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Statement by the President on the DISCLOSE Act | The White House

The White House

Office of the Press Secretary
For Immediate Release
April 29, 2010
Statement by the President on the DISCLOSE Act

"I welcome the introduction of this strong bi-partisan legislation to control the flood of special interest money into America?s elections. Powerful special interests and their lobbyists should not be able to drown out the voices of the American people. Yet they work ceaselessly toward that goal: they claim the protection of the Constitution in extending this power, and they exploit every loophole in the law to escape limits on their activities. The legislation introduced today would establish the toughest-ever disclosure requirements for election-related spending by big oil corporations, Wall Street and other special interests, so the American people can follow the money and see clearly which special interests are funding political campaign activity and trying to buy representation in our government. I have long believed that sunlight is the best disinfectant, and this legislation will shine an unprecedented light on corporate spending in political campaigns. This bill will also prohibit foreign entities from manipulating the outcomes of American elections and help close other special interest loopholes. I hope that Congress will give this legislation the swift consideration it deserves, which is especially urgent now in the aftermath of the Supreme Court?s Citizens United decision. Passing the legislation is a critical step in restoring our government to its rightful owners: the American people."

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Pedro Nava: Governor Schwarzenegger's Budget Is a California Job Killer

Republicans say their number one priority is jobs. What about the jobs of the people who teach our children and care for the sick and elderly? How come their jobs don't matter? What about our classroom sizes? What about the seniors who are currently receiving health care that keeps them out of nursing homes? What about keeping our schools safe and clean? What about the children who will be left without health insurance? What about caring for the disabled?

It may be easy for conservatives to win political points by beating up on California's workers and talking about cuts, cuts, cuts, but it is important to remember that California's employees provide valuable services that benefit all of us. The reality is that California's workers are scientists, teachers, school bus drivers, firefighters, game wardens, and nurses among other things. They teach and protect our children, enforce the law, preserve the environment, care for the disabled, treat the sick, and provide other valuable services. A "cuts only" budget will hurt all Californians. In addition to looking for ways to save money, the Legislature and the Governor must look at possible revenue sources.

Mr. Nava, the problem, as I see it, is that California's public employees have been spared from the wrenching job cuts that workers in private industry take for granted. California has a chronic budget deficit, in violation of its own constitution, yet refuses to take the necessary steps to get its financial house in order. The current financial crunch merely intensifies an already-existing over-reliance on financial gimmicks and borrowing in order to avoid the real cuts that are needed.

Now, the foundation of California's financial problem is Proposition XIII, which caps property tax revenues for local governments and schools, making them all dependent upon statewide revenues. By pushing schools to complete dependence upon state funding, true local control is impossible, so schools cannot react to the situations "on the ground" in their local communities. Cities and counties eagerly pursue low-paying retail businesses, because they generate sales tax revenues, even though higher-paying extraction, transportation, and production businesses would be more helpful to area residents. Another effect of Prop. 13 is that newly-built and recently-purchased properties receive a higher valuation for tax purposes than older properties that have been held by the same owner for several years. This means that localities have an incentive to seek rapid and unchecked development, even at the expense of lowering the quality of life for their residents.

What California needs is to completely rewrite parts of the state constitution that deal with taxation, so that local governments have an incentive to make life better for their local residents, school districts are controlled and funded by local parents and other local residents, and the state government's structure is streamlined. I imagine that the effect will be higher taxes to support schools, parks, and city / county programs and services. Meanwhile, residents will probably send less money to Sacramento. This matters, because our schools need more and better teachers (but fewer administrators, each of whom draws a reduced salary). Our colleges (University of California, California State University, and California Community Colleges) need stable funding patterns that eliminate "fee increase" landmines that shipwreck our next generation's future. Colleges also need to have sufficient funding for grants, so that most students can graduate "loan free" and able to pursue whatever they wish.

The article quoted also goes on to describe a proposed "extraction tax" on oil production. This might be a good idea, particularly if it also applied to other extraction activities, such as mining. However, without cutting California's prodigious appetite for spending and borrowing, new and higher taxes will never be enough.

In this state, we have enough independent commissions to wallpaper the governor's mansion with. Why is there a "Board of Equalization" and a "Franchise Tax Board"? Why aren't they all consolidated into a "division of revenue" within the state treasury department? Why isn't the California Coastal Commission under the direct authority of the Governor?

The truth is, California's politics and budgets have been "job killers" for twenty years. Don't confuse the microcomputer (PC), semiconductor, software, and Internet booms with real, long term job growth. In each of these fields, one after another, companies find out that they can save money by moving their production offshore, and they do so, leaving only a remnant of jobs here in California.

