Tag: Budget

California is F%$#ed Up and Sh%$

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We’ve all heard that the head of the California State Assembly killed the single payer bill.

While you are condemning lobbyists and timid Democrats, it should be noted that the bill had no funding mechanism, and because of California’s out of control initiative petition system, which passes bills with all the sophistication of the saying in fortune cookies, every dollar of benefits would require two dollars in taxes:

In the days since California Assembly Speaker Anthony Rendon shelved for the year SB562, which intends to establish a state single-payer health care system, he’s been subject to mass protests and even death threats. The bill’s chief backers, including the California Nurses Association and the Bernie Sanders-affiliated Our Revolution, angrily point to Rendon as the main roadblock to truly universal health care.

They’re completely wrong. What’s more, they know they’re wrong. They’re perfectly aware that SB562 is a shell bill that cannot become law without a ballot measure approved by voters. Rather than committing to raising the millions of dollars that would be needed to overcome special interests and pass that initiative, they would, apparently, rather deceive their supporters, hiding the realities of California’s woeful political structure in favor of a morality play designed to advance careers and aggrandize power.

………

It’s because you can’t do the funding without help from the voters, because of California’s fatal addiction to its perverse form of direct democracy. The blame, in other words, lies with ourselves.

To figure this out, you need only turn to the actual legislative analysis of the Senate bill, which passed in early June. It states very clearly what Rendon alluded to in his announcement shelving SB562: “There are several provisions of the state constitution that would prevent the Legislature from creating the single-payer system envisioned in the bill without voter approval.”

To cut through the clutter, let’s focus on the biggest constitutional hurdle, known as Proposition 98. Passed in 1988, Prop 98 requires that roughly 40 percent of all general fund revenues — money the state receives in taxes — must go to K-12 education. If you include community college spending, it must exceed 50 percent.

Prop 98 was itself a reaction to the notorious Prop 13, which sharply limited state property taxes. It was intended to ensure that education received its fair share of funding. But it also created a budgetary straitjacket that affects virtually anything that costs California money.

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Substituting a centralized state program for the skyrocketing premiums people pay today would actually be relatively affordable. But if half the money has to be siphoned off to education, that rationale becomes harder to sell.

Self-appointed experts have countered that the state can suspend Prop 98 with a two-thirds vote of the legislature. This has been done twice in the past, during downturns in the economy. But the suspension can last for only a single year; it would have to be renewed annually to keep single payer going. More important, as the California Budget and Policy Center explains, after any suspension, “the state must increase Prop 98 funding over time to the level that it would have reached absent the suspension.”

So legislators would have to vote year after year to suspend Prop 98, but add more money back to cover it in subsequent years. That backfill would grow with every budget, and over time lawmakers would need to vote for ever-increasing giant tax hikes. If this didn’t return Republicans to power in Sacramento within a few years, some enterprising lawyer would sue the legislature for violating the spirit of Prop 98. Suspension is not politically, legally, or financially sustainable.

Until California fixes the network of stupid and dysfunctional initiative petitions that have completely f%$#ed up state government, the best that they can expect is the, “Same Sh%$ Different Day.”

Bummer of a Birthmark, Sam

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I don’t know which is more surprising, the fact that the the Kansas State House and Senate have overridden Governor Sam Brownback’s veto of their bill raising taxes, or the fact that even the most die-hard of Kansans Republicans are ecstatic over the the fact that taxes are being raised, because they actually want the Government services, and they recognize that the fairy dust of the Laffer curve doesn’t work:

The five men, most retirees, had been friends far too long to hold back.

“Brownback? That dumb…,” Larry Craig, 68, exclaimed, laying into Kansas’ Republican governor, Sam Brownback, now in the third year of his second and final term. “He screwed up everything since he became governor.”

Craig, a Republican, was sipping coffee at 7 a.m. Thursday at Mom’s Kitchen in Olathe with his buddies — another Republican, two independents, one Democrat. A lawyer, a business owner, a retired truck driver among them. They’ve been meeting up for 20 years.

“No Brownback fans in here,” declared Larry Hurt, 68, the lone Democrat and a retired Teamster.

The topic on the table: the governor’s 2012 tax plan, the most sweeping tax cut in state history. The governor called the cuts a “real live experiment” of the principle that slashing taxes and cutting government spending would spur economic growth that would power the state.

But over the last five fiscal years, that plan has failed to create enough jobs and businesses, leaving Kansas’ overall revenue — the money it spends on the mass of state services from fixing roads to schools to social services — down by some $3.6 billion.

