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‘Think Long’ Group Short On Serious Ideas
NOV. 27, 2011 By STEVEN GREENHUT Would California be in better shape if former governors Arnold Schwarzenegger or Gray Davis, or former Assembly Speaker Willie Brown were back in power? That’s an odd question given the fiscal mess that those politicians helped create, or at least were powerless to fix. These politicos had their chance at the pinnacles of power, yet they blew it. Schwarzenegger was elected in a historic recall, yet he left the state in a more precarious position than when he assumed power. Davis and Brown were advocates for the big-spending, pro-public-sector-union policies that turned California’s government into a bloated mess. No one in the media would champion returning these former leaders to power. Yet the media are championing a new “Blueprint to Renew California” based on the year-long work of a commission dominated by these and other has-been politicians. The report, released Nov. 21 by the Think Long Committee for California, purports to provide out-of-the-box solutions. The committee is a who’s who of the California political establishment. Members include Davis and Willie Brown and included input from Schwarzenegger, Jerry Brown and Lt. Gov. Gavin Newsom. One won’t find many real reformers in the bunch. The only thing sillier than expecting this group to fix what ails California is the big idea unveiled by the committee, which amounts to a $10 billion annual tax increase on California residents. After a year, the best it could do is come up with a plan based on the same failed ideas that are fashionable in the Capitol all the time —- hiking taxes on ordinary Californians to spare the state bureaucracy the pain of the cutting knife. That isn’t thinking long. It’s thinking small. The most dangerous idea is a proposal to place a sales tax on every service in the state except for health care and education. That will mean that the cost of living here will go up, as everything from haircuts to lawn services will carry an additional tax. Even if the tax starts small, it will grow, given the spending tendencies typical in this state’s governments. The plan would eliminate most income-tax deductions, not including the mortgage deduction and a few other exemptions. Sales tax rates would drop slightly as would corporate tax rates. But virtually everyone would pay more in their overall tax bill although the reform would reduce income taxes for wealthier Californians. The committee would end the Proposition 98 guarantee that 40 percent of the state budget go to K-14 education, but then it promises the school establishment an increase in education funding from other sources. There’s no talk about educational choice or reform. The committee plans to place two initiatives on the November 2012 ballot, backed by billionaire financier Nicolas Berggruen. He is the latest in a long line of wealthy folks who come up with “state-saving” plans that end up taxing us more and rearranging the arm chairs around the 1,000-pound gorillas in the living room. The committee’s 23-page report also includes some detailed suggestions for improving the state government and reducing gridlock. Some of the ideas are OK as far as they go, but they rarely challenge establishment thinking. The report mentions the unsustainability of public-sector pensions but offers the lamest solution: “We recommend that the governor, legislature and local government officials make it the highest priority to work with public employee unions to find ways to address the long-term costs of pensions and the unfunded liabilities that have already been built up.” Thanks very much for that great advice! The commission spent a year coming up with detailed ways to increase taxes, but the best its members could do on the pension crisis is to call on officials to work with reform-averse unions to come up with unspecified reforms. The committee proposes the creation of a “Citizens Council for Government Accountability,” a toothless good-government body with amorphous goals. The committee would be “an independent, impartial and non-partisan body” that would “develop a vision encompassing long-term goals for California’s future.” This council would “be tasked with charting, coordinating, shepherding and sustaining an integrated strategy … aimed at creating educational excellence, world-class infrastructure, environmental quality” and blah, blah, blah. There’s no call for reducing government or creating competitive pressures on the monopoly systems that provide state services so poorly. If this council is populated by the same type of folks who populate the Think Long Committee, we will find yet another arm of government devoted to higher taxes and bigger government. Some of the committee’s budget and oversight reforms are fine, but of the insufficient variety that short-thinking reformers always come up with —- multi-year budgeting, a rainy day fund, a two-year-legislative session, pay-as-you-go legislation and a modification of term limits. The committee wants to use the initiative process to implement its ideas, but also wants to reduce the ability of ordinary California voters to use the initiative process for themselves. The committee “supports a constitutional amendment to allow the Legislature to review pending initiative proposals and to fix flaws.” Not only is this elitist —- the Legislature knows best! —- but it’s dishonest. The Legislature would gut those initiatives it doesn’t like (i.e., anything that limits taxes or government power). The committee also wants to increase the number of signatures needed to qualify an initiative for the ballot. There’s other discussions about “accelerating” the environmental review process, and for spending more money on the state’s admittedly dilapidated infrastructure and for higher education. Yet the establishment thinkers behind this report don’t recognize the inflationary affect of government spending on educational costs or the degree to which California’s infrastructure has crumbled because government has been misspending its vast resources. If this is thinking long, then I’d hate to see the group’s short-term proposals.
