Threatening Businesses Over Proposition 8

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Threatening businesses that have made donations in the Proposition 8 campaign on gay marriage has become a weapon used by both sides in the debate. Opposing Proposition 8, Californians Against Hate, created specifically to draw attention to donors who contributed to the measure, organized boycott efforts against some business contributors as reported in the Wall Street Journal and elsewhere. ProtectMarriage.com, a leading group supporting Prop 8, announced it will publicize any business that donates against the measure unless that company also makes an equal donation to the Yes side. Rest assured, that publicity is intended to be negative.

Asking consumers to be political activists with their dollars is not a new phenomenon. Some have argued it is a good way for people to become active in politics. University of South Carolina history professor Lawrence Glickman argued in a 2005 Boston Globe piece that, “The fact that so many Americans are not only ardent consumers but avid consumer activists suggests that they see consumption not only as a private pleasure but as a public good.”

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Lottery: The Schools Win Again!

Loren Kaye
President of the California Foundation for Commerce and Education

Modernizing the State Lottery and allowing the state to “securitize” (get an advance on) future revenues are well-known elements of the budget deal hammered out in September. A constitutional amendment and related changes to the lottery initiative will be proposed to voters at the next statewide election. The Governor estimates that these changes will result in a $5 billion bump in revenues in 2009-10, which will be used “to pay down debt and fill the rainy-day fund in the out-years.”

But one of the lesser-known features of this deal will be to disconnect the Lottery from its original purpose to supplement public school and college budgets. Instead, any surplus revenues beyond prizes, administration, and loan repayment will be deposited in the state General Fund. In return, the amount of lottery spending for public education this year will be added to the Proposition 98 guarantee, and increased as the constitutional minimum floor is raised. This is not a trivial change: for the eight years through 2006-07 (most recent data), lottery revenues increased by 34 percent while the Prop 98 guarantee increased by 54 percent.

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Pay now, pay later — but by all means pay more

Loren Kaye
President of the California Foundation for Commerce and Education

Much of the debate over controlling greenhouse gases is a variation of “pay now or pay later.” Pay a higher price (for a light bulb, refrigerator, or automobile) and save on more efficient operation later.

Since autos and light trucks account for more than a quarter of all GHG emissions in California, regulators are focusing their attention on more efficient automobiles. New technology to produce highly efficient cars will cost more, but the Air Resources Board, claims that “because these technology improvements will also reduce the operating cost of vehicles … the average consumer will ultimately save $30 a month.”

But are regulators considering all the operating costs of smaller or more efficient vehicles when determining a net benefit in purchasing and operating these vehicles? Perhaps not.

A recent report in the Wall Street Journal reveals there is more to cost than buying fuel. The cost to insure smaller or high technology vehicles is more than for larger or less fuel-efficient cars. And it isn’t a small difference.

For example, for a 40-year-old male, the miserly Honda Civic costs $412 more a year to insure than its big cousin, the Honda CR-V SUV, because small cars have higher premiums for personal injury protection for occupants and because they are more likely to be stolen than larger cars. So the better fuel efficiency of the Civic (assuming the current price of gas at $3.35 a gallon) won’t come into play until that car has been driven more than 13,600 miles.

A 2009 Toyota Camry hybrid costs $655 more a year to insure than its non-hybrid sibling – mostly because parts replacement is much more expensive for the high-tech vehicle. This means the fuel saving benefit for the hybrid will not become apparent until the car has been driven more than 18,450 miles.

Since the average passenger car in California travels less than 12,000 miles a year, these examples suggest there would be far less overall consumer savings than suggested by better fuel mileage alone. Advocates for cost-effective greenhouse gas reduction measures should take note, and include the full cost to the consumer of vehicle efficiency mandates.

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Imagine being happy the Dow only fell 300 points

David S. White
Principal of the Law Firm of David S. White & Associates, West Los Angeles, specializing in litigation, arbitration and mediation of real-estate-related disputes and litigation since 1977; www.dswlawyers.com

Last Friday was a real sign of the times. The market braced early Friday morning for a huge wipeout, so huge in fact, that a drop somewhere north of 1000 points would have stopped trading under emergency rules. The collective sighs of relief when the Dow only plunged 312.30 points, or 3.6 percent, could be heard in unison from all the TV Talking Heads and financial gurus. Earlier in the day, the Dow took a dive of more than 500 points and, judging from big drops in the Asian and European markets and the distinctly downward plunge of futures before Friday’s market opened, many feared the worst.

