California Commits Suicide

California is on its way to self-destruction. The Budget which was just passed by both houses means that a family of four will be paying approximately $1,500.00 more in taxes at time when California can least afford it and in an economy that Obama has repeatedly equated to a quasi-Great Depression.

Why doesn't California understand that when you raise taxes, the ones you want to stay, leave? The ones who leave are the job creators, and those with resources who are tired of California's confiscatory tax system. The ones who stay are the illegal immigrants or those who clamor for the social services California provides. California's unemployment rate is 9.3% and climbing. Its budget deficit is 42 billion dollars, and this tax increase will not solve the deficit – it will make it worse.

There is an exodus from California. Millionaires in California dropped from 44,000 in 2000 to 29,000 in 2002. They are leaving in droves. In addition 1.5 million people have left California more than entered in the past decade. People are leaving because of the onerous tax burden California imposes on its citizens.

Tax revenue is decreasing not because the state doesn't tax enough, but because people leave for greener pastures where they don't have to worry about the government confiscating their hard earned money to support a state that cannot manage its own affairs because of prolifigate spending by an out-of-control legislature. Retirees take their 401ks and IRAS with them depriving California of a source of tax revenue. Businesses relocate outside the state depriving California of even more tax revenue. Anyone would be crazy to retire in California with California's tax burden. I know several people who would not come to California for that reason. two-thirds of the economy is from consumer spending. This tax increase will only cause consumers to spend less. So, what is the answer to California's ills – Raise taxes.

Yesterday California passed its budget after a grueling 48 hour stand-off. California voted in a so-called "temporary" sales tax of one cent. Nothing is more permanent than a temporary tax. Vehicle registration fees will increase from the current level of .65% to 1.15%. How is that for destroying an automobile industry already on the brink? And then we have a .25% percent surcharge on personal income tax. Aw – but that would be cut in half if we receive more federal stimulus funding than expected. Here is the kicker - California will only allow annual expenditures to increase 5% annually. Why are they allowing expenditures to increase at all when tax revenue is failing to keep pace with expenditures? Any business would slash costs when it fails to meet its goals. Tax revenues do not materialize, but California continues to spend. When tax revenues fail to materialize, the state will try and raise taxes again.

The Wall Street Journal stated the following:

It's sad to watch. The Golden State -- which a decade ago was the booming technology capital of the world -- has been done in by two decades of chronic overspending, overregulating and a hyperprogressive tax code that exaggerates the impact on state revenues of economic boom and bust. Total state expenditures have grown to $145 billion in 2008 from $104 billion in 2003 and California now has the worst credit rating in the nation -- worse even than Louisiana's. It also has the nation's fourth highest unemployment rate of 9.3% (after Michigan, Rhode Island and South Carolina) and the second highest home foreclosure rate (after Nevada).

Political Vanguard reports that the California budget was a mere $50 billion in the early 1990s. It more than doubled since then and in the last five years, it increased over 40%. That constant growth matched against a fluctuating revenue stream is the anatomy of our current crisis.

Year	Revenue	Expenditures	Deficit
00	88,419,000,000	96,382,000,000	-7,000,000,000
01	89,780,000,000	99,220,000,000	-9,440,000,000
02	95,794,000,000	106,779,000,000	-10,985,000,000
03	96,365,000,000	104,223,000,000	-7,858,000,000
04	104,462,000,000	107,591,000,000	-3,129,000,000
05	118,347,000,000	119,612,000,000	-1,265,000,000
06	120,663,000,000	129,968,000,000	-9,305,000,000
07	126,030,000,000	145,227,000,000	-19,917,000,000
08	129,788,000,000	141,031,000,000	-11,251,000,000

Source Politicalvanguard.com

All Democrats and three Republicans from the Senate and three Republicans from the House voted for passage of the Budget. Republicans who voted for this should be voted out of office. The Republicans who should be voted out of office are: The Senate: Roy Ashburn of Bakersfield, Dave Cogdill of Fresno, and Abel Maldonado of San Luis Obispo. The three Republicans in the Assembly are Anthony Adams of Claremont, Roger Niello of Sacramento and Mike Villines of Fresno.

