Prop 13 Has and Always Will Be a Problem

There is a trend among Californians these days: We love to think of progressive ideas, but rarely have the will to get them passed. Some examples:

1. We love public transit, but will never amend the constitution to make sure gas tax goes to public transit projects (currently it is required, but law, to go to maintaining roads and highways).

2. We love public transit, but we will never pass a tax to pay for it.

3. We love clean air, but our largest public utility is having trouble with divesting from coal power

4. We love that our public universities are top in the country in academics and athletics, but our legislators would rather cut hundreds of millions from them instead of pass a tax to support them.

5. We love our K-12 education, yet our legislators are unwilling to pass a tax to prevent cuts to the school year

6. We love our public services, yet complain about high taxes

7. We complain about high taxes and bad schools, but still overwhelmingly support Proposition 13

The last (and bold) point is what this blog post is about. Some controversial points about Prop 13 are:

1. Maximum value-based tax on real property shall not exceed 1% of the value of the property.

2. Decrease in property taxes by assessing the real value of a property at its 1975 price and restricting assessment of annual increases to an inflation factor not to exceed 2%. Reassessment of a new value can only happen under an ownership change or completion of construction.

3. Requires a 2/3 majority of both houses of the CA Legislature to increase tax rates or collect revenues.

4. Requires a 2/3 majority in local elections to pass an increase in special taxes

The passage of Prop 13 was a result of the "Taxpayer Revolution" headed off by anti-tax people like Howard Jarvis. But, Prop 13, which is considered to be the third rail of CA politics, has caused decreased tax revenues for localities, which have been forced to find creative ways to recapture those monies.

Here are some supportive arguments for Prop 13:

1. It creates certainty for Homeowners

True. But, it created uncertainty for localities and pegs a portion of their tax base to the rise and fall of the real estate market. This is especially bad in coastal communities, where home ownership and prices are higher. These localities must find creative ways to recapture tax money. They become dependent on state block grants and look to "use fees" and higher sales taxes. Cities have begun to decrease services and increase fees to compensate for that move.

2. The acquisition-value assessment provides property tax equity

Suspect. The scheme is good for taxpayers if you look at the prop as a whole. But, it's condition that the value be reassessed for change of ownership highly favors commercial properties. If a commercial property is owned by one company and it sells, but continues to be deeded to that company, they are exempt from the reassessment condition in Prop 13. This works well for those who own big box stores and shopping malls.

3. Decreases volatility for funding of municipalities

True. But, it also decreases that funding. It creates certainty, but in a negative way. See my answer for #1.

Some negatives:

1. Sales disincentives

Because of the condition that the house value will be reassessed upon change in ownership, there is a disincentive towards upward mobility or selling of a home. There is also a disincentive to build more homes.

2. Loss of Revenues to local government

The 2% maximum has under paced the Consumer Price Index, giving local government less money to collect against the 2% levy or when the price of a parcel is reassessed. Translation: less tax money to the coffer. Result: find ways to recover that loss money through creative means (see #1 under "Arguments for Prop 13").

3. Bubbles and Ownership/Renting volatility

When housing bubbles occur, taxes collected increase due to increase in housing values. Once the bubble bursts, downward pressure is put on collected revenues, creating a tax deficit. Trends in ownership/renting follow these bubbles creating both rigidity and friction in the housing market. This can attributed to Prop 13.

4. Price Increase for New Developments

Because there is a disincentive to move out of a home due to the reassessment condition, older homeowners are not selling and younger prospective homeowners are increasingly renting. Finding new places to build homes in a constrained market also leads to higher prices. Adding in environmental, geographical and development limitations only makes prices for development even higher.

When Gov. Schwarzenegger was elected governor in a recall, his financial adviser Warren Buffett told him that Prop 13 needed to be repealed or changed in order to cover the widening state budget deficit. The governor said it was no politically possible. Current governor Jerry Brown has openly criticized Prop 13 and it's negative affects on the power of local governments. Part of Brown's initial budget was to return power back to local governments and away from Sacramento.

With the partisan gridlock in Sacramento holding back any modification to Prop 13, these inequities, high sales/use taxes and uncertainty will only persist.

Mississippi Amendment 26: Knowing What's Right Since Jesus Rode Dinosaurs

Let me first explain the title of this blog:

Whenever I ridicule the religious right for thinking the federal government (or state government) should be a lightning rod for Christian morality, I always include a statement about the ridiculousness of creationism. Creationism, and Intelligent Design, are anathema to rationality and the scientific method. Based on observations made by paleontologists, anthropologists, planetary scientists, geophysicists, archaeologists, cosmologists, evolutionary biologists and geneticists, the earth is 4.54 billion years old, humans evolved from apes and the universe is expanding at an ever increasing rate. Saying that the earth is around 6,000 years old is as rational as saying that Jesus rode dinosaurs.

