Author: Joe Armendariz

Assemblyman Pedro Nava has essentially the same remedy for every problem facing California. Indeed, regardless of the question, Pedro’s answer is the same, create a new tax, hike an existing tax, or make a temporary tax wider, deeper and permanent. Nava’s advice for every fiscal ill that we face is to ask all of us to pay more taxes and call him in the morning…at which point he will probably be well on his way to his next political office.

In his latest attempt to right what he thinks is wrong about oil development in California, Nava is calling for…you got it, a new tax. A so-called "severance tax" on all of the oil produced here in California. This is Pedro’s latest political tonic to help grow his chances at becoming California’s next Attorney General. A severance tax is "fair", according to Nava, because oil companies are getting a "free ride" and that is, well, unfair. But are oil companies in California really getting a free ride as Nava suggests? Hardly. In fact, not only is this suggestion laughable, but the next thing we know Nava will suggest the Balloon Boy’s dad deserves the Nobel Prize for Science.

Due to the way the State’s cash flow works, e.g. the lion’s share of budget expenditures occur in the first half of the fiscal year and the lion’s share of revenues come into the state treasury in the second half of the fiscal year, the state’s need for a cash cushion is essential to help smooth this cash flow discrepancy.

However, as the LAO chart below illustrates, the state’s cash cushion going into the first half of the next fiscal year is a third of what it was just two years ago. Also significant is the fact that the only reason the state is ending this fiscal year with a “cash cushion” at all is because of budget gimmicks and short term loans and transfers engineered by the Legislature in September, 2008 and February, 2009.

I got the strangest phone call this morning…

…someone claiming to be the national debt called me …it was the weirdest thing.

I said hello? and it said money never sleeps pal…so I said who is this? it said this is the national debt, I said the national who? it said the national debt you dope! I said dope? excuse me…why are you calling me?

It said, I’m calling everyone…I said why? It said because I’m hungry…I said what are you talking about? It said yeah, everyone needs to eat, especially someone who weighs over $11 trillion pounds dollars, except that my food comes to me in the form of interest…

ah…

so I said you want more interest? It said exactly…I want more interest…

And so what am I supposed to do about that? It said support politicians who want to tax, spend and borrow …because that is how I will eat more and how I will grow bigger, stronger and more powerful…

Today whenever you debate a public employee you will hear them justify their annual raises as if to deny them that would subject them to abject poverty. This is bunk.

First of all, what increase in the cost of living are they referring to?

Are housing prices higher today than they were a year ago? How about rents? How about automobiles? How about gas? How about food? how about computers? How about cell phones?

Are interest rates higher today than a year ago? In fact, they are at never before seen lows rivaling Japans rates during their so-called “lost decade”.

There is no increase in the cost of living that justifies these perpetual increases in public sector labor costs.

Insanity is defined as doing the same things and expecting different results. This is also an apt description for what is being proposed in our nation’s capitol, with respect to how to stimulate the American economy.

President-elect Barack Obama, once he takes office, should re-direct the hundreds of billions of recycled stimulus dollars into our nation’s military industrial infrastructure. The jobs created in our nation’s defense industries are the type of jobs that pay annual wages a family can actually live on.

Plus, these jobs are value-added. New public investment in cutting edge defense technologies will also have civilian applications and this will help drive entire new private industries into existence. It would also make America and our allies safer and that ain’t no small thing.