Comments(26) |
May 23, 2012
The sales tax is the most regressive tax there is-it KILLS the poor. Yet that is teh one they always go to when they want to ream the poor. It is always for a “good cause” like the Think Dorky people say, EDUCATION!!!!!! Yeah, I guess they never heard of Prop 98.
I mean this is such an obvious attack on the working class hero. It shifts an increasing amount of the tax burden on to the little people. But look at the ones who form the ‘think long’ committee and those who advise it. Have any of them EVER been concerned about the little people? Of course not. So why would they start now? The purpose of the ballot initiatives is to increase tax revenue. That is the ONLY purpose. Now they have to wrap the big piece of crap in fancy paper with a pretty bow to sell it to the California voters. Watch the big money pour in to accomplish that. Don’t EVER sell these people short on their ability and conviction to bombard the masses with contrived propoganda. How do you think we’ve arrived at where we are today? How many bond measures for education, or this or that, have been approved by the California voters over the years? Has education improved? Of course not.
Listen, folks. The well is running dry. These people are getting desperate. Somebody has to pay for those massive pensions. Someone has to fund guaranteed employment in the public sector. Someone has to provide free health care, education, welfare and funding to incarcerate over 100,000 illegal migrants in the State of California. Instead of directly going after the problem – once again – the elite are coming for your wallets. The more things change, the more they stay the same.
Don’t expect anything good.
NEW: ‘Think Long’ Group Short On Serious Ideas”
Their ideas are raising taxes on the poor, middle class and everyone in between so the government employees-the top 10%- make out like bandits , nothing new, same old same old.
These people are getting desperate. Somebody has to pay for those massive pensions. Someone has to fund guaranteed employment in the public sector
Only one person in one major CA city has doen ANYTHING about te government employment scam/problem, and tha person is Carl Demaio in San Diego.
Mark my words, after the election in June 2012 every new public employee in San Diego is going to be in a 401K style pension.
The only thing sillier than expecting this group to fix what ails California is the big idea unveiled by the committee, which amounts to a $10 billion annual tax increase on California residents. After a year, the best it could do is come up with a plan based on the same failed ideas that are fashionable in the Capitol all the time —- hiking taxes on ordinary Californians to spare the state bureaucracy the pain of the cutting knife.
And lets say-in arguendo- thsat htis massive tax increase does pass, do you know what will happen next???? We will be right back here again 5 years from now. Massive deficit and debts, top 10% public employees, and nothing will have changed.
Who remembers the “temporary” half cent sales tax in 1988/89 to pay for the Loma Prieta earthquake damage???? Well, ot was converted into a “public safety” tax, became permanent, and now we have mutli millionaire cops retiring at age 50. Yeah!!!!…… that worked out real good!
Cut cost of higher education in California. University of California Berkeley Chancellor Birgeneau hijack’s all our kids’ futures. I love University of California (UC) having been a student & lecturer. But today I am concerned that at times I do not recognize the UC I love. Like so many I am deeply disappointed by the pervasive failures of Regent Chairwoman Lansing, President Yudof, Chancellor Birgeneau from holding the line on rising costs & tuition increases
Chancellor Birgeneau has molded Cal. into the most expensive public university. Paying more is not a better education.
Californians are reeling from 19% unemployment (includes: those forced to work part time; those no longer searching), mortgage defaults, loss of unemployment benefits. And those who still have jobs are working longer for less. Faculty wages must reflect California’s ability to pay, not what others are paid.
Current pay increases for generously paid University of California Faculty is arrogance. Instate tuition consumes 14% of Ca. Median Family Income!
Paying more is not a better education. UC Berkeley(# 70 Forbes) tuition increases exceed the national average rate of increases.
UC President Yudof, Cal. Chancellor Birgeneau($450,000 salary) dismissed many much needed cost-cutting options. They did not consider freezing vacant faculty positions, increasing class size, requiring faculty to teach more classes, doubling the time between sabbaticals, cutting & freezing pay & benefits for chancellors & reforming pensions & the health benefits.
They said such faculty reforms “would not be healthy for UC”. Exodus of faculty, administrators? Who can afford them and where would they go?
We agree it is far from the ideal situation, but it is in the best interests of the university system & the state to stop cost increases. UC cannot expect to do business as usual: raising tuition; granting pay raises & huge bonuses during a weak economy that has sapped state revenues & individual Californians’ income.