The underlying message is that the religious right, with enough support, can turn these superstitions into law. I will defend to the end of my life someone's right to be religious and to follow the doctrines supported by whatever church, synagogue, mosque or holy pillar that is the center for their beliefs. But, the law of the United States of America, and it's many states, should not include the moral inclinations of any single religion. The whole reasoning behind the 1st Amendment's religious protection clause was to make sure the country did make any law "respecting the establishment of a certain religion, or prohibiting the free exercise thereof." Jefferson's purpose behind including the freedom of religious clause was to make sure that there was a "wall of separation" between church (any religion) and state. I interpret this protection as a law that makes sure no law is established on the basis of the core beliefs of one religion.

This brings us to Mississippi, and it's Amendment 26 "Personhood" legislation. This law, if passed, would define "personhood" or "life" as starting at the time of conception. This will effectively outlaw abortion (in ALL cases), birth control, morning after pills and in vitro fertilization. Haley Barbour, governor-extraordinaire, said that he supports the law, but is hesitant because it includes ambiguous language like "life begins at fertilization, or cloning, or the functional equivalent thereof."

Here is my beef:

1. It is based on religious inclinations: Most Pro-Life (whatever that means) believe that life starts at conception because they follow the religious (Catholic mostly) idea that sex is purely for procreation. Keep that belief to yourself and out of our statehouses.

2. It casts the government as a moral crusader: It makes the Mississippi government an enforcer of anti-abortion morality. No government should make laws to enforce the moral inclinations of one group.

3. It translates unanswered ethical questions into law: It essentially settles an ongoing ethical debate, de jure. The definition of "personhood" and "where life starts" has been debated for decades, and there are good arguments on both sides. But to make a law that forces the debate to a conclusion is unbelievably premature.

4. It defines life: No one has the right to define where life starts. Not Haley Barbour, not Mississppi, not Barack Obama...no one.

5. It gives the Mississippi government too much power over the bodies of women: Women have the right to choose what they want to do with their body. Simple as that. No state has the right to legislate that choice. This is why the Federal Government has the Hyde Amendment. It makes sure that the government does not meddle with the abortion debate.

The encroachment of any government on the rights of individuals should stop when it comes to legislating abortion. This amendment goes a step further by defining life, and thereby expanding the definition of murder. This will not only have implications for women's rights, but will also impact family planning and restrict access to in-vitro fertilization for Mississippians who cannot conceive.

What disturbs me most is the quote by obstetrician Dr. Freda Bush:

"In rape and incest, the life that has created during that has done nothing to deserve death. The mother is a victim and there is no reason to make a victim a murderer."

This scary, sick and demented logic is common, unfortunately. This Amendment will only encourage this kind of view, while setting women's rights back to the age of back alleys and clothes hangers.

Herman Cain: Out of Touch with Reality and Race

The Joint Committee on Deficit Reduction has until Thanksgiving to come up with a plan to reduce the deficit by $1.5 trillion. If they don't, a series of emergency cuts will be triggered that will slash from entitlements (Democrats cry) and the Pentagon (Republicans cry).

At this point, I am not sure if a deal will be struck. Debt reduction aside, the current political situation, as it is related to condition on Main Street, is abysmal. Herman Cain is a prime example of this disconnect:

I don't enjoy using the "race card," but in this case it is completely appropriate. When he was on the Hannity Show earlier this month, Cain said that he does not "have a lot of patience for people who want to blame racism on the fact that some people don't make it America." Next he will tell us how far in the sand you have to stick your head before you get the Republican nomination. Let me make something abundantly clear to Mr. Cain: Racism exists. The legacy of racism is still prevalent today. It is embodied in the fact that a large population of African-American people are unemployed and live in low income communities. If given the same opportunities to succeed, as you have so purported with your statement Mr. Cain, then why is statistic still starkly visible?

Cain's attempt to "simplify" the tax code through his infamous "9-9-9" plan will only burden the middle class and low-income communities with more taxes, while giving a nice tax break for those who make exorbitantly large amounts of money. Tax reform is a respectable, yet gargantuan undertaking. You cannot simply extend what amounts to a "flat tax" and (with a wave of the wand) make all the tax problems disappear. First, only about half of all Americans pay taxes. Some of those people are either on some sort of government assistance, or do not make enough money. With this plan, low income communities and the elderly will see their taxes go up. Second, simplifying the tax code is a nice slogan (like 9-9-9), but it is also very unpopular if you decide to eliminate deductions that reduce the tax rate of middle income earners. It would also raise sales tax in 47 states.

