Golden State Bailout?
A piece I penned in today’s New York Times, entitled Golden State Bailout, grew out of some reporting I did for a post at Fox&Hounds a few weeks ago. Despite all of today’s back and forth, the case for the state to receive federal loan guarantees for its short-term borrowing is a very easy one. Such borrowing would keep the state from falling off the cliff, and there’s virtually no risk — and absolutely no cost — to the treasury. In fact, California will have to pay a fee.
That said, for political and policy reasons (namely, that California appears unable to govern itself), the feds should attach major conditions to guarantees. Essentially, the feds should use its leverage on the short-term cash flow problem to force the state to adopt a real budget plan that fixes the long-term, structural deficit.
How can CA win the Lottery? Become a powerful magnet for the next wave of innovative products!
This week the Assembly
Revenue and Taxation Committee passed — with 6 voting yes and 3 not
voting — a bill that brings California in line with 47 other states by
exempting the sales tax on manufacturing equipment and giving working
families a fighting chance for higher paying careers. The
bill is AB 829 by Assemblymember Anna Caballero.
Unfortunately, the bill was amended to include offsetting revenue
sources, a difficult circumstance during tough budget times.
But the vote on the bill shows that legislators want to put out the
welcome mat for high wage employers.
Many in both
the capitol and media circles have argued that companies aren’t leaving
the state and they often use that as carte blanche to oppose the
removal of any barriers to conducting business in California —
including reinstatement of the sales tax exemption that our employers
lost back in 2003.
A Wealth of Movement
How often have you heard the bromide about how the rich get richer and the poor get poorer?
Well, it’s difficult to look over this year’s list of the wealthiest Angelenos, which is in the May 18 issue of the Los Angeles Business Journal, and declare that that’s true. By our count, 41 of the 50 wealthiest Angelenos lost money over the last year, and eight of them lost more than $1 billion each. Only three on the Business Journal’s wealthiest list actually gained money. On the whole, the rich certainly did not get richer.
Now, I know some could argue that this is only one year and an aberrant one at that, so it doesn’t really count. Over time, the rich do get richer and the poor, poorer.
Governor Obama
When I voted for Barack Obama for President. I certainly never expected him to wind up as the de facto Governor of California.
Now it looks like the only way out of this money mess is to just give up and toss it all onto the good faith and credit of the federal government. If effect, President Obama will soon be wearing at least one more hat as the CEO of the now rather tarnished Golden State. Not fun, but a better bet than his General Motors hat any day.
Fine with me. This may be just what California needs, a political Supreme Being who can order up salvation with the stroke of a pen, a Hercules who can clean out the stables in Sacramento by simply letting the American River overflow the capitol, a smart guy who can add and subtract and, by the way, inspire.
But, can anyone really save us from ourselves?
New Jobs Will Balance Budget
On Monday night, several lawmakers could be overheard in the Southwest Terminal in Sacramento saying that layoffs are eminent as are tax hikes and more spending cuts. (They were assuming that the budget reform initiatives were going to fail the next day—and they were proven right!).
Sadly, we don’t hear more about improving our business climate to generate new tax revenues and to reverse unemployment trends. So, here is a quick list of ideas for more than a handful of legislators to consider:
· Give manufacturers more incentives to operate in California, particularly in areas where large employers have gone out of business (i.e. auto dealerships).
· Provide employers some help in creating jobs instead of downsizing their workforces.
· Take another big step in protecting employers from lawsuits that are unheard of in almost every other state.