ARCHIVE - 2013 - California Policy Center

ARCHIVE: 2013

How to Think About Debt

Summary:  Balancing the budget is a good idea and receives a lot of press. However, the budget is far less important than the steady growth of debts, unfunded obligations, and entitlements. These items are stealthy future deficits. To really understand whether or not we have financially sustainable government budgets, we have to go to the balance […]

Los Angeles: Will the City of the Future Make it There?

When I arrived in Los Angeles almost 40 years ago, there was a palpable sense that here, for better or worse, lay the future of America, and even the world. Los Angeles dominated so many areas — film, international trade, fashion, manufacturing, aerospace — that its ascendency seemed assured. Even in terms of the urban […]

Union Controlled Classrooms – What Happened to Public Education in the U.S.

The United States spends more per pupil on public education than any other country in the world, about one trillion dollars annually, but it is at the bottom of the class. In 2009, 15-year old American students ranked 17th in reading, 23rd in science and 32nd in mathematics in the PISA international assessment of academic […]

Record Corporate Profits vs. New Firm Creation

Corporate Profits Are at a Historic High The economic malaise characterizing the years after the financial crisis has largely bypassed corporate America. Corporate profits are currently at a historic high of 11 percent of GDP (see fig. 1 below). Expert speculation abounds as to the causes and implications of this trend. Many commentators, seeing these […]

How Regulations Favor Monopolies and Big Government

Before discussing how Big Food operates today, let’s take a moment to look back at how agriculture operated in the US South in the late 19th and early 20th centuries. Viola Goode Liddell, daughter of a cotton salesman, described the system: When an [Alabama] Black Belt farmer sent his cotton down river to Mobile, he . . . had to take what […]

Ideological Battles Divide Both of America’s Major Political Parties

To our progressive friends, it seemed like a century of advocating for government-sponsored universal health care reached fruition when the Affordable Care Act became the law of the land. But triumph turned to tragedy when Progressivism’s signature accomplishment blew up on the launch pad. Not only did this make a shambles of our wounded president’s […]

Ways to Grow California’s Economy: A Checklist for Discussion

There is no substitute to growing California’s private sector economy. Growing the economy has substantial benefits: The private sector economy is the only source of jobs and tax revenues. It’s better for everyone to raise tax revenues by growing the economy rather than through tax rate increases and new taxes. A growing private sector economy also […]

Principles of a Good Tax System

Editor’s Note: This article by Jason Mercier outlines the principles of optimal tax policies in Washington state. It should be of interest to Californians because it offers a useful perspective on our own tax policies. Washington has succeeded in one key area, “balance and reliability,” because their three primary tax revenues, based on sales, gross […]

Why Are the Medical Insurance Companies Silent?

Editor’s Note: This essay by John Goodman makes explicit, in the context of the federal passage of the Affordable Healthcare Act, a phenomenon that is alive and growing in California. We usually call it corporatism, or crony-capitalism, but the endpoint of the trends, usually described using euphemisms, is economic fascism. Where communism might be correctly […]

Too-big-to-fail Banks Will Kill the Global Economy

Editor’s Note: Anyone who is still wondering whether or not California’s trillion dollars of state and local government debt is a problem, or, by extension, whether or not the $15 trillion of federal government debt, or the $50+ trillion of total market debt in the U.S., is invited to read the following article. While reading, […]

Exploring a Prosperity Policy Agenda for California

The People of California want prosperity but most are not getting it. The California Policy Center has established this new website, the Prosperity Forum, to explore the reasons why Californians are not as prosperous as they once were. By making prosperity the primary focus, other objectives, which sometimes dominate our State’s politics, can be placed […]

Are Annual Contributions Into CalSTRS Adequate?

Preface: Earlier this year the California Policy Center published a study evaluating the Orange County Employee Retirement System (OCERS) to explore this same question: Are Annual Contributions into OCERS Adequate? That study adopted a unique focus, evaluating contributions into OCERS not based on percent of payroll, but by looking at the actual amount of cash being contributed […]

Fixing California: The Green Gentry’s Class Warfare

Historically, progressives were seen as partisans for the people, eager to help the working and middle classes achieve upward mobility even at expense of the ultra-rich. But in California, and much of the country, progressivism has morphed into a political movement that, more often than not, effectively squelches the aspirations of the majority, in large […]

California’s “Open Enrollment Act” Empowers Students to Transfer Out of Underperforming Schools

Have you ever wanted to know if your child is attending a chronically underperforming school? Well, start spreading the word: the list is out. Due to a law I wrote while serving in the California Senate, the 2010 Open Enrollment Act identifies the 1,000 chronically underperforming schools in California and empowers parents of kids enrolled […]

Bipartisan Solutions for California

When examining policy options that might help restore a financially sustainable public sector, reformers tend to focus on what may be politely referred to as austerity programs. And no effective package of reforms can ignore austerity measures; cutting government programs, cutting government staff, and cutting government employee compensation. At the same time, an essential element […]

The Next Climate Debate

In his second inaugural address, President Obama promised to “respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations.” The crowd roared. “Environmentalists Hail Obama Climate Change Focus,” proclaimed an Associated Press headline. Three weeks later, in his State of the Union address, the […]