Politics, because we lack the willpower to create a consistent framework for economic policies. Everything seems to be ad hoc, spur-of-the-moment, because we can't look far enough ahead, nor can we follow an already approved policy, because of political infighting. Budgets because we focus so much on short term, spend-all-you-got-and-ignore-the-future policies that we're always caught flat-footed by the next minor downturn. California borrows up to its nose, then screams in fear when the ground underneath it sinks, leaving it underwater. Any way you look at it, California is a mess, and not likely to get better soon.

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It is no secret to anyone that California's financial problems are symptomatic of an underlying pathology of unbalanced budgets. This has been the rule, rather than the exception, for ten to fifteen years or more.

I recall when Pete Wilson was Governor. California was severely impacted by a recession. Rather than cut spending across the board to match revenues, the K-12 schools were sheltered, while other programs suffered financial massacres. The University of California's revenues are partially protected by the state constitution, but the California State University and the California community colleges are not. So the campuses that cater to lower income students, disadvantaged students, and first-generation college students faced deep budget cuts and their students experienced steep increases in "fees". (Note: California's constitution prevents its public colleges from charging tuition, so they use the term "enrollment fee" to describe what everyone else knows as tuition.)

During the Wilson administration, the state also raised taxes, seized revenues that should have been forwarded to local governments, and borrowed from reserved funds. The overall effect was to make an already tough situation tougher for residents and businesses in the state--and to prolong the recession far beyond its end in the rest of the country.

Then came Gray Davis. Davis, a Democrat, came in as revenue surged. The dotcom boom was on, and for some reason, the state seemed to expect it to go on forever. State and local government payrolls grew rapidly, as did education budgets. The state decided to try to reduce class size to no more than twenty students in a classroom for grades K to 3. That was and is an admirable goal. But then came the inevitable crash, the dot-bomb, which caught the state with its pants (emergency fund) down.

After that came another revenue crunch. This one resulted in the recall of the governor, with actor Arnold Schwartzenegger being elected to replace him. "The Governator" soon discovered that the state's chronic and serial deficits were not just a few small miscalculations by the former governor's administration, but were symptoms of a systemic aversion to corraling spending, even in the face of a widespread determination to try and keep taxes from increasing.

Now California is faced with another such crisis. As before, there are games being played in which outgoing payments are delayed and reserved funds are borrowed. Local governments' funds are being held up. This time, however, there are some cuts going on. Teachers are being laid off--or at least warned that they may be--cities and counties are going beyond hiring freezes and Friday furlough days to actually starting to implement reductions in force. And yet, California still refuses to deal with its chronic overspending.

Rather than directly raise taxes, we usually tack fees on top of everything. Then, we give discounts and subsidies to large, out-of-area corporations (LOOACs) to motivate them to come to town. The effect of this is to shift the burden onto families and smaller, locally-owned businesses (SLOBs). This has a secondary effect: since these LOOACs have their highly paid corporate officers elsewhere, the effect is to pump dollars out of the local area and ship them wherever the LOOAC is headquartered.

If anything, our governmental leaders appear to be living in a dream world. California is a beautiful place, full of wonderful (and not so wonderful) people. The California dream has made it the promised land. And yet, we have the idea that through the wonders of government, we can have something for nothing. We need to make sure that taxes (and fees) are tied directly to benefits and costs of government. At least as important, we need to provide all services at the lowest possible level--as close to the receiver of that service as we can--and ensure that the revenue needed to pay for it is also directed to that level of government (and not pulled to Sacramento first for aggregation and dispensing).

Tags: California, taxes, overspending

I am seeing a lot of crowing that we are in a recovery. I do not believe a word of it. Here's why:

Symptoms

*** Jobs are not a "trailing indicator", but are in fact one of the most accurate measures of how the everyday American experiences life. GDP, unfortunately, is badly skewed by throwing millionaires and billionaires in with thousandaires and hundredaires. So as soon as stock prices start rising, the wealthiest people start spending again, but it is two or three years later before the average Joe on the street is finally able to move out of his mother-in-law's place.

In this case, the jobs we lost were higher-paid. Financial services, automobile manufacturing, recreational vehicle manufacturing, and new/used car dealerships--most of the jobs lost in these industries are gone forever. Retail, fast food restaurants, education, government--in the first two fields, job gains may remain for a while, but people in these industries earn a fraction of what jobs in the now-closed industries above earned. In education and government, deep and lasting cuts are almost guranteed within the next two or three years, simply because there aren't enough private-sector jobs earning enough to pay enough in taxes to support the people working in those fields.