California is racing to be number one, number one in the highest state taxes in the country.

Who will be the last man standing in California?

The Dow is down another 172 points at 7,293, and there is no bottom in sight. Again, how does the market like Obama's stimulus package?

 
 

California gone bonkers for global warming.

AB2558 - Hey Los Anglenes are you ready? Now is the time to vote if you believe in this global warming fraud or not? The first of global warming taxes coming to a city near you, yes Los Angeles, that means you!!!!! 9 more cents on gasoline for tax, additional 90 dollars registration for vehicles to fight global warming. It is called the climate change mitigation and adaptation fee coming to a ballot near you.

Will the Real Hillary Clinton Stand Up?

Last Sunday, the attractive and alluring Christina Fernández de Kirchner rode into the Argentinean presidency on the cusp of her husband and President, Néstor Kirchner. “Es la hora del pueblo”, It is the people’s time intones the Argentinean singer Teresa Parodi on Christina Kirchner’s official website. Christina won a clear mandate 44%, from the Argentinean electorate, 23% above her nearest rival. Her election cements the Kirchner dynasty in Argentinean politics, and it will allow her husband to be reelected after her term according to the Argentinean constitution. Christina, a Peronista, has been compared to the former vice president and first lady of Juan Perón, the still venerated Evita Perón. She has also been compared to Senator Hillary Rodham Clinton. Christina is the first female Argentinean president to be elected to office, and she is currently riding a wave of popularity. This is definitely the era of the woman in global politics.

Uxorial politics, a tradition in Argentina, is coming to the United States. Like Christina, Hillary Clinton seems to be riding a wave of popularity among her constituency beating out both Edwards and Obama by a wide margin. She will almost certainly win the Democratic nomination, and probably the presidency. I do not understand it.

Saturday, I was listening to Bob Brinker’s money talk. I occasionally listen to his show because he does sometimes have good insight into the market. He correctly predicted the dot-com crash. However, Brinker also had some disastrous predictions, and had you followed him then, the effects to your portfolio could have been dire.

Brinker’s show is usually never political in nature, but I was amazed at the volume of callers who were concerned about what a Clinton presidency would do to investor’s portfolios. This does not bode well for consumer confidence. There is a lot of concern and trepidation among investors about the impact raising taxes will do to their investments, and Hillary has promised to raise taxes.

These are just some of the comments made by Brinker to caller’s responses

HILARY AND CAPITAL GAINS TAX: Brinker guessed that she would settle for 20%, but she might want more, “……..because she is a big believer in re-distributing the wealth. She really loves that notion of re-distributing, so she might want more.” On dividends, “She hasn’t made it clear." On income tax, “Over $200,000, you are getting a tax increase.”
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BOB BRINKER TAX WARNING: “So what does this mean? It means you have the balance of this year and all of next year to make money at today’s income tax rates – maximum federal 35, capital gains 15, dividends, qualified dividends, 15-Federal. You have until the end of 2008 because George W. Bush is not going to raise your taxes. "
(source: (http://honeysbobbrinkerbeehivebuzz.blogspot.com/2007/10/moneytalk-summary-october-28-2007.html) Honeybee’s summary of Bob Brinker’s Moneytalk radio show

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I have never seen an election since I have been voting where raising taxes, (a central platform of the Democrats), is a plus rather than a negative. Hillary doesn’t even lie about it. Hillary makes no qualms about raising taxes. She continuously touts new ideas such as $5,000 baby bonds, matching 401K contributions. Adding up all her programs could increase the average family’s taxes in real terms by more than 20%. These taxes would be enacted as the United States continues to reel from the subprime mortgage debacle, and as the dollar continues to fall against major currencies. This can only be a recipe for disaster.

When Bill Clinton left office, the country was on the verge of a recession due to the dot-com crash. A year and a half later, during the second Bush administration, the twin towers were hit. The impact of the dot-com crash was still being felt. The ephemeral patriotism of the country soon led to a decline in consumer confidence. Had Bush raised taxes, we would have gone into a recession, but he didn’t, he decreased taxes. This increased consumer confidence, and we averted the recession that pundits said we were going to have. Now we are facing another crisis. It will take years before the cost of this subprime debacle is fully realized, and Hillary plans to raise taxes. This will throw us into a recession. This doesn’t even count the cost of Hillary care, which will make the cost of Bush’s Medicare plan seem like petty cash.

