Remember the federal "economic stimulus" bill that was supposed to
curtail job losses and prevent our economy from failing?

Well, despite
the rosy assurances from President Obama and Congress, unemployment
remains high and the economy is teetering on the verge of a double-dip
recession. The only thing that appears to be "stimulated" is the
national debt, which is now a jaw-dropping – and record high – $13.2
trillion.

The nonpartisan Congressional Budget Office recently laid out a
sobering potential future for America as part of its long-term budget
outlook, in which the national debt reaches 90 percent of Gross
Domestic Product by 2020. Aggravated by increasingly higher interest on
increasingly higher debt, that figure rises to 180 percent by 2035,
leading to a fiscal crisis that destabilizes the national economy.

Last week President Barack Obama emphasized once again the importance
of doing everything possible to aid small businesses in jump-starting
the U.S. economy. We agree, and that is why we are speaking out about a
very disturbing part of the Health Care Reform Bill that has nothing to
do with health care and everything to do with small business. It is
Section 9006, which would place an unprecedented burden on small
business reporting and paper work requirements.

This provision would require any business that purchases more than $600
of goods or services from another business to submit a 1099 tax form to
the Internal Revenue Service. The mandate, which is to take effect in
2012, was included to help pay for the health care bill and was
estimated to raise $17 billion.

At a time when President Obama and everyone else agrees that our
economy needs small businesses to help our country grow out of this
recession, saddling them with expensive new paperwork requirements only
further hampers their ability to succeed and ultimately aid in our
economic recovery. H.R. 5141 and S. 3578, the "Small Business Paperwork
Mandate Elimination Act" would repeal this section of the "Patient
Protection and Affordable Care Act."

In 2005, I wrote in a document titled, Creating a Business Friendly California, meant to energize the business community: "To achieve a business friendly California, the business community must speak directly to the voters.  We must educate voters on issues of the economy, business, regulations, and taxes. It’s not enough to educate the elected policy makers. Voters are the policy makers, themselves, when they vote on initiatives.  We have to show them that a business friendly California is good for everybody."

Finally, such an effort is coming about thanks to the United States Chamber of Commerce. The Chamber issued a report the end of last month on California’s economic troubles and offered suggestions on how to turn around our economy. You can find the full report here.

The Chamber plans to back up this report with a media campaign to get the word out along the lines of my proposal from years ago.

California
needs high quality jobs, new manufacturing facilities and small
business growth. Rational state environmental policy, supported by
economic impacts analysis, will help us achieve these goals.

Unfortunately, the state is implementing another expensive
environmental program that drags the economy farther down. SB 375,
passed into law two years ago, seeks bold greenhouse gas emission
reductions by controlling regional planning policies.

As the lead agency, the California
Air Resources Board (CARB) has been charged with working with Regional
Metropolitan Planning Organizations (MPOs) to determine reasonable and
achievable greenhouse gas targets to meet the goals of SB 375. The
substantial undertaking started out as a collaborative process but it
has turned into a disaster for the economy.

It
is no secret that two Texas oil companies have bought their way onto
the California ballot in an attempt to undo California’s clean energy
and clean air standards. The companies bankrolling Proposition 23,
Tesoro and Valero, are two of the largest polluters in our state. Their
intent: kill California’s job-creating clean air and energy standards
and cripple their clean-energy competition.

Their campaign, which has received more than 89 percent of its
contributions from out of state, deceptively frames Proposition 23 as a
"jobs" initiative and uses the word "suspend" rather than repeal. But
the trigger for resumption of the law would be when unemployment falls
below 5.5 percent for an entire year – something that has happened only
three times in 40 years, according to the Legislative Analyst’s Office.
For any business, Prop 23 would create a climate of uncertainty and
cause chaos in the marketplace.

As the recovery begins, albeit fitfully, where can we expect growth
in jobs, incomes and, most importantly, middle class opportunities? In
the US there are two emerging "new" economies, one largely promoted by
the Administration and the other more grounded in longer-term market
and demographic forces.

The November election and its subsequent massive expansion of
federal power may have determined which regions win the post-bust
economy, but the stakes in November are particularly acute for some
prime beneficiaries of what could be called the Obama economy: the
education lobby, Silicon Valley venture firms, Wall Street, urban land
interests and the public sector. All backers of his 2008 campaign,
these groups have either reaped significant benefits from the stimulus
or have used it to bolster themselves from the worst impact of the
recession.

In a sense the Obama policies are designed to overturn the pattern
of economic dispersion -towards the exurbs, the south, the
intermountain West, and more recently the Plains – that has defined the
last half century. The biggest winner, in regional terms, is the
Washington area. Even as local governments cut back, the federal
establishment continues to swell. Federal employment, excluding the
postal service, remains roughly 200,000 larger than in 2008.

You remember the fairy tale … the little girl visits her grandmother but notices something strange about her … "What big teeth you have, grandmother."

A Big Bad Wolf has dressed up as Little Red Riding Hood’s grandmother so as to catch her by surprise and devour her.

The backers of Proposition 27 play the Big Bad Wolf in a modern day version of the tale. The politicians behind Prop 27 want to devour the poor voters who think it’s a good idea to remove legislators from the obvious self-interest of drawing their own legislative districts.

In their magnificent study about eight centuries of financial folly
("This Time Is Different"), economists Ken Rogoff and Carmen Reinhart
lampoon the low level of accuracy with which governments maintain their
books: ""Think of the implicit guarantees given to the massive mortgage
lenders that ultimately added trillions to the effective size of
national debt, the trillions in dollars in off-balance sheet
transactions engaged in by the Federal Reserve . . . not to mention
unfunded pension and medical liabilities. Lack of transparency . . . is
almost comical."

It’s also expensive. In a recent study, Alicia Munnell, a member of
President Clinton’s Council of Economic Advisors and now director of
the Center for Retirement Research at Boston College cited one example:

"In 1999, the California Public Employees’
Retirement System (CalPERS) reported that assets equaled 128 percent of
liabilities, [after which] the California legislature enhanced the
benefits of both current and future employees. If CalPERS liabilities
had been valued at the riskless rate, the plan would have been only 88
percent funded. An accurate reporting of benefits to liabilities would
avoid this type of expansion . . .."

We
just celebrated Labor Day, which means you’ve gotten a dose of boring
"state of the labor market" articles and opinions. Alas, this is
another one.

The
situation on the job front is not good. You probably know that unemployment
nationwide was 9.6 percent in August. It was much worse in California
at 12.3 percent and in Los
Angeles County
at 12.4 percent in July. A year earlier, L.A.’s
unemployment was 11.9 percent. In other words, it was bad last year and worse
this year.

But
you may not know that the unemployment rate only tells some of the story.
Another part is how many jobs are being created. Or lost.