The Sanchez Report

Jerry Brown's Tax Proposal Has Support? Yeah Right

According to the latest poll conducted by Public Policy Institute of California, we are to believe that 65% of Californians support raising taxes on the rich and raising the sales tax. What a crock! I don't care what this poll says, Californians have seen this game before. It's the same story although the sob story has some variations. The victim could be the Firemen, Police or Schools who will suffer if we don't give Sacramento more taxes. I say forget about raising taxes until after we reform the pension program for State workers and cut spending back to the levels seen in 2001. We don't need more revenue, we just need Sacramento to stand up to the Unions and cut spending. In real dollars, not the baseline cuts that politicians try to pass off to voters.

Jerry Brown's Answer For California ... Higher Taxes

Last month I wrote about the current anti-business climate in California. For more than a decade, California has been in a free fall economically due to higher taxes, more costly regulations and an aggressive expansion of government spending and bureaucracy. Rather then elect new leaders with fresh ideas, last year Californians sent the 1970's washout, Jerry "Moonbeam" Brown back to Sacramento as Governor. In a classic case of not being able to teach an old dog new tricks, Jerry Brown has come up with a radical new approach to solving our state's problems. Wait, Wait, Wait for it... He's asking voters to approve the largest tax increase in California history. This proposal is being sold as a "tax on the rich and wealthy" in order to save our schools and infrastructure. Ladies and Gentlemen, we generate enough tax revenue in this state. The problem isn't taxes, it's too much spending. You know, the type of spending that provides cushy pensions to state employees, generous benefits and overtime thanks to the SEIU and other shake down unions.

When will Californians wise up and stop falling for the scam in Sacramento? When will voters begin to ask why our school test scores are low? Why are prison populations are so high? Why do we allow state employees to earn on average over $100,000 and retirement at age 55 with full salary?  When will voters begin to ask why we're falling behind other states with far lower tax rates in jobs, infrastructure and education? Raising taxes is not the answer. That's the same liberal solution for every problem. When have the liberals controlling Washington or Sacramento have EVER called for lower taxes and lower government spending/ NEVER. Wise up Californians. Stop falling for the same lie that's been told to us for decades. The poor will not suffer, the elderly will not die and children will not suffer if we begin to follow the path of other states that have figured it out.

California... The Anti-Business State

For many years, California conservatives have railed against the anti-business, tax and spend liberals and their stranglehold on Sacramento. For the most part, their words have fallen on deaf ears with voters. The liberal wing of the Democratic Party has essentially controlled both chambers of the State Capital, statewide offices and the Governorship for most of the past forty years. I know, I know, there were a few Republican Governors throughout those years and its no coincidence that the state was in better fiscal shape during their administrations. Need I remind you of Gray Davis's doubling of the budget in less than eight years? These wreckless policies have brought the Golden State to its knees. We are in big trouble and rather than moving towards a more hospitable climate for business, the Democrats are doing the opposite.

The Los Angeles Times yesterday published a sobering op-ed on the current toxic business climate in the Golden State. I would encourage you to read the entire article to get a sense of why a heavy regulation and high tax combination make it nearly impossible to create jobs.

From the Los Angeles Times:

Unless Sacramento moves to improve the business climate, California's reputation as one of the country's most toxic business environments will make it hard for the Golden State to regain its luster.

California's suffocating regulations have a lot to do with this discontent. A 2009 study by two California State University finance professors, Sanjay Varshney and Dennis Tootelian, estimated that regulation cost the state's businesses $493 billion annually, or nearly $135,000 per company. Additionally, dense and complex land-use regulations have driven up housing construction costs in the state, giving residents a double whammy: a stagnant economy and unaffordable home prices, even since the real estate bubble burst.

Taxes are another burden. According to the Tax Foundation, California imposes the nation's second-heaviest tax burden on businesses, and finance officers of major companies recently rated the state's overall tax environment the worst in the country, according to a poll in CFO magazine.

On top of taxes and regulation, the state can also claim what may be America's most expensive litigation environment for firms. The American Tort Reform Foundation recently named California one of the country's five worst "judicial hellholes," in part because state law allows trial lawyers to sue firms for minor violations of California's complex labor and environmental regulations.

