Monday, July 23, 2012


Last Friday, the national unemployment figures were released and California did not look great once again. The "golden" state came up short to having the worst unemployment rate in the nation at 12.1%, second only to Nevada at 13.4%.

Why is the state of California, home to silicon valley, Hollywood, and the largest ports in the nation, to name a few good assets, having difficulty creating jobs and maintaining businesses in the not so "golden" state? We have heard so called "experts" say America is out of the recession. But not we are told that we are still in it and it just might get worse before it gets any better!

President Obama spoke to the joint session of Congress and to the American people on national television. The President told us much about the same of what we already know....we are economically in trouble. He also unveiled his job plan for America. Both parties immediately took aim at shooting it down to some capacity. Not shocking to see democrats and republicans continuing their partisan politics and moving their personal agendas of "business as usual" tactics at the expense of the American people!

On Sunday's "Meet The Press", the ex-governor of Michigan, Jennifer Granholm, was an invited guest. The Governor spoke about her eight years at the helm of a state facing many of the same issues as California. Interestingly enough, Granholm is a California native who grew up and went to college in the San Francisco - Bay area. She is familiar with the issues and differences facing her home state of California.

The funny thing about her responses is that I agree with many of her answers. She seems to think like a fiscal conservative. California, like most states in the union, are starving for tax revenue. The recent housing melt down, for example, did nothing in bringing new or even maintaining property tax revenue to state coffers....on the contrary it has gone down to record lows. Previous voter approved and "anti-tax" philosophy behind the passing of Proposition 13 in 1978, not only limited property tax but also required a two-thirds majority vote to raise other taxes. In the Granholm's recent book, "A Governor's Story, the Fight for Jobs and America's Economic Future", she states, "These restrictions have crippled the efforts of lawmakers to bring fiscal stability to California and have driven the state to the brink of bankruptcy repeatedly."

Spending cuts are a must and tax breaks can help, but they are only part of the overall solution. Here are some necessities needed by the states' elected officials to pump economic life back to California:

1.) Pick & invest in winning industries
2.) Develop public-private partnerships
3.) Invest more money in educating our current workforce (i.e. via the community college system)
4.) Renegotiate on public salaries and pensions that are more realistic

Tax cuts for corporation has to be tied to job creation or it does not make any sense to offer them. If not, all we will see is job creation being taken overseas. In addition, tax rates play a small role in bringing back jobs, profits, and prosperity back to California. For example, Granholm states, "For teh kinds of advanced-manufacturing, high-tech businesses we were recruiting, (worker) talent is what matters, (along with) quality of life, culture, and sheer 'coolness' factor of host cities.

With all that the great state of California has to offer, the golden state (or not so golden) should be the fastest in the nation in job creation. But unfortunately, the state government has been awfully slow or even unresponsive in today's polarized politics to solve its problems....S.O.S.....please SAVE OUR STATE!!!

It's Labor Day...but where are all the American Jobs?

I will start today's blog with a quote from President Reagan back in 1981,"...government isn't the solution, government is the problem!"

As America waits for the President to give his long awaited jobs plan speech this Thursday, we got to think for a moment and say is this really America? The August employment report came out and the number of new jobs created: ZERO. The unemployment rate, as of today, remains at 9.1%. The number of fellow Americans who are unemployed today is officially 14 million people. A CNN poll that just came out last week, stated that 8 out 10 Americans think we are still in a recession. The situation is dire.

In a recent interview with Ken Rogoff, a professor at Harvard University said, "Well, clearly we're stagnating. I mean, the employment numbers have been getting weaker and weaker for a while. I think what it really underscores is that the recession never ended. We have not got back to where we started on output. We're not close on employment. We're still very much crawling our way out of the recession. And right now...nothing."

The editorial writer for the Wall Street Journal, Stephen Moore says, "There is a BIG difference between the two parties and it may lead to gridlock." I think that train has unfortunately already passed us. "But I don't think either party has anything that they've proposed that will get us out of this because I think they're missing the fundamental point. And that this economy does not appear to be capable anymore of creating enough jobs to put enough decent jobs on the table."

