chart helps to better compare the increased tax rates against those of other states.

The Governor purposely did not increase tax rates on lower incomes, perhaps in a nod to tax fairness. After all, those making more than $300,000 only currently pay more than eight times more total tax and have an eight times higher average effective tax rate than the vast majority of other Californians. The only thing lacking from the 1.9% of taxpayers is the votes at the ballot box to prevent more exploitation by the majority.

Those in upper brackets not only pay a higher effective tax rate, they also obvious pay far more in absolute dollars. Those fortunate 42,517 taxpayers with incomes of $1 million or more paid an average of $304,553 in California income taxes with an effective tax rate of 8.97%.

In all fairness, all taxpayers, especially those at the lower-end of the income spectrum, will be hit by Governor Brown's proposed sales tax increase. California ALREADY has the nation's highest sales tax rate. Governor Brown will enshrine our first place finish by adding another 0.5% on top, not including the additional taxes charged by various California counties and cities. This amounts to a 6% increase over current tax law.

Governor Brown's tax increase proposal will likely be popular with the two biggest spenders in California politics, the California Teachers Association (CTA) and the California State Council of Service Employees (SEIU). Both are significant donors to the Governor's political party. Furthermore, even fellow Democrats acknowledge that Governor Brown must kowtow to the teacher's union.

The bulk of any tax revenues is earmarked for education, which is already one of the biggest recipients of taxpayer dollars.

The big questions remain. How will these proposed tax increases affect California's already damaged business climate--you know, the source for all that tax revenue. California currently ranks at or near the bottom of various surveys, from multiple independent sources, for multiple years.

California's poor business climate and high taxation resulted in a net migration out of California. According to the L.A. Times, the percentage of people from other U.S. states is the lowest it has been in a hundred years! Because California's tax revenues are so dependent on very few, high-income taxpayers, small changes in taxpayer population can have dramatic effects on tax revenues. Over 50% of income taxes come from less than 2% of the population.

Political columnist Dan Walters has a great summary message for those that oppose the tax increases.

Why should we pay more ...

when we already have one of the nation's highest tax burdens,

when the Legislature is handing out raises to its staff,

when politicians haven't curbed rapidly increasing pension costs,

when they're wasting billions on prisons,

when they've shunned a spending limit,

when they've squandered money on a hapless bullet train project and unworkable computer systems,

when they're spending tens of millions on illegal immigrants' college educations, and

most importantly – when the state is mired in recession and 2 million-plus are jobless?

Well said, Mr. Walters!

See also ...

Governor Jerry Brown: An Open Letter to the People of California (5-DEC-2011)
www.jerrybrown.org/sites/default/files/GovernorsLetter12_5_11-1.pdf
Governor Jerry Brown: The Schools and Local Public Safety Protection Act of 2012www.jerrybrown.org/sites/default/files/TheSchoolsandLocalPublicSafetyProtectionActof2012.pdf
Dan Walters: Jerry Brown's tax plan tries easy political routewww.sacbee.com/2011/12/07/4104882/dan-walters-jerry-browns-tax-plan.html
Soquel by the Creek: Who Pays Their "Fair Share" in California?soquelbythecreek.blogspot.com/2011/10/who-pays-their-fair-share-in-california.html
Soquel by the Creek: American Federation of Teachers: Part of the Solution or Part of the Problem?
soquelbythecreek.blogspot.com/2011/10/american-federation-of-teachers-part-of.html

Who is ReFund California?

2011-11-09T15:13:00.000-08:00

A new group called the ReFund California Coalition is actively organizing on California's university campuses as part of the Occupy Wall Street movement.

They're asking the University of California Regents, California State University Trustees and other political and corporate leaders to sign the Refund California Pledge.

The problem is NOT that California's taxes are too low. The problem is that California has a structural deficit that cannot be solved by raising taxes on a small percentage of taxpayers.

Never mind that California ALREADY has the nation's second highest marginal tax rate.

Never mind that the top wage earners ALREADY pay significantly higher effective income tax rates than the majority of other Californians. Never mind that California ALREADY treats capital gains just like ordinary income (part of the so-called "Buffett Test").

Never mind that the vast majority of California's income tax revenues (94%) comes from just 33% of taxpayers while the other 67% contribute just 6%.

Never mind that most of California's General Fund also comes from just 33% of taxpayers while the other 67% of taxpayers contributes just 3%. If unions understand one thing, it's the power of mobs.

Never mind that, for all of the class warfare rhetoric about "The 99%" and "The 1%", the top 1% of California taxpayers pays 42% of all income taxes, at over three times the average tax rate, but have less than 1% of the voting power.

Never mind that "The 1%" by themselves contribute 24% of California's entire General Fund.

Never mind that, despite all the budget cuts due to our smaller economy, education still receives the lion's share of revenue, as it should.

Their motives are probably clearer if you see the group's URL, www.makebankspaycalifornia.com, and some of the site images.

If the ReFund California wants to fight corruption in the U.S. financial system and its too cozy relationship with cronies in national and state government, then I'm with you. However, many of Refund California's strategies are seemingly misguided and counterproductive. City squares in Oakland, Sacramento, Los Angeles, and San Francisco are a LONG WAY from the seat of real power and corruption in Washington, D.C. Likewise California's campuses.

Who are the ReFund California Coalition? According the group's web site, ReFund California consists of the following organizations, many listed only by acronyms.

Let's explore these organizations and see who they are.

AFT 1521

AFT 1521 is the American Federation of Teachers, Los Angeles College Faculty Guild.
The American Federation of Teachers has been pushing to increase the top marginal income tax rate for California's top income earners, despite that California already has one of the most income-progressive tax systems in the nation. A whopping 94% of California's income taxes are paid by just a 33% minority of taxpayers. See also, "American Federation of Teachers: Part of the Solution or Part of the Problem?".

Nationally, the American Federation of Teachers is the #11 top political spender with 91% of their member's funds going to one political party.

Alliance of Californians for Community Empowerment (ACCE)

The group was previously part of ACORN, but changed its name (see this and this) after the scandal-plagued national organization lost access to federal funding.
SEIU and ACORN have had a long financial relationship.
ACORN has had a long history working against banks. Ironically, many partially blame ACORN's supposedly well-intentioned push for subprime loans to unqualified, low-income borrows as one of the many driving forces behind the subprime mortgage crisis.

California Calls

Includes ...

Alliance of Californians for Community Empowerment (ACCE) from Los Angeles and San Diego Counties, mentioned above.
Communities for a New California

California Partnership

Includes ...

California Immigrant Policy Center
Coalition for Humane Immigrant Rights in Los Angeles
Libreria de Pueblo
LIFETIME
Parent Voices
PUEBLO
SEIU 721 (see below)
Service, Immigrant Rights & Education Network (SIREN)

Clean Carwash Campaign

California Nurses Association

Part of National Nurses United, who includes nurses as part of the taxpayer-funded Veteran Affairs medical system. See the video of their protest efforts.

Oakland Education Association

Part of California Teachers Association (CTA).
The California Teachers Association (CTA) is the #1 Top Spender in California politics, according to a March 2010 report by the California Fair Political Practices Commission (FPPC). It spends twice that of the next biggest spender, SEIU.

POWER

People Organized to Win Employment Rights (POWER)

San Diego and Imperial Counties Labor Council

An affiliate of the AFL-CIO

SEIU 1000

Service Employees International Union, Local 1000
SEIU is the #2 Top Spender in California politics, according to a March 2010 report by the California Fair Political Practices Commission (FPPC).
SEIU is the #5 Top Spender in national politics, according to the Center for Responsive Politics, who tracks campaign spending.
According to public campaign records, SEIU is the top spender nationally on 527 political action committees (PACs).
Despite seemingly being against policies endorsed by the Obama Administration, SEIU has formally endorsed Obama for President 2012. This should not be surprising, given that SEIU boasted of spending $60 million to elect President Obama in 2008.
SEIU's Committee on Political Education (COPE) is know to fund shadowy organizations that aren't what they might appear to be. One such example was the Tea Party-like group called The Patriot Majority, who campaigned against Senator Harry Reid's opponent in the 2010 Nevada Senate race.
SEIU organizer Stephen Lerner is widely acknowledged as one of the key architects behind the Occupy Wall Street movement.

Why is SEIU so anti-bank, especially against Bank of America? Could it be that SEIU owed Bank of America lots of money?

CNN/Money: What's really behind SEIU's Bank of America protests?
New York Daily News: SEIU president Andy Stern has been bashing Bank of America - the same bank that gave union big loan

SEIU 1021

Service Employees International Union, Local 1021

SEIU 721

Service Employees International Union, Local 721 representing Southern California Public Service Workers

SEIU ULTCW

Service Employees International Union, representing United Long-Term Care Workers

SEIU USWW

Service Employees International Union, Local 1877, representing United Service Wokers West

UAW 2865

United Auto Workers, Local 2865
Representing academic student employees at the University of California
Few realize that the United Auto Workers also represents student employees--it's not just for auto workers anymore.
For a group against government bailout of the banks, it is ironic that the UAW is protesting. The UAW was one of the bigger beneficiaries of the federal government's multi-billion dollar bailout of General Motors in 2009.
In the 2008 Presidential election, the students, faculty, and staff of the University of California were the single largest block of donors to Barack Obama.
Nationally, the UAW is #17 on the top political spenders list.

UAW 4121

United Auto Workers, Local 4121
Representing academic student employees at the University of Washington

United Students Against Sweatshops (USAS)

The New Bottom Line

Includes ...

National People's Action (NPA)
People Improving Communities through Organizing (PICO National Network)
Alliance for a Just Society (AJS)
Right to the City Alliance
Main Street Alliance
Alliance of Californians for Community Empowerment (ACCE)
Oregon Action
Washington Community Action Network (Washington CAN)
Contra Costa Interfaith Supporting Community Organization (CCISCO)
People Acting in Community Together San Jose (PACT SJ)
Inland Congregations United for Change Inland Empire (ICUC)
Oakland Community Organizations (OCO)
L.A. Voice
People Improving Communities through Organizing California
Faith in Community (FIC - Fresno)
Faith Action for Community Equity (FACE Hawaii)
Progressive Leadership Alliance of Nevada (PLANevada)
Colorado Progressive Coalition
Communities Creating Opportunity Missouri (CCO)
Harriet Tubman Center/ Michigan Organizing Collaborative Detroit
Lakeview Action Coalition Chicago
Grassroots Organizing Missouri (GROMO)
Illinois People's Action
Iowa Citizens for Community Improvement (Iowa CCI)
Working in Neighborhoods Cincinnati (WINCincy)
Communities United for Actions Cincinnati (CUFACincy)
Take Action Minnesota
Federation of Congregations United to Serve Orlando (FOCUS)
Industrial Areas Foundation Southeast
Virginia Organizing
Voices Of Community Advocates & Leaders (VOCAL - NY)
Brockton Interfaith Community (BIC - MA)
Brooklyn Congregations United (BCU)
Maine People's Alliance

Elizabeth Warren and a Very Strange Bedfellow

2011-10-20T09:43:00.000-07:00

Everyone knows that Elizabeth Warren is a champion of financial reform, right? She's got a good reputation, which is one of the reasons that she's running for U.S. Senate in Massachusetts. She's the darling of Occupy Wall Street people looking for real reform of the American political system, supposedly free from the corrupting influence of big-money politics.

They say that politics makes for strange bedfellows. Need a blatant example? He's an invitation for a fundraiser for Elizabeth Warren's campaign. See anything unusual? Let's just focus on one name.

Why would ANYBODY pretending to be a champion for middle-class, against the supposed oppression and corruption of the super-rich, associate themselves with George Soros?

George Soros is a speculator and hedge-fund manager who currently ranks at number 7 on the Forbes list of richest Americans. While the fortunes of most Americans plummeted during the financial crisis, his increased.

George Soros is also the #4 top funder of shadowy 527 committees.

George Soros is also one of the founding members of the so-called "Shadow Party" within the Democratic Party.

Soros is a New York resident. Ms. Warren is running for office in Massachusetts. George Soros is active in the politics of other states, including here in California. He and other well-connected, big-money Democrats funded Proposition 27, designed to eliminate citizen-based reforms of California's redistricting process.

In my opinion, Proposition 27 was a very anti-democratic piece of legislation (which was supported, naturally, by various Progressive politicians and labor unions).

Be careful, people. You can tell a lot about someone by the people with whom they associate.

American Federation of Teachers: Part of the Solution or Part of the Problem?

2011-10-18T12:02:00.000-07:00

According to a recent article in the San Jose Mercury News, the American Federation of Teachers (AFT) is pursuing a possible ballot initiative to raise taxes YET AGAIN on California's millionaires. I certainly wish that the members of the American Federation of Teachers (AFT) would actually apply their math, economics, history, and critical reasoning skills. AFT is right. We do have a problem, but the problem is NOT that California's taxes are too low for upper-income earners.

First, a caveat: I am not now, nor have I ever been a "millionaire." However, in 2007, 2008, and 2010, I spent more on federal, state, and payroll taxes than all my other family living expenses COMBINED!

California ALREADY has the second highest marginal tax rate (10.3%) in the nation. Only Oregon and Hawaii have higher marginal rates (11%).
http://www.taxfoundation.org/files/state_individualincome_rates-2000-2011-20110503.pdf

California's millionaires ALREADY pay a surtax supposedly to fund mental health services proving, I guess, that you must be crazy to be a millionaire and officially live in California.

California ALREADY implements President Obama's so-called "Buffett Test." Capital gains in California are ALREADY taxed EXACTLY like ordinary income.

California's wealthy ALREADY pay the bulk of the state's income taxes. The top 2% pay roughly HALF OF ALL PERSONAL INCOME TAXES (PIT).
http://soquelbythecreek.blogspot.com/2009/07/oppressive-progressive-income-tax.html

The top 33% minority ALREADY pays 94% of the entire Personal Income Tax load. Meanwhile, the bottom two-thirds supermajority contributes JUST 6%. But who has more voting power to raise taxes on the minority?

Similarly, the 33% minority contributes more than half of California's General Fund revenue.

California's upper-income taxpayers ALREADY pay a much higher effective tax rate than do the majority of Californians. I ask you, looking at the chart in the article below, who isn't paying their fair share?
http://soquelbythecreek.blogspot.com/2011/10/who-pays-their-fair-share-in-california.html

Even though a majority of Californians pay a lower state income tax rate than do a small minority, California's overall state tax burden is ALREADY one of the highest in the nation.