The Hypocrisy of Occupy Wall Street

Hey OWS protesters, your hypocrisy has reached epic levels.  You don't represent 99% of Americans, you  represent the radical, left wing 9%, who never passes up an opportunity to protest against capitalism and corporate america. You dream of a communist or socialist revolution and yet you can't present one example of a country that has succeeded in creating this utopia. You want to blame Wall Street and corporate america for our problems? You want to do away with mega, multinational corporations? You say banks are stealing and robbing America? Get real.

You're probably using an Apple iPhone to communicate. If it wasn't for Wall Street, Apple would have never gone public and raised the money necessary to grow into the amazing company that it has become. You're probably wearing cool looking clothes made by a "mega" clothing manufacturer who also went public with the help of Wall Street banks. The electricity and gas supplied to your house is provided by your local utility whose stock trades on the NYSE and who pays a dividend to the 1% who you want to punish. Your car was made by a multinational corporation. The gasoline supplied by a Big Energy company. Your grocery store is probably a "mega" company as well. The sleeping bags and tents that you're living in were manufactured by companies who relied on funding, loans and equity investment provided by Big Banks. Your ability to use social media like Facebook and Twitter exists because the venture capital and banking community took on the risk and provided capital to fund great ideas. Those videos that you filmed of your protest are now viewed around the world because of sites like YouTube. Guess what? YouTube was funded by venture capital firms who you want to penalize by making them pay huge taxes and yet expect them to continue to back and develop these great new technologies. The music that you listen to was produced and recorded by record labels, owned by mega global media companies. Do you know who supplies capital to these Big Banks and Venture Capital firms? Yup, you guessed it, wealthy individuals. The 1% who you want to blame for our financial mess. Do you know what life would be like if banks, multinational corporations and wealthy investors didn't exist? Have you ever been to a poor, undeveloped third world nation? Is that the society you envision? Our country has paid a heavy price including the shedding of blood to give you the right to protest and the means to live a relatively comfortable life with all of the modern conveniences that you demand.

I rarely agree with Alec Baldwin's political views, but during his visit to the Occupy Wall Street encampment he made a point to defend capitalism. From Yahoo News:

Alec Baldwin visited the Occupy Wall Street protests in New York City this week, where he found himself defending the very institutions the demonstrators are protesting: Banks, capitalism and the rich."You have to have capital markets in this country," Baldwin said. "You can't not have strong capital markets in this country or this country is going to go down the tubes. ... Capitalism is worthwhile and capitalism demands the flow of money. ... You want the banks to do what the banks do."

There's nothing wrong with companies making a profit to provide that convenience along the way. That my friends is the beauty of capitalism. It's not perfect and not everyone will succeed, but it has lifted more people out of poverty compared to any other economic system known to man. Your solution has been tried before. Just take a look at North Korea, Cuba and the former Soviet Union. How did that work out for them?

The California GOP Rebirth?

Next year could prove to be a turning point for the California GOP. The 2010 statewide elections will include two prominent Republican women vying for high office. The Governor's race will feature former eBay CEO, Meg Whitman and the Senate race will more than likely include Carly Fiorina, the former CEO of Hewlett Packard. Both candidates are considered social moderates and fiscal conservatives. These candidates could help foster the rebirth of a party that has been on life support for the past thirteen years.

From the Wall Street Journal:

After Arnold Schwarzenegger replaced a Democrat in 2003 to become California's governor, fellow Republicans were hopeful the former movie hero's popularity would help arrest a long decline here.

But six years later, Republican voter registration continues to fall, and now many in the party are pegging their hopes on two former corporate chief executives: Meg Whitman and Carly Fiorina.

Ms. Whitman, former president and CEO of San Jose-based online-auction company eBay Inc., in February threw her hat into the ring for the 2010 race to succeed Mr. Schwarzenegger when his second and final term as governor ends in January 2011.

Ms. Fiorina, former chairman and CEO of Hewlett-Packard Co., this month registered a campaign committee called "Carly for California" for a potential 2010 challenge against Democratic Sen. Barbara Boxer.

