2010-06-19: National Debt: Too Big And Getting Bigger
A Sacramento judge ruled Tuesday that the state can raid more than $30 million from Victor Valley redevelopment agencies ? a move city officials have said could stall local road and building projects and hamper efforts to attract new businesses.
This is going to have some impact. Local governments sold bonds--borrowed money--based on state law, which allowed them to dedicate a tax increment to the redevelopment agency, to help with repayment. Many cities are already shuffling funds from one agency to another in order to stave off layoffs, defaults, and bankruptcy. This foolhardy move by uncaring spendthrifts in Sacramento could result in one or more California cities or counties being forced into bankruptcy under the bankruptcy code.
Other possible effects:
- New or existing projects will be delayed, resulting in higher interest and other carrying charges to the local agency.
- Because the state can seize revenues from local agencies at any time, making revenue streams uncertain, local governments throughout California will face higher risk premiums and fewer willing investors whenever they seek outside financing.
- The State of California will once again avoid the kind of deep restructuring that it has needed for at least ten years. It isn't just layoffs that are needed. There are all sorts of independent commissions that should be consolidated into fewer and smaller executive agencies. There should be one person--the Governor--responsible for all executive actions in the state. The current mishmash of separately-elected department heads and so-called "independent" agencies whose governing boards are appointed under the state's cumbersome one-for-you-one-for-me process has got to go. California can get rid of highly compensated agency heads, commissioners, and managers, and then cut back on the number of subordinates it keeps.
- Many local governments may default on their bonds and go through bankruptcy restructuring. Like the state itself, local governments tend to rely upon debt financing for most construction. It is politically infeasible to cut current expenditures in order to pay for a building or maintenance program. It is far easier to pay off a bond than it is to raise taxes or cut spending enough to prepay the project.
- Affected projects could include road repairs, congestion-relief projects, "blight" cleanup, sewer repairs, water pipelines, and other infrastructure.
- Local government agencies may raise fees and set up "trap" financing. An example of trap financing is Los Angeles' move to fine banks $1,000 per day for refusing to maintain repossessed properties, many of whom have residents who refuse to allow maintenance crews in because they are undergoing an eviction process. Once the residents refuse access, the banks can no longer send maintenance crews to the properties, hence they are 'trapped' in a fine-paying situation.
- Local governments are more likely to look at other ways to raise funds at the expense of their residents. For example, there may be special assessment districts formed to re-raise funds for infrastructure. Traffic-light camera systems are likely to be expanded, and yellow-light grace periods shortened, as a way to raise money for cities' general funds.
- School districts are probably also going to join the hunt for funds, charging parents for their students' bus rides, requiring parents to purchase more of the supplies used in the classroom, and charging for extracurricular activities such as sports teams and drama clubs. Look for attempts to sneak in commercial advertisements in exchange for zero-price supplies and content, or perhaps exclusive franchise deals, such as requiring all student athletes to wear a particular brand of athletic gear.
This decision was so bone-headed that I wonder how the judge could justify it. California law allows local entities to set up redevelopment agencies, which borrow funds in their own names, secured against the increased tax revenues of properties within the redevelopment district. In reliance on the assurances of that law, local agencies formed such districts, borrowed funds, and incurred obligations. By allowing the state to seize those redevelopment funds, the judge broke faith with everyone involved in the local governments which formed such redevelopment agencies, as well as breaking with every bondholder or lender for those redevelopment agencies.
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2010-04-30: Statement On The DISCLOSE Act
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."
I'm glad for some action on disclosure of corporate campaign contributions and electioneering, but it doesn't go far enough. What the US needs is a constitutional amendment which strikes down "corporate personhood". Once we no longer give corporations special rights that aren't available to individuals, much of the corrosive influence they've had on our government will go away. Now, I have to be clear that a corporation is not just a profit-seeking entity, but that corporations include non-profits, unions, and advocacy groups as well. So, for example, Citibank, Sears, Wal-mart, and General Motors are corporations, but so are the ACLU, Greenpeace, the NRA, the Catholic church, and the United Auto Workers. There is no reason why an organization should have a greater say in forming policy than the individuals that comprise it.
As for the bill, do its reporting requirements apply to these other corporations, too? If not, it is fatally flawed.
Whether the bill passes in its current for or not, let us work together to restore the influence of individuals by eliminating the influence of corporations [and corp-alike entities] entirely.
