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February 6, 2009

Is California On The Verge Of A Financial Collapse?

California is America’s most populous state and it might be on the verge of a financial collapse.  If this is happening in California, how long will it be before this same type of financial monsoon slams into your state?

More than 200,000 state government employees are expected to stay home without pay today as California began it’s first-ever furlough (involuntary unpaid leave of absence), a move intended to save money during the ongoing fiscal crisis.

State agencies scrambled in the days before the furloughs took effect to avoid confusion for the public, such as people trying to register vehicles, getting drivers license or trying obtain professional licenses or city permits.

Among the offices to be closed Friday are those of the Department of Motor Vehicles and Department of Consumer Affairs. The governor’s Office of Emergency Services also would be dark as part of a cash-saving move ordered by Governor Arnold Schwarzenegger.

Critical and revenue-generating agencies were scheduled to remain open, including police precincts, fire stations, parks and employment centers that process unemployment insurance claims. California’s unemployment rate is 9.3 percent — a 15-year high.

Schwarzenegger ordered the two-day-a-month furloughs, reducing the average state worker’s salary by 9.2 percent, as he and lawmakers try to solve the state’s $42 billion budget shortfall.

The governor had hoped his order would apply to some 238,000 state employees, but each of the seven other constitutional officers have said they will not comply. Employees of the Legislature are not under his authority.

Schwarzenegger’s legal affairs secretary, Andrea Hoch, said the administration was prepared to sue the state controller if he did not reduce paychecks for more than 15,000 workers in the other constitutional offices, which include the attorney general, secretary of state and insurance commissioner.

A judge who affirmed Schwarzenegger’s authority to order the furloughs said his ruling did not apply to statewide elected officials because they were not a party to the lawsuit. The administration has maintained that employees of constitutional offices are covered by the furlough order.

Doors to about 180 DMV offices were to be locked Friday. Some people said the state gave little notice to the public about the furloughs, which will continue on the first and third Fridays of each month through June 2010.

“They don’t have any signs telling us about Friday,” said Ingrid Dela Cruz of Sacramento, who was inside a Sacramento DMV office on Thursday.

In fact, there were plenty of signs, but they were posted in locations invisible to most customers because they were hidden behind sliding glass doors.

Schwarzenegger’s administration estimated that cutting worker hours would save the state $1.3 billion over the next year-and-a-half.

The state decided to keep some 250 career centers open after previously announcing they would be closed. The centers are where the unemployed get information about job training and benefits.

Dan Gurule, a police officer at the state mental hospital in Norwalk, said the state would have to pay overtime at 24-hour facilities to those workers who backfill the shifts of people on furlough. Five state mental hospitals and 33 adult prisons are required to provide constant care to patients and inmates.

“Somebody has to fill in my position,” Gurule said. “We still have to have a minimum staffing. That’s going to be someone on overtime, being paid time-and-a-half.”

California is not the only state on the brink of a financial disaster. The state of Florida still has a balanced budget — for the time being — but barely.  Governor Charlie Crist has acknowledged that “this economy is struggling greatly.”  He has co-signed a letter with Governor Jim Doyle of Wisconsin, a Democrat, supporting Obama’s stimulus package and encouraging all governors to do the same. “If President Obama sees a need for Republican assistance with his stimulus plan, I’m happy to do that,” said Crist.

He sees in Obama and his recovery plan “lifelines of hope to persevere.”  “There is a level of optimism that is not detached from reality. … I see the glass as half-full —and not without reason. … My optimism does relate to the stimulus plan.”

Many Governors and Mayors support President Obama’s Stimulus Plan since they are on the front lines and see the crises up close and personal on a daily basis. 

Governors and Mayors do not want to see police precincts and fire stations closed.  Nor do they want to see thousands upon thousands of teachers losing their jobs which will cause classroom sizes to increase or schools to close. 

Governors and Mayors do not want to see the millions of unemployed Americans lose their unemployment insurance and lose the ability to pay for food, utilities, rent/mortgage, taxes, car loans and the necessities of life.

I urge you to contact your Senators and Congresspersons from both Houses and encourage them to get together, make the necessary revisions and get this stimulus plan passed for the greater good of all Americans!