The Republican-led Legislature, weary of severe budget shortfalls, handed Brownback a new tax plan aimed at reversing the state’s sinking fortunes by raising $1.2 billion more over two years. Income tax rates would go up, and 330,000 owners of “pass-through” businesses such as law firms and family farms would start paying taxes again.

 ………

The governor vetoed the plan. But on Tuesday, in a stunning rebuke, the Legislature overrode the veto, wiping away the centerpiece of Brownback’s conservative agenda.

If the voices of these Kansans are any indication, the mood of many people seems to be one of relief. The overall sentiment: “What took so long?”

It appears that everyone in the state realizes that Sam Brownback’s experiment, where he suggested that tax cuts would trigger economic growth to outpace the loss in tax revenues, has been an abject failure.

Only the truly delusional, for example one Samuel Dale Brownback, haven’t yet realized this.

Our Corrupt Pentagon

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In an effort to simplify procurement and save costs, the Pentagon buys fuel for all the services, and then distributes it to each of them on an as needed basis.

In theory, this should save money by reducing procurement and inventory costs.

In practice, the Pentagon has overcharged the services and diverted the profits to a secret slush fund:

The Pentagon has generated almost $6 billion over the past seven years by charging the armed forces excessive prices for fuel and has used the money — called the “bishop’s fund” by some critics — to bolster mismanaged or underfunded military programs, documents show.

Since 2015, the Defense Department has tapped surpluses from its fuel accounts for $80 million to train Syrian rebels, $450 million to shore up a prescription-drug program riddled with fraud and $1.4 billion to cover unanticipated expenses from the war in Afghanistan, according to military accounting records.

The Pentagon has amassed the extra cash by billing the armed forces for fuel at rates often much higher — sometimes $1 per gallon or more — than what commercial airlines paid for jet fuel on the open market.

Under a bureaucracy that dates to World War II, the Defense Department purchases all of its fuel centrally and then resells it at a fixed price to the Air Force, Navy, Army, Marine Corps and other customers, who pay for it out of their own budgets. The system is intended to reduce duplication and promote efficiency.

The Defense Department is the largest single consumer of fuel in the world. Each year, it buys about 100 million barrels, or 4.2 billion gallons, of refined petroleum for its aircraft, warships, tanks and other machines.

The practice of exploiting fuel revenue to plug unrelated gaps in the defense budget has escalated in recent years, prompting allegations — and official denials — that the accounts are being used as a slush fund.

I am not sure of the etymology of the term “Bishop’s Fund”, maybe it goes back to the Borgia Popes or some such.

In any case,  this is no surprise coming from an agency that has kept its books unauditable for decades, despite laws requiring it to clean up its act.

This Would Be Ironic

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When the Supreme Court declined to overturn Obamacare, they did restrict it somewhat, by declaring that the provision of the law that required states to expand Medicaid or leave the program.

The Court found that it was too coercive.

Legal experts are saying that this ruling would likely apply to Jeff Sessions’ attempts to defund sanctuary cities:

The Trump administration announced this week that it will make good on its January threat to claw back funding from so-called sanctuary cities that limit information-sharing with federal immigration officials. Yet hundreds of legal experts say the move would itself be illegal—in part due to a court ruling Republicans cheered just a few years ago.

In 2012, the Supreme Court forced the Obama administration to make Medicaid expansion voluntary for states instead of mandatory, ruling that when the federal government “threatens to terminate other significant independent grants as a means of pressuring the States to accept” a federal policy, it is unconstitutionally coercive.

Conservative groups that celebrated this victory over “infringement on state sovereignty by the federal government” may now be dismayed to learn that it could throw a wrench into the Trump administration’s current plan to punish sanctuary cities.

I am amused.

Oh, Snap!

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The Congressional Budget Office (has scored Paul Ryan’s Obamacare replacement bill, and says that it would strip health insurance from 24 million people.

Rather predictably, the Republicans completely lose their sh%$, and attack the CBO chief that they themselves appointed:

An hour after the Congressional Budget Office released its dire assessment of the GOP Obamacare plan, Donald Trump’s top health official went on the attack.

“We disagree strenuously with the report,” Tom Price said. “The CBO report’s coverage numbers defy logic.”

That initial Republican assault on Monday was the first of many that amounted to dismissing their own scorekeeper.