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2010-04-29: California Budget A Job Killer?
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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2010-03-30: Secret Treaty May Threaten Constitution
The goal of the trade pact is to tighten enforcement of global intellectual property rules. The leaked draft, though incomplete in many respects, makes clear that negotiators are considering ideas and principles not reflected in U.S. law.
ACTA could, for example, pressure Internet service providers -- such as Comcast and Verizon -- to kick users offline when they (or their children) have been accused of repeated copyright infringement because of content uploaded to sites such as YouTube. It also might oblige the United States to impose criminal liability on those who "incite" copyright violation. The draft more generally addresses "IP infringement" and thus could extend some of its rules to trademark and possibly patent law in ways that, after inevitable international compromises, will depart from U.S. law. It also contemplates creating an international "oversight council" to supervise (and possibly amend) aspects of the agreement.
This is a frightening expansion of Presidential power. Reading the article (yes, please go read it and come back). The proposed treaty itself already raises fundamental constitutional questions. To augment that by routing around Congress is not a good thing. You see, unless Congress or the Supreme Court stands up to the Executive Branch, this means that the copyright abuse industries (movie industry, record industry, software industry, publishing industry) will dictate government policy without any recourse by citizens.
For those who believed that this administration would be different from the previous administration, this should put all such thoughts to rest. In either case, the power of the federal government expands, and that of the executive branch in particular, while the rights of citizens wither and are ignored.
The "three strikes" provision alluded to above would require ISPs (e.g., Verizon) to permanently cancel a customer's Internet access in response to accusations of copyright infringement--not convictions, accusations--with little or no "due process" required. If the user uploads a video of his or her small child dancing to a copyrighted song,
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2010-03-18: DDR Weekend: The War Song
I hadn't seen this since the 1980s. In a conversation with MJ about anti-war music, I mentioned this. He hadn't seen it at all.
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2010-02-19: State Gov't Pensions Have $1B Gap To Fill
The Pew Center on the States released a survey Thursday of state-administered pension plans, retiree health care and other post-employment benefits in all 50 states that blamed a decade's worth of policy decisions for leaving them shortchanged.
The result for some states will be "high annual costs that come with significant unfunded liabilities, lower bond ratings, less money available for services, higher taxes and the specter of worsening problems in the future," the study said.
The cost of the trillion-dollar shortfall, which will be paid over the coming decades, is about $8,800 for each American household. The study did not include many city, county and municipal pension plans, which are thought to have similar underfunding.
The article says that an estimated $1 trillion dollars in unfunded state pension liabilities will have to be made up through some sure-to-be unpopular actions. It also says that local governments were not included in this study, but it is thought that they have a similar shortfall to cover. Also, Y!News articles don't stay up very long. In about ten days, you may not be able to find it again.
Are there similar unfunded liabilities in the federal government? Yes, there are. For one, Social Security is unfunded. Sure, there is a so-called fund for Social Security benefits. But that fund consists of federal bonds--IOUs--which are promises to pay back funds out of then-current tax revenues. In the case of borrowing from Social Security, this is done without openly admitting that the funds are being borrowed for current spending. It looks like we'll be in repayment mode later this year (2010) or early next year, so expect to see sudden growth in the federal deficit.
So how do we fix this? Well it didn't happen overnight, and a solution won't either. We got into this situation because it is politically popular to have benefit programs and military endeavors, but politically unpopular to raise people's taxes in order to pay for them. We'll either have to cut way back on the programs and endeavors, or we'll have to raise taxes sharply.
There is a third option: make a foolish move. What kind of foolish move? Well, one way would be to turn on the printing presses and inflate the currency rapidly, so that repaying these liabilities (in then-current dollars) would not be so expensive. This, of course, would scare foreign investors, including China. They would watch the value of their assets (dollars held as a result of American imports of their products and bonds held as a result of their funding our government's overspending) plummet, and they wouldn't be too happy about it. Another way is to default on some or all of the obligations. This may be inevitable, given the size of the deficit in proportion to National Income (NI), as measured by GDP. But that would mean that many exporting nations would refuse to do business with us, and many others would only use a cash-only basis. If the size of the shock to a foreign economy is large enough, it could even cause a war.