There is no question the necessary realignments with economic reality are painful. Regent Chairwoman Lansing can bridge the public trust gap with reassurances that salaries & costs reflect California’s ability to pay. The sky above UC will not fall when Chancellor Birgeneau is ousted.
Opinions? Email the UC Board of Regents marsha.kelman@ucop.edu
There is no good reason to raise taxes and fees when wage concessions are available at UC. Government wages must reflect California’s ability to pay, not what other colleges are paid.
Californians are reeling from 19% unemployment (includes: those forced to work part time; those no longer searching),
The U-6 CA unemployment rate is what you’re quoting, and it is not 19%, it is 22% and has been at 22% for over 30 months now………
What gets me is they propose to simply take more money from the same pool of stagnant or dwindling pool of funds- the average Californian’s wallet. No mention of trying to increase that pool of funds by encouraging industry or bringing other businesses to the state, but I suppose that’s to be expected from the same folks who helped run the state into the ground in the first place.
Also no mention of cutting comp for gov employees who are grossly overpaid.
“UC cannot expect to do business as usual: raising tuition; granting pay raises & huge bonuses during a weak economy that has sapped state revenues & individual Californians’ income”
Mr. Moravec, do you understand one of the primary drivers of higher education cost inflation?
Like with any other commodity the cost of education is determined by supply and demand.
You see, the banks and the universities work hand in hand to bring as many students as possible into our college classrooms. Mr. Banker offers easily accessible educational loans (the bait) to students who need the money. And since these loans are guaranteed by the Federal government (taxpayer) Mr. Banker doesn’t give a damn whether these loans go out to sociology, art history or minority studies majors who are lucky to find jobs paying $12/hr after graduation. And, of course, the Federal government now prohibits student debtors from declaring bankruptcy on their obligation. Unlike 95% of other debts – the student loan debt follows them to their grave. Hence, these students exit undergrad school with $50,000 – $70,000 in student debt with few opportunities for gainful employment necessary to meet their living expenses and to pay back their loan. What does that produce? A DEBT SLAVE.
Naturally, the universities play along with this game because it brings in more students so that they get more government subsidies per student and fill the classrooms so that the professors stay on the payroll. Do you think they warn their students not to get in over their head with educational debt? Of course not. Once the student leaves campus with his little sheepskin the university doesn’t give a damn what happens to him.
You see, the university gets it’s money. Mr. Banker gets his money one way or the other since it is GUARANTEED by the Feds and since the debtor cannot declare bankruptcy on it, thereby forcing Mr. Banker to EAT THE LOSS for making a bad loan.
So, basically, what we are seeing here is another version of a banker induced real estate bubble. But this is a student loan bubble. And, as we know, all bubbles eventually explode.
The answer, of course, is to change the law and allow students to file bankruptcy on their educational loans – just like we Americans are allowed to do on 95% of our debts. But that would make Mr. Banker eat the loss – and since the bankers own Capital Hill – such a law would never get enacted. That’s essentially how the game is played in 2011.
You see, easy money has greatly inflated the demand for education. Just like easy money greatly inflated the demand for housing. See the correlation?
We know that all these games are unsustainable, Mr. Moravec. We know they must eventually come to an end – and when they do the chaos will begin.
Now you know the rest of the story.
Naturally, the universities play along with this game because it brings in more students so that they get more government subsidies per student and fill the classrooms so that the professors stay on the payroll. Do you think they warn their students not to get in over their head with educational debt? Of course not. Once the student leaves campus with his little sheepskin the university doesn’t give a damn what happens to him.
Many, if not the majority, of college and universities today exist soley to milk student loan funds from gov without regard to graduation rates or ability to repay the loans.
Case in point- Bridgepoint Education which runs “Ashford University”, one of many online “colleges” they run. The only problem is they allow in ANYONE and have a 85% drop out rate. The 15% who do graduate cannot pay back the federal loands b/c they are making $8 an hour with their worthless “Ashford” degree.
It is a scam, the Congress and leaders know it is a scam, and they don’t care because the tax[payers will foot the bill. The Bridgepoint Education’s will keep giving the Congress bribes to make sure their scams keep rolling in federal money.
BTW- not only are student loans not dischargable in BK, thye also have no statute of limitations which is unconstitutional-violates the contracts clause- but you sure don’t see any federal courts striking that law down do you-no, it helps their buddies that’s why.
Student loans lenders also can attach your property WITHOUT A COURT ORDER- that too is an unconstitutional violation of the contracts clause, but once again, you won’t see any federal judge striking that scam down either.