Left unmentioned by Price, Trump’s Health and Human Services secretary: When he was in Congress, he recommended the CBO’s current director, Keith Hall, for the job. Hall took the helm at the CBO in April 2015, chosen by Republican House and Senate leaders to provide advice to a GOP-controlled Congress.

Obamacare sucks, the Republican proposal sucks even more, and the pre-2009 state of affairs sucked even more.

This might explain why the ACA hasn’t created a groundswell of political support for the Democrats, “We suck a little bit less,” which these days seems to be the motto for the Dems, just does not motivate voters these days.

He’s Gonna Fold Like Overcooked Broccoli

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Greek PM Alex Tsipras is insisting that he will go no further with austerity.

While I agree with his sentiments, Angela Merkel and her Evil Minions™ have turned Greece into the world’s largest debtor’s prison, Tsipras has been saying this for years now, and when push comes to shove, he folds:

Greek Prime Minister Alexis Tsipras dug in against creditor demands for more pension cuts and tax increases before a meeting of euro-area finance ministers to unblock the country’s bailout review.

“There is no way we are going to legislate even one euro more than what was agreed in the bailout,” Tsipras said in an interview with Efimerida ton Syntakton, to mark the two-year anniversary since he was elected on an anti-austerity platform. “The demand to legislate more measures, and contingent ones, no less, is alien not just to the Greek Constitution but to democratic norms.”

Euro-area finance ministers will discuss Greece when they meet in Brussels on Thursday, with Greece and officials representing the European Commission, the European Central Bank, the European Stability Mechanism and the International Monetary Fund locked in a stand-off over how to complete the country’s second bailout review, now a year behind schedule. The IMF, in particular, views the projections shared by Greece and the European creditors that the country can reach a primary budget surplus of 3.5 percent of gross domestic product by 2018 as too optimistic.

The IMF will make noises about the unsustainability of the program, but will then break its own rules and go along.

The Greeks will protest, and then capitulate.

Angela Merkel will use her “toughness” as a cudgel in the next round of elections.

The Greek people will continue to suffer.

Bet on it.

Tweet of the Day

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Betsy’s DeVos’s response re free college yesterday is nearly identical to John Lewis’s attack on Sanders/defense of Clinton in February. pic.twitter.com/HaGZLYK4Aw

— corey robin (@CoreyRobin) January 18, 2017

The argument was bogus when John John Lewis made it, and it is bogus now.

I have no idea what Clinton had on the Democratic Party establishment, they really did sell their soul to her during the primaries.

Some More Silver Linings

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First, we had a historically large (but still small) number of batsh%$ insane district attorneys turfed out of office, because they are sick and tired of abuse of prosecutorial power.  (In Houston, the DA jailed a mentally ill rape victim, and they were given the boot, for example)

Also, in conservative San Diego, voters rejected another huge give away to a pro sports franchise for a gold plated stadium complex.

I hope that both of these are the beginnings of a trend.

It’s a little thing, but it is a good thing.

Nashville Does the Right Thing, of Course, AT&T Will Sue to Stop This

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After months of obstruction and delay by the incumbent providers, the Nashville City Council has voted to Google Fiber authorization to mount the the lines on the poles themselves.

Needless to say AT&T will not stand for such consumer friendly behavior:

The Nashville Metro Council last night gave its final approval to an ordinance designed to help Google Fiber accelerate deployment of high-speed Internet in the Tennessee city, despite AT&T and Comcast lobbying against the measure. Google Fiber’s path isn’t clear, however, as AT&T said weeks ago that it would likely sue Nashville if it passes the ordinance. AT&T has already sued Louisville, Kentucky over a similar ordinance designed to help Google Fiber.

The Nashville Council vote approved a “One Touch Make Ready” ordinance that gives Google Fiber or other ISPs quicker access to utility poles. The ordinance lets a single company make all of the necessary wire adjustments on utility poles itself, instead of having to wait for incumbent providers like AT&T and Comcast to send work crews to move their own wires.

One Council member who opposed the ordinance asked AT&T and Comcast to put forth an alternative plan, but the council stuck with the original One Touch Make Ready proposal.

AT&T and Comcast were using their positions on the top of the poles to delay Google deployment, a rather unsurprising state of affairs given that their business model is predicated on extracting monopoly rents.

The existing model is not a free market, but incumbent monopolies, which is why US internet is so expensive and so slow.