*** Real wages, or inflation-adjusted wages, have not increased in decades, and anecdotal evidence suggests that they have declined over the past fifteen to twenty years. Of course, the government changed the formula it uses to determine this around 1994, so some of the negative trends that the earlier calculation might have shown are muted by the current calculation. See ShadowStats for more information on that.

This means that the average Joe on the street hasn't had a noticeable raise since Bill Clinton was President. The lowest income people in the economy have, in fact, experienced a gradual pay cut, as prices have risen, but their wages have not kept pace.

*** Real estate prices are still insanely high, relative to people's incomes. The government's stabilization program was focused on stopping the price slide, because inflated real estate values are a huge part of many banks' portfolios.

We should also mention the AARP generation, a good number of whom are property owners as well as active voters, as a reason why the Bush and Obama administrations chose to prevent real estate prices from "right-sizing". Whatever the motivation, this will continue to price many families out of the market for owning their own SFDH (single-family detached housing) units, and as long as that remains true, we are all poorer for it.

*** Lack of criminal prosecutions against those in the financial and real estate industries (as well as publicly-traded corporations in other industries) is also an issue. I'm not a lawyer, not a police officer, not an accountant. But I'd be surprised if an energized and motivated DOJ couldn't bring 100 or more prosecutions in 18 months time against managers, officers, directors, advisors, and investors in these firms.

Now, the issue here is that everyone has seen how much cheating benefited these companies and their officers and investors. The rest of us will be spending the next thirty years paying for the resulting bailouts, on top of our already-existing responsibilities. Without aggressive prosecution, confidence in the economy will remain weak. When we see 100 or more corporate officers in orange jumpsuits and leg irons, we will know that we have turned the corner.

*** Corporate lobbying and political schmoozing. When I'm at work, I can easily spend 10, 12, or even more hours each day, six days a week, trying to make a living. I don't have much time or energy afterward to try and persuade a Congress-member to vote a certain way on an issue. Presumably, you don't either. You're more concerned with getting Junior fed, with his homework done and his bath taken, before his bedtime. Corporations have nearly-unlimited resources, and are therefore able to advocate for their points of view while you're trying to put bread on the table.

As long as politicians refuse to write and pass an amendment to our Constitution that eliminates "corporate personhood" and the rights that implies, we all know that the "playing field" is uneven. If you know that the government and the legal system are under the control of someone whose goal is to drain you of all your resources, will you be confident in the economy? No? Why not?

Remedies

What I'd really like to see is a renewed focus on helping people build small, locally-owned businesses (SLOBs), and a stern resolution to let LOOACs (large, out-of-area businesses) pay their own way. A resolution that will stop subsidizing the costs of importing goods from low-wage countries and stop ignoring companies right here that employ undocumented labor because it allows them to pay illegally low wages.

But realistically, this isn't likely unless the above-mentioned constitutional amendment passes. As long as corporations are legally persons, the right to petition for redress of grievances will allow them to continue to control Congress and the President--no matter who is in office--and through their control of the elected branches, they'll also control the courts.

Financial overhaul: I haven't read the administration's overhaul bill, but from what I have read about it, it neglects the very things that are necessary:

• Require compliance with state consumer-protection laws in the individual consumer's state. Establish criminal penalties for non-compliance, and allow states to prosecute violations.


• Remove enforcement powers from the Federal Reserve, which is not actually a government agency, and give them to an agency of the Treasury Department.


• Consolidate the seven dwarves, the alphabet soup of financial rule-making and enforcement agencies, excepting the FASB, into this Treasury-based agency.


• Reinstate "mark-to-market", the accounting rule which the FASB repealed under Congressional pressure, and alter other accounting rules to make accounting statements a more transparent, current, and accurate statement of a firm's financial condition in the present and the near future.


• Restore Glass-Steagall restrictions separating commercial, consumer, and investment banking from one another and from insurance (and reinsurance). Restrict financial firms' activities to a home state and its contiguous (touching) states. For example, a California bank would be allowed to expand into Nevada, Arizona, and Oregon, but not Washington or Utah.


• Financial institutions get a maximum of five years to shed holding companies and no-longer-allowed businesses and locations.


• Require "skin in the game". Loans and investments must be partly made from a firm's invested capital. This should put stockholders on the brake pedal. But to further discourage overly risky actions, corporate officers and upper management should also have some of their financial resources on the hook. This is not necessarily direct exposure (which could put their interests in competiton or opposition to the interests of stockholders), but perhaps making some of their assets available for recovery in the event of collapse.

Certainly, bringing goods from more than 500 to 1000 miles away should be expensive enough that local businesses, with local labor and local suppliers have an even shot at landing the sale. By this I'm referring to fuel subsidies, highway subsidies, and other ways that we take tax money and use it to lubricate the export of American workers' jobs.