California's high taxes ALREADY places the state at or near the bottom on a variety of business climate surveys. On one survey of 500 CEOs from around the country, California has ranked DEAD LAST as a place to do business since at least 2005! In another survey, 70.5% of respondents ranked California as the least favorable business climate in the U.S.!
http://chiefexecutive.net/best-worst-states-for-business
http://www.taxfoundation.org/research/topic/15.html
http://www.aboutdci.com/wp-content/themes/dci/docs/Winning-Strategies-2011.pdf (See Appendix C).

Is it any surprise then that California also has the nation's second-worst unemployment rate?
http://www.bls.gov/web/laus/laumstrk.htm

Of course, as part of the AFL-CIO, the American Federation of Teachers (AFT) enjoys tremendous clout both in Sacramento and Washington, as does its cousin organization, the California Teachers Association (CTA). The California Teachers Association (CTA) is the #1 top spender in California politics according to the California Fair Political Practices Commission (FPPC). CTA outspends the #2 top spender, SEIU, by almost double!
http://soquelbythecreek.blogspot.com/2011/02/do-public-employee-unions-have-major.html
http://www.fppc.ca.gov/reports/Report31110.pdf

AFT is #11 on the list of top all-time national political donors, giving 91% of their member's state-mandated contributions to Democrats, 0% to Republicans. Hmmm.
http://www.opensecrets.org/orgs/list.php?order=A

California's politicians kowtow to the unions. Even fellow career Democrats like former Assembly Speaker Willie Brown recognize this. As he stated in his article, "Jerry Brown won't challenge teachers union," ...
http://articles.sfgate.com/2011-02-27/bay-area/28635640_1_teachers-union-pensions-union-leaders

"No one knows the power of such unions in California better than Gov. Jerry Brown.

"You'll notice that even as he's proposed draconian cuts to health and welfare programs and the state's universities, and asked taxpayers to pony up extra for several more years, BROWN HAS BEEN CAREFUL NOT TO TOUCH TEACHERS.

"HE KNOWS GOOD AND WELL WHAT THE CALIFORNIA TEACHERS ASSOCIATION CAN DO FOR HIM - OR AGAINST HIM - IN AN ELECTION."

Here's the ironic part of the story.

BOTH the American Federation of Teachers (AFT) and the California Teachers Association (CTA) are tax-exempt 501(c)(5) organizations, according to Form 990 disclosures on file with the U.S. Government and with Guidestar.org.
BOTH the American Federation of Teachers (AFT) and the California Teachers Association (CTA) derive the majority of their revenues from state-mandated union dues, paid by hard-working public school teachers.
This begs the next obvious question: Who pays teachers' salaries? Naturally, these come from the taxpayer.

Instead of using their political clout on REAL solutions, the American Federation of Teachers (AFT) is wasting their member's dues and our time on yet more non-solutions. AFT, how about using your political clout on tax reform, spending reform, or pension reform? For too long, organizations like AFT have blocked prudent reforms in California and in Washington. Consequently, there are likely massive spending cuts coming as part of the Super Committee process, which likely means jobs cuts for AFT members and other public employees. AFT, if you refuse to be part of the solution, then by definition, you become part of the problem.

Who Pays Their "Fair Share" in California?

2011-10-04T11:35:00.001-07:00

President Obama is fond of saying that "millionaires and billionaires" are not paying their "fair share" of taxes. Of course, the President never explicitly defines what someone's "fair share" should be.

Here is a chart showing the average effective tax rate for California taxpayers, paying the state's highly income-progressive Personal Income Tax (PIT). The effective rate is the tax paid divided by the Adjusted Gross Income (AGI). The effective tax rate for the supermajority (66.67%) of Californian taxpayer's was between 0% and 1.5% in 2008--the latest tax data available. Meanwhile, the superminority (33.33%) paid between 1.5% and 8.97%. Why is this important? California requires a two-thirds majority to pass a tax increase. Effectively, the supermajority of Californian's impose excess taxes on the one-third majority.

Revenues from Personal Income Tax (PIT) contributed over half (58%) of the state's General Fund (see Figure SUM-04), ...

... which pays for the majority of California's governmental services, including K-12 and secondary education, corrections, health and human services, etc. (see Figure SUM-05).

The General Fund also pays off California's General Obligation Bonds. In 2011-12, about 5.57% of the General Fund is allocated to paying off California's debt-financed projects. An October 2011 report from the California Treasurer indicates that debt service is over 7% and will spike at over 9%, even without new borrowing.

The 33.33% superminority pays roughly 94% of all California Personal Income Taxes (PIT), effectively contributing over half of the entire General Fund. The 66.67% supermajority contributes just the remaining 6% of PIT, and roughly 3% of the General Fund. Those with an Adjusted Gross Income (AGI) of $50,000 or less were in the bottom 66.67% in 2008.

At the ballot box, however, every taxpayer has the equivalent voice. Consequently, the supermajority decides the projects and programs for which the superminority shall pay and how much the superminority will be charged for the privilege.

The Occupy Wall Street movement employs divisive "us-versus-them" class-warfare rhetoric when it talks of "The 99%" and "The 1%." Maybe the "The 1%" in California aren't pulling their weight. Let's look at the data. Despite being only 1% of the taxpaying population, "The 1%" paid 42% of all California Personal Income Tax (PIT) in 2008--the latest data available. On average, the tax rate paid by "The 1%" was over three times higher than the average rate paid by "The 99%." At the ballot box, "The 1%" represents about 0.86% of all registered voters. Want to understand why there is so much money distorting our political process? It's because one set of voters decides how to spend the money raised by a minority of wealthy voters, who cannot prevail at the ballot box.

Again, 58% of California's General Fund revenues comes from Personal Income Tax (PIT) revenues. Consequently, due to California's highly income-progressive tax system, "The 1%" pays 24% of the entire General Fund while the remaining 99% pay 34%.

It should be noted that California ALREADY implements President Obama's "Buffett Test."

California ALREADY imposes significantly higher marginal tax rates on upper-income taxpayers. Consequently, California has one of the most income-progressive tax systems in the United States.
California taxes capital gains exactly like it does ordinary income. There is NO capital gains tax preference in California.

If the "Buffett Test" really provided a solution, then California wouldn't have significant budget shortfalls.

Also, in honor of Governor Brown's tax increase proposal, the following chart cuts the day by those making over $300,000 (the target of most of the increases) and the 2/3rds majority of taxpayers, required to pass a tax increase (and who happen to earn $60,000 or less).

See also ...

Soquel by the Creek: "Examining Governor Jerry Brown's Proposed Tax Increases"
http://soquelbythecreek.blogspot.com/2011/12/examining-governor-jerry-browns.html
Soquel by the Creek: "Average Federal Income Tax Rate by Income Group (1998-2008)"
http://soquelbythecreek.blogspot.com/2011/08/chart-average-federal-income-tax-rate.html
Soquel by the Creek: "The Oppressive Progressive Income Tax: California Edition"
http://soquelbythecreek.blogspot.com/2009/07/oppressive-progressive-income-tax.html
Soquel by the Creek: "Is Warren Buffett Paying His 'Fair Share'?"
http://soquelbythecreek.blogspot.com/2011/08/is-warren-buffet-paying-his-fair-share.html
California Franchise Tax Board: "2009 Annual Report--Statistical Appendix Tables," Table B-3
http://www.ftb.ca.gov/aboutFTB/Tax_Statistics/2009.shtml

The Stagecraft President Stages More Political Kabuki

2011-09-28T17:16:00.000-07:00

Oops, he did it again. President Obama is already on record with a number of news organizations for carefully stage-crafting town hall meetings with well-placed planted questions. There were many such events during the health care "debate." Here's but one example.

Of course, the President and his team insist that it's all just great luck. Uh huh, right.

The latest example is the planted question by a well-connected, big-money donor to the Democratic Party at a town hall meeting ~~scheduled~~ staged at LinkedIn. Uncharacteristically, the President had a well-thought-out, eloquent, impromptu answer, all without the aid of a teleprompter.

The man who asked the staged question was Doug Edwards, a former Google marketing executive and author of "I'm Feeling Lucky: The Confessions of Google Employee Number 59".

The media, of course, lapped it up.

Surprisingly, I saw little follow up investigation by the media. Who was this guy? What would prompt him to ask such a question? What's his angle?

Well, according to campaign finance disclosures for "Doug Edwards" and "Douglas Edwards" of Los Altos, CA and Campbell, CA, the esteemed Mr. Campbell graciously donated some $465,682 to various political causes between 2004 and 2012. Amazingly, every single recipient is either a member of the Democratic Party or associated with the Democratic Party. What are the odds?

Despite residing in California, Mr. Edwards' generosity extended to a variety of other states, including Montana, Wisconsin, Ohio, Minnesota, Massachusetts, and Tennessee. Similarly, over $144,000 went to ActBlue, a money-laundering organization for the Democratic Party who bills themselves as "the online clearinghouse for Democratic action." According to OpenSecrets.org, who tracks campaign spending at the national level, ActBlue is the #1 top all-time political donor with 99% of their money going to Democrats and 0% going to Republicans.

Mr. Edwards' biggest benefactors include:

ActBlue (money-launderer for the Democratic Party): $144,100
Democratic Congressional Campaign Committee (DCCC): $73,900
Democratic Senatorial Campaign Committee (DSCC): $68,900
Gillibrand for Senate (Democrat): $12,000
Ohio Democratic Party: $10,000

You can find a detailed list of Mr. Edwards' political contributions here. The few apparent duplicated contributions are because of simultaneous contributions to both primary and general election campaigns, given on the same date. It is more difficult to find spending records for the state level, but records show that Mr. Edwards spent at least $14,500 across California, Wisconsin, and Iowa. Some of his ActBlue spending may actually be for state candidates.

Mr. Edwards is also a public member of the self-proclaimed "Patriotic Millionaires for Fiscal Strength".

In a few cases, Mr. Edwards' donated the maximum legal amount to various campaigns--well, the maximum legal amount unless you happen to be married. Then, your wife can also contribute to the cause.

Mr. Edwards has indeed married very well. His amazingly bright and talented wife, Kristen, has a Ph.D. and M.A. from Stanford, degrees from Brown University and Middlebury College, and even studied at the Leningrad State University in the Soviet Union during the height of the Cold War, before it later became Saint Petersberg State University.

According to public campaign records, "Kristen Edwards" of Los Altos, CA gave another $113,400 to the Democratic Party and its causes.

Mrs. Edward's biggest benefactors include:

ActBlue (money-launderer for the Democratic Party): $33,100
Democratic Senatorial Campaign Committee (DSCC): $28,500

You can find a detailed list of Mrs. Edwards' political contributions here. State donations are more difficult to track, but Mrs. Edwards spent at least $9,500 in California. Some of her ActBlue spending may actually be for state candidates.

Ironically, the Edwards' don't need action from the President of the United States or even from the ineffectual U.S. Congress to increase their tax burden. The Edwards' can contribute more of their money to taxes now, of their own free will, without waiting for the government to act. Here's how.

Useful Information for Under-taxed Individuals

http://soquelbythecreek.blogspot.com/2010/09/useful-information-for-under-taxed.html

So, we are left with a few possible conclusions:

The President is the luckiest man on the planet and just happened to call on someone in the audience who just happens to agree completely with the President's stance on taxation and his job bill.
That the Democratic Party really isn't the crack, money-making machine that we all believed and the President had no idea that someone who's family gave over $500,000 to the Party, over multiple years, across multiple states, was in the audience. Me? I give a minor amount to one Democratic Party candidate and I'm on their mailing list forever!
The President and his handlers have little respect for the intelligence of the American public or the American press.

See also ...

Los Angeles Times: "'Raise my taxes,' town hall attendee tells Obama"
http://articles.latimes.com/2011/sep/26/news/la-pn-obama-town-hall-20110926

"Most of Us" Recognize Divisive Rhetoric When We See It

2011-09-21T20:29:00.000-07:00

Elizabeth Warren, Candidate for Senate, Massachusetts 2012

"I hear all this, you know, 'Well, this is class warfare, this is whatever.' No. There is nobody in this country who got rich on his own -- nobody.

"You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police-forces and fire-forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory -- and hire someone to protect against this -- because of the work the rest of us did.

"Now look, you built a factory and it turned into something terrific, or a great idea. God bless--keep a big hunk of it. But part of the underlying social contract is, you take a hunk of that and pay forward for the next kid who comes along."

I agree very much in principle with Elizabeth Warren's passion, but I'm sorry, Ms. Warren, your comments DO INDEED sound like "class warfare."

Who paid to build the roads? You say, "the rest of us." I say, "most of us, including ME!" In fact, some of us paid MANY TIMES MORE for those very same roads than did the majority of Americans.

Who paid to educate my workers? You say, "the rest of us." I say, "most of us, including ME!" In fact, some of us paid MANY TIMES MORE to educate my workers and my children than did the majority of Americans. At my company, we provide fairly expensive training for employees after they come on board so that they can be productive, internationally competitive, that my company can be successful, and that all of us can be happy, productive taxpayers. My employees and I volunteer at local public and private schools to enhance math, science, and technology classes. Yet, some failed politicians vilify us for not paying or doing our "fair share" (which mysteriously has never been explicitly defined).

Who paid for police and fire protection services? You say, "the rest of us." I say, "most of us, including ME!" If fact, some of us paid MANY TIMES MORE for the very same police and fire protection service than did the majority of Americans.

If you look at the FACTS--not the feel good rhetorical bullshiloney from certain Progressives--the MAJORITY of upper-income taxpayers pay their "fair share" of taxes and more. In 2002, 2003, 2004, 2005, 2006, 2007, and 2008, federal, and state taxes were my single largest expense item--greater than my mortgage payment, insurance, food, and car payment COMBINED.

Don't take my word for it. Check for yourself. The data is readily available to all. You can start your education here.

Soquel by the Creek: "Average Federal Income Tax Rate by Income Group (1998-2008)"
http://soquelbythecreek.blogspot.com/2011/08/chart-average-federal-income-tax-rate.html
Tax Foundation: "Summary of Latest Federal Individual Income Tax Data"
http://www.taxfoundation.org/taxdata/show/250.html
Tax Policy Center: "Current-Law Distribution of Taxes"
http://www.taxpolicycenter.org/taxtopics/currentdistribution.cfm
Soquel by the Creek: "'The Rich Don't Pay Taxes' Lie: Purposely Deceptive, Or Backed Up by Data?"
http://soquelbythecreek.blogspot.com/2010/02/rich-dont-pay-taxes-lie-purposely.html
Soquel by the Creek: "Pretty Pictures and a Political Rorschach Test"http://soquelbythecreek.blogspot.com/2011/03/tax-infographic-is-political-rorschach.html

Never mind that President Obama's "Buffett Test" tax plan is a side-show and a distracts from needed, real tax reform. Never mind that an estimated 46% of households will PAY ZERO INCOME TAX in 2011. Never mind that taxpayers paid $4.2 BILLION in tax incentives to people who are in the United State illegally.