But the experiences of this strange year have re-defined what the “worst” now means. Once, a drop of over 300 points in the Dow would have been a really terrible, horrible, four or maybe five-martini day. Last Friday, it was actually cause for celebration.

We’ve become accustomed to wide daily swings and all the panic and fear those cause. The magic question, of course, is: when do we hit bottom? This should be the big buying signal to go back into the market, take some of that cash currently being hoarded on the sidelines, and take advantage of stocks which are down 50%, 60% or even 70% or more, from where they used to be just a short time ago. Paper losses right now are staggering. My condolences sincerely go out both to those who are already retired and living on fixed incomes and those who had planned to retire this year, or next, or the one after.

Robert Burns’ poem, “To a Mouse,” is often quoted for the saying that "The best-laid plans of mice and men/often go awry," (though the phrase in the original Scots of the poem is "The best laid schemes o’ mice an’ men/Gang aft agley," which is quite a bit tougher on the intellectual palate of the modern speaker). It certainly seems that most of what we took for granted back in the 20th Century is now all up for grabs nearly nine years into this strange new Century and Millennium.

World economics now resemble the cube-shaped, Bizzaro World from the old 1960’s Superman DC comic books, where, if you are too young to remember, everything familiar in our world was the opposite there. We are engaged in two serious wars in faraway places, with many more raging that we are not engaged in. The continental US was attacked in 2001 for the first time since the War of 1812. Our collected problems now include a crumbling infrastructure which will cost trillions to rebuild, leaving us no choice unless we want to see bridges collapsing like the one in Minneapolis, and tunnels sprouting leaks like Boston’s Big Dig with hundreds of places where the Massachusetts Bay dribbled into the tunnels running underneath, killing a poor woman motorist when a portion of the tunnel caved in on her. And, lest we forget, the Baby Boomers are graying and will soon distort our Medicare, Social Security and healthcare systems beyond recognition. Many hospitals are insolvent and may not last through the onslaught of more unemployed and uninsured. Weather is strange, whatever the cause, gas costs way too much, and our oceans are turning into cesspools.

The ancient Chinese proverb: “May you live in interesting times!” (maybe more legend than fact and actually a curse), certainly applies to the curious times in which we now find ourselves living, where we can actually be happy that the Dow only fell 300 points and not 1000.

I attended a Conference for legal and accounting professionals in Chicago in October 2007 where the speakers discussed for two days ‘The Subprime Mortgage Crisis,” as this nightmare was only beginning to unfold as of a year ago. Not one of the eminent speakers there dared to predict anything as dire as the total wipeout of 3 of the 5 major investment banks, with the 2 survivors fleeing to the safety of full-Monty banking regulatory structure; the crashing and burning of Countrywide, Wamu, AIG, Wachovia, Lehman, Bear Stearns, Freddie Mac, Fannie Mae, and a whole host of others; the utter devastation of trillions of dollars of paper wealth in the markets in the blink of an eye, or; the 60-65 trillion dollar booby prize of all those credit default swaps hiding out there like improvised explosive devices on balance sheets worldwide.

May this week prove to be a little less “interesting,” so that we can all catch our collective breath.

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Socialists of the GOP unite!

Public Affairs Consultant specializing in Issue Advocacy and Strategic Communications

This week, the McCain/Palin ticket has been using the term "Socialist" over and over to describe the positions of their Democratic rivals. (Although today, McCain returned to the Bill Ayers theme).

So, when Gov. Palin accuses Sen. Obama of being a Socialist is she saying that Alaska’s system where every resident of her state receives a $1,000 check from the oil companies who drill there is not Socialist? If they don’t work for the oil companies, why do they deserve a generous check for just living there?

Is Sen. McCain also calling for America to dissolve its most Socialist program—Social Security? He used to mention the idea of privatizing Social Security, but I don’t hear anybody talking about that in this volatile market.

How about the recent Wall Street bailout which Senators McCain, Obama and Biden all supported? And didn’t Sen. McCain suspend his campaign in order to work on the financial crisis? If so, he should explain why Obama is a Socialist but he isn’t.

