The February budget deal has fallen apart with a heavy dose of economic reality. The May vote of the people has rejected tax increases and borrowing. The state’s constitutional officers and the Legislative Analyst are reporting that borrowing is impossible without a balanced budget. And the Governor, to his credit, is proposing a budget package that is almost entirely cuts in spending. Now some of the cuts are one-time, which merely postpones the day of reckoning, and some of the ‘cuts’ are actually fee increases, which hit Californians in the pocketbook.

Nevertheless, his plan works, especially now without the riskiest borrowing. The Legislature would be wise to pass it this week. Let me advise legislators that the pain and pressures are not going to get any better. In fact, if the Legislature seriously considers rejecting any one of the cut items, then they have the burden to find another cut of equal value and then tell that interest group that their spending is less important.

Pass the Schwarzenegger budget. He has accepted the reality of our economic times clashing with our spending excesses. No amount of tinkering will… Read More

Sacramento Democrats, desperate to avoid the kind of reduction in the size and scope of state government in California that are needed to balance the state’s books, are unbelievably still pursuing tax increases as a "solution" to chronic overspending, and a tax code that is predictably volatile as it disproportionately taxes the income of California’s wealthiest citizens.

In yesterday’s Los Angeles Times there is a story about how Democrats are supportive of a $1.50 per pack increase in cigarettes which, according to their analysis, would result in a $1.2 billion increase in tobacco tax revenues to the state’s general fund.

This is a stupid idea. As we have pointed out many times, Californians are among the most overtaxed people in the entire country, and the last thing we need is higher taxes, frankly, on anything. Never mind the fact that this takes us back down the path of the "sin tax" where all-knowing politicians in Sacramento hoist taxes on activities that they decide are "bad" for our collective community. Ironically, of course, taxes like these… Read More

President Barack Hussein Obama will announce the nomination of Sonia Sotomayor to the Supreme Court at 7 am pacific time this morning, according to an Associated Press leak of the embargoed announcement.

Sotomayor is a female hispanic first generation American who grew up in a housing project with one parent, her mother, and who went to Princeton, graduated second in her class, and then went to Yale Law School. That covers an awful lot of bases in the Democrat’s demographic. But Sotomayer has also earned what she has the hard way. God bless America.

Sotomayor is a left liberal who will be a judicial activist. Surveys of her rulings, even by liberal observers, put her in the same ideological groove as Justice Souter (whom she would replace) if not a little more to the left. In one case, the "Ricci" case, she dismissed a discriminationappeal brought by white firefighters without even writing an opinion. She has also made a couple of light-headed public statements. She… Read More

Sacramento Democrats, desperate to avoid the kind of reduction in the size and scope of state government in California that are needed to balance the state’s books, are unbelievably still pursuing tax increases as a "solution" to chronic overspending, and a tax code that is predictably volatile as it disproportionately taxes the income of California’s wealthiest citizens.

In yesterday’s Los Angeles Times there is a story about how Democrats are supportive of a $1.50 per pack increase in cigarettes which, according to their analysis, would result in a $1.2 billion increase in tobacco tax revenues to the state’s general fund.

This is a stupid idea. As we have pointed out many times, Californians are among the most overtaxed people in the entire country, and the last thing we need is higher taxes, frankly, on anything. Never mind the fact that this takes us back down the path of the "sin tax" where all-knowing politicians in Sacramento hoist taxes on activities that they decide are "bad" for our collective community. Ironically, of course, taxes like these… Read More

For anyone who has actually been following this little series, you will note that I have not yet even talked about government expenditures yet. That is because I believe that, to solve the budget problems in this state, we need to completely rethink how we do budgets.

(1) First focus on history–see where we have been, what has occurred, how we got here. Government budget analysts never look back, they never analyze how they ended up where they are. As a result, they never know where they have been and consequently don’t really know where they are going

(2) Focus on revenue first. Government revenue, as we all know, is dependent on the private sector. As p. 69, Figure REV-03 shows, those earning between 0 and $50,000 a year constitute 65% of the taxpayers, yet generate less than 5% of the revenue to the state. Those who earn more than $50,000 a year are 95% of the state’s revenue. A solution must focus on attracting more people to the state who earn more than $50,000 a year. A quick question–will raising taxes on those folks attract more of them, or encourage them to leave? And if they leave, how will that affect… Read More

I attended a Memorial Day event today that was modeled after the USO tours of the 40’s, 50’s and 60’s. It was a great event and Marilyn Monroe even sang a couple of lusty songs for the troops! The proceeds benefited the George Patton Museum.

A couple of observations grabbed me. First, a retired Colonel who was a war hero was asked by the MC prior to the show if he would get up on stage and say a few words. The Colonel declined because he wasn’t in uniform and didn’t want the attention to be on him and not the military.

The next one was an elderly gentleman who caught my attention throughout the show. When we stood, he stood a little straighter than us. His demeanor was more intense, more reverent than most of ours. At one point they played the service songs and asked members to stand when their branch’s song was played. When he stood up, the pride, dignity and unselfishness he exuded, withoutsaying aword,spoke about Memorial Day.

It made me wonder what these soldiers were remembering. Buddies who died and didn’t make it back home? The seperation from family during the fighting and… Read More

If there is any problem with government budgeting, it is how the government budgeting analysts approach their job. They always (not sometimes, not once in a while, not even frequently, but always) start the budget discussions with what they spent last year on a program by program basis. Take a look at the Governor’s Budget Summary I referenced in my last post on this item. Go to the Table of Contents. The first substantive item? 38 pages of "Summary of Major Changes by Major Program Area," summarizing how much the change is spending on each program area is. There are then 8 pages of "Economic Outlook," recognizing that government revenue is based on growth and activity in the private sector. Finally, on page 63 of an 85 page document, the analysts discuss revenue. Finally.

Want a real budget solution? Talk about revenue first. Analyze why revenue is dropping. Is it a "general economic malaise? Is it a government induced recession? Are government policies toward the private sector inhibiting private economic growth? What things can government do to enhance revenue growth in the private sector, thereby increasing… Read More

One of the most frequent recipient of the FlashReport’s Golden Pen Award is scholar, professor, columnist and radio talk show host Dennis Prager. Prager has just released his first "Prager University" video on You Tube. Did you know that the key to the uniqueness and greatness of America can be found on the front and back of a penny? … Read More