Every taxpayer I know would actually agree to pay more IF (and it's a very significant IF) we actually believed that giving more money and more power to the state and federal governments would actually help solve the problem. Most taxpayers are appalled at the dysfunction, corruption, and absolute lack of leadership in our state houses and in Washington, D.C.

I'm sorry, Ms. Warren, but "most of us" recognize your statement as yet more divisive rhetoric.

See also ...

Verum Serum: "Elizabeth Warren’s Know-Knothing, Left-wing Populism"
http://www.verumserum.com/?p=29579#comment-1882703

What Percentage of the Congressional Black Caucus (CBC) Are Also Members of the Congressional Progressive Caucus (CPC)?

2011-08-30T14:10:00.000-07:00

In a post last year, I noticed that a number of members of the Left-leaning Congressional Progressive Caucus (CPC) are also members of the Left-leaning Congressional Black Caucus (CBC). I was wondering how many CBC members were also CPC members and vice versa.

Using the lists of CBC members and CPC members as of 30-AUG-2011, I compared the names and tallied how many members there were in each group and how many members were common to both groups. Interestingly, most members of the Congressional Black Caucus (CBC) tend to have Left-leaning political views. The noticeable exception is Congressman Allen West of Florida, who is a former Lt. Colonel in the U.S. Army and an outspoken favorite of the Tea Party. Congressman West is the only Republican on the CBC. Although, due to racist rhetoric coming from members of the Congressional Black Caucus itself, Congressman West is apparently reconsidering his decision.

Perhaps not surprisingly, 89% of CBC members where also members of the CPC. Similarly, more than half of the CPC membership is from members of the CBC. I'd call that significant overlap.

CHART: Average Federal Income Tax Rate by Income Group (1998-2008)

2011-08-25T09:57:00.001-07:00

(Click image to enlarge)

Raw Data Source:
http://www.editgrid.com/user/soquel_by_the_creek/usa_federal_income_tax_data

See Also ...

"Is Warren Buffett Paying His 'Fair Share'?"
http://soquelbythecreek.blogspot.com/2011/08/is-warren-buffet-paying-his-fair-share.html

Is Warren Buffett Paying His "Fair Share"?

2011-08-24T17:09:00.000-07:00

I have tremendous respect for Warren Buffett. I own shares in Berkshire Hathaway and he and his group of companies have generated some reasonable gains over the years.

But, is Mr. Buffett right? Do the superwealthy like him pay less than their "fair share" of taxes as he seemingly claims is his New York Times editorial? Mr. Buffett's non-scientific technique was to ask 20 of his employees how much tax they pay.

Likewise, Mr. Buffett didn't distinguish between income taxes, sales taxes, corporate taxes, estate taxes, or payroll taxes. I'll focus on federal income taxes, which generates one of the largest shares of revenue for the federal government. Payroll taxes (Social Security and Medicare) are another matter that I'll cover in a later post. Likewise, Mr. Buffett didn't distinguish between MARGINAL tax rate or EFFECTIVE tax rate. The MARGINAL rate is the amount that you pay on each additional dollar of income. The EFFECTIVE rate is how much you pay in total taxes, divided by your total income. The EFFECTIVE rate is nearly always less than the MARGINAL rate, although most people remember the MARGINAL tax rate because it usually seems so extreme. See "Pretty Pictures and a Political Rorschach Test" to see how marginal rates have changed over time.

Unfortunately, Mr. Buffett's non-scientific sample of 21 taxpayers represents just 0.000015% of the total population of 140 million taxpayers, or about 1 in 6.664 MILLION taxpayers. In statistics, this is called a non-representative sample. Given that Mr. Buffett by himself is also a member of an elite group, the Top 400 taxpayers, any result will be highly skewed.

Wouldn't it be great if we could use real IRS data and could validate if wealthy taxpayers were indeed not paying their "fair share"? Oh wait, we can! The IRS provides freely downloadable summary statistics for all income taxes filed by year, income group, etc. Groups like the Tax Foundation and the Tax Policy Center use this data to report on how the tax burden falls on taxpayers.

According to Warren Buffett's editorial, he paid $6,938,744 ($6.938 MILLION) in federal income taxes in 2010, representing 17.4% of his taxable income. So, is Warren Buffett scamming the system? The average tax bill for all taxpayers in 2008 (the latest year of data from the IRS), was $7,373, down from $7,911 in 2007. The average taxpayer paid 12.24% of his taxable income in federal income tax in 2008. Taxpayers in the Top 0.1% population paid an average $1,357,143 in taxes in 2008. Warren Buffet paid over $5 MILLION more! The Top 0.1% also paid 22.7% of their total income as income tax. Warren Buffet paid about 5.3% less. However, Mr. Buffett is 80 years old and like many others his age, he likely receives considerable income from long-term capital gains, which are presently taxed at 15%. Likewise, being a shrewd investor and having lived through prior times with much higher tax rates, Mr. Buffett likely has an extensive portfolio of tax-free municipal bonds and U.S. Treasuries, but this is conjecture.

To summarize ...

Warren Buffett paid significantly more in absolute dollars than did the average taxpayer ($6.938 MILLION vs. $7,373).
Warren Buffet paid a higher percentage of adjusted income in taxes than the average taxpayer (17.4% vs. 12.24%) but less than those in the Top 0.1% of taxpayers (17.4% vs. 22.7%)

(Click image to enlarge)

QUESTION: Does Warren Buffett pay more or less of the total share of income taxes than his total share of income?

Let's determine how much he made last year. He claims that he paid $6.939 MILLION in taxes and had a 17.4% effective tax rate. Divide $6.939 MILLION by 17.4% and you derive that his adjusted gross income was around $39.878 MILLION (a nice job, if you can get it!). Because 2010 tax data isn't yet available, I'll mix some apples and oranges using the top-line 2009 tax summary data. In 2009, the total US adjusted gross income (for tax purposes) was $7.63 TRILLION. The total 2009 federal income tax bill was $865.95 BILLION.

Warren Buffett's share of total U.S. income = 0.00052% ($39.878 MILLION / $7.626 TRILLION)
Warren Buffett's share of total U.S. income tax bill = 0.00080% ($6.939 MILLION / $7.626 TRILLION)

As do most wealthy taxpayers, Warren Buffett also pays a higher share of the total tax bill than his total share of US income. In fact, Warren Buffett pays 53% more in taxes than his share of income ((share of taxes / share of income) - 100%). A number greater than 0% indicates that the taxpayer is taxed on both income and on a fraction of accumulated wealth. A number less than 0% indicates that the taxpayer potentially receives government services that are subsidized by all other taxpayers.

(Click chart to enlarge)

Using 2008 historical data for the Top 0.1% taxpayers (again, Mr. Buffett is in the Top 400 group or the Top 0.0003%), his share of taxes versus total income should be around 85%. His tax payments current are more in line with the Top 1% to 5% of taxpayers. If this Top 0.0003% taxpayer wants to keep up with the Top 0.1% of taxpayers, then his 2010 tax bill should be in the neighborhood of $11.128 MILLION instead of a "measly" $6.939 MILLION. However, if he wants to pay 22.7% of his income as tax to match the Top 0.1%, then he only needs to contribute another 5.3% of his income or $2.144 MILLION. Instead of waiting for the slow-moving Congress to take action, Mr. Buffett is free to voluntarily write a check for an addition $2.114 MILLION or $4.189 MILLION or more, unless perhaps he has better use of that money such as investing in the U.S. economy and creating jobs--two actions that the federal government that is seemingly incapable of doing.

The last time that Congress attempted to address "inequalities" in the U.S. tax code, it created the ill-conceived and poorly-constructed Alternative Minimum Tax (AMT). AMT was originally targeted at just 155 high-income taxpayers, who paid $0 in income tax but broke no law and merely followed existing U.S. tax code. Ultimately, because AMT was not indexed to inflation, it impacted millions of middle-class taxpayers (myself included).

Back to our fundamental question: Does Warren Buffett pay his "fair share" of income tax? He pays significantly more taxes than the average taxpayer, both in total dollars, as a percent of his income, and as a percent of his share of total income. Could he pay more? Undoubtedly. Is he paying his "fair share"? First, tell me what your definition of "fair share" is.

You know what we're not discussing while wasting time on the definition of "fair share"? TAX REFORM! I believe that all sides agree that our current income tax system is antiquated and internationally un-competitive. Generally, you get less of whatever you tax. The U.S. government currently taxes work (jobs), investments, and savings. Instead, we should be taxing consumption! But, there will likely be no changes until the next major crisis.

(click to enlarge)

See also ...

Raw Data Tables
http://www.editgrid.com/user/soquel_by_the_creek/usa_federal_income_tax_data
New York Times: "Stop Coddling the Super-Rich"
http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html
Tax Foundation: "Summary of Latest Federal Individual Income Tax Data"
http://www.taxfoundation.org/taxdata/show/250.html
Tax Policy Center: "Current-Law Distribution of Taxes"
http://www.taxpolicycenter.org/taxtopics/currentdistribution.cfm
Stu Burguiere: "Eleven ways Warren Buffett is lying about Warren Buffett"
http://www.glennbeck.com/content/blog/stu/eleve-ways-warren-buffett-is-lying-about-warren-buffett
George Skelton: "'Buffett Rule' a bust in California: The state's over-reliance on taxing the rich has been a disaster during bad times"
http://www.latimes.com/news/local/la-me-cap-buffet-20110922,0,5024481,full.column
Soquel by the Creek: "'The Rich Don't Pay Taxes' Lie: Purposely Deceptive, Or Backed Up by Data?"
http://soquelbythecreek.blogspot.com/2010/02/rich-dont-pay-taxes-lie-purposely.html
Tax Foundation: "Warren Buffett’s Proposed Tax Hikes Would Provide Insignificant Revenue"
http://www.taxfoundation.org/news/show/27556.html
Tax Policy Center: "Buffett is Right: Raise Taxes on the Wealthy"
http://www.taxpolicycenter.org/publications/url.cfm?ID=901442
Tax Policy Center: "Was Buffett Right? Do Workers Pay More Tax than Their Bosses?"
http://taxvox.taxpolicycenter.org/2011/08/23/was-buffett-right-do-workers-pay-more-tax-than-their-bosses/
Soquel by the Creek: "Average Federal Income Tax Rate by Income Group (1998-2008)"
http://soquelbythecreek.blogspot.com/2011/08/chart-average-federal-income-tax-rate.html
Soquel by the Creek: "Pretty Pictures and a Political Rorschach Test"
http://soquelbythecreek.blogspot.com/2011/03/tax-infographic-is-political-rorschach.html

Another Example of California's Flawed Government

2011-08-10T07:05:00.001-07:00

California is home to some of the nation's toughest anti-smoking legislation. The state collects an extra $0.25 tax per pack to pay for the adverse health effects of smoking and to fund a public-service campaign that advertises against tobacco use.

California is also home to CalWORKS, a program designed to help unemployed and low-income families. The California Legislature moved to close obvious fraud when CalWORKS cards were used out of state to fund extravagances such as vacations, casino gambling, and at strip clubs--all at taxpayer expense.

Despite that California leads the way on public efforts to discourage smoking and the California Legislature feels free to mandate the behavior of every-day Californians by banning certain incandescent light bulbs, the California Legislature rejected common-sense CalWORKS reforms (SB 417) designed to prevent those that receive taxpayer-funded CalWORKS benefits from purchasing alcohol and tobacco using those same benefits.

It really makes you wonder about what passes for logic in Sacramento--either that or they really need to check the old plumbing in the Capitol for lead contamination.

The Debt Ceiling and Where Do You Hide $238 BILLION?

2011-08-05T08:29:00.000-07:00

If you followed the USA's debt-ceiling debate, you may remember that U.S. Treasury Secretary Timothy Geithner said that the U.S. Government would reach the Congress-imposed debt ceiling on 16-MAY-2011.

As Congress did little to act on the debt ceiling up to that point, the debt-ceiling debate was delayed until a 1-AUG-2011 drop-dead date. The Treasury admitted to delaying payments to certain federal retirement and disability funds to postpone the date beyond 16-MAY-2011. Using the ever-popular "everybody-does-it" defense, Secretary Geithner claims, "Each of these actions has been taken in the past by my predecessors during previous debt limit impasses."

After tortuous debate and political wrangling, the U.S. Congress agreed to increase the debt ceiling. Immediately afterward, the U.S. Treasury borrowed a record $238.3 BILLION in a single day!

(click to enlarge)

The chart above uses data directly from the U.S. Treasury and shows the accumulated total public debt from 1-JAN-2011 until 3-AUG-2011. The red line shows the TOTAL public debt. Not all of the debt is subject to the debt ceiling (as described here and here), so the line seemingly crosses the official debt ceiling limit. However, the red line flattens out on 16-MAY-2011, the day that Treasury Secretary Timothy Geithner says that the U.S. hit the official debt limit.

At first glance, it would appear that the U.S. debt did not increase from 16-MAY-2011 until 2-AUG-2011 and then suddenly the debt increases by $238.3 BILLION. However, from the historical "burn-rate", the U.S. Government was in reality still borrowing an average of $2.72 BILLION per day! The blue dashed line shows extrapolated borrowing even during the period where the official total debt flat-lines.

In essence, the Government merely stopped borrowing on the open market and instead borrowed from federal employees and retirees--many whom where likely unknowing and unwilling U.S. creditors.

So, where did the U.S. Treasury "hide" this $238.3 BILLION? If a public company acted this way, these actions would likely trigger an SEC investigation (and shareholder lawsuits). But, as we sadly know, the U.S. government isn't constrained by the same rules that it mandates for everybody else.

In a side note, the total USA public debt is rapidly reaching the size of the U.S. gross domestic product (GDP). In 2010, the U.S. GDP was $14.658 TRILLION.

QUESTIONS:

Where did the U.S. Treasury "hide" this $238.3 BILLION?
Were their actions legal?
Were their action ethical?
The Congress delayed action on handling the debt crisis well beyond the original 16-MAY-2011 date. How much did Congress' inaction cost the nation?

See also ...

