California Debates How to Blow Tax Windfall

[Ad Orientem]

LOS ANGELES — After years of grueling battles over state budget deficits and spending cuts, California has a new challenge on its hands: too much money. An unexpected surplus is fueling an argument over how the state should respond to its turn of good fortune.

The amount is a matter of debate, but by any measure significant: between $1.2 billion, projected by Gov. Jerry Brown, and $4.4 billion, the estimate of the Legislature’s independent financial analyst. The surplus comes barely three years after the state was facing a deficit of close to $60 billion.

At first glance, the situation should be welcome news in a state overwhelmingly controlled by Democrats, who have spent much of their time slashing programs they support. After last November’s elections, the party has two-thirds majorities in the Assembly and the Senate, relegating Republicans almost completely to the sidelines.

Instead, the surplus has set off a debate about the durability of new revenues, and whether the money should be used to reverse some of the spending cuts or set aside to guard against the inevitable next economic downturn.

This is California. It's a one party state (always a bad thing) and the Dems will spend that money just like the guy with a maxed out credit card who suddenly gets a bonus from work. IMHO half the money should be socked away in a rainy day fund and the other half spent on paying down debt. Reducing public debt frees up more money in the form of interest payments no longer required.

[Pointedstick]

It's been a great couple of years for silicon valley, that's for sure. But that's one of California's biggest budgetary problems: it's highly dependent on windfall revenues from wealthy folks in hollywood and silicon valley, which fluctuate greatly. There's no stability. I mean, just recently they were predicting a $60 billion deficit and now there's a surplus? This is madness! You can't run a state budget with that degree of unpredictability unless you have a huge emergency fund and the willingness to refill it during times of plenty (as Keynes advocated). Unfortunately in the real world politicians never do this and so the state lurches from boom to bust.

[WildAboutHarry]

IMHO half the money should be socked away in a rainy day fund and the other half spent on paying down debt. Reducing public debt frees up more money in the form of interest payments no longer required.

Great idea and I agree completely, but is "half" $1.2 billion/2 or $4.4 billion/2?

And what do we get for our taxes in CA?  Dan Walters in the Sunday Bee said:

That $9,139 [in CA per-pupil spending] is about $1,400 under the national average and less than half of top-spending New York's $19,076. California was 36th among the 50 states and the District of Columbia, with Utah lowest at $6,212.

So 36th in per-pupil spending but Dan says:

Californians already have the nation's fifth highest overall tax burden.

I guess buying defective bolts, botching inspections, and installing rust-prone hardware on the new Bay Bridge is expensive.  As is the new bullet train, delta canal, et al.

But I'm not bitter

[dragoncar]

Instead, the surplus has set off a debate about the durability of new revenues, and whether the money should be used to reverse some of the spending cuts or set aside to guard against the inevitable next economic downturn.

This is California. It's a one party state (always a bad thing) and the Dems will spend that money just like the guy with a maxed out credit card who suddenly gets a bonus from work.

How exactly do you get this or the post title from the quote above?  Sounds like there is a prudent debate over the stability of the surplus and not only how but of it should be spent.  It's stuff like this that makes me worry about my decision to invest in the Pp.

[Pointedstick]

How exactly do you get this or the post title from the quote above?  Sounds like there is a prudent debate over the stability of the surplus and not only how but of it should be spent.  It's stuff like this that makes me worry about my decision to invest in the Pp.

1. He lives in California, as do I. We're familiar with the way things work here.
2. What does the PP have to do with California's ability to maintain its budget in a sane manner or anyone's opinion about it one way or another?

Personally, I have found the stability of my PP quite reassuring no matter what the dimwits in Sacramento are doing.

[WildAboutHarry]

How exactly do you get this or the post title from the quote above?  Sounds like there is a prudent debate over the stability of the surplus and not only how but of it should be spent.

There is no agreement between the governor and the legislature on exactly what the amount of surplus is let alone what to do with whatever it turns out to be.

And "prudent debate" and California legislature is a non sequitur

[craigr]

If government carries any debt, there is no way they have a "surplus" of funds. This is just political spin. Clinton said the same thing during his budget with trillions of long term debt on the books and trillions more in unfunded liabilities still in existence.