This, by the way, is more of the econolypse showing through. The econolypse, for those who haven't been paying attention, isn't just the present economic meltdown. The econolypse is the revealing of what has been going on behind the scenes in the economy. The negative effects we're experiencing are just symptoms of a deep and systematic disease. And unfortunately, both the present administration and the former have failed to deal with the roots of the sitatuation--instead, they have sought to bring back the veneer of prosperity which existed a few years ago (but which concealed a rotten carcass). States, particularly California, failed to set aside adequate reserves during the go-go years, when anyone with a pulse was offered a home loan, real estate prices were growing rapidly, and consumers borrowed on their homes in order to spend-spend-spend. Further, states looked at the situation and thought it would be permanent, so they based their financial futures on ever-increasing tax revenues. When the house of cards began to collapse, their dreams of always-upward revenues were broken. Now, we are left with figuring out how to pay benefits we promised to people who have already done the work for which the benefit was earned.
Personally, I'd like to see us raise and dramatically simplify taxes1, as well as sharply curtail government spending. There is always some group that benefits from an agency's existence, so it isn't easy to close them. But we'll have to close and consolidate some agencies, stop performing some functions, and tell a lot of people who had safe and secure jobs that they no longer have them. It will take years of stick-to-it persistence.
1 I favor absolutely no deductions or credits of any kind, for anyone, with two or three brackes: For those who earn under $20,000 per year (index these bracket amounts to inflation), zero tax. For those who earn $20,000 to $250,000 per year, 25% of each dollar above $19,999 should go to federal taxes. For those who earn over $250,000, I could support a third bracket at 35% of every dollar over $250,000. For corporations, I favor taking pay for managers and executives out of post-tax income (meaning no deduction for the corporation, so no subsidies from taxpayers for the company's management). I also favor taking debt repayment (bonds, notes, et cetera) out of post-tax income, because it isn't right for the rest of us taxpayers to subsidize corporations' unsound capital structures.
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Pilot Joe Stack's Full Manifesto ...
Man angry at IRS crashes plane into building
I just read this on the Daily News site. I don't know what to say. I'm just shocked.
Mr. Stack, it is too late. You already flew your plane into the IRS building in Austin, TX, but I really want to respond to your rant.
First of all, everyone knows that the government is bought and paid for by corporate organizations. No one over the age of thirty, certainly, believes the garbage we were taught in school. We each have to deal with it in our own way, but very few of us try to blow up government buildings or hope to foment a revolution.
Did you even know what a revolution would mean? Did you think about the millions of American who would die if something like that happened? About the race-hate groups who would try and make it an ethnically-based us-versus-them thing? Did you think about the foreign powers who are just waiting for America to fall into anarchy, so they can march in and take us over?
Have you read about the killing frenzy which was the French revolution? They started off executing those who had been oppressing them, and wound up with near-complete anarchy and an orgy of blood. If you had even the slightest concern for America and Americans, you would not want that to come here.
Did you even think about those of us who have to fly? Just when the TSA was starting to use a little common sense, bozos like you and the Christmas bomber come along and ruin it for the rest of us. Or maybe that was your goal? To cause them to require strip searches for anyone boarding any kind of flying machine? It seems to me that the goal of most terrorism is to cause the nation to overreact, in the hope of breaking down the society. It that was your goal, I sincerely hope it fails.
Is the tax system fair? No, of course not. The only fair system would have no deductions of any kind, and one tax rate for everyone who made more than some minimum figure--such as $20,000 per year--and would be so simple that a ten year-old could figure someone's taxes. A fair system would be unchanging, meaning that we wouldn't be subsidizing this group and that group through lower taxation on them than everyone else. A fair system would have individuals' and business' tax levies subject to full examination by the courts, not with an eye to preserving exemptions and deductions and exclusions, but to ensuring that due process is followed, even after the fact. As you wrote, none of these things are true.
The tax system is complicated because the government plays one group off against the other. A no-deduction, no-exemption tax system would run into objections from married couples (because unmarried people would no longer be subsidizing them), parents (because childless people would no longer be subsidizing them), homeowners (because renters would no longer be subsidizing them), real estate brokers and mortgage lenders (because without the interest subsidy, borrowers would be more careful about getting good loans, if they bought at all), self-employed individuals (because their home offices would no longer be subsidized by everyone else), investment banks (because there would be no demand for "passive loss" investments), people in certain age groups or ethnic groups (because they also would lose subsidies), medical insurance companies (because their products would no longer be tax-subsidized when offered through employers), student loan companies (because the interest paid on loans would no longer be subsidized by everyone else), and many more groups.