"Growth in USA Public Debt (2001 to 2021)"
http://soquelbythecreek.blogspot.com/2011/07/usa-public-debt-january-2001-to-june.html
"IDEA: Government Efficiency Standards Modeled on Fuel Standards"
http://soquelbythecreek.blogspot.com/2011/07/idea-government-efficiency-standards.html

Matt Damon Needs a Wider Circle of Friends (and an Education on the U.S. Tax System)

2011-08-03T08:24:00.000-07:00

I loved Matt Damon in "The Adjustment Bureau" where he played a likable, ambitious politician living in a world controlled by a higher-power that makes adjustments to reality. The movie's ending was a bit weak, but Mr. Damon delivered a solid performance. He's a very talented actor.

Unfortunately, Mr. Damon apparently sometimes confuses reality with acting when he plays politician, as shown in the following clip on taxation. Maybe Matt Damon now believes that he is part of The Adjustment Bureau. There are numerous factual mistakes with some of Mr. Damon's remarks and, I can speak from personal experience, that he is wrong about what some people actually did with their Bush Tax Cuts.

DAMON: [0:06] "The wealthy are paying less than they paid, you know, at any time else, I mean, certainly in my lifetime, and probably ... probably, you know, in the last century."

Okay, let's check a few facts.

FACT: The share of total income tax paid by upper-income taxpayers has actually INCREASED over time. (chart, data)
FACT: There is a difference between the marginal tax rate and the actual taxes paid by a taxpayer, called the effective tax rate. The effective federal tax rate for ALL taxpayers has dropped since at least the 1980s. The absolute drop was larger for upper-income taxpayers because they also pay among the highest effective rates. Taxes from upper-income taxpayers are also swayed by recession.

FACT: According to Wikipedia, Matt Damon was born in 1970.
FACT: The so-called Bush Tax Cuts reduced the top marginal tax rate on the wealthy from 39.6% to its current rate of 35%. Similarly, the bottom tax rate was reduced from 15% to 10% (though many often forget to mention this point). The top margin rate was reduced by 11.6% while the bottom marginal rate was reduced by 33%.
FACT: During Mr. Damon's lifetime, the lowest top marginal tax rate was actually 28%, passed by Congress in 1986. Although many refer to this as one of the Reagan Tax Cuts, this Legislation was co-sponsored by Democratic Congressman Dick Gephardt (MO) and by Democratic Senator Bill Bradley (NJ).
FACT: 28% is lower than 35%.
FACT: The "last century" includes the period from 1912 until today.
FACT: The modern income-progressive tax system started in the United States in 1913 after the passage of the Sixteen Amendment (see one author's take on the damage wrought by the Sixteenth Amendment).
FACT: Thanks to the Revenue Act of 1913, the top marginal tax rate was 7% until 1917 when dramatically Congress raised taxes to pay for the United States' entry into World War I, under the Wilson Administration.
FACT: During the last century, the lowest top marginal tax rate was 7%.
FACT: 7% is lower than 35%.
FACT: Technically, before 1913, there was no federal income tax (in modern times, hence the requirement for the Sixteenth Amendment so that income taxes would be considered Constitutional). Because 1912 falls within the "last century," one could argue that the lowest top marginal tax rate was actually 0%. But, I'd be quite happy with 7%.
For a more detailed look at recent tax history, see "Pretty Pictures and a Political Rorschach Test."

DAMON: [0:16] "Tax the really rich--you know, guys like me."

Mr. Damon, if you feel that you are not paying your "fair share" of taxes, and you feel that sending more money to the government is the best and most productive use of your excess capital, then there are plenty of easy ways to pay even more taxes.

Avoid taking any deductions or exemptions on your federal tax return.
Cut a check directly to the Treasury. Please see "Useful Information for Under-taxed Individuals."
Don't wait for slow-moving, ineffectual Washington, D.C. to take action!

DAMON: [0:34] "Well, I didn't go start a small business with my tax break, uh, and I don't know anybody else that did. ... Nobody went and started a business with their Bush Tax Cut. I don't know who would believe something like that. It just defies common sense."

Mr. Damon, I recommend broadening your circle of friends. What did I do with the extra money that I kept thanks to the Bush Tax Cuts? I started a business! You what else? That business generates taxable income that pays for things like roads, fire and police protection, public schools, etc. In an indirect way, it created jobs by freeing up my old job at a productive, profitable, tax-generating company, while I created a new position for myself and my employee.

And you know what I do with a portion of the profits from that company? I use it to help math, science, and technology education in my local public and private schools. I take an ACTIVE role in my community. I do not depend on a far-away, slow-moving government in Washington, D.C. to do the job for me.

IDEA: Government Efficiency Standards Modeled on Fuel Standards

2011-07-30T12:21:00.000-07:00

"... what [is] good for the country [is] good for General Motors, and vice versa." -- Charles E. Wilson, former President of General Motors and Secretary of Defense in the Eisenhower Administration.

The White House recently mandated new fuel-efficiency standards for cars and trucks sold in the United States. Presently, the U.S. fuel standard is 28.3 miles per gallon. The new standard mandates 54.5 miles per gallon by 2025, just fifteen short years from now.

This new government standard mandates a 93% improvement, saving money and reducing greenhouse gas emissions. Cars and trucks sold in 2025 must be nearly TWICE as efficient as they are now. New cars could travel the same distance burning only half as much fuel. Imagine the power of the government's mandate!

Okay, now imagine if U.S. citizens placed similar mandates on the federal government. By 2025, we could have a similar-sized federal government that burns only half as much money.

Currently, the U.S. federal government borrows about $0.42 of ever $1.00 that it spends. If we could improve government efficiency at delivering necessary services, we could reduce our enormous budget deficits and reduce the national debt.

Debt Speech BINGO!

2011-07-29T08:20:00.001-07:00

Growth in USA Public Debt (2001 to 2021)

2011-07-27T23:02:00.001-07:00

The following chart shows the U.S. public debt from 2001 to 2021. The data from January, 20001 through June, 2011 uses the latest public debt data available directly from the U.S. Treasury. The values from 2012 through 2012 use public debt data (Table 1-4) from the Congressional Budget Office's (CBO) January 2011 baseline projections. Adjacent to segments of the data is the growth rate in the debt. You can see that the debt from 2009 through 2011 greatly exceeds the historical growth rate. For example, the growth rate in the debt from 2002-2008 was about $505 BILLION per year. The growth rate from 2009-2011 jumped to about $1.2 TRILLION per year, or over two TIMES the previous growth rate.

The chart also lists the political leaders of the United States during this period, including the President, the Senate Majority Leader, and the Speaker of the House. Lastly, the chart shows the political party that controlled the Congress at large.

(click to enlarge)

President George W. Bush was inaugurated in January, 2001 and his Presidency lasted until Barack Obama was inaugurated President in January, 2009. The Bush Administration saw a tremendous amount of political and financial turmoil.

The crash of the telecom/Dot-Com bubble in 2000 until 2001. The resulting recession of March through November 2001, the Republican-dominated Congress passed the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA)--the first part of the Bush Tax Cuts.
The terrorist attacks on September 11, 2001 targeting the World Trade Center in New York, the Pentagon in Washington, D.C., and an additional attack thwarted by passengers that crashed in Pennsylvania.
The Afghanistan War beginning in October, 2001, a response to the World Trade Center attack. Congress granted authority to use force on September 14, 2001, signed by President Bush a week after the 9/11 attacks.
The second Iraq War beginning in March, 2003. Congress had previously granted authority to use force in October 2002.
In September, 2003, the Bush Administration asked for significant oversight reform of mortgage giants Fannie Mae and Freddie Mac. Congress did not act.
In 2005, Senator Chuck Hagel introduced reform legislation over government-sponsored home mortgage enterprises. The legislation died in committee.
Hurricane Katrina struck New Orleans and the Gulf States in August 2005. The damage wrought by Katrina made it the costliest in U.S. history and the deadliest in recent history.
Medicare Part D, passed in 2003, went into effect in 2006.
The subprime mortgage/housing bubble in 2006 through 2008.
The collapse of Lehman Brothers in September, 2008.
The government seizure of semi-governmental Fannie Mae and Freddie Mac, also September, 2008.
The passage of the Trouble Asset Relief Program (TARP), a bank rescue program, in October 2008.
Due to the economic turmoil in the banking and real-estate sectors, a number of major banking institutions failed and were consolidated into healthier banks.
Mass layoffs and a rising unemployment rate.

Republic President George W. Bush enjoyed a Republican-majority Congress during 4.5 of his eight years in office. Due to the deteriorating economy and the wars in Iraq and Afghanistan, the Republicans lost control of both Houses of Congress in the 2006 election cycle. Democrats controlled both Houses from 2007 until 2011, when Republicans regained the House. Despite having a divided Congress in the latter party of his second term, President Bush rarely exercised his veto power over Congress or its spending.

In an historic election, Barack Obama became the country's first African-American President. Although President Obama inherited economic turmoil, the Obama Administration and Congress embarked on its own spending programs. President Obama also inherited a significantly larger debt to pay for the TARP bank bailouts, some of which has since been repaid. President Obama enjoyed a solid nearly veto-proof majorities in both Houses of Congress from 2009 until the Republicans reclaimed the House in 2011.

Soon after Barack Obama's inauguration, the Congress passed a $787 billion economic stimulus package called the American Recovery and Reinvestment Act (ARRA).
The federal government rescued failing automobile manufacturers General Motors (GM) and Chrysler. The federal government became a majority shareholder in GM and sold a majority of Chrysler to Italy's Fiat.
The Congress passed a $3B "Cash for Clunkers" program to spur auto sales.
A further escalation of the Afghan conflict in December, 2009, including air attacks from drones in Pakistan.
The Congress re-authorized the expiring Bush Tax Cuts in December, 2010 for another two years. The "Great Recession" of December, 2007 through June, 2009 still held sway over the United States economy.
A new military conflict began in Libya in March 2011, in an attempt to sway the ongoing civil war.
Due to high levels of unemployment, the Congress extended the time allowed for long-term unemployment benefits.
Due to changes in the tax code and the weak economy, about 46% of taxpayers will pay no federal income taxes or will receive a net refund in 2011.

U.S. Defense Spending by Various Measures

2011-04-14T09:37:00.000-07:00

(click image to enlarge)

How California Taxpayers Help Fund the California Democratic Party

2011-03-25T09:56:00.001-07:00

Pretty Pictures and a Political Rorschach Test

2011-03-20T10:50:00.000-07:00

"The power to tax is the power to destroy"
John Marshall, Chief Justice of the United States (1801-1835)

A recent blog post regarding U.S. income tax caught my eye. The post included an aesthetically beautiful infographic from data artist Stephen Von Worley and his Data Pointed blog that, according to multiple blog posts, purports to show once again that those #@*&# rich people are just not being taxed enough.

"Chart shows low tax burden for rich"news.yahoo.com/s/yblog_thelookout/20110316/ts_yblog_thelookout/chart-shows-low-tax-burden-for-rich

"Shifting Burdens"www.datapointed.net/2011/03/relative-us-income-taxes-1913-2011

"Chart of the Day, US taxes edition"blogs.reuters.com/felix-salmon/2011/03/15/chart-of-the-day-us-taxes-edition

Unfortunately, as an engineer and scientist, I have a number of problems with the infographic. One problem is that the original chart is mislabeled, based on the data that it presents as I will explain below. Another problem is that many people apparently misinterpreted what the chart actually tells you.

Infographics, though often useful, are essentially "visual statistics," which reminds me of a favorite quote.

"Statistics are like bikinis. What they reveal is suggestive, but what they conceal is vital." -- Aaron Levenstein

Why the Chart is Mislabeled

The original post proclaims "The tax man cometh, and to illustrate the inequities of his cleft-hoofed embrace, we’ve charted the shift in U.S. income taxes from rich to poor over the past century." Unfortunately, the data behind the chart does NOT show this.

The chart claims to show relative tax burden, which in the post is defined as "the amount of tax due relative to the long-term average at each income level."

So what does the infographic actually show? After some reverse engineering, it actually shows the relative change in marginal income tax rate compared to historical averages. Keywords here are "relative change, " "marginal income tax rate," and "historical averages" It’s a common mistake, but high marginal tax rates DO NOT equate to actual tax burden or increased revenues for the government. High marginal tax rates do affect behavior and dissuade earning and investment plus encourage tax avoidance strategies.

Choose Your Average

The non-obvious distortion is that the chart relies on historical averages. Averages themselves can be greatly deceiving.

"Then there is the man who drowned crossing a stream with an average depth of six inches." -- W.I.E. Gates

"The average human has one breast and one testicle." -- Des McHale

Fist, a little background information. Since the inception of the federal income tax, the top marginal tax rate ranged from 7% to 94%. The chart below is color coded according to a chart used later in this post. The source data is available here.

Marginal Tax Rate for Top Income Category, by Year (1913-2011)

Meanwhile, for the bottom tax bracket, the tax rate varied from a low of 0% in the 1970's/1980's to a high of 23% during the New Deal, World War II.

Marginal Tax Rate for Bottom Income Category, by Year (1913-2011)

The average marginal tax rate for top earners was over 59%, with a standard deviation of ±25% for the specified 99 year period (1913-2011) since the 16th Amendment was passed. If considering the entire 235-year history of the United States, the average drops to 25%. If using just the last 25 years, then the historical average is 35.8%. Choosing the specific time period dramatically affects the average.

Relative Difference in Top Marginal Tax Rate Compared to
Historical Average, by Year (1913-2011)

Marginal tax rates for all income taxpayers were at historic highs for twenty years, from 1944 to 1963. For upper income taxpayers, the top marginal rate was 90% or more. Even for the bottom of the income ladder, the rates were over 20%.

However, there was a ten year period (1977-1986) when the marginal rate for lower-income taxpayers was 0%--zip! Mathematically, these zeroes reduce the average. For example, the average marginal tax rate for low-income taxpayers over the thirty-year period (1944-1963, 1977-1986) drops to 13.7%.

The History Embedded in the Charts

With due apologies to Stephen Von Worley for mashing up two of his beautiful infographics, here is some of the history of the U.S. income tax embedded in the charts. The numbered annotations are described below.

Marginal Tax Rate

This is an excellent infographic showing how the marginal tax rate changed over time. The tax rate is presented as a heat map. The higher the tax rate, the closer the color is to white hot. The lower the tax rate, the closer the color is to cool black. The data is also adjusted for inflation, which shows the effect of "bracket creep" over time.

Original, unmodified image:

http://www.datapointed.net/visualizations/money/historical-us-income-tax-brackets/

I re-oriented this graphic to match the "tax burden" chart.

(click image to enlarge)

Changes in Marginal Tax Rate Compared to Historical Average

This is an aesthetically beautiful infographic showing how the marginal rates changed compared to their historical average, over the lifetime of 99-year history since the 16th Amendment was ratified.