Unreformed Welfare: California’s Armegeddon

Welfare in America is a classic example of government failure. The combined federal, state and county welfare programs have had enormous destructive economic, social and moral consequences. In the absence of significant change, the Heritage Foundation projects their cost at $10.6 Trillion over the next decade. [1] The initial beneficiaries of government aid were widows […]

Unaffordable California – It Doesn’t Have To Be This Way

Here’s a documented comparison of California taxes and economic climate with the rest of the states. The news is bad, and getting worse. But the state and local government policies that created an unaffordable California can be reversed: PERSONAL INCOME TAX:  Prior to Prop 30 passing in Nov. 2012, CA already had the 3rd worst […]

Announcing the Prosperity Forum

One of the overwhelming challenges facing fiscal conservatives is how to cut government spending without harming economic recovery. It may seem obvious that governments eventually have to stop relying on borrowing to finance their deficits, but eliminating government spending deficits can only partly rely on spending cuts. Economic growth is the other essential element. To […]

California’s New Feudalism Benefits a Few at the Expense of the Multitude

California has been the source of much innovation, from agribusiness and oil to fashion and the digital world. Historically much richer than the rest of the country, it was also the birthplace, along with Levittown, of the mass-produced suburb, freeways, much of our modern entrepreneurial culture, and of course mass entertainment. For most of a […]

Fiscal Responsibility Starts with Main Street

Two events in the past month have caused me extreme concern that one of our greatest economic errors as a nation is being repeated. I refer to the five-year anniversary of the Lehman Brothers bankruptcy filing we just observed and to the decision of the Federal Reserve to defer the “tapering” of their gigantic quantitative […]

Fixing California: Will Fracking Bonanza Be Allowed?

Seven years ago, the California unemployment rate was virtually the same as the national rate — under 5 percent. The Golden State had seen some downs during the broad economic growth enjoyed across America since the 1980s, especially after the end of the Cold War hollowed out the defense industry in the early 1990s. But […]

California can protect the environment while sharing in an energy bonanza

Hydraulic fracturing — fracking — has been used to extract oil and natural gas from shale rock for decades. But technological improvements in recent years have made the process far more efficient. It’s expanded use in states like North Dakota, Texas, Ohio, Pennsylvania and Colorado has sparked an energy revolution that is pushing the United […]

The Best Way to Help the Poor is to Grow the Economy

We have heard a lot from the Obama administration about the growing gap between the rich and poor among us. Less discussed by the Left however, is how middle-income families have done under this administration. What is their record? The fact is that median household income has fallen by 7% since 2007, with most of […]

How Should Technological Advances Affect the Role of Government?

“Robots will steal your job, but that’s ok.” Federico Pistono Anyone who has recently driven through Mountain View, in the heart of Silicon Valley, is likely to have had the memorable experience of sharing the road with a car that has nobody inside. Google’s “autonomous cars” are being tested there, and apparently they drive better […]

The Case for Single Sex Education

The debate about education in this country is never more intense than on the issue of single-sex education. Once the tradition in America, it became marginalized after the feminist protests in the sixties. Title IX reforms in 1972 made coeducation in public schools a national policy. Single-sex public education became illegal and in 1996 after […]

Future of Education is At Hand:Online, Accredited, Affordable, Useful

The entire education system is financially unsustainable and has been for some time. The price of education is so expensive as to make college a poor choice for many who attend, and a downright bad choice for those who go heavily in debt for degrees in little demand. The cost of education keeps rising along with: […]

Are Annual Contributions Into Orange County’s Employee Pension Plan Adequate?

By Ed Ring, August 30, 2013 Summary: During 2012 the Orange County Employee Retirement System, OCERS, collected $628 million from employees and employers to invest in their pension fund. Of this $628 million, $410 million was the so-called “normal contribution,” which was a payment to cover the present value of future pensions earned during 2012 […]

State Pension Litigation Update

By Joe Luppino-Esposito, August 9, 2013 About the Author:  Joe Luppino-Esposito is an editor and author at State Budget Solutions, focusing on public employee pensions, labor law, and state budget reforms. Prior to joining SBS, Joe was a researcher at the Center for Union Facts, and previously served as a Visiting Legal Fellow at the Heritage […]

Anti-Sprawl Policies Threaten America’s Future

Among university professors, government planners and mainstream pundits there is little doubt that the best city is the densest one. This notion is also supported by a wide number of politically connected developers, who see in the cramming of Americans into ever smaller spaces an opportunity for vast, often taxpayer-subsidized, profiteering. More recently density advocates cite […]

California’s Government Policies Causing Exodus of Skilled Workers and Capital

We’ve written before about the efforts of Texas Gov. Rick Perry to lure California businesses to his state, which elicited a scatological response from Gov. Jerry Brown. Relocation expert Joseph Vranich, who has done such a good jobassembling the list of California firms leaving the state, has a revealing column  chronicling a further list of governors poaching in the Golden […]

The Market, not Government Bureaucrats, Identifies Successful Products and Technologies