Hillary believes that redistribution of wealth is good for America. She believes in big government. The government will take care of you. This is the opposite of laissez-faire capitalism, and it will impede economic growth.

The Harvard economist Joseph Schumpeter coined a term which he described was the central dynamic of capitalism, “creative destruction.” Creative destruction is the process of destroying the old (the obsolete) while creating the new. Some examples that underwent the way of creative destruction are the telegraph, the selectric typewriter, the railroad, and the computer chip. Creative destruction is necessary for capitalism to work. Governmental interference impedes this process

As creative destruction takes place, employees are displaced. Employees must have to continuously acquire new skills and knowledge to advance or maintain their place in society. It has been proven time and time again that creative destruction makes a nation wealthier (including the poor.) Innovation and risk taking are the hallmarks of creative destruction. All socio-economic classes take part in this process.

Human tendency, however, is to avoid change, and to want security. Change and insecurity are essential components of creative destruction. The creative destruction component of capitalism causes societies to gravitate towards socialist governments where the government takes care of you from cradle to grave. Third world nations are very susceptible to Socialist governments. The thinking goes something like this, “It’s my right, and I am entitled to it.”

As Alan Greenspan notes in "The Age of Turbulence, Adventures in a New World."

Capitalism creates a tug-of war within each of us. We are alternately the aggressive entrepreneur and the couch potato, who subliminially prefers the lessened competitive stress of an economy where all participants have equal incomes.

Socialism has proven to impede economic growth in every society that has tried it. The more socialist a government, the less efficient an economy will be. This doesn’t seem to matter to Hillary. She still seems to believe in a socialized, centrally planned government in spite of all the evidence that such governments hurt economies.

Once entrenched in socialist style governments, governments find it difficult to extricate their way out. Citizens become used to the social net that is provided. Margaret Thatcher was a proponent of capitalism, and she took on Britain’s socialist policies with an iron hand. The new intrepid French president Nicolas Sarkozy has offered hope against France’s socialist policies including its 35 hour mandatory work week. In Switzerland, the far-right Swiss party has been gaining popularity and according to the Economist, has offered expulsion of foreign criminals, no EU entry, tax cuts—the SVP captured seven more seats in the National Council. With 62 seats and 29% of the vote, against 26.7% in 2003, it recorded the best result of any party since.

What is happening in Europe? A recent poll according to Alan Greenspan shows that 71% of Americans agree that the free-market system is the best economic system available, but only 36% of the French agree. Three-fourths of the French also prefer to work in the government sector, because the government offers security. France has double digit unemployment, a mandatory six week vacation, a mandatory 35 hour work week, and socialized health care. Taxes are a heavy burden on French society. The French view capitalism as “The law of the jungle.” The dichotomy is that while polls suggest that the French still view capitalism as an “evil.”, France elected Sarkozy, a protectionist, but a firm believer in free-markets. An ally of the United States, Sarkozy has promised France sweeping change.

Socialized health care has also proved to be deleterious on governments that practice it.

West Germany was forced to absorb East Germany into its social net after the fall of the Berlin wall. This proved to be a heavy burden on West Germany, and resentment grew among West Germans. Think illegal immigration.

Bush has destroyed the GOP. He has alienated his base from Immigration, the Medicare drug plan boondoggle to the deficit. But Hillary is not the answer, and all the other Democratic nominees are to the left of Hillary (if you can believe that.)

After decades of failed policies, Europeans are beginning to realize that with such heavy burdens on society, it is hard to compete in the global marketplace. Hillary, a European socialist, plans to take us in the direction of those same failed European policies.

Rudy Guliani was prescient when he said, “American can’t afford you (Hillary).”

Who needs Usama Bin Laden to destroy our economy when we have Hillary? If Hillary is elected president, she will take us down a path of “no return.” It will be decades before we can unravel the mess that Hillary will cause.

By Mark Dias


"We're going to take things away from you on behalf of the common good.”

Hillary Clinton