Original, unmodified image:

http://www.datapointed.net/2011/03/relative-us-income-taxes-1913-2011

(click image to enlarge)

Note 1:Two lines are added to the United States Constitution upon ratification of the 16th Amendment, legalizing federal income tax.

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

Congress subsequently passed the Revenue Act of 1913. The 18 pages of legislation imposed a federal income tax ranging from 1% to 7%, depending on income. The 1913 federal income tax form and instructions are simple and run just four pages.

Note 2:

Due to the costs of World War I, Congress passes the War Revenue Act of 1917 and the Revenue Act of 1918, dramatically increasing the top marginal tax rate to 67%, then to 77%.

Treasury Secretary Mellon understood the negative impact on the high level of taxation.

"The present system is a failure. It was an emergency measure, adopted under the pressure of war necessity and not to be counted upon as a permanent part of our revenue structure. The high rates put pressure on taxpayers to reduce their taxable income, tend to destroy individual initiative and enterprise, and seriously impede the development of productive business…. Ways will always be found to avoid taxes so destructive in their nature, and the only way to save the situation is to put the taxes on a reasonable basis that will permit business to go on and industry to develop."

Note 3:

Due to the unpopularity of the Wilson Administration and World War I, Warren G. Harding was elected President, along with solid Republican majorities in Congress. Congress reduced tax rates by passing the Revenue Act of 1921.

Note 4:

Congress, under the leadership of President Coolidge, reduced all income tax levels by passing the Revenue Act of 1926. The bottom marginal rate was reduced to 1.5%. The top marginal tax rate was reduced to 25%.

Note 5:

The Republican Congress had previously passed the disastrous Smoot Hawley Tariff, heavily opposed by Democrats. Democrats made major gains in the Congressional election of 1930.

Congress, under President Hoover, increased income taxes for all income levels by passing the Revenue Act of 1932. The bottom marginal rate was increased from 1.5% to 4%. The top marginal tax rate was increased from 25% to 63%. It was the largest peacetime tax increase in U.S. history, up to that point.

The combination of bad policy and increased taxation lead to disastrous unemployment, shifts in economic activity, and decreased investment activity. Welcome to the Great Depression.

Note 6:

Congress, under the President Franklin Roosevelt (FDR), passes the "soak the rich" tax policies of the Revenue Act of 1935 (The Wealth Tax Act) and the Revenue Act of 1936. Top marginal tax rates increased to 79%.

Roosevelt’s leadership was challenged by previous Democratic Presidential candidate, Alfred E. Smith, in his famous 1936 radio address, "Betrayal of the Democratic Party."

Note 7:The immense costs of the "New Deal" policies of FDR's Administration plus World War II lead to the highest marginal tax rates for all income levels. Top marginal rates reach an astonishing 94%. Even low-income taxpayers faced a 22.2% rate.

The United States emerged from World War II with its industrial and manufacturing capacity relatively untouched. Much of Europe and Asia were enslaved by oppressive Communist regimes. India was seduced by the unfulfilled promises of Socialism. The United States helped rebuild Europe and Japan and was engaged in a Cold War with the Soviet Union and the Communist Chinese.

Because the United States was essentially the only game in town for those that enjoy Western-style democracy, the federal government could continue to oppressive tax rates.

Note 8:
The Revenue Act of 1964 cut all income tax levels by about 20%. Top rates were reduced to 70% while bottom rates were reduced to 14%.

The tax cut was made popular by Democratic President John F. Kennedy and was an attempt to spur the U.S. economy. Unfortunately, President Kennedy was assassinated before the legislation was finally enacted.

Note 9:The Tax Reduction and Simplification Act of 1977 essentially reduced bottom tax rates to 0% for the next ten years. Top rates were unaffected.

This 0% rate effectively reduces the historical average for lower income taxpayers and causes the "birds eye" pattern in chart of relative marginal tax rates.

Note 10:Congress passes Economic Recovery Tax Act of 1981 (ERTA), better known as the Kemp-Roth tax cut. Top rates were reduced to 50% while bottom rates remained at 0%.

Tax brackets indexed to inflation, reducing "bracket creep." Note how the white line in the tax brackets chart flattens after this point.

Note 11:

Congress passes the Tax Reform Act of 1986, eventually reducing top tax rates to 28%, their lowest levels in modern history. The act also increased bottom tax rates from 0% to 14%.

Although many consider it the second Reagan Tax cut, the act was officially sponsored by Democrats, Richard Gephardt of Missouri in the House of Representatives and Bill Bradley of New Jersey in the Senate.

Note 12:
Congress passes the Omnibus Budget Reconciliation Act of 1993, raising top marginal tax rates from 28% to 39.6%.

The act received no Republican votes and was opposed by some Democrats. Vice-President Gore provided the tie-breaking vote in the United States Senate.

Note 13:
In response to recession from the Dot-Com bubble, Congress passes the Economic Growth and Tax Relief Reconciliation Act of 2001. The act is also known as the first of the Bush tax cuts. Rates were reduced at all levels. The top marginal tax rate was reduced to 35% while the bottom marginal tax rate was reduced to 10%.

In response to the further recession caused by the September 11, 2001 World Trade Center terrorist attack, Congress accelerated some of the changes by passing the Jobs and Growth Tax Relief Reconciliation Act of 2003.

The Open Question

So the question remains, are marginal rates too low for top income earners?

By international comparison, no.

Marginal Tax Rateshttp://www.nationmaster.com/graph/tax_hig_mar_tax_rat_ind_rat-highest-marginal-tax-rate-individual

The marginal tax rate is less important than the effective tax rate. Despite the official tax rate, how much to people really pay. This is measured as the tax paid divided by the adjusted gross income.

The Tax Foundation tracks this information (see Table 8), but only since 1980. Using their information, the following chart shows that top tax payers pay more as a share of the adjusted gross income (AGI). The calculations for AGI changed with the 1986 tax law, which results in the apparent spike on the chart.

Because top taxpayers have more income, they would also pay more taxes in absolute dollars, even if their tax rates were the same or lower. However, the chart shows that high-income taxpayers do indeed pay a larger share of their income in taxes than do almost all income classes.

Average Effective Tax Rate by Income Class and by Year

This effect is also obvious looking at the amount of share of revenue contributed by different income levels. Not surprisingly, high-income taxpayers pay the bulk of U.S. income tax.

Van Jones is the Source for "Koch Plantation"

2011-02-27T15:26:00.000-08:00

At a Tea Party counter-union rally in Jefferson City, Missouri, a MoveOn.org counter-counter protester responded to a sign proclaiming "Liberty, Not Slavery" by telling the Tea Party members that "You're on Koch's plantation." The incident was reported by Gateway Pundit and later on the The Blaze. The reference was obviously to the supposedly "evil" Koch Brothers, who fund Americans for Prosperity (AFP), a major ally of the Tea Party. Oh, and David Koch also funds NOVA on PBS (scroll to the bottom of the PBS page) so you know he must be evil, right?

That phrase, "Koch's plantation," sounded familiar. Where had I heard it before?

In January 2011, the Koch Brothers held a secretive meeting in Palm Springs for the ultrawealthy and the well-connected on the Right. Many from the American Left were there to protest (and protest they did).

The "Koch plantation" reference comes directly from a Van Jones speech, at a meeting sponsored by Common Cause to protest the Koch Brothers' event.

The "plantation" line is at about 6 minutes, 55 seconds ([6:55]) into the video.

"We will not live on a national plantation run by the Koch Brothers."

The remainder of the speech is classic Van Jones partisan, class-warfare rhetoric with a few quotable moments.

[0:22]

"I was born in 1968 ... that was the year 'They' assassinated hope in America."

Hmm, so who is this nameless "They" for whom Van Jones cannot mention? Is he aware of some conspiracy that he dare not mention? There were many prominent political figures assassinated in 1968, including political violence throughout the United States.

Martin Luther King: April 4, 1968 by James Earl Ray, a long-time criminal and white supremacist. The assassination sparked riots across the United States, including in Washington, D.C., Chicago, Baltimore, Louisville, Wilmington, Kansas City--many of which were most damaging to black communities themselves.
Robert Kennedy: June 5, 1968, carefully premeditated by Sirhan Sirhan, a 24-year-old Palestinian immigrant.
Violent protests at the 1968 Democratic Convention in Chicago. The protests were held by groups to the left of the Democratic Party at large, including Students for a Democratic Society (SDS). Some SDS members later went on to form the Weather Underground domestic terrorist organization.
There were protests by Left-wing organizations around the globe.

Van Jones seems fascinated by '68, the year of his birth. His Twitter account is @VanJones68.

[0:39]

"... and 'They' tried to assassinate hope in our country."

Again, who is "They"? Misguided white supremacists? Palestinians? The Democratic Party? Rioters?

[0:50]

Speaks about 40 years in the Wilderness.

[4:47]

"Our political process has been hijacked by people who are only interested in their own gain, who are only interested in their own profit, and are willing to tell any lie, and spend any amount of money, to prevent America's government from coming to the rescue of the American people."

Unfortunately, many Americans feel that government has become the problem--not the solution. I do not want to be "rescued" by a government that wishes to dictate every matter in my life. Nor do I wish the government to confiscate my wealth to pay for other's follies.

[5:15]

Talks about Tea Party and their concern about Liberty. But, there are two threats. Over-concentration of political power. But there is a greater threat. Excessive concentration of economic power.

[9:12]

"If you want to know what side to bet on, ... big money mean people ... or little people with the truth on their side ... look over there in Egypt"

... attendee ...

[9:33]

"Bring Egypt here!"

I find it amazing that the Left is so worried about the Koch Brothers and is evidently is not bothered or worried about the spending by the likes of Stephen Bing, Peter B. Lewis, Fred Eychaner, Haim Saban, Peter Angelos, George Soros, etc., etc., shown here and here. Or, how about those well-connected, ultrawealthy from the Left, many from outside of California, that attempted to impose and formally institute one-party rule in California by passing Proposition 27? Even Common Cause, who openly fights the secretive ways on the Koch Brothers, fought against the alliance of well-financed backers of Proposition 27. For that, I give Common Cause some credit.

See also ...

"Capital Rivals: Koch Brothers vs. George Soros"

www.opensecrets.org/news/2010/09/opensecrets-battle---koch-brothers.html

"Koch Industries Continues to Expand Political Influence"

www.opensecrets.org/news/2010/10/koch-industries-continues-to-expand-1.html

"California Proposition 27, Elimination of Citizen Redistricting Commission (2010)"

ballotpedia.org/wiki/index.php/California_Proposition_27,_Elimination_of_Citizen_Redistricting_Commission_(2010)

"Proposition 27 Revealed!"

soquelbythecreek.blogspot.com/2010/09/proposition-27-revealed.html

California Legislative Analysts' Office (LAO) Weighs in on Public Pensions

2011-02-27T14:40:00.000-08:00

The California Legislative Analysts' Office (LAO) finally weighed in on the California public pension crisis.

I have great respect for the LAO and include links to their material to view without comment. Jason Sisney form the LAO presents "Public Retirement Benefits, Options for the Future," which takes just 15 minutes to watch. The materials provided include the webcast, a summary transcript of the webcast, and copy of the presentation slides.

Presentation Slides

View Slides in Adobe Acrobat (PDF)
Download Slides Microsoft PowerPoint (PPT)

Webcast (via YouTube)

Transcript

View Transcript in Web Browser

Do Public-Employee Unions Have Major Influence in California Politics?

2011-02-27T12:55:00.000-08:00

With the recent turmoil in the Wisconsin public-employee union debate, it begs the question here in California: Do public-employee unions have undue influence over the political process?

A March 2010 report from the California Fair Political Practices Commission (FPPC), titled Big Money Talks: The 15 Special Interests that Spent $1 Billion to Shape California Government seems to provide evidence of the undue influence of public sector unions in California politics.

The relevant information appears on page 10, in a table titled "The 15 That Spent $1 Billion to Influence California Voters and Public Officials." The data is shown below and available online here.

The minimum entry price for an organization was $34 million. The top spender, California Teachers Association (CTA), spent over $211 million.

Charting the data, the imbalance becomes quickly obvious. The two top senders in California politics are both public-sector unions. California Teachers Association (CTA) is by far and above the largest spender, spending nearly twice that of the next biggest spender, California State Council of Service Employees (SEIU).

(click image to enlarge)

Likewise, charting the spending by the type of organization, again, an obvious pattern appears. According to FPPC data, roughly thirty cents of every dollar spent by the big spenders in California politics comes from the two major California public-sector unions. And where do the unions get all that money? From employee's state-mandated union dues, essentially paid by California taxpayers. With whom do these public-sector unions bargain for their salary and benefits? With many of the same Legislators placed in office courtesy of generous campaign funding from labor. Am I the only one that sees the inherent conflict of interest?

As an aside, I'm also amazed by the spending from California's native American tribes, apparently related to casino gaming.

See also ...

"What Influences California Politics More, Business or Union Spending"
http://soquelbythecreek.blogspot.com/2010/06/what-influences-california-politics.html
"Proposition 27 Revealed!" for an in-depth view of how labor and the Democratic Party often work together for mutual benefit
http://soquelbythecreek.blogspot.com/2010/09/proposition-27-revealed.html

Former Democratic Party Candidate for President Speaks about the "Betrayal of the Democratic Party"

2011-01-26T10:00:00.000-08:00

"Those that do not remember history are doomed to repeat it."

Alfred E. Smith, the four-term Democratic governor of New York, became the Democratic candidate for President in 1928 but lost to Herbert Hoover. Franklin Roosevelt had nominated Alfred Smith for the Democratic candidate for President in 1928. In 1932, Smith supported Franklin D. Roosevelt for President. By 1936, Smith was appalled by Roosevelt's "New Deal" policies and attempted to warn the Democratic Party. Because of Roosevelt's popularity, Smith's January 25, 1936 speech was considered by some to be treason. Remarkably, many of Smith's views would now be considered "Republican" or "Tea Party" viewpoints, portions sounding as though they were written by Glenn Beck himself. My how things have changed.

BETRAYAL OF THE DEMOCRATIC PARTY
By Alfred E. (Al) Smith

At the outset of my remarks let me make one thing perfectly clear. I am not a candidate for any nomination by any party at any time, and what is more I do not intend to even lift my right hand to secure any nomination from any party at any time. Further than that I have no ax to grind. There is nothing personal in this whole performance so far as I am concerned. I have no feeling against any man, woman or child in the United States. I was born in the Democratic party and I expect to die in it. And I was attracted to it in my youth because I was led to believe that no man owned it. Further than that, that no group of men owned it, but on the other hand, that it belonged to all the plain people in the United States.