Suppose you are offered a bargain on a pair of well-made shoes. You can have the new footwear at half price. The catch? They don’t fit and the discount is partially paid for through your tax dollars. This is the kind of deal the public is being offered on some alternative energy vehicles. It is […]

‘Progressives’ advancing California monopolies

Modern California politics was forged from the Progressive Movement’s “purification” of the political machines and bosses to bring about the reform of monopolistic railroad, insurance and banking trusts that dominated the state. The Progressives reached their apogee a century ago with Gov. Hiram Johnson’s reforms of 1911, especially his initiative, recall and referendum reforms. Fast-forward […]

Social Security is Healthy Compared to Public Sector Pensions

Last week yet another missive on the lessons to be learned from Detroit’s bankruptcy was published, this time in Forbes Magazine by Jeffrey Dorfman, an economist at the University of Georgia. Dorfman’s article, “Detroit’s Bankruptcy Should Be A Warning To Every Worker Expecting A Pension, Or Social Security,” clearly implies that future Social Security benefits […]

Happy Birthday, Milton Friedman

Economist Milton Friedman would be 101 today. His passing several years ago was lamentable but many of his ideas — involving monetary policy and price theory, for instance — are immortalized in his many scholarly books, academic papers and tributes by fellow scholars who knew him best. Friedman was born the son of immigrants in Brooklyn, N.Y. He earned […]

A Method to Estimate the Pension Contribution and Pension Liability for Your City or County

July 24, 2013 Summary: With last week’s announcement that Detroit has declared bankruptcy, many wonder how their city, county, school district, or other government organization is doing. Citizens want their elected officials to behave responsibly so that what happened to Detroit won’t happen to them. But elected officials are not always cooperative when it comes […]

Preserving America’s Middle Class

To say America’s middle class is threatened is a common refrain. But there is no malevolent force operating to shrink America’s middle class. America’s middle class is challenged by the momentum of history. Technology automates jobs at the same time as the capacity of foreign manufacturers continuously improves. At the same time, American taxpayers confront […]

Merge Social Security and Public Sector Pensions

When solutions to the challenge to provide retirement security to American citizens in the 21st century are considered, they typically address either social security or public sector pensions, but rarely focus on both of these systems together. But when considered together, as systems that each have unique strengths and weaknesses that might be combined in […]

How Interest Rates Affect the Federal Budget

The relationship between stagnant economic growth and high levels of total market debt should be clear to anyone trying to manage a household where their home mortgage payment consumes 50% or more of their entire household income. Similarly, the relationship between economic growth and the ability to borrow should be clear to anyone who has […]

How Big Are California’s State and Local Governments Combined?

June 21, 2013 By Bill Fletcher and Ed Ring SUMMARY:  California’s local governments and agencies spent far more in FYE 6-30-2011, $316 billion, when compared to spending for direct state government operations, $49 billion. Similarly, using realistic assumptions regarding the value of unfunded retirement pension and healthcare obligations, the amount of long-term debt carried by […]

Moody’s Final Adopted Adjustments of Government Pension Data

June 2, 2013 By John G. Dickerson About the Author: John Dickerson is a financial professional living in Mendocino County who is involved in public sector pension analysis and reform. Dickerson focuses on the impact of unfunded pension debt on the 21 California counties that operate their own independent Pension Funds. He is a financial […]

Calculating California’s Total State and Local Government Debt

SUMMARY:  The total outstanding government debt confronting California’s taxpayers is bigger than is generally known. Earlier this year, when Governor Brown referred to the $27.8 billion in state budgetary borrowings as a “Wall of Debt,” his intention was probably to warn Californians that balancing the state budget was only a first step towards achieving financial […]

Irvine, California – City Employee Compensation Analysis

April 8, 2013 INTRODUCTION When the issue of public sector compensation is discussed, it is vital for participants to fully understand the concept of total compensation. Because the “wages” paid directly to a worker are only part of what they earn. Any costs for any direct benefits enjoyed by an employee that are paid for […]

How Lower Earnings Will Impact California’s Total Unfunded Pension Liability

By Ed Ring, February 18, 2013 SUMMARY:  This study describes how actuaries calculate two key variables that govern pension solvency; the plan’s “accrued actuarial liability,” defined as the present value of all future obligations to pay pensions, and the plan’s “actuarial value of assets,” defined as the current value – adjusted upwards or downwards to […]

Gina Raimondo’s Shining Example – Pension Reform in Rhode Island

January 28, 2013 By John G. Dickerson About the Author:  John Dickerson is a financial professional living in Mendocino County who is involved in public sector pension analysis and reform. Since 2008 Dickerson has been the publisher of the influential website and newsletter www.YourPublicMoney.com. He focuses on the impact of unfunded pension debt on the […]

The Impact of Moody’s Proposed Changes in Analyzing Government Pension Data

January 8, 2013 By John G. Dickerson About the Author:  John Dickerson is a financial professional living in Mendocino County who is involved in public sector pension analysis and reform. Since 2008 Dickerson has been the publisher of the influential website and newsletter www.YourPublicMoney.com. He focuses on the impact of unfunded pension debt on the […]

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