BTW, the law school scam is another rip off, where these cash cows ($5K per class in charges, x 30 classes, while the cost to the school is $500 per class) are popping up all over the country. Yet there are NO legal jobs, they are actually contracting big time, and more than 50%-75% of zALL graduating law students will NEVER work as an attorney, becuase there are no jobs for them.
See the Cooley and New York Law School class action lawsuits for more evidence of this scam. These schools have no regard of ability to repay the debt-they dont care.
Of course, Rex. It’s all a money-making scam for the universities and for the banks – that work together to screw the uninformed and naive young people – essentially turning them into debt slaves for the rest of their natural lives.
Do you think one university warns their students of these financial dangers? Nope. The student recruiting office sells the false belief that a college education is the road to wealth and riches. In 2011 we know that is a total lie.
Trust me, if kids were allowed to declare banktrupcty on their student loans thereby forcing Mr. Banker to EAT THE LOSSES – Mr. Banker would be VERY SELECTIVE about who he loans his money to! And that’s the way it SHOULD BE! Mr. Banker would be VERY recluctant to give a loan to a sociology, art history or women’s studies major. But Mr. Banker has the lawmakers in his back pocket and knows that HIS money (principle and interest) is guaranteed by the taxpayer and that he has the power to suck every earned dime or asset from the student debtor – backed by the strongarm of the government – until the day he is planted 6 feet under.
This is why tuition and fees at universities are going through the roof, Rex. The uniformed bait swallowers know that there’s easy money provided by Mr. Banker thus allowing him to attend college. DEMAND for a college education is at an all time high. If Mr. Banker were FORCED TO EAT HIS BAD LOANS AND LOSSES VIA STUDENT DEBT DEFAULT (bankruptcy)the cost of college tuition would plummet!
This is identical to the real estate bubble, Rex. The bankers were handing out mortgage loans to those they knew could not repay the loan. But they didn’t care because they KNEW the government would bail them out. And that’s exactly what happened! And that is EXACTLY what is happening with student loan debt. THE VERY SAME SCAM REPLAYED IN A DIFFERENT MARKETPLACE!!!!
The differnce between SL’s and the home/Real Estate bubble is the people who bought over priced homes csan walk away, and not be sued for the losses. They are in a FAR BETTER position than a poor student who has nothing, yet they can walk.
Big scam. Sallie Mae started this scam, by getting the BK laws changed and claiming there was a crush of students filing BK to discharge student loans and the system would fail, when in fact there was not-that was a lie, that was a HUGE lie, proven up in a law review article from Michgan law professor John Pottow. Less than 1/2 of 1% of students filed BK on their loans when that legislation was slipped into a bill as a”rider”. Sallie Mae was paying their CEO Al Lord $500 million over 4 years-and ALL of that money came on the backs of the poor and middel class. Sallie Mae makes MORE money when a SL defaults, thereby encouraging them to default SL’s. ALL of Sallie Mae’s top executives rotate back and forth between the DoE and Sallie Mae. Like I said in another post, these scams are set up with Big Business-like Sallie Mae- where they offer jobs to the people who regulate them so they can game the system.
“The differnce between SL’s and the home/Real Estate bubble is the people who bought over priced homes csan walk away, and not be sued for the losses”
Not always, rex. Depends on if the loan was recourse or non-recourse. If recourse the bank can follow them and collect. Minimally, their credit rating is screwed for at least 7 years, possibly 10.
But, yes, the student is totally screwed. Young and naive – they take the bait and are hooked for life, unaware of the consequences for making a deal with the devil.
Yep. The bandits are rotated through business and government jobs. Many in Obama’s administration are old Wall Street thugs from Goldman and JP Morgan. They do a stint for government then go back to their old stomping grounds on Wall Street. They’ve rigged the system so that everything is perfectly orchestrated to support the elite and screw the little people.
Everytime I hear “of, for and by the people” I howl with laughter.
Not always, rex. Depends on if the loan was recourse or non-recourse.
Trust deeds (aka mortgages) in CA are all non recourse. All of them.
OK, fast correct here-Under California law, lenders cannot go after a borrower for a deficient balance from a FIRST MORTGAGE (aka a “trust deed”, TD is the correct term) used to purchase a residence, but not so for 2nd r 3rds which me be recourse-CCP § 580b.
“Trust deeds (aka mortgages) in CA are all non recourse. All of them”
If you refinance a mortgage it automatically goes ‘recourse’. Research it.