Indeed, this country needs a profound focus on a common-sense energy policy. I'm not talking about a lunacy-based policy based on fear of carbon dioxide, either. I'm talking about the coming oil shortage, and its effect on transportation, keeping our homes warm, and even our agriculture. I'm talking about homes that are in areas where there is plenty of insolation (incoming solar radiation), but which have no system to capture some of that energy and put it to use. I'm talking about homes that are not highly-insulated , and which therefore require more energy to heat and cool. I'm talking about cities whose building codes forbid wind turbines, not because of safety, but because of aesthetics.

Adam Smith, the father of economics, recognized that the returns on doing business properly belong to those whose labor went into producing the product or service. A portion is rightly diverted to the provider of capital (in most cases, through providing money; capital itself is the land, buildings, equipment, tools, etc which are provided by the money and which are used to produce the product or service for sale, not the money itself) as a reward, and some portion is then paid to the managers and foremen who direct the laborers in their tasks of production. We have it backwards: management first, stockholders and lenders second, workers last.

What do these things have to do with recovery? Simple: the economy has been undergoing a radical transformation for several years. This economic crisis accelerated it, which is why two of the three US auto makers required taxpayer bailouts (and Chrysler is so gravely wounded that it isn't likely to see the end of 2011 in my opinion). There are whole industries that have lost many of the companies that were a part of said industry. Those companies, those jobs, are not coming back. Telling laid-off workers that going to college will help them obtain replacement jobs is false at best, and at its worst, a damnable lie. What we need is to recognize where we are and what our options are for undoing this mess we're in.

Tags: recovery, economy, recession, econolypse

Twenty years ago, when we had Barnes and Noble but no Amazon, there was all kinds of literature, from 2600 to Love & Rockets, from Heather Has Two Mommies to Duplex Planet, that survived mainly in the independent ecosystem, but whose host bookstores also needed to sell enough Stephen King or M. Scott Peck to stay open. Fifteen years ago, when use of the web was still a minority pursuit, online bookselling changed this game, but hadn?t yet ended it. Even ten years ago, when more than half of U.S. adults had already become internet users, there were still many book lovers not online. Though the value of bookstores in supporting variety had shrunk, it was still there.

Those days are over. Internet use is as widespread as cable TV, and an internet user in rural Utah has access to more books than a citizen of Greenwich Village had before the web. Millions more books. Like record stores and video rental places, physical bookstores simply can?t compete for breadth of offering and, also like the social changes around music and moving images, the internet is strengthening rather than weakening the ability of niches and sub-cultures to see themselves reflected in long-form writing.

Local Bookstores, Social Hubs, and Mutualization « Clay Shirky

Change is affecting many traditional businesses. In most cases, they are building walls to try and keep change out, rather than going with the flow of time. When American Motors was forced to ally with Renault in an attempt to stay alive, we recognized that it was probably near the end of the road for AMC, but no one thought for a second that people no longer needed to get from point A to point B.

So why do we panic when change comes to other industries? Technological change is what gave us the publishing industry to begin with. Societal (social, educational, and economic) change gave us retail bookstores. If change eventually replaces them with something else, we'll figure out new ways to derive the benefits that we currently obtain from books and bookstores.

There are lots of things that bookstores have tried, and lots more that they need to try. And if the retail model is no longer self-supporting, try to think about what comes after Amazon, because that's where smart sellers want to be.

The most important thing to realize is that a lot of businesses are being disintermediated. That is, the middleman who previously performed a valuable service by collecting and narrowing the selection of choices in a location near you is now increasingly unneeded. When one wants to buy, it is often the online vendor that has the selection and price. Frequently, that online vendor is also the publisher, too.

This is an interesting time for that industry, just as it is for newspapers, magazines, record companies, movie companies, and others who are seeing their business models collapsing.

Out of ashes, value.

Tags: retail, bookstores, economy

This was a personal favorite for a long time. I'd have bought it tonight if Amazon offered open formats (OGG audio--.oga or .ogg).

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Pretty heavy airplay by the disco stations meant that I heard this song a lot. Actually, I heard it long after I was ready for something else.

I can't believe how much I loved this song. Who knows how much time I spent going back and forth from 93 KHJ-AM to KIIS-FM chasing this song. The only time I saw them on television back then was on a very snowy UHF station (which, as I recall, I viewed on a black and white portable TV).


Televised performance video


Static video of the record playing

Yes, we're remembering the high energy dance music of the 1970s and the disco craze. Kind of appropriate thing for Disco Technologies, don't you think?

It has been a while since I've posted anything, but this begins another DDR Weekend.