Patriotism above Partisanship

It is not easy for me to stand up here tonight and talk to the American people against the Democratic Administration. This is not easy. It hurts me. But I can call upon innumerable witnesses to testify to the fact that during my whole public life I put patriotism above partisanship. And when I see danger, I say danger, that is the "Stop, look, and listen" to the fundamental principles upon which this Government of ours was organized, it is difficult for me to refrain from speaking up.

What are these dangers that I see? The first is the arraignment of class against class. It has been freely predicted that if we were ever to have civil strife again in this country, it would come from the appeal to passion and prejudices that comes from the demagogues that would incite one class of our people against the other.

In my time I have met some good and bad industrialists. I have met some good and bad financiers, but I have also met some good and bad laborers, and this I know, that permanent prosperity is dependent upon both capital and labor alike.

And I also know that there can be no permanent prosperity in this country until industry is able to employ labor, and there certainly can be no permanent recovery upon any governmental theory of "soak the rich" or "soak the poor."

A Government by Bureaucrats

The next thing that I view as being dangerous to our national well-being is government by bureaucracy instead of what we have been taught to look for, government by law.

Just let me quote something from the President's (Franklin Roosevelt) message to Congress:

"In 34 months we have built up new instruments of public power in the hands of the people's government. This power is wholesome and proper, but in the hands of political puppets of an economic autocracy, such power would provide shackles for the liberties of our people."

Now I interpret that to mean, if you are going to have an autocrat, take me; but be very careful about the other fellow.

There is a complete answer to that, and it rises in the minds of the great rank and file, and that answer is just this: We will never in this country tolerate any laws that provide shackles for our people.

We don't want any autocrats, either in or out of office. We wouldn't even take a good one.

The next danger that is apparent to me is the vast building up of new bureaus of government, draining resources of our people in a common pool of redistributing them, not by any process of law, but by the whim of a bureaucratic autocracy.

The 1932 Platform

Well now, what am I here for? I am here not to find fault. Anybody can do that. I am here to make suggestions. What would I have my party do? I would have them reestablish and redeclare the principles that they put forth in that 1932 platform.

The Republican platform was ten times as long. It was stuffy, it was unreadable, and in many points, not understandable. No Administration in the history of the country came into power with a more simple, a more clear, or a more inescapable mandate than did the party that was inaugurated on the Fourth of March in 1933 (the Democrats).

And listen, no candidate in the history of the country ever pledged himself more unequivocally to his party platform than did the President who was inaugurated on that day (Franklin Roosevelt).

Well, here we are!

Millions and millions of Democrats just like myself, all over the country, still believe in that platform. And what we want to know is why it wasn't carried out.

Now, let us wander for awhile and let's take a look at that platform, and let's see what happened to it. Here is how it started out:

"We believe that a party platform is a covenant with the people, to be faithfully kept by the party when entrusted with power, and that the people are entitled to know in plain words the terms of contract to which they are asked to subscribe.

"The Democratic Party solemnly promises by appropriate action to put into effect the principles, policies and reforms herein advocated and to eradicate the political methods and practices herein condemned."

My friends, these are what we call fighting words. At the time that that platform went through the air and over the wire, the people of the United States were in the lowest possible depths of despair, and the Democratic platform looked to them like the star of hope; it looked like the rising sun in the East to the mariner on the bridge of a ship after a terrible night.

But what happened to it?

Economy in Government

First plank: "We advocate immediate and drastic reduction of governmental expenditures by abolishing useless commissions and offices, consolidating departments and bureaus, and eliminating extravagance to accomplish a saving of not less than 25 per cent in the cost of the Federal Government." (remember, this was the Democrat's 1932 Platform)

Well, now, what is the fact? No offices were consolidated, no bureaus were eliminated, but on the other hand, the alphabet was exhausted. The creation of new departments -- and this is sad news for the taxpayer -- the cost, the ordinary cost, what we refer to as housekeeping cost, over and above all emergencies -- that ordinary housekeeping cost of government is greater today than it has ever been in any time in the history of the republic.

The Unbalanced Budget

Another plank: "We favor maintenance of the national credit by a Federal budget annually balanced on the basis of accurate Federal estimate within revenue."

How can you balance a budget if you insist upon spending more money than you take in? Even the increased revenue won't go to balance the budget, because it is hocked before you receive it. What is worse than that?

The Middle Class Will Pay the Debt

Now here is something that I want to say to the rank and file. There are three classes of people in this country; there are the poor and the rich, and in between the two is what has often been referred to as the great backbone of America, that is the plain fellow.

That is the fellow that makes from one hundred dollars a month ($1,500 a month in 2009 dollars) up to the man that draws down five or six thousand dollars a year ($76,500 to $92,000 annually in 2009 dollars).

Now, there is a great big army. Forget the rich; they can't pay this debt. If you took everything they have away from them, they couldn't pay it; they ain't got enough. There is no use talking about the poor; they will never pay it, because they have nothing.

This debt is going to be paid by that great big middle class that we refer to as the backbone and the rank and file, and the sin of it is they ain't going to know that they are paying it. It is going to come to them in the form of indirect and hidden taxation. It will come to them in the cost of living, in the cost of clothing, in the cost of every activity that they enter into, and because it is not a direct tax, they won't think they're paying, but, take it from me, they are going to pay it!

What About State's Rights?

Another plank: "We advocate the extension of Federal credit to the States to provide unemployment relief where the diminishing resources of the State make it impossible for them to provide for their needs."

That was pretty plain. That was a recognition in the national convention of the rights of the States. But how is it interpreted? The Federal Government took over most of the relief problems, some of them useful and most of them useless. They started out to prime the pump for industry in order to absorb the ranks of the unemployed, and at the end of three years their employment affirmative policy is absolutely nothing better than the negative policy of the Administration that preceded it.

"We favor unemployment and old age insurance under State laws."

Now let me make myself perfectly clear so that no demagogue or no crack-pot in the next week or so will be able to say anything about my attitude on this kind of legislation. I am in favor of it. And I take my hat off to no man in the United States on the question of legislation beneficial to the poor, the weak, the sick, or the afflicted, or women and children

Because why? I started out a quarter of a century ago when I had very few followers in my State, and during that period I advocated, fought for, introduced as a legislator and finally as Governor for eight long years, signed more progressive legislation in the interest of the men, women and children than any man in the State of New York.

Unconstitutional Measure -- Unfulfilled Pledges

And the sin of this whole thing, and the part of it that worries me and gives me concern, is that this haphazard, hurry-up passage of legislation is never going to accomplish the purposes for which it was designed and -- bear this in mind, follow the platform -- under State laws.

Another one: "We promise the removal of Government from all fields of private enterprise except where necessary to develop public works and national resources in the common interest."

NRA (National Recovery Administration)! A vast octopus set up by government, that wound its arms around all the business of the country, paralyzed big business, and choked little business to death.

Did you read in the papers a short time ago where somebody said that business was going to get a breathing spell?

What is the meaning of that? And where did that expression arise?

I'll tell you where it comes from. It comes from the prize ring. When the aggressor is punching the head off the other fellow he suddenly takes compassion on him and he gives him a breathing spell before he delivers the knockout wallop.

Wasteful Extravagance

Here is another one: "We condemn the open and covert resistance of administrative officials to every effort made by congressional committees to curtail the extravagant expenditures of Government and improvident subsidies granted to private interests."

Now, just between ourselves, do you know any administrative officer that has tried to stop Congress from appropriating money? Do you think there has been any desire on the part of Congress to curtail appropriations?

Why, not at all. The fact is that Congress threw them right and left -- didn't even tell what they were for.

And the truth, further, is that every administrative officer sought to get all that he possibly could in order to expand the activities of his own office and throw the money of the people right and left. And as to subsidies, why, never at any time in the history of this or any other country were there so many subsidies granted to private groups, and on such a huge scale.

The fact of the matter is that most of the cases now pending before the United States Supreme Court revolve around the point whether or not it is proper for Congress to tax all the people to pay subsidies to a particular group.

Here is another one: "We condemn the extravagance of the Farm Board, its disastrous action which made the Government a speculator of farm products, and the unsound policy of restricting agricultural products to the demand of domestic markets."

What about the restriction of our agricultural products and the demands of the market? Why, the fact about that is that we shut out entirely the farm market, and by plowing under corn and wheat and the destruction of foodstuffs, food from foreign countries has been pouring into our American markets -- food that should have been purchased by us from our own farmers.

In other words, while some of the countries of the Old World were attempting to drive the wolf of hunger from the doormat, the United States flew in the face of God's bounty and destroyed its own foodstuffs. There can be no question about that.

Now I could go on indefinitely with some of the other planks. They are unimportant, and the radio time will not permit it. But just let me sum up this way. Regulation of the Stock Exchange and the repeal of the Eighteenth Amendment, plus one or two minor planks of the platform that in no way touch the daily life of our people, have been carried out, but the balance of the platform was thrown in the wastebasket. About that there can be no question.

Let's see how it was carried out. Make a test for yourself. Just get the [1936] platform of the Democratic Party, and get the [1936] platform of the Socialist Party (see also "The Road Ahead: A Draft Platform for the Socialist Party," December, 1936), and lay them down on your dining room table, side by side, and get a heavy lead pencil and scratch out the word "Democrat," and scratch out the word "Socialist," and let the two platforms lay there.

Then study the record of the present Administration up to date. After you have done that, make your mind up to pick up the platform that more nearly squares with the record, and you will put your hand on the Socialist platform. You don't dare touch the Democratic platform.

Democratic or Socialistic?

And incidentally, let me say, that it is not the first time in recorded history, that a group of men have stolen the livery of the church to do the work of the devil.

Now, after studying this whole situation, you will find that that is at the bottom of all our troubles. This country was organized on the principles of representative democracy, and you can't mix Socialism or Communism with that. They are like oil and water; they refuse to mix.

And incidentally, let me say to you, that is the reason why the United States Supreme Court is working overtime throwing the alphabet out of the window -- three letters at a time.

Now I am going to let you in on something else. How do you suppose all this happened? Here is the way it happened. The young Brain Trusters caught the Socialists in swimming and they ran away with their clothes.

Now, it is all right with me. It is all right to me if they want to disguise themselves as Norman Thomas or Karl Marx, or Lenin, or any of the rest of that bunch, but what I won't stand for is to let them march under the banner of Jefferson, Jackson, or Cleveland.

"We Can Take a Walk"

Now what is worrying me, where does that leave me as a Democrat? My mind is now fixed upon the Convention in June, in Philadelphia. The committee on resolutions is about to report, and the preamble to the platform is:

"We, the representatives of the Democratic Party in Convention assembled, heartily endorse the Democratic Administration."

What happens to the disciples of Jefferson and Jackson and Cleveland when that resolution is read out? Why, for us it is a washout. There is only one of two things we can do. We can either take on the mantle of hypocrisy or we can take a walk, and we will probably do the latter.

Now leave the platform alone for a little while. What about this attack that has been made upon the fundamental institutions of this country? Who threatens them, and did we have any warning of this threat? Why, you don't have to study party platforms. You don't have to read books. You don't have to listen to professors of economics. You can find the whole thing incorporated in the greatest declaration of political principles that ever came from the hands of man, the Declaration of Independence and the Constitution of the United States.

Constitutional Limitations

Always have in your minds that the Constitution and the first ten amendments to it were drafted by refugees and by sons of refugees, by men with bitter memories of European oppression and hardship, by men who brought to this country and handed down to their descendants an abiding fear of the bitterness and all the hatred of the Old World was distilled in our Constitution into the purest democracy that the world has ever known.

There are just three principles, and in the interest of brevity, I will read them. I can read them quicker than talk them.

"First, a Federal Government, strictly limited in its power, with all other powers except those expressly mentioned reserved to the States and to the people, so as to insure State's rights, guarantee home rule, and preserve freedom of individual initiative and local control."

That is simple enough. The difference between the State constitutions and the Federal. Constitution is that in the State you can do anything you want to do provided it is not prohibited by the Constitution. But in the Federal Government, according to that government, you can do only that which that Constitution tells you that you can do.

What is the trouble? Congress has overstepped its bounds. It went beyond that Constitutional limitation, and it has enacted laws that not only violate the home rule and the State's right principle -- and who says that? Do I say it? Not at all. That was said by the United States Supreme Court in the last ten or twelve days.

Chorus of Yes-Men in Congress

Secondly, the Government, with three independent branches, Congress to make the laws, the Executive to execute them, the Supreme Court, and so forth. You know that.

In the name of Heaven, where is the independence of Congress? Why, they just laid right down. They are flatter on the Congressional floor than the rug on the table here. They surrendered all of their powers to the Executive, and that is the reason why you read in the newspapers references to Congress as the Rubber Stamp Congress.

We all know that the most important bills were drafted by the Brain Trusters, and sent over to Congress and passed by Congress without consideration, without debate and, without meaning any offense at all to my Democratic brethren in Congress, I think I can safely say without 90 per cent of them knowing what was in the bills.

That was the meaning of the list that came over, and besides certain bills were "Must." What does that mean? Speaking for the rank and file of American people we don't want any executive to tell Congress what it must do, and we don't want any Congress or the Executive jointly or severally to tell the United States Supreme Court what it must do!

And further than that, we don't want the United States Supreme Court to tell either of them what they must do.

What we want, and what we insist upon, and what we are going to have is the absolute preservation of this balance of power which is the keystone, the arch upon which the whole theory of democratic government has got to rest. When you rattle that you rattle the whole structure.

Of course, when our forefathers wrote the Constitution of the United States it couldn't be possible that they had it in their minds that it was going to be all right for all time to come. So they said, "Now, we will provide a manner and method of amending it."

That is set forth in the document itself, and during our national life we amended it many times.

We amended it once by mistake, and we corrected it. What did we do? We took the amendment out. Fine, that is the way we want to do it, by recourse to the people.

But we don't want an Administration that takes a shot at it in the dark and that ducks away from it and dodges away from it and tries to put something over in contradiction of it upon any theory that there is going to be a great public howl in favor of that something; possibly the United States Supreme Court may be intimidated into a friendly opinion with respect to it.

What I have held all during my public life is that Almighty God is with this country, and He didn't give us that kind of Supreme Court.

Now this is pretty tough on me to have to go at my own party this way, but I submit that there is a limit to blind loyalty.

As a young man in the Democratic Party, I witnessed the rise and fall of Bryan and Bryanism, and I know exactly what Bryan did to our party. I knew how long it took to build it after he got finished with it. But let me say this to the everlasting credit of Bryan and the men that followed him, they had the nerve and the courage and honesty to put into the platform just what their leaders stood for. And they further put the American people into a position of making an intelligent choice when they went to the polls.