[dragoncar]

1. He lives in California, as do I. We're familiar with the way things work here.

OK, so do I.  I don't make up completely unsubstantiated and inflammatory post titles, include a benign article quote in the guise of support, and then draw irrational conclusions based on being "familiar with the way things work."

2. What does the PP have to do with California's ability to maintain its budget in a sane manner or anyone's opinion about it one way or another?

The sheer volume of these zealous right-wing posts make me worry, for example, because they imply that other posts on this forum are subject to lurking biases.  When intelligent people come to different conclusions one one topic, and the same conclusions on another topic, it makes you wonder which conclusions are right, and which are wrong.

[melveyr]

The sheer volume of these zealous right-wing posts make me worry, for example, because they imply that other posts on this forum are subject to lurking biases.  When intelligent people come to different conclusions one one topic, and the same conclusions on another topic, it makes you wonder which conclusions are right, and which are wrong.

Well, I am not right wing at all and I like the PP. I have felt similarly to you, but ultimately it only matters if you think the PP makes sense. Who cares what a bunch of nutty libertarians think 

When I look at the story and the data, the diversification makes sense to me. The idea of wide diversification is bigger and older than Harry Browne or any other individual. The PP works the same no matter your beliefs. And you know what, perhaps separating the PP brand will help you out. Forget the "PP", does a blend of stocks, bonds, bills, and gold make sense to you? That is the only thing that matters.

[Pointedstick]

The sheer volume of these zealous right-wing posts make me worry, for example, because they imply that other posts on this forum are subject to lurking biases.

Aren't we all subject to lurking biases? Your choice of the phrase "zealous right-wing posts" reveals yours, for example. We all have different points of view here; that's just normal IMHO. Doesn't mean we have to cast doubt on the choices that others have made just because we may disagree with their political views.

For example Moda and I have these huge political and philosophical discussions that we approach from very different angles but at the end of the day I'd like to say that we respect each other's intelligence, points of view, and portfolio management ideas. Having differing views on human nature doesn't mean that one of us is necessarily right or wrong. People have been debating it for millennia.

When intelligent people come to different conclusions one one topic, and the same conclusions on another topic, it makes you wonder which conclusions are right, and which are wrong.

That's sort of a funny way of looking at the world. We all have to agree on everything?

As Melveyr said, the PP is a separate constuct from us nutty libertarians. One thing I like about the portfolio is actually how it confounds politics; you might expect that it's some guns-and-gold libertarian thing, but half its assets are government bonds. It defies political categorization, as do most of its adherents in my experience.

If I sound like a right-wing lunatic, would it blow your mind to hear that I support gay marriage, marijuana legalization, and an end to (what I view as) purposeless, entangling foreign military intervention?

[Ad Orientem]

1. He lives in California, as do I. We're familiar with the way things work here.

OK, so do I.  I don't make up completely unsubstantiated and inflammatory post titles, include a benign article quote in the guise of support, and then draw irrational conclusions based on being "familiar with the way things work."

2. What does the PP have to do with California's ability to maintain its budget in a sane manner or anyone's opinion about it one way or another?

The sheer volume of these zealous right-wing posts make me worry, for example, because they imply that other posts on this forum are subject to lurking biases.  When intelligent people come to different conclusions one one topic, and the same conclusions on another topic, it makes you wonder which conclusions are right, and which are wrong.

Dragoncar
A few quick observations in my defense, after which the flogging may resume.

1. I posted this in the "Other Topics" forum, not in any of the forums dealing with PP specific issues.
2. Op-Ed pieces are quite common in here.
3. I did not cherry pick any quotes. When posting from news articles I typically quote the first few paragraphs and then link to the rest of the story out of deference to copyright.
4. I DID in fact post a title that reflects my political biases. Guilty as charged. If you disagree with my views on the wisdom of one party government, or those on the fiscal profligacy of the Democratic controlled legislature in California I would be more than happy to entertain your contrary opinions. That's what the comment boxes are for. I think you will find that I enjoy a friendly debate.
5. As for for the political landscape of the forum I believe it is fair to say that you will find some diversity of opinion on political subjects, though there is I concede a rightward tilt. Even there however there are sharp differences, as for example  between neo-cons and our more libertarian elements. But everyone has biases. Nor is that a phenomenon limited to right wingers. It is just a fact of life and one which we must deal with in evaluating commentary.