There are other qualifiers for automatic ‘recourse’ too.
But generally first time mortgages on a property are ‘non-recourse’.
If you refinance it is still a first trust deed, non recourse. CCP 585b.
OK, refi IS recourse if it is a *judicial foreclosure*. If not (and most forclosures are non judicial) then it is non recourse.
So if it is a refi it depends on how the lender/bank proceeds with the foreclosure- to determine if the loan is recourse.
As a real estate broker I should have known that
You can raise taxes to 100% and it will not make a difference.
This generation of “leaders” will always spend more, more, more.
They are supported by an army of unassailable “experts” who are immune to basic, common sense, time-tested principles.
All of them were inculcated with the belief that the past has no bearing on the present, let alone the future. Their egos were inflated with “new,” revolutionary ideas that will “reinvent” the world.
If the budget is $10, they will spend $11. If you then raise the budget to $11, they will spend $12.
In the end, We, the People, WILL bear the worst of it. Sovereign immunity, y’know.
The die is cast. The only question is what event will trigger our collapse.
“OK, refi IS recourse if it is a *judicial foreclosure*. If not (and most forclosures are non judicial) then it is non recourse”
If a lender underwrote a refinanced RE loan (recourse type) for some guy and the bottom fell out of the RE market and the debtor walked away from his property which was, let’s say, $150k underwater….I am going to assume that a prudent and reasonable lender would file a ‘judicial foreclosure’ to recover the loss. Convince me otherwise.
If a lender underwrote a refinanced RE loan (recourse type) for some guy and the bottom fell out of the RE market and the debtor walked away from his property which was, let’s say, $150k underwater….I am going to assume that a prudent and reasonable lender would file a ‘judicial foreclosure’ to recover the loss. Convince me otherwise
No, judicial foreclosures are VERY uncommon. The banks essentially don’t want the brain damage and **legal costs** of engaging the judicial system. And last the banks are DUMB, very dumb. Also, the $150K is not going to be able to be recovered in most cases- the lenders view a judicial foreclosure as throwing good money after bad.
And banks are VERY DUMB (did I say that already??), the bigger they are the dumber they are. This is a very common scenario with a bank REO on a SFR, condo apartment etc…;
1) Bank will forecloses on a REO property, yet property in decent condition with nice landscaping;
2) REO proeprty has water turned off and $50K of landscaping is destroyed. This happens with 99% of all lender owned REO residential properties, SFR, Condo, apartments.
3) Loss of lanscaping costs value of home to drop by a $2, $3 or $4 to $1 margin. For every $1 of lanscaping the return is $2-$4 dollars in higher value. So loss of $50K in landscaping causes a loss in value of $100K or more in the properties value.
4) For REO properties that need minor rehab, banks will not put in the money for the best ROI of the property. Example, Paint, carpet and landscaping return $2-$4 for every $1 invested. Lenders, especially BIG banks (BofA, Wells etc) won’t do this. Why? They are dumber than a bag of rocks.
I was a broker in the recession of the late 1980′s and through the mid 1990′s, when we had the Ronnie Raygun S&L meltdown. The lunacy I dealt with with big lenders was mind boggling.
I will give you a good example of how stoopid these peopel are. In this example it was Freddie Mac. They had an REO property for sale for like $55K (this was in 1988) it had been on the market for over a year. The broker selling the REO said they would do a deal at $50K. I offered $48K and was going to do the deal in the middle at $50K, Freddie countered with $54K. I countered back with my best and final of $50K, they turned it down. Now remember, this property had been vacant for over 12 months. Carrying costs at 10% would be $5.5K per year. This property sat vacant another 6 months until I made a new offer at $45K, Freddie counteres at $49K, $1K LESS than what I had offered 6 months earlier. I countered at $46K, we did the deal at $48K. Freddie last $2K and 6 months of holding costs-about $2500. for a toal loss of $4500, 10% below what they could have sold the proeprty for 6 months earlier. Very typical
This kind of mismanagmenet is COMMON with TBTF lenders.
California will not hear the calls for it to get itself right. California is tax addicted, and its people are addicted to Government Services. Like all addicts, they do not see they have a problem. California’s tax addiction has been ignored for too long. Now California is about to OD and it is demanding a new source for its addiction. I will miss California. Too bad that no one was willing to force it into rehab.
California will not hear the calls for it to get itself right. California is tax addicted, and its people are addicted to Government Services. Like all addicts, they do not see they have a problem
No, we are not addicted to gov services- at leats most of are not, we have a small minority who have hijacked the ysstem, public employees.