Why, the fact of this whole thing is -- I speak now not only of the executive but of the legislature at the same time -- that they promised one set of things; they repudiated that promise, and they launched off on a program of action totally different.

Well, in 25 years of experience I have known both parties to fail to carry out some of the planks in their platform. But this is the first time that I have known a party, upon such a huge scale, not only not to carry out the plank, but to do the directly opposite thing to what they promised.

Suggested Remedies

Now, suggestions, and I make these as a Democrat anxious for the success of my party, and I make them in good faith.

No. 1: I suggest to the members of my party on Capitol Hill here in Washington that they take their minds off the Tuesday that follows the first Monday in November. Just take their minds off it to the end that you may do the right thing and not the expedient thing.

Next, I suggest to them that they dig up the 1932 platform from the grave that they buried it in, read it over, and study it, breathe life into it, and follow it in legislative and executive action, to the end that they make good their promises to the American people when they put forth that platform and the candidate that stood upon it 100 per cent. In short, make good!

Next, I suggest to them that they stop compromising with the fundamental principles laid down by Jackson and Jefferson and Cleveland.

Fourth: Stop attempting to alter the form and structure of our Government without recourse to the people themselves as provided in their own Constitution. This country belongs to the people, and it doesn't belong to any Administration.

Next, I suggest that they read their Oath of Office to support the Constitution of the United States. And I ask them to remember that they took that oath with their hands on the Holy Bible, thereby calling upon God Almighty Himself to witness their solemn promise. It is bad enough to disappoint us.

Washington or Moscow

Sixth: I suggest that from this moment they resolve to make the Constitution the Civil Bible of the United States, and pay it the same civil respect and reverence that they would religiously pay the Holy Scripture, and I ask them to read from the Holy Scripture the Parable of the Prodigal Son and to follow his example.

Stop! Stop wasting your substance in a foreign land, and come back to your Father's house.

Now, in conclusion let me give this solemn warning. There can be only one Capitol, Washington or Moscow!

There can be only one atmosphere of government, the clear, pure, fresh air of free America, or the foul breath of Communistic Russia.

There can be only one flag, the Stars and Stripes, or the Red Flag of the Godless Union of the Soviet.

There can be only one National Anthem. The Star Spangled Banner or the Internationale.

There can be only one victor. If the Constitution wins, we win. But if the Constitution . . . stop! Stop there. The Constitution can't lose! The fact is, it has already won, but the news has not reached certain ears.

Contemporary Cartoon: "Planned Economy or Planned Destruction?"

What was the political mood at the time? Here is a 1934 political cartoon from the Chicago Tribune.

(click image to enlarge)

They say that the nut never falls far from the tree. On careful examination of the cartoon, you may notice a familiar name among those riding in the wagon. The man in the middle, looking straight at you with a shaking fist, is "Ickes". Harold L. Ickes was Franklin Roosevelt's Secretary of the Interior and was responsible for implementing much of Roosevelt's "New Deal" policies. Ickes son, Harold M. Ickes was President Clinton's Deputy Chief of Staff, was a contender for Chairman of the Democratic National Committee (DNC) against Howard Dean, and was a political strategist for Hillary Clinton's failed 2008 Presidential campaign.

Other Reading

The New Deal Made Them "Right" (as in "right wing")
Betrayal of the Democratic Party
Al Smith was mentioned in Ronald Reagan's famous 1964 "A Time for Choosing" speech. Interestingly, Ronald Reagan himself was once a Democrat.

Is America A Great Country or What?

2010-11-10T09:55:00.000-08:00

This video is courtesy of the CBS affiliate WBZ-TV in Boston. It is presented here without comment. All I ask is that while you watch the videos that you consider our entitlement system, our immigration system, and our legal system. Does the system as practiced make sense and does it meet the goals for which is was designed? Do her views possibly explain the policies and practices of the current Administration?

In the President's defense, I fully understand deadbeat relatives. But, to the best of my knowledge, none is currently violating any laws. Likewise, the President is toughing it out having only declared only $5.5 MILLION in adjusted gross income and himself living in taxpayer-provided housing.

Favorite line: "If I come as an immigrant, you have the obligation to make me a citizen."

Part 1:

Part 2:

See also ...

Washington Times: "Obama's illegal uncle arrested; 'Uncle Omar' almost hits cop car, tries to call White House"
http://www.washingtontimes.com/blog/watercooler/2011/aug/28/picket-obamas-illegal-uncle-arrested-uncle-omar-hi/
Boston Herald: "President Obama's uncle had Social Security ID"
http://www.bostonherald.com/news/regional/view.bg?articleid=1362374
Boston Herald: "Obama's uncle is called a fugitive: Said to ignore '92 deportation order"
http://www.boston.com/news/local/massachusetts/articles/2011/08/31/obamas_uncle_called_a_fugitive_from_deportation_since_1992/

One of These Things Is Not Like the Others ...

2010-11-03T15:19:00.001-07:00

Cookie Monster of Sesame Street fame teaches children how to spot important difference while singing his equally-famous "One of These Things Is Not Like the Others" song. Let's see if we can spot any differences in how most Californians think about redistricting.

There were two -- count 'em two! -- redistricting measures on the November 2010 ballot in California. One, Proposition 20, extended existing redistricting reforms by empowering the Citizens Redistrict Commission to draw U.S. Congressional districts. Proposition 20 passed with a 60% plus majority.

The second redistricting initiative on the ballot was Proposition 27. Proposition 27's aim was to eliminate the Citizens Redistricting Commission and to return redistricting control back to the California Legislature. Why was this a bad idea? First, the California Legislature is dominated by one party with nearly a 2-to-1 majority. Second, everybody remembers the horrible job that the Legislature did drawing the 2001 political district lines. Proposition 27 was funded by 25 self-serving incumbent politicians and their well-connected, big-money party donors--many from outside of California! No surprise, Californians rejected Proposition 27, also by nearly a 60% majority.

At the county level, both Proposition 20 and Proposition 27 were nearly universally approved or rejected statewide. Note the key word, "nearly." One county, and only one county, voted completely opposite of all the others. See if you can spot which one. Look carefully.

Spot the difference yet? Look along the West coast (the left edge) mid-way up the state.

San Francisco county was the only California county to oppose Proposition 20 and support Proposition 27.

Initial Reflection on California 2010 Election Results

2010-11-03T10:57:00.000-07:00

As a fourth-generation Californian and a fiscal conservative, I am obviously disappointed by the 2010 election results. I have little respect for Jerry Brown and even lower expectations from his second Gubernatorial administration. I cannot fathom how Californians could re-elect Senator Boxer, but I do acknowledge their hesitation with Carly Fiorina (I supported Tom Campbell in the primary). Are these really the best leaders that California can produce?

Fortunately, there were a few positives from the election.

First and foremost, the naked power grab by the Democratic Party oligarchy in California, Proposition 27, failed at the ballot box by nearly a 60% majority. Proposition 27's aim was to disband the Citizens Redistricting Commission and to return redistricting decisions to the California Legislature, currently dominated by the Democrats with a nearly 2-to-1 majority. Proposition 27 was funded by many well-connected, big money donors to the Democratic Party, many from outside California! For more information, see ...

Proposition 27 Revealed!

http://soquelbythecreek.blogspot.com/2010/09/proposition-27-revealed.html

Interestingly, the electorate not only defeated Proposition 27 but also passed Proposition 20 by a 60%+ majority. Proposition 20 increased the power and scope of the Citizens Redistricting Commission by expanding their redistricting responsibilities to include U.S. Congressional districts. This has big implications for future elections especially given the changes in the 2010 Census. As evidence that redistricting reform is needed, just look at how many California incumbents were re-elected in a year when other states removed long-standing incumbents from office. The poster boy for redistricting reform is 20-term Congressman Pete Stark, who received over 95% of his campaign contributions from out-of-state political action committees (PACs). Does he work for his constituents or for his benefactors?

Bill Lockyer was re-elected state Treasurer. Interestingly, in an 2009 address to the California Legislature he said, "Particularly I would say to the Democrats, in an era when we aren't going to have tax increases, give it up. Figure out how to be more efficient about spending the money we've got."

http://soquelbythecreek.blogspot.com/2010/02/california-treasurer-lockyer-scolds.html

His words were prescient about other California 2010 election results.

Proposition 21 failed. There will be no additional car fees to pay for state parks (although I supported this one).

Proposition 22 passed. The state can no longer raid local governments for funds.

Proposition 24 failed. There will be no repeal of earlier corporate tax breaks.

Proposition 26 passed. Fee increases now require a 2/3rd majority vote, just like taxes.

California's future will be interesting, to say the least. Over the last decade, California's government spending increased both as a percent of gross domestic product (GDP, or the size of the economy) and per person, adjusted for inflation (shown here as constant 2005 dollars).

The state's taxpayers still face a massively underfunded state employee pension problem along with dwindling tax revenues. The pension problem was spawned by the California Legislature when it approved overly generous pension benefits with SB 400 passed in 1999. Ahhhh, yes. Remember 1999? We were all going to get rich selling dog food from our web site--and then the Internet bubble popped. Californians and California businesses long ago adjusted to that economic reality. California's state government and pension system has yet to confront either the economic reality of the 2000 Internet bubble or the 2008 sub-prime mortgage bubble.

Again, in California State Treasurer Bill Lockyer's prescient words ...

It's impossible for this Legislature to reform the pension system and if we don't, we bankrupt the state.
...
And I don't think anybody can do it here because of who elected you. You're just captive of the current environment. I don't see any way out.

It really inspires confidence and provides hope for the future, doesn't it? What exactly did Bill Lockyer mean when he said, "I don't think anybody can do it here because of WHO elected you"? Who elected the California Legislators? Wasn't it the people? Or, was Bill Lockyer merely acknowledging the people that PAID to elect many of the California Legislature--namely public sector unions. After all, according to the California Fair Political Practices Commission (FPPC), the California Teachers Association (CTA) and the California State Council of Service Employees (a.k.a. SEIU) are the two largest spenders in California politics, attempting to influence voters and public officials. See the full list on page 10 in the following document.

Big Money Talks: California's Billion Dollar Club

http://www.fppc.ca.gov/reports/Report31110.pdf

After the 2010 election, California Democrats now have nearly unanimous control of the State of California, including the following offices.

Governor (Jerry Brown)
Lt. Governor (Gavin Newsom)
Secretary of State (Debra Bowen)
Controller (John Chiang)
Treasurer (Bill Lockyer)
Attorney General (likely at the time of this writing)
Insurance Commissioner (Dave Jones)
A nearly two-thirds majority in the California Senate
A nearly two-thirds majority in the California Assembly

California Democrats now OWN the government's response to success or failure of the California economy going forward. I hope and pray that they can show real leadership in addressing state's many daunting challenges. First and foremost, they must confront their traditional allies in California's public sector unions and adjust California's budget to reflect economic reality.

Personally, I expect conditions to deteriorate as more California taxpayers and businesses move to other states or at least leave California's taxation authority.

For a great read on how California arrived in this horrible situation, I recommend ...

The Golden State’s War on Itself: How politicians turned the California Dream into a nightmare

http://www.city-journal.org/2010/20_3_california-economy.html

A Fake Latino Reform Group Appears in Nevada

2010-10-20T09:55:00.000-07:00

Apparently the Nevada Angle/Reid Senate race is going ugly. First, it was radio ads against Sharron Angle from a fake Tea Party group called The Patriot Majority, funded by labor unions and Harry Reid supporters. Now, radio ads urging Hispanics not to vote in the upcoming election come from a fake reform group called Latinos for Reform.

There is scant Federal Elections Commission (FEC) data on this group, although OpenSecrets.org has some information.

Latinos for Reform: Overview

http://www.opensecrets.org/527s/527cmtedetail.php?ein=943447148&cycle=2008

Donor List

http://www.opensecrets.org/527s/527cmtedetail_donors.php?ein=943447148&cycle=2008

An alternate source of information is from CampaignMoney.com. Their data matches the OpenSecrets.org information.

From the OpenSecrets.org information, it appears that the organization raised most of their money in 2008 and spent all but about $25,000. According to NPR, the group ran advertisements against candidate Obama in the 2008 Presidential race. The NPR article also indicates that Latinos for Reform has connections to a Republican political consultant named Robert Posada.

Searching for the address at the bottom of the Latinos for Reform web page, yields hits to one of the contributors of record for Latinos for Reform. The address itself appears to be in rural Virginia.

One Marketing & Research Inc.
205 North Berry Lane
Madison, VA 22727

The company appears not have an independent web site. Searching for One Marketing & Research yields a LinkedIn profile for one Robert Posada of One Marketing &Research.

Robert Posada's name appears on a 2008 IRS filing for Latinos for Reform. Robert de Posada is listed as the "contact person" on line 6a. Similarly, Robert Garcia de Posada of One Marketing & Research Inc. is listed as a contributor on page 2, 6th contributor from the top.

Here's a classic Jimmy Kimmel send up on the situation.

See also …

Soquel by the Creek, “A Fake Tea Party Group Appears in Nevada”

NPR, “Promoting An Ethnic Wedge Issue,” October 24, 2008

Fire Dog Lake, “Latinos for Reform Run By Bush Pioneers and Appointees”

Huffington Post, “GOP-Linked 'Latinos For Reform' Airs Nevada Ads Urging Hispanics Not To Vote”

Talking Points Memo (TPM), “Just Coming Right Out & Saying It”

Talking Points Memo (TPM), "Maker Of Ad Telling Latinos Not To Vote Has Long History In GOP"

Resources for Tracking Campaign Spending

2010-10-19T13:24:00.000-07:00

A variety of people have requested information on how to track campaign spending. Here are a few of my personal favorites. I would love to hear if you have others to suggest.

Center for Responsive Politics

My all-time favorite tracking tool for campaign spending is OpenSecrets.org, run by the Center for Responsive Politics.

Their search engine could use some work, but the information is generally there for those willing to dig a little deeper.

Here are some of the things that you can find.

Also read their free online guidebook, "Follow The Money: A Handbook for Do-It-Yourself Data-Digging".

Influence Explorer

Influence Explorer is a great tool courtesy of the Sunlight Foundation. It doesn't provide as much detail as OpenSecrets.org, but it's a great starting point to see overall spending and relationships.

MAPLight.org

The MAPLight.org web site is another great resource. I find it particularly useful for tracking Californian politicians, my home state. Here are some of the things that I can find using MAPLight.

What are the top political interests contributing to my California Assemblyman, Bill Monning?
Who are the top donors to Bill Monning?
By default, MAPlight only shows current year donations. However, with the search engine, you can dig deeper and into prior years.