Then, there is the deficit. By some estimates, this plan would cut federal tax receipts in half. Cain's plan is an extreme example on how cutting taxes and spending can lead to both higher deficits and higher unemployment (as I have said here, here and here).

Herman Cain is just one, albeit extreme, example of how Republicans vying for the nomination in 2012 and those seated in the Halls of Congress are increasingly out of touch with reality. They are calling for measures to boost employment, while pressuring the Deficit Committee to reduce the deficit in a completely unbalanced (deep cuts) and economically unsound way.

We are continuously bombarded with messages about the 99% and the tax rate of wealthy Americans. What we should be hearing from candidates and Washington is about the 16% - those who are unemployed or have given up on looking for employment. Tax rates and political grandstanding mean nothing to those in the 16%.

Lamar Alexander: Thank You

I hardly ever agree with Republicans. I can't stand their position on healthcare, abortion, environmental regulations, rights for homosexuals and the role of government. Recently, I have pushed myself farther left in reaction to the polarizing right shift that Congress and the administration has taken in the last year. Everything from rolling back public health regulations to focusing a debt debate on an imbalanced package of cuts without entitlement reform or a long term source of revenues have shown me that Congress is too dysfunctional to create progress and pass legislation to help those who are most in need.

The focus in Washington has been to create an environment where "job creators" can find enough "certainty" to start hiring workers. Well, that's what Republicans have been saying. In a recent interview with NPR, Finance Committee Chairman Paul Ryan (R-WI) said that short term incentives like payroll taxes and a "second stimulus" don't give "job creators" enough support to start hiring. He used this point to justify a rollback in regulation and a massive tax cut for the wealthiest (IE, the "job creators").

As for those who were affected the most by the recession and the state and national service cuts, he said that his policies will "widen the pie" so more people have opportunities to return to work. The problem with this approach is that it is a long term fix at a time when a short term solution is necessary. For the poor and middle class, infrastructure jobs and incentives like the payroll tax cut will allow for short term job growth while leadership in Congress can deal with long term fiscal health, like deficit reduction, regulation reform and changes to the tax code.

This blog is related to the partisan rancor that has enveloped Congress, pushing it's approaval rating to the low teens and spotlighting polarizing figures like Michelle Bachmann (R-MN), Paul Ryan (R-WI) and Jim DeMint (R-SC) while completely ignoring statesman like John Kerry (D-MA), John McCain (R-AZ) and the subject of this blog: Lamar Alexander (R-TN).

Lamar Alexander is a Republican Senator from Tennessee. The 71 year old has recently announced that he will be stepping down from his position as the 3rd most powerful Republican in the Senate to "get the best results on the issues [he] care[s] about" which means that "you have to get some people from the other party to agree with you or you don't get 60 votes."

Thank you.

No truer words have ever (well, maybe not in the last year) been spoken. Here is a Senator (a Republican, no less) who is known for bucking his own party in the face of stern opposition (and cowardly name calling). He worked across the aisle on the failed energy and climate bill, he voted for the START arms reduction treaty, he worked on the "Gang of Six" deficit panel, worked to find suitable areas for nuclear storage with Barbara Boxer (D-CA) and Lisa Murkowski (R-AK), and even mentioned that he was open to supporting "increased revenues" as a part of a deficit reduction plan.

There are many areas I disagree with Alexander on. But, at a time when the debate has become so toxic that bills to fund disaster relief are being held up by fiscal orthodoxies and presidential candidates are calling the Federal Reserve treasonous, it is always nice to hear that some Senators want to get something done.

Here's the video from the Senate Floor:

Political Center: Where Hast Thou Gone?

Barack Obama was elected on a wave of optimism. Starting from his speech at the Democratic National Convention in 2004, to his response to President Bush's State of the Union Address in 2006, it looked as if the Democratic Party had found a superstar.

And, they did.

He ran an extremely successful grassroots campaign, raised hundreds of millions of dollars (pre-Citizen's United) and energized young voters. I was one of those voters.

But, the hazy days of malaise are starting to creep in, and I have become disillusioned. Let's take a look at how things have changed:

Obama's post-partisanship rhetoric was something I latched onto when he was elected. To me, this meant that he was going to work across the aisle to create bipartisan legislation that would grow the economy, protect the environment, ensure our national security and get us out of the recession that he had inherited.

He started with the stimulus package, which enjoyed bipartisan support.