OK, I Approve

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The Obama administration has closed a loophole that allowed companies to take a tax credit on foreign taxes paid for income that they have refused to repatriate:

The U.S. Treasury Department took fresh steps on Thursday to curb tax avoidance by multinational corporations, announcing new curbs on a loophole through which companies artificially use credits for foreign taxes they pay to improperly lower their U.S. tax bills.

In a notice that took direct aim at the European Union’s push to have its member states collect more taxes from U.S. companies’ overseas units, Treasury officials said they’re writing new rules that would restrict how corporations can use credits on their foreign tax payments to reduce their U.S. tax bills. The official notice puts corporate tax planners on notice that officials will challenge any strategies that violate their intended rules.

The measure will focus on tax-planning strategies in which companies separate foreign tax payments from the underlying income that they’re based on. That separation — which Treasury’s notice described as a “splitter” arrangement — allows companies to artificially inflate credits they use to cut their U.S. tax bills.

Officials with the Treasury and the Internal Revenue Service said it was possible that U.S. companies that find themselves subject to new tax bills as a result of EU investigations could use splitter arrangements to reduce their U.S. taxes. Last month, the European Commission found that Ireland must collect $14.5 billion in back taxes from Apple Inc. after determining that the iPhone maker received a special tax deal that violated so-called “state-aid” rules, which are aimed at fostering competition.

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In effect, the new rule would disallow corporations from using foreign tax credits unless the companies actually bring home to the U.S. — or repatriate — the overseas earnings on which they’ve paid the foreign taxes. Repatriation of overseas income triggers the 35 percent U.S. corporate tax rate, one of the highest in the world — and companies can use foreign tax credits to reduce or eliminate it. Treasury officials are worried that without the new rule, companies could claim artificially inflated foreign tax credits tied to offshore money they haven’t brought home.

U.S. officials have grown increasingly concerned that more than $2 trillion in offshore earnings that U.S. multinationals haven’t yet repatriated is now fair game for European countries.

Mark J. Mazur, Treasury’s assistant secretary for tax policy, said the new regulation would close “another tax loophole that contributes to the erosion of our tax base.”

“Today’s action protects the U.S. tax base by ensuring that such credits are only available when corporations repatriate their foreign earnings,” Mazur said.

Why the f%$# did this take 7 years to do?

Why did Obama have to wait until the  “I no longer have a f%$# to give” stage of his Presidency?

This should have started on day one.

LCS is Raison d’Etre Abandoned, Ships Will Still Be Bought

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At the core of the Littoral Combat Ship (LCS) design was the idea that they would have combat modules that could be swapped out to convert the ships between surface warefare (SuW), mine counter-measures (MCM), and anti-submarine warfare (ASW) versions on the fly.

This was why the US Navy bought them, even though there were much larger, and more expensive, but no more heavily armed than existing corvettes.

In fact, they are the size of frigates, about 3000 tons, but carry a 57mm gun equivalent to the armament of a corvette, which typically displaces around 1500 tons.

There were a number of problems with this, among them the fact that there was no way to make the logistics work without the ship having to return to the United States to make the swap.

So you ended up with a bloated and overpriced ship, and now the USN has admitted that swapping mission modules is never going to happen, but (surprise) they will continue to buy more of these warships:

When the first Littoral Combat Ship launched a decade ago this month, the U.S. Navy expected it to herald a new class of inexpensive, agile fighting ships with a radically new “modular” design — allowing them to swap out bundles of weapons, sensors and crews for different missions.

So if the LCS needed to fight other warships, hunt submarines or search for mines, sailors could quickly install distinct modules for each mission, although only one at a time. Don’t worry, the Navy promised, it’ll work.

It didn’t.

On Sept. 8, the Navy announced that it is effectively abandoning the LCS’ modular concept for 24 of the ships in both the Freedom and Independence-class variants. The initial four ships — which are already in service — will become testing vessels.

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That means these new, multi-purpose vessels will become … single-purpose vessels.

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In reality, costs ballooned to more than $500 million per ship — twice the original estimate. They are fast. However, the modules don’t work. Instead of taking a few days at most to replace them, it takes weeks without extremely precise planning. That’s far from assured in peacetime, let alone during a major war.

The 3,000-ton LCS is heavier than first planned — and it’s poorly armed and vulnerable to anti-ship missiles. Michael Gilmore, the Pentagon’s director of operational testing and evaluation, described the LCS in 2013 as “not expected to be survivable” in combat.

But the Navy is still going to buy as many as 40 of theses ships.

Your tax dollars at work.