The star power of both CEOs is likely to give them some momentum. An August Daily Kos poll gave the 53-year-old Ms. Whitman 24% support among California Republicans ahead of the June 8 primary, topping support for her two main challengers, state Insurance Commissioner Steve Poizner and former U.S. Rep. Tom Campbell.

A July poll by Rasmussen Reports showed Ms. Boxer with a slim lead of 45% among likely voters to 41% for the 54-year-old Ms. Fiorina in a hypothetical match-up. Ms. Boxer cited that slim lead in a fund-raising letter she sent to potential donors July 29. "We've got our work cut out for us," Ms. Boxer said in the letter.

California: Plenty Of Blame To Go Around

In case you've been wondering who is to blame for the mess in California, I found this article that pretty much sums it up. One caveat, the article does not go far enough to place blame on those who have controlled the Assembly and Senate for much of the past forty years, namely the Democrats. After all, they're the ones who are responsible for spending and have grown the annual budget from roughly $70 billion twelve years ago to nearly $150 billion today. The entire article can be found on Forbes.com:

The findings:

1. Arnold Schwarzenegger

The Terminator came to power with the support of much of the middle class and business community. But since taking office, he's resembled not the single-minded character for which he's famous but rather someone with multiple personalities.

2. The Public Sector

Who needs an economy when you have fat pensions and almost unlimited political power? That's the mentality of California's 356,000 workers and their unions, who make up the best-organized, best-funded and most powerful interest group in the state.State government continued to expand in size even when anyone with a room-temperature IQ knew California was headed for a massive financial meltdown. Scattered layoffs and the short-term salary givebacks now being considered won't cure the core problem: an overgenerous retirement system. The unfunded liabilities for these employees' generous pensions are now estimated at over $200 billion.

3. The Environment

In California today, everyone who makes a buck in the private sector--from developers and manufacturers to energy producers and farmers--cringes in fear of draconian regulations in the name of protecting the environment. The activists don't much care, since they get their money from trust-funders and their nonprofits. The losers are California's middle and working classes, the people who drive trucks, who work in factories and warehouses or who have white-collar jobs tied to these industries.

4. The Business Community

This insanity has been enabled by a lack of strong opposition to it. One potential source--California's business leadership--has become progressively more feeble over the past generation. Some members of the business elite, like those who work in Hollywood and Silicon Valley, tend to be too self-referential and complacent to care about the bigger issues. Others have either given up or are afraid to oppose the dominant forces of the environmental activists and the public sector.

Theoretically, according to business consultant Larry Kosmont, business should be able to make a strong case, particularly with the growing Latino caucus in the legislature. "You have all these job losses in Latino districts represented by Latino legislators who don't realize what they are doing to their own people," he says. "They have forgotten there's an economy to think about."

5. Californians

The last hope lies with those of us still enamored with California. We have allowed ourselves to be ruled by a motley alliance of self-righteous zealots, fools and cowards; now we must do something. Some think the solution is reining in citizens' power by using the jury pool to staff a state convention, as proposed by the Bay Area Council, or finding ways to undermine the initiative system, which would remove critical checks on legislative power.

The 10 Most Liberal and Conservative Cities In California

The Sacramento Bee released a report that lists the ten most liberal and conservative cities in California. Their staff completed a data crunch using the latest voter registration numbers provided by the California Secretary of State. For you quants out there, you'll probably take this data and try to draw some correlations. If you come up with anything interesting, please let me know. The only surprise was that San Francisco ended up as the tenth most liberal city in the state. I thought it would place higher.

Conservative Places
10. Temecula (Riverside)
9. Palos Verdes Estates (Los Angeles)
8. Ridgecrest (Kern)
7. Coronado (San Diego)
6. Rancho Santa Margarita (Orange)
5. San Clemente (Orange)
4. Yorba Linda (Orange)
3. San Marino (Los Angeles)
2. Newport Beach (Orange)
1. Canyon Lake (Riverside)

Liberal Places
10. San Francisco
9. Compton (Los Angeles)
8. San Pablo (CoCo)
7. Fairfax (Marin)
6. Richmond (Contra Costa)
5. Albany (Alameda)
4. Inglewood (Los Angeles)
3. Emeryville (Alameda)
2. Oakland (Alameda)
1. Berkeley (Alameda)