Then, he went to universal healthcare, which was a campaign pledge. The debate over the healthcare law was so caustic, that it rendered any Bush era rhetoric almost benign. It passed, barely.

Then he took on energy, stumping for a bill with a cap and trade scheme for pollution reduction. He used stimulus money to encourage the growth of the Renewable Energy and to make Carbon Capture and Sequestration economically viable for coal-fired power plants. It never passed.

Then, he took on financial market reform. The Dodd-Frank Bill and the CARD Act passed, along party lines. The rhetoric and the partisanship was getting to extreme levels at this point.

Still, I blamed the TEA Party and extreme wing of the Republican party for manufacturing apocalyptic scenarios if any of these reforms were passed. I defended Obama as a president who attempted to work across the aisle, but was shut out.

Then came November. Republicans took the House and nearly won the Senate. Obama would try to pull a Clinton. The problem: the economy was faltering, a government shut down was looming and he still had to raise the debt ceiling.

What did he do? He put propositions on the table and compromised every balanced approach to end up with a one-sided, Republican monstrosity:

He kept the Bush tax cuts
He abandoned his "grand bargain" of a balance of taxes and cuts
He opened more lands to offshore and onshore oil drilling
He let the BLM auction off coal mining in the Powder River Basin at the "competitive" rate of 0.90/ton (sales rate is around $12-13/ton)
And recently...he told the EPA to withdraw smog and ozone standards. Ozone and smog formation is very dangerous for public health.

The president I elected in 2008, defended in November, 2010 and tolerated in most of 2011 has finally forced me to think outside of the two-party norm for 2012. I really don't want to be in the position, but his appeasement and acceptance of non-centrist Republican ideals has forced me into this state. I can no longer defend him without sacrificing my own principles.

No matter what he does, he will always be criticized by Republicans. There is always an election to win and a party platform to shore up. If he opens up lands for drilling, they will say he hasn't done enough. If he allows for increased coal mining, they will say he is waging a "war" on coal. If he withdraws important, life-saving standards under the guise of "regulatory burden," they will say he is killing business. There is compromise, there is centrist and then there is Obama. Republican? Democrat? Who knows....

Deficits and Natural Disasters

Hurricane Irene made landfall around the 6th anniversary of another devastating storm: Hurricane Katrina. Hurricane Katrina revealed that an underfunded FEMA with an ignorant leader (Michael Brown - "Brownie...you're doing a heck of a job") can lead to both environmental and human catastrophes. Katrina also shot holes into the political orthodoxy over cutting government spending, or what is known as "starving the beast."

We are dealing with monumental and unprecedented deficits. The financial situation that the U.S., and the world, is facing has not been seen since the Great Depression. A combination of austerity measures and spending cuts has been proposed to bring the country back to fiscal health. In previous blogs, I harped on the affects that budget cutting will have on local governments, unemployment and how a balanced approach is necessary.

Nothing is worse than the ignorance and short sightedness embodied in the recent proposal by House Majority Leader Eric Cantor on dealing with FEMA costs over Hurricane Irene. Cantor vowed to find "dollar-for-dollar" cuts in other programs in order to cover the cost of Hurricane Irene. His aim is to not increase the deficit.

Really?!

You're talking about deficits when people are losing their homes and their livelihood? You dare mention "fiscal health" when people are dying? Were you not around when an underfunded FEMA created the fiasco that was the aftermath of Hurricane Katrina?

I don't get it. I really don't get it. These costs are not intangibles. These costs are helping people survive. These costs are the salaries of rescue workers who are delivering food and water to 12 communities cut off by flood waters in the state of Vermont. These costs are going to airlift stranded people in New Jersey, New York and Virginia. These costs save lives.

Bernie Sanders, Senator from Vermont (and one of my favorites - also Jewish), characterized this situation best. He told MSNBC that he had been to the stranded communities around his state and helped drop supplies to devastated families. He said that the U.S. will become the laughing stock of the world if we don't start investing in infrastructure. These floods have exacerbated the problems associated with an already crumbling road and highway system. More specifically, he lambasted Cantor for being a divisive force. He talked of a "United" States being "one nation" whose purpose is to protect the health and well being of its people.

Sanders is spot on. Our infrastructure is abysmal, and investments will put hundreds of thousands of people back to work. More importantly, if we let this obsession, this cult, this stubborn orthodoxy of deficits blind us from helping our fellow Americans during natural disasters, then we need to reevaluate our priorities.

To give some perspective - we spent $700 million/week on wars and FEMA's ENTIRE budget is only $800 million.

How Many Mistakes Make a Candidate?