A fair tax system wouldn't have the lower half of us, with, with 13-17% of taxable income, paying about 3-7% of the tax burden [PDF], as odd as it sounds, because this is part of the reason people want governmental expansion: it costs them little because someone else is paying for it. It wouldn't rely upon number voodoo (e.g., off-the-books borrowing from Social Security) to make things look like we aren't overspending or undertaxing. It wouldn't allow top-bracket taxpayers to use "financial engineering" to reduce their taxes. It wouldn't allow corporations to escape their share of taxes by moving the headquarters overseas, but would tax each company according to the share of profit that is derived from within US borders. It wouldn't allow companies to reduce their taxes by taking out loans instead of issuing stock. Instead, it would encourage prudent financial structures by eliminating the tax subsidy for debt that is built into our current tax system. Without deductible interest payments, people would have an incentive to save up instead of borrowing, so it would put our nation's people on a better financial footing.
When Americans turn off the television and stop becoming passive media consumers, their brainwashing will wear off, and all of these things will change. Until then, the best thing that you could have done, and the best thing that those of us still living can do, is educate those around us about our government, our tax system, and the media. I sincerely wish you had gone to the FBI and told them to incarcerate you. Your stupidity will make it all the more hard for those of us who wish to reform the system to be heard.
As always, everything I write here is my own personal opinion, not that of Disco Technologies, Snotnosed Brats, Open Technology Pros, LLC, or of any employer, government agency, or family member.
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2010-02-14: DOJ No Friend Of Privacy
The FBI and other police agencies don't need to obtain a search warrant to learn the locations of Americans' cell phones, the U.S. Department of Justice told a federal appeals court in Philadelphia on Friday.
A Justice Department attorney told the Third Circuit Court of Appeals that there is no constitutional problem with obtaining records from cellular providers that can reveal the approximate locations of handheld and mobile devices.
This is frightening. Despite the fourth amendment's guarantee of privacy against unreasonable searches, the government is seeking to gain warrantless access to people's historical locations. Imagine that you are downtown and you see some robbers enter a mini-mart. Wisely, you flee, and you decide that you don't want to testify, so you don't come forward.
The government pulls the mobile phone records, sees that you were very close to that place at that time, now, they may decide you are a potential suspect, or they may decide that you're a witness. Either way, without having any specific basis, they'd be pulling records of phones from the local towers. Now you have to tell them what you saw, and hope you can escape without testifying.
Please be aware that I am not approving anyone's testify / do not testify decision. I am saying that without privacy, they'll know who was there, whether or not they testify.
As the judge himself asked, what if you attend a protest march? Should they be allowed to use your mobile carrier as a surveillance tool? I certainly hope the court rules in favor of privacy and against expansive government intrusion.
Your girlfriend spends the night while your wife is visiting her sister. I'm not saying I approve of it, but why should the police know about it?
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2010-02-05: Paranoia Continues To Fuel Stupidity
A Jewish teenager trying to pray on a New York-to-Kentucky flight caused a scare Thursday when he pulled out a set of small boxes containing holy scrolls, leading the captain to divert the flight to Philadelphia, where the commuter plane was greeted by police, bomb-sniffing dogs and federal agents.
Have you ever wondered what is wrong with people when they make obviously stupid decisions? Jewish males have used prayer boxes since at least the time of Jesus. It is a well-known practice that certain observant Jews (not everyone is religious, but we are talking about a group of those who are religious) use these in their prayer rituals.
Apparently, someone decided that it could be a bomb.
Question: why do we bother taking off our shoes and going through all of the security theater at airports if we still have to be afraid that a praying teen is a dangerous? The screening ritual is already an ordeal, so if it needs to be more rigorous, do it.
This doesn't quite match the vice-principal of a technology magnet school who decided a student's homemade science project was a possible explosive, but come on, Americans. Turn off the television and the radio. Use your own brains. Think. Ask questions. Mull over the answers, and then formulate new questions to ask.
As it stands now, we are in the middle of one of the fastest self-destruction processes in recorded history. If we intend to turn it around, we have to stop with the fear obsession. Take some risks. Let Junior walk to and from school without you surreptitiously spying to ensure his safety. You want him to grow up and learn to think for himself? Now is the time to teach it to him. You cannot wait until he is 18 or even 21 and then expect him to ever pick it up. It starts now.
Stop obsessing about terrorism and get back to living you life!
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