Speaking of handouts, I think that Gov. Palin looks smashing in her new suits. However, if I were an incumbent GOP Congressman fighting for my political life, I’d be pretty upset that the RNC spends $150,000 on suits for McCain’s running mate instead of putting it into my race where it could make the difference. And isn’t it against the McCain-Feingold rules for political parties and donors to spend money on candidates’ personal needs? I’ll bet Ted Stevens is jealous!

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Chicks Conference Rocks the House

President and CEO of Lucas Public Affairs

The Governor and First Lady’s conference for Women was a marathon — a 12-hour day, but well worth the price of admission.

The conference this year blew away all expectations. It was bigger, better and had a more excited and diverse line up of speakers than ever before.

Kicking off the day was a humorous panel with multi, multi billionaire Warren Buffett and Governor Arnold Schwarzenegger that was moderated by political pundit, Chris Matthews.

Three men at a conference with 14,000 women — It was clear the three were loving it and played ruthlessly to the house. At one point, Warren Buffett asked Chris Matthews if he thought so highly of women would have rather been one. Matthews skirted the answer…

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California: Fiscally Conservative, Socially Liberal — Or is it?

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Conventional wisdom has pegged California as a fiscally conservative, socially liberal state. Whether that’s true or not will be measured by the results of a number of statewide ballot measures on November 4.

If Californians are truly fiscally conservative then the bond measures on the November ballot don’t stand a chance. How in heaven’s name can fiscally conservative voters support $16-billion in bonds when the California economy and the national economy are in meltdown mode?

These general obligation bonds have first call on the state treasury. In other words, the bond obligations must be met before a dime is spent on other state functions. So while it is technically true, as every bond ad screams out: THIS PROPOSITION ____ (fill in the blank with Props 1A, 3, or 10) WILL NOT INCREASE TAXES, bonds put pressure on the general fund because they reduce available tax revenue needed for day to day state responsibilities.

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Oops.. Now he tells us!

David S. White
Principal of the Law Firm of David S. White & Associates, West Los Angeles, specializing in litigation, arbitration and mediation of real-estate-related disputes and litigation since 1977; www.dswlawyers.com

There it is in the mid-day, NY Times ‘Breaking News’ feed:

“Facing a firing line of questions from Washington lawmakers, Alan Greenspan, the former Federal Reserve chairman once considered the infallible maestro of the financial system, admitted on Thursday that he ‘made a mistake’ in trusting that free markets could regulate themselves without government oversight.”

Now he tells us!

Greenspan’s mea culpa testimony went on to say that, well, maybe he was only ‘partially wrong’ during his 18-year tenure as Chief Honcho of the Fed, not to regulate our old friends, those pesky credit default swaps that nobody except a few math geeks really understand. Oh, those things.

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Democrat VP Nominee Joe Biden to endorse Republican Abram Wilson in AD15!?

Judy Lloyd
President of Altamont Strategies

“Vice Presidential candidate Joe Biden in a recent visit to the Bay Area a few days ago endorsed Abram Wilson, the Republican Candidate running in the sharply contested 15th District Assembly Race in Contra Costa, Alameda, Sacramento, and San Joaquin Counties. This seat, the most contested legislative district in Northern California, has a 2% registration difference between Republicans and Democrats – Biden’s endorsement could put Wilson over the top.”

And – if you believe that – I have some swampland in Florida to sell you.

The thought of the liberal “Joe Senator” endorsing mainstream Republican Wilson is about as likely as the thought of Republican VP Nominee Sarah Palin endorsing union-backed Joan Buchanan in this contested race.

Yet, a mailer sent out this week from a group called “Create Change – Support Joan Buchanan Independent Expenditure Committee” suggested that Republican Vice Presidential Candidate Sarah Palin was indeed supporting Buchanan, a Democrat.

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Memo to the Special Session: Taxes have already been raised on business this year

Loren Kaye
President of the California Foundation for Commerce and Education

The sun rose this morning, the Cubs are not in the World Series, and California’s budget is in crisis. All may not be well with the world, but we can count on some things remaining constant.

Also predictable: renewed positioning for new taxes to solve the budget deficit.

But if the Governor calls the Legislature into special session next month to address the deficit, they should be mindful that this year’s budget was predicated on nearly $6 billion in new or accelerated taxes on California businesses and investors. When it comes to taxing California’s employers, they gave at the office.

What are the tax changes?

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