Contact Congress:      

http://www.visi.com/juan/congress/

Contact Senate:          

http://www.senate.gov/general/contact_information/senators_cfm.cfm

October 4, 2008

Economy – Trickle Down Theory Is A Myth: Money Doesn’t Trickle Down But Pain Crawls Up

 What is the trickle-down economy theory? It’s the set of economic policies based on the concept that you provide economic incentives to the wealthy by cutting their taxes (by letting them keep their money) while at the same time deregulating industry, you’ll let loose a tsunami of economic activities that will enrich even the least advantaged among us.

Wow, this sounds great in theory but as we all know now, it doesn’t work.

Trickle-down is largely a rationale for upward redistribution that’s been kept alive by those who benefit from it by paying less tax. Reagan put this stuff on the map, GW Bush brought it back with a vengeance and McCain intends to take it even further. McCain’s policy calls for an extension of the Bush tax cuts plus he adds pork fat of about $75 billion more in corporate tax cuts on top of that!

In the 1990s when Clinton came into office he would have nothing to do with allowing the rich to pay less taxes; he instead cut taxes on lower-income households and raised taxes on the wealthiest. Obama takes a similar approach.

Because of lowering taxes on the middle-class and raising the taxes on the wealthy in hind sight we see evidence of the strong real growth in median incomes and sharp declines in poverty that occurred during the 1990s compared with the opposite movement in the 2000s with Bush’s policies.

The income for the middle-class grew by 10% or by $5,200 in the 1990s (1989-2000); these same households saw a decrease of $2,000 in 2000s under Bush when he lowered taxes for the wealthy.  If Bush had kept Bill Clinton’s policy of lowering the taxes for the middle-class, income would have continued to increase in the 2000s and middle class median income would have gone up $3,600 instead of falling $2,000.

So why do the republicans continue to push tax cuts for the rich?  It seems that it is as simple as ‘because they and their friends are rich’ and it benefits them and their friends including heirs and heiresses.  That’s straight-talk.

(more…)

Economic Pain: 159,000 Jobs Lost In September. Obama Will Be BEST Protector of Middle Class

 Can you or your family afford to lose a job next week or next month? Barack Obama will be best protector of our economy which is in the middle of the worst financial crisis since the Great Depression.

“John McCain doesn’t seem to understand that this crisis isn’t two weeks old,” Ohio Governor Ted Strickland said earlier today in the Democratic Party’s address. “Maybe he doesn’t realize that we’ve lost jobs every month this year. He hasn’t said one thing he’d do to make his economy look any different than George Bush’s economy.”

 
Labor Department figures released on Friday shows that the U.S. lost 159,000 jobs in September, the most in five years! The jobless rate was unchanged from August at 6.1 percent but up from 5 percent as recently as April.
 
September’s unemployment data followed a 73,000 decline in jobs during August and showed that America’s economy – the world’s largest economy – may be headed for bigger job losses as consumers and companies cut back and economize on just about everything.

Obama strongly supports an economic recovery package. Following Friday’s jobs report, Obama said:

“Instead of Sen. McCain’s plan to give tax breaks to CEOs and companies that ship jobs overseas, I will rebuild the middle-class and create millions of new jobs by investing in infrastructure and renewable energy that will reduce our dependence on oil from the Middle East. I also call on Congress to pass an immediate rescue plan for our middle-class that will provide tax relief, save one million jobs, and save our local communities from harmful budget cuts and painful tax increases.”

McCain opposes a stimulus package for working families and did not take part in the Senate vote on the first stimulus bill last spring.

As bad as the new jobs data are, the underlying picture is even worst because the number of long-term unemployed workers (those jobless for more than six months and may have stopped looking for work) grew to 2 million in September, an increase of 728,000 over the past 12 months.

Senator Obama would create 2 million new jobs by investing in rebuilding crumbling infrastructure, roads, bridges, and schools, Strickland said. He would give tax breaks to companies that create jobs in America, he said.

Obama yesterday criticized Governor Palin for saying in the vice-presidential debate Democratic economic policies would “kill jobs.”

“When Senator McCain and his running mate talk about job killing, that’s something they know a thing or two about,” Obama said yesterday at a rally outside Philadelphia. “Because the policies they’re supporting are killing jobs every single day.”

Earlier in September, a Bloomberg/Los Angeles Times poll showed more respondents said Obama would do a better job handling the financial crisis than McCain, and almost half of the voters said they believed he had better ideas to strengthen the economy than McCain does.

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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