George W. Bush was well known for talking "off the cuff" with a folksy demeanor. He was prone to ridicule by the left for both social and grammatical blunders. This attitude allowed him to connect to the average American. They were able to identify with his image, which is something that won him (in part) two terms in office.

President Obama has been criticized as being too "professorial" and isolated, lacking the skill to connect to the people the way that Bush did. In the book "Obama's Wars," journalist Bob Woodward described Obama as someone who thrived on knowing the nuanced detail of every plan, including alternatives and opposing opinions. It is this kind of detail that caused him to clash with top military brass when formulating a plan to expand troop levels in Afghanistan after the Bush Administration has essentially ignored a regrouped Taliban.

2012 is slowly approaching, and a couple of the candidates have stood out in their ability to be both folksy and spread egregiously erroneous information, which was a major skill of the Bush Administration.

Newly minted candidate Texas governor Rick Perry is well known for making "shoot-from-the-hip" remarks about topics he has no expertise in. Here are some ones to mull over:

1. Financial Crises and the Fed - Perry called Federal Reserve Chairman Ben Bernanke's monetary policies treason. This was so outrageous that even Libertarian and well-known Federal Reserve detractor Ron Paul was made uncomfortable. The question that reporters should have asked Perry was: "What is the Federal Reserve?" I'm sure that would have generated some nice "uhhs" and "ummms."
2. Evolution - Perry called evolution an "theory" with "gaps." Setting aside anthropological, paleontological, archeological, geological and geographical data that has proven evolution, Perry, like most Evolution-haters, do not understand the nature of a "theory." Theories are, by definition, hypotheses that have been proven by observation. So, yes, Rick...Evolution is a theory.
3. Global Warming - Perry said that Global Warming is a scheme where data is manipulated by scientists in order to get higher pay. He calls it (once again falling into the "theory-hypothesis" trap) a "scientific theory that has not been proven." He is once against stirring up the "climategate" conspiracy theorists, who will nitpick any language to prove their point. He is like the Wizard, brushing the years of data collected by credible climatologists and atmospheric scientists with advanced degrees behind the curtain. There must be some sort of cadre of scientists who get together to think of ways to squeeze money out of the regular taxpayer. That is how we have Antibiotics, Antivirals, successful cancer treatment, large scale particle accelerators, nuclear weapons, nuclear energy, space travel, devices to capture energy from the sun, wind and the earth...well, the list goes on.

Michelle Bachmann, Tea Party favorite, has also released some fun sound bites that really showcase her intelligence (or lack thereof):

1. History - When she talked about the U.S. being a nation of individuals who were attracted by vast opportunity in a new land, she omitted one major group: slaves. Unfortunately, most of the economy of the Southern United States, for the first 100 years of U.S history was based on slave labor. Slaves did not come here because of opportunity - they were forced. There is nothing wrong with touting American greatness. But, the ultimate measure of greatness is how we treat those with the least freedom.
2. Oil - Bachmann said that, as president, she would return gas prices to $2/gallon. Then, she went on to criticize Obama by saying that Gas was $2/gallon when he started, and now it is close to $4/gallon, so his policies must have failed. I guess she might have forgot a little thing called the "Arab Spring?" Or, maybe she forgot when Oil hit its highest price after Hurricane Katrina hit the Gulf Coast during the Bush Administration? Bachmann has no grasp of markets or economics related to Oil. I am not alleging that I am an economic expert, but Oil is such an important commodity because it reflects the market so well. It is very volatile. Bachmann also doesn't realize that she has no control over the majority of the oil we refine for gasoline. She cannot, by some sort of fiat or swish of a presidential wand, make gas $2/gallon. It is impossible.
3. Downgrade - When S&P downgraded the country, Bachmann criticized the Obama Admin. While this is not necessarily a "mistake," it is so completely idiotic that it makes the list. It was her TEA Party Caucus that gummed up the gears of the House of Representatives so that an 11th hour deal was inevitable. It was her stubborn orthodoxy that lead to an unbalanced deal that did not prove to S&P that the U.S. would reign in on its deficit. I bet she is buying some nice curtains for her glass house.

The president or presidential nominee must be able to identify with the American people. This is why Bush and now Perry and Bachmann have so many followers. But, the president must take responsibility for the ideas they put forward. When Rep Giffords was shot in Arizona, many criticized Sarah Palin's "crosshairs" map and "reload" rhetoric. Palin balked, showing that she has no tact and, like Perry and Bachmann, did not take responsibility for her rhetoric. While it is apparent that Jared Lee Loughner was mentally unstable, the point remains: influence translates to action.

In the case of Bachmann and Perry, that influence translates into a widespread adoption of ideas into the American lexicon that make a mockery of science, economics and history.