The flogging may now continue.

[Dieter]

If government carries any debt, there is no way they have a "surplus" of funds. This is just political spin. Clinton said the same thing during his budget with trillions of long term debt on the books and trillions more in unfunded liabilities still in existence.

Running such a "surplus", esp in "prosperity", sounds like a good start to me....

[RuralEngineer]

I'm sorry, but anyone who thinks this forums is a bastion of "right wing zealots" needs to get their head checked. Or at least go meet some ACTUAL right wingers first. I guess if you live on a commune, it might seem that way, but there's almost nobody here I'd classify as truly right wing. Everyone's views span the spectrum. The closest we used to have was probably TrippleB.

I think the off-topic section is firmly center right and it's overwhelmingly populated by moderates, on both sides.

My father is a true right winger, so I have some perspective.

[Ad Orientem]

I'm sorry, but anyone who thinks this forums is a bastion of "right wing zealots" needs to get their head checked. Or at least go meet some ACTUAL right wingers first. I guess if you live on a commune, it might seem that way, but there's almost nobody here I'd classify as truly right wing. Everyone's views span the spectrum. The closest we used to have was probably TrippleB.

I think the off-topic section is firmly center right and it's overwhelmingly populated by moderates, on both sides.

My father is a true right winger, so I have some perspective.

+1

All anyone needs to do is go check out Free Republic sometime if you want a glimpse of the lunatic right. Those boys are just waiting for the revolution / secession.

[moda0306]

I think this whole "right wing" debate depends on what you mean by it.

Most people here don't care too much for military adventurism and flag-waving bible-thumpism or violent revolt.  However, if we ran a poll here as to whether Medicare should be repealed I'd be willing to bet the percentage who'd be for it is far, far higher than the US population as a whole.  (I believe 58% of the country oppose CUTS to Medicare.

Libertarianism isn't exactly "right wing," but there's something very unique and unpopular to questioning the very legitimacy of our government in the first place (even though I do on a theoretical level all the time).  These don't usually feel like extreme views to the people who have them (after all, it's the GOVERNMENT who's stealing from ME, how is my opinion to end that theft "extreme"?), but all we can do is measure from some statistical norm, and there is a very strong libertarian presence here that would be very foreign to that statistical norm.

Which I'm glad to be exposed to, btw.

I don't think people would hesitate to call a Blog/Forum "liberal" just because the members weren't preaching violent revolt against the government for the sake of equality and animal rights .

[Pointedstick]

That gets to a peculiar thing I've noticed: an awful lot of liberals equate libertarianism with a flavor of ultra-right-wing-extremism. Which is funny, since liberals share many views with libertarians, but what I believe liberals are perceiving is the core of the movement which, as you say, rejects government. That's terrifying to liberals even if it leads to conclusions that they agree with since modern American liberalism fundamentally, philosophically requires an expansive, activist government.

Humorously enough, that's actually something liberals agree with conservatives on! They each just want it to do different things. IMHO conservatives don't feel as threatened by libertarianism because they both like to use the anti-government language, but the most self-aware conservatives I've known understand that they're jockeying for control of government just like liberals are. They just think they know better than liberals how to use it to create a safe and free society.

[KevinW]

I'll say this: I identify as left-libertarian and disagree with almost all of the Democrat and Republican platforms. On this board I've been rankled by statements that sound Republican-compatible a lot more frequently than by statements that sound Democrat-compatible. By that measure I would say the Other Discussions area leans right.

That gets to a peculiar thing I've noticed: an awful lot of liberals equate libertarianism with a flavor of ultra-right-wing-extremism. Which is funny, since liberals share many views with libertarians, but what I believe liberals are perceiving is the core of the movement which, as you say, rejects government. That's terrifying to liberals even if it leads to conclusions that they agree with since modern American liberalism fundamentally, philosophically requires an expansive, activist government.