Influence Tracker

Influence Tracker is a fun tool courtesy of Wired Magazine, MAPLight, and OpenSecrets.org. Enter the name of a federal-level politician, last name first. It then creates a web page showing the contributions to the politician and (my personal favorite), a NASCAR-like shirt with the logos of the largest contributors.

The text box in the lower left corner includes code so that you can embed the result in your own website. Here's an example screen capture for Harry Reid, who is running for U.S. Senate in Nevada.

Don't confuse Influence Tracker with Influence Explorer listed above.

National Institute on Money in State Politics

FollowTheMoney.org is another good site that is very complementary to OpenSecrets.org, which focuses primarily on national races.

CampaignMoney.com

I find the CampaignMoney.com site itself difficult, but it often comes up during Google searches. It only shows contributions to a campaign, and not spending with a PAC or a 527 committee.

I find it easiest to enter a search string directly in the browser address field. For example, here is a search for George Soros spending during the current election cycle. This gives you the general pattern.

http://www.campaignmoney.com/political/contributions/george-soros.asp?cycle=10

ElectionTrack.com

ElectionTrack.com is a great resource for tracking campaign spending in California. It's fairly simplistic, but timely and easy.

For example, I used the specific page on those funding Yes on Proposition 27 to write a recent article revealing how the donors supporting Proposition 27 are well-connected to a single political party. It's easy to search for a specific donor or amount.

Federal Election Commission (FEC)

The Federal Election Commission web site is the ultimate resource for tracking federal elections spending, including PACs and 572s.

Click the Campaign Finance and Data link.
Then, click Search the Disclosure Database link.
You can search for donations from a specific individual.
You can search for a Political Action Committee (PAC). For example, here is the search result for "Patriotic Majority PAC" for a recent article about this fake Tea Party group.

Internal Revenue Service

California Secretary of State

The ultimate resource for tracking campaign spending in California is the Secretary of State's office. Likely, there are similar sites for other states.

For example, I needed historical data on those funding opposition to 2005's Proposition 77, a previous attempt at redistricting reform.

FundRace

The Huffington Post FundRace tool is another tracking tool for campaign donations. It has some relatively good top-level tracking tools on where money is going by occupation and city.

NPR

Here's an oldie but goodie from NPR dated from 2008. NPR has had some good journalism about "shadow money" (examples here and here), but I do have some concerns about possible corrupting influence going forward due to the Soros/Open Society Foundation investment.

"Who's Who: Key Leaders Of Independent Groups", September 2008.

A Fake Tea Party Group Appears in Nevada

2010-10-18T14:36:00.001-07:00

[updated 24-OCT-2010]

While listening to The Jerry Doyle Show via the web from a Las Vegas radio station KDWN, I heard a political advertisement from a supposed Tea Party group against Nevada Senate candidate Sharron Angle and supporting another candidate named Scott Ashjian. The group called themselves The Patriot Majority PAC, which certainly sounds like a Tea Party organization. According to the Las Vegas Review-Journal, The Patriot Majority has spent over $831,000 against Sharron Angle as of October 15, 2010.

Here is an audio clip of the ad, although this one is slightly different than the one that I heard. This is the raw feed, including the preamble information probably used by the radio station.

Having never heard of the group, I searched for them on OpenSecrets.org. I found little available yet, except for a blog post, describing the organization (look for the group's logo). OpenSecrets.org also lists the independent expenditures so far. There is a well-funded 527 organization with a similar name with significant contributions in 2010 and 2008 from AFSCME and SEIU.

Okay, so now it's off to the Federal Elections Commission (FEC) web site.

According to required financial disclosures, The Patriot Majority PAC received nearly $2 million as of 23-OCT-2010.

Looking through the FEC disclosures, I find the following major contributors of $10,000 or more.

1. SEIU Committee on Political Education (COPE): $400,000

2. American Federation of Teachers (AFT): $300,000

3. Guy David Gundlach: $300,000

4. MGM Resorts and MGM Mirage: $300,000

5. VoteVets.org Action Fund: $250,000

6. American Association for Justice (AAJ PAC): $100,000

7. Clean Energy Fuels Corporation: $75,000

8. Harrah's Operating Company: $75,000

9. Carpenter's Legislative Improvement Committee, United Brotherhood of Carpenters and Joiners: $60,000

10. San Pablo Lytton Casino (San Pablo, CA): $50,000

11. Laborers' International Union of North America (LIUNA) PAC: $20,000

12. Sheet Metal Workers International PAC: $10,000

According to FEC filings, The Patriot Majority PAC "committee will not use those funds to make contributions, whether direct, in-kind, or via coordinated communications, to federal candidates or committees." It's funny how everybody aware of the system knows that this is baloney.

Let's look again at the major donors. More than a few are associated with major labor unions that are listed on the OpenSecrets.org list of major political donors, known as the Heavy Hitters list. Here are a few examples.

Service Employees International Union (SEIU) is #11 on the Heavy Hitters list with 95% of their contributions going to Democrats.
American Federation of Teachers (AFT) is #13 on the Heavy Hitters list with 98% of their contributions going to Democrats.
American Association for Justice (AAJ) is #6 on the Heavy Hitters list with 90% of their contributions going to Democrats.
United Brotherhood of Carpenters and Joiners is #12 on the Heavy Hitters list with 89% of their contributions going to Democrats.

What about individual donors? Do they primarily donate to Democrats?

According to OpenSecrets.org, Guy David Gundlach, who gave $300,000 to The Patriot Majority, also gave $2,400 to Harry Reid's campaign (the maximum legally allowed) and $10,000 to the Democratic Party of Nevada. Harry Reid is the incumbent Senator in Nevada running against Sharron Angle. A person of the same name also gave $2,400 to Nevada Congresswoman Shelley Berkley, a Democrat, but the donation was from a California address. Likewise, Guy David Gundlach also gave $12,400 to the Reid Nevada Fund (see page 28, first contributor).
According to OpenSecrets.org, VoteVets.org gives exclusively to Democrats in 2010 and primarily to Democrats in 2008.
According to Influence Explorer, Clean Energy Fuels Corporation gives primarily to Republicans, but has supported Harry Reid.
According to Influence Explorer, Harrah's Entertainment, which may be different than Harrah's Operating Company, is a major contributor to Harry Reid.
According to Influence Explorer, MGM Mirage was a major donor to both Senator Harry Reid and Congresswoman Shelley Berkley, although their political contributions were fairly evenly balanced between parties.
One strange member of the list is the San Pablo Lytton Casino in California, which is apparently part of the Lytton Rancheria Of California. I'm not sure what interest they have in this fight other than the casino owners obviously have connections to Nevada casinos.

I also looked up to see who owns the web domain for The Patriot Majority.

http://www.whois.net/whois/patriotmajority.us

The site is registered to "Craig Varoga" with an "independentstrategies.com" E-mail address. Craig Varoga is also the Treasurers name for the FEC filings. Who is Craig Varoga? According to the Independent Strategies web site ...

http://www.independentstrategies.com/page.php?id=94510

Craig Varoga is a national political strategist whose presidential experience includes managing former Iowa Governor Tom Vilsack’s campaign for president, serving as national field director for retired Four Star General Wesley Clark, managing the Texas Truth Squad in 2000 and running the state-research program for the Clinton-Gore re-election. ... During the 1990s, Varoga served as communications director to Senator Harry Reid .... Partner at Varoga & Associates and founder of the Patriot Majority, Varoga writes a monthly column ("Ask the Campaign Doctor") for Campaigns & Elections magazine.

But still, who is Craig Varoga? According to a Michelle Malkin post from April, 2010.

Before them, it was Craig Varoga--a shady Democrat political operative and overseer of a convoluted, money-shuffling web of 527s. He launched TheTeaPartyisOver.org in January to target Republicans who supported the Tea Party movement and to prevent the "radical" and "dangerous" fiscal accountability agenda from "gaining legislative traction."

Joseph Abrams also wrote about Craig Varoga and friends back in February, 2010.

Here's how it works: What appears like a local groundswell is in fact the creation of two men -- Craig Varoga and George Rakis, Democratic Party strategists who have set up a number of so-called 527 groups, the non-profit election organizations that hammer on contentious issues (think Swift Boats, for example).

Varoga and Rakis keep a central mailing address in Washington, pulling in soft money contributions from unions and other well-padded sources to engage in what amounts to a legal laundering system. The money -- tens of millions of dollars -- gets circulated around to different states by the 527s, which pay for TV ads, Internet campaigns and lobbyist salaries, all while keeping the hands of the unions clean -- for the most part.
...
And this whitewash is entirely legal, say election law experts, who told FoxNews.com that this arrangement more or less the norm in Washington.

"It's not illegal but it is, I think, dishonest on the part of the organizations," said Paul Ryan, a legal counsel at the Campaign Legal Center. "And there's a reason they do it: they know voters don't like outsiders coming in to sway the vote."
...
Outside of that firm, the center of their activity appears to be a single office in Southeast D.C. -- 300 M Street, Suite 1102 -- which plays host to a sprawling political shell game they have established.

Public records show at least seven political shops listed in Suite 1102, most of which are essentially clones of one another, but all of which have offered money -- from measly thousands to game-changing millions -- in state-level elections across the country:
The American Public Policy Committee [2010 donations | 2008 donations ]
Patriot Majority [2010 donations | 2008 donations ]
Citizens for Progress [2010 donations | 2008 donations ]
Oklahoma Freedom Fund [ 2008 donations ]
Mid Atlantic Leadership Fund [2010 donations ]
Public Security Now [ 2008 donations ]
Pioneer Majority [ 2008 donations ]
Bluegrass Freedom Fund [ 2008 donations ]
The APPC, which developed the anti-tea party ads, has gotten all of its money for 2010 from Patriot Majority and from Citizens for Progress, which is also called Patriot Majority West.

The 300 M Street, Suite 1102, Washington DC address appears to be the current address for political law firm Sandler Reiff & Young and for business law and litigation firm Shapiro Sher Guinot & Sandler. The "Sandler" in both firms are cousins Paul Mark Sandler of Shapiro Sher Guinot & Sandler and Joseph E. Sandler of Sandler Reiff & Young. Paul Mark Rosen of Shapiro Sher Guinot & Sandler has been involved in high-profile campaign law cases.

USA Today: "Feds probe for Clinton campaign violations", October, 2004.

Talk about Astroturf, I'm calling this one TOTALLY BUSTED! on The Patriot Majority. By all measures, this is a sham Tea Party group and is purposefully deceptive. Anybody from The Patriot Majority care to refute these findings? For you Sarah Palin fans, refute means refudiate. :-)

Source Data

(link to table)

See also ...

Center for Public Integrity, "Craig Varoga"

Las Vegas Review-Journal, "Reid distances himself from group attacking Lowden"

Las Vega Sun, "Pro-Harry Reid group out with radio ad touting Scott Ashjian"

Politico, "Casinos place bets on Reid"

DC Independent Examiner, "When Astroturf is really Astroturf: phony grassroots PAC reveals massive 527 network"

Washington Examiner, "Want to know how to really astroturf a movement? Just ask Democrat money men Craig Varoga and George Rakis"

Washington Post, "Democratic group targets tea party candidates"

FoxNews.com, "Anti-Tea Party Web Site Part of Scheme to Funnel Funds"

Las Vegas Review-Journal, "Reid, Angle even on campaign cash"

NPR, "Profile: Patriot Majority"

MSNBC (30-MAR-2010)

American Thinker, "Information War: TheTeaPartyIsOver.org"

Nevada News Bureau, "Chickens For Checkups TV Ad & Patriot Majority PAC"

Cranky Hermit, "MGM Resorts Dives Headfirst Into the Campaign - And Some Employees and Customers May Not Be Too Happy About It"

SF Weekly, "Jackpot: How four tiny Indian tribes, with help from powerful gambling interests, are trying to transform the Bay Area into a slot machine Mecca," October 27, 2004. Article about the Lytton Casino and Indian gaming in California.

Soquel by the Creek, "A Fake Latino Reform Group Appears in Nevada"

Craig Varoga, Varoga & Associates: This site looks nearly identical to the Independent Strategies web site.

The Big Spenders Behind the Scenes

2010-10-18T13:25:00.000-07:00

Many political pundits and even the President and Vice-President themselves are decrying the amount of money being spent behind the scenes in the 2010 election. I happen to agree, as I have been concerned about this for about a decade now. Nearly half a trillion dollars, some $480 million, was spent just on 527 committee activity in the 2004, 2006, 2008, and so far in the 2010 elections.

However, look at who and which organizations are spending behind the scenes by examining the contribution to 527 political organizations, otherwise known as "soft money." This money is not subject to the same legal constraints as direct contributions to a state or national candidate.

Fortunately, organizations like the Center for Responsive Politics (www.OpenSecrets.org) scour the required campaign disclosure statements and publish the results.

Here are the total for the top contributors to 527 committees for the time period covering the 2004, 2006, 2008, and 2010 election cycles. Obviously, not all the 2010 contributions are included as the 2010 election is still in progress.

(link to table)

A few things are notable from the table and chart.

The Service Employees International Union (SEIU) is the 800-pound gorilla of 527 campaign funding, providing nearly 30% of the total 527 funding. SEIU was a major contributor to the Obama Presidential campaign and various current and former SEIU executive members are now part of the Obama Administration, including frequent White House visitor, former SEIU President Andy Stern on the President's Deficit Commission and SEIU Secretary/Treasurer Anna Berger at the President's Small Business Summit.
Many of those funding the Joint Victory Campaign 2004 are also major campaign contributors including George Soros of Soros Fund Management and the Open Society Institute, Peter B. Lewis of the appropriately named Progressive Corp., and Stephen Bing of Shangri-la Entertainment.
Those contributing to the Victory Campaign 2004 (not to be confused with the Joint Victory Campaign) were primarily smaller donors.
Nine of the top ten donors gives primarily to Democratic Party candidates. The one Republican-oriented group is Perry Homes. Robert J. Perry is perhaps most infamously known for the Swiftboat campaign against John Kerry in the 2004 Presidential race.
Golden West Financial is the brainchild of Herbert Sandler and Marion Sandler. Well Fargo Bank, who purchased Wachovia Corp. during the height of the 2008 financial crisism was forced to modify loans sold by Golden West Financial's World Savings, which was later purchased by Wachovia. Both of the Sandler's are major contributors to the Center for American Progress, a leftist, progressive think tank, also often connected with George Soros.

It is also interesting to see the contributions by election cycle. It becomes obvious that SEIU is the dominant 527 committee donor. It also becomes obvious of the huge sums spent in the 2004 and 2008 elections, which were Presidential election years.

(link to table)