March 15, 2011 … Read More

News items not only tell a story but they are often symbols of larger issues. Considering the following from recent new stories:

CalTrans that incompetent beast of a bureaucracy is closing down the only unpaved highway in California. Remember back when the California Department of Highways actually built highways? No consideration was given to paving the road which has served as not only access to remote mountains but has a major evacuation route for San Bernardino Mountain residents. Not only is small beautiful in modern California but apparently primitive is better. The Japanese people do not loot. Shocking to Americans, people in Japan are not taking criminal advantage of their neighbors property. While here in California looting the public treasury is a prime recreational sport. In one week CalPERS has heard how their executives steered investment money to friends for kickbacks, San Bernardino County Sheriff deputies falsified time cards to gain pay raises for classes they did not take, and San Bernardino County welfare workers steered welfare money to themselves and friends. Shameful behavior all around … Read More

So apparently tomorrow the State Assembly is going to put the Governor’s proposed budget up for a vote tomorrow.

After the passage of Proposition 25 last November, which allows for the adoption of a budget on a majority vote, this should be a non-event. While not one Republican will go up on Brown’s budget, not one Republican vote is needed… EXCEPT…

Oh yes, Brown’s budget has not been revised to accept the political reality, which is that there are no Republican votes to place the largest tax increase in the history of any state on the ballot this June. And Brown has not responded by putting forward the additional cuts necessary to present a real, balanced budget to the legislature.

So what we have tomorrow is a game of political theater. Which makes you wonder what the liberal Democrats will do with their votes. These committed leftists don’t support any cuts in California’s generous social safety-net spending. So will they put up votes for tomorrow’s cuts, knowing that they are just part… Read More

Senate Republican Leader Bob Dutton responded to Senate President pro Tempore Darrell Steinberg’s representation that the budget being voted on Wednesday "responsibly and honestly promises to put California’s fiscal crisis behind us once and for all."

"The simple truth is, the budget the Senate Democrats are putting up for a vote on Wednesday is not a balanced plan," said Dutton. "It is just another short-sighted tax-and-spend scheme that relies on a $50 billion bailout from California taxpayers. It does nothing to fix the state’s budget crisis or put Californians back to work. The Democrats say, "Let the people vote," but what the Democrats really want is for the people to pay for government as usual."

The Democrats’ budget proposal is not half cuts/half taxes:

$50 billion in total tax increases over 5 years $26 billion in extra spending over 3 years $14 billion in tax hikes this year $7 billion in … Read More

For those who read Jill’s post below this one, please be advised that Ron Nehring’s proposal has now been altered to provide that any participant in a caucus who is away, on active duty, may have an alternative represent them. So while there are differences between the plan, both plans address the concern about active duty military personnel.

Clearly some electioneering was going on, as no attempt was made to get Nehring to take care of this concern before "going public" — this was just an effort to attack the Nehring plan. Nevertheless — the issue has now been addressed and is moot.… Read More

From today’s Wall Street Journal Political Diary E-mail… … Read More

The Sacramento Bee’s Capitol Alert Blog is reporting this morning that Assembly Republican Leader Connie Conway, who apparently spoke with some of the "Rogue 5" GOP State Senators, that their negotiations with Governor Brown craft a budget deal have broken off.

Specifically (excerpted from Capitol Alert):

"It’s my impression, after speaking to some of (the Senate Republicans), that the talks are done and over, and they walked away from the table," Conway said. "It’s their impression that, even though the governor seems willing, labor has said ‘no’ to all of the requests. So I think everybody left very unhappy from the table." … Read More

Treasury Bonds: I learned something last week. I learned that fully 40% of the over $9 trillion in Treasury debt currently outstanding to the public has a maturity of 3 years or less. Put another way, it means that we are rapidly approaching $4 trillion in U.S. debt that matures by 2014 or sooner. As I write this, the yield (interest rate paid) on a 2-year Treasury note is 0.645% or about 2/3 of one percent. The yield, at the same time, on a 10 year Treasury note is 3.4%, and on a 30 year is 4.55%. In bond parlance, this is called a "steep yield curve" where interest rates get much higher as you go farther out in time.

It’s pretty clear why the Treasury is doing this. By issuing mostly short-term notes, the Treasury is paying less interest, thereby keeping interest costs and, consequently, the deficit down. In addition, the Federal Reserve is in the middle of its "quantitative easing #2" (QE2) under which it is buying $600 billion of our own Treasury debt over about a 6 month period. The Fed is not buying the short-term notes, but is buying 10 year maturities and longer in order to hold those rates down.… Read More