In general people that engage in partisan politics seem pretty uninformed about political viewpoints other than their own. I too have observed that outspoken liberals tend to really misunderstand libertarianism. Or more precisely, have a superficial understanding of a straw man version of libertarianism. In a similar way outspoken conservatives tend to really misunderstand leftist ideologies, e.g. the distinction between communism and socialism. I think most people engage in politics more as a form of neotribalism than as a coherent and self-consistent philosophy.

[Pointedstick]

I think most people engage in politics more as a form of neotribalism than as a coherent and self-consistent philosophy.

+100

[dragoncar]

Aren't we all subject to lurking biases? Your choice of the phrase "zealous right-wing posts" reveals yours, for example. We all have different points of view here; that's just normal IMHO. Doesn't mean we have to cast doubt on the choices that others have made just because we may disagree with their political views.

I don't see bias in the phrase "zealous right-wing posts" ... if the majority of political posts on this forum were anti-republican (I can recall one such), then I might have said "zealous left-wing posts".  The term is purely descriptive for observed partisan vitriol (e.g. "the Dems will spend that money just like the guy with a maxed out credit card who suddenly gets a bonus from work").

That's sort of a funny way of looking at the world. We all have to agree on everything?

Of course not, but if someone tells me 1+1=3, and the sky is blue, I'm going to take another look at the sky.

If I sound like a right-wing lunatic, would it blow your mind to hear that I support gay marriage, marijuana legalization, and an end to (what I view as) purposeless, entangling foreign military intervention?

Now, now, I never called anyone a lunatic.  I personally think there is merit to libertarianism, although I do believe the government serves a valuable role. 

I also did not call the forum a bastion of right-wing zealots.  Perhaps there are a bunch of left-wing zealots around here that simply do not post to the Other Discussions.  Here are some hypothetical examples:

"Conservative Activist Advises GOP: Ignore Hispanics, Go For White Voters Instead."
"Senator John McCain Confident of Identifying 'Good Guys' in Syria."
"Trial date set in Iowa court case against Michele Bachmann"

[Pointedstick]

If you would like to see threads with those titles, nothing's stopping you from posting them.

[dragoncar]

If you would like to see threads with those titles, nothing's stopping you from posting them.

I would not like to see threads with those titles. 

[Ad Orientem]

If you would like to see threads with those titles, nothing's stopping you from posting them.

I would not like to see threads with those titles.

Well I would! They all sound perfectly legit to me.

[rocketdog]

This is California. It's a one party state (always a bad thing)

I lived in CA for 13 years, and everybody always thinks it's a heavily blue state, yet here is the pattern of governors over the past 70 years:

Code: Select all

Democrat	2011-
Republican	2003-2011
Democrat	1999-2003
Republican	1991-1999
Republican	1983-1991
Democrat	1975-1983
Republican	1967-1975
Democrat	1959-1967
Republican	1953-1959
Republican	1943-1953

That's a total of 48 years in office for the Republicans, but only 22 years in office for the Democrats.  That's more than a 2-to-1 ratio! 

People think CA is a liberal bastion, but that's only true in highly visible pockets like L.A. and San Francisco.  Overall it's a red-leaning state.  After all, Prop 8 never would have even gotten on the ballot in a blue-dominant state, let alone get passed. 

[Pointedstick]

People think CA is a liberal bastion, but that's only true in highly visible pockets like L.A. and San Francisco.  Overall it's a red-leaning state.  After all, Prop 8 never would have even gotten on the ballot in a blue-dominant state, let alone get passed.

Kinda like how Illinois and New York are red-leaning states once you forget about Chicago and NYC. 

[KevinW]

People think CA is a liberal bastion, but that's only true in highly visible pockets like L.A. and San Francisco.  Overall it's a red-leaning state.  After all, Prop 8 never would have even gotten on the ballot in a blue-dominant state, let alone get passed.

Yeah, I've tried to make that point here too, with little success. LA and San Francisco are very left-leaning, but outside those two metroplexes California is a conservative Western state.