Richard Trumka, president of the AFL-CIO and a member of the President's Council of Jobs and Competitiveness, also has some interesting things to say about America's current economic situation. Trumka states, "We have bad trade laws, we have tax laws that reward people for moving jobs overseas. If we'd focus on manufacturing here and all of us coming together, labor, government and business, and business and labor all working together, we can compete with anybody in the world. Because if you don't compete, if you don't manufacture things, you can't compete in the global economy!"

So where do we turn? Who has our best interest? What are some solutions?Here are some possible solutions being put on the table from both the business and labor sectors:

1) Eliminate the number of government regulations that are killing job creation.

2) Lower taxes on individuals and corporations (maybe even a possible flat tax?)

3) Target specific communities throughout America for job creation.

4) Regulate Wall Street.

We must remember economics 101....demand drives up business and hiring. From CNN's Your Money show, the host Ali Velshi says to the President:

"And finally, go big Mr. President. Americans are not spending money because they're frightened about their economic have to tell America how it can be great again. Extract yourself from the embarrassing quagmire that Washington has become. America has reason to be proud and hopeful. This is a tall order, but lay out the road map on Thursday. Tell us how you think we'll get there. Maybe you will be right, maybe you won't be, but we'll have something to talk about other than politics as usual."

Local Government FINALLY Takes A FISCAL Stand!

The City of Los Angeles, like many other cities across our great nation, is facing fiscal chaos. Many government agencies are dealing with slashed budgets, cut revenue streams, and lack of strong political leadership.

On Wednesday, City of L.A. officials from the public works commission, denied the permits to Sunset Junction, a 30 year old street festival and one of the city's oldest & most popular music festivals. This event first started as a two day grassroots event to sooth tensions between the area's Latino and gay residents. It has now become known as the "Coachella of the City". It has transformed itself from a street festival that brings tens of thousands of visitors and has a lineup of more than 80 acts, including K.D. Lang, Three Degrees and Ozomatli to name a few.

The ISSUE: A dispute of $260,000 in unpaid fees from the organizers, and not including this year's fees of $140,000. 

The city has lost millions of dollars in uncollected debts which include community groups and unpaid parking tickets. Its estimated that the City of Los Angeles last year only collected 53% of money owed to them! In addition, many local residents have complained. A member of the local neighborhood council stated, "The use of the public property for private profit is what really upsets people. That's our streets, our neighborhood, our stores, our coffee shops we can't get to..."

The City of Los Angeles gave the organizing group 48 hours to come up with a $141,000 check to at least cover this year's cost. The group was able to raise $100,000 but could only prove the amount through a fax from a bank account, and not even bring an actual check. L.A. City Public works board president, Andrea Alarcon said, "Fail me once, shame on you. Fail me twice, shame on me. This organization has failed the city time and time again."

The SOLUTION: The City of Los Angeles finally grabbed the bull by the horns and said enough is enough! The city owes it to its taxpayers to put its foot down and protect the coffers of its residents and taxpayers. 

The spokesman for L.A. City Councilman Eric Garcetti, whose district includes the music festival, said it best:
"...the festival organizers tried to flimflam $400,000 from the taxpayers. The fact thaty they came up with a large just 36 hours, shreds their credibility even more. They should have spent the last 12 months coming up with the full amount."

TAXING Warren Buffet

In today's Los Angeles Times, a great editorial piece was written titled "Taxing Warren Buffet" which discusses how Republican critics are seemingly oblivious that, in many ways, Buffett's tax ideas mirror those of Ronald Reagan. 

Believe it or not it has been a quarter of a century since the last comprehensive overhaul of the U.S. tax code. President Reagan signed the Tax Reform Act of 1986 in which: 

* the number of tax brackets was reduced 
* loopholes here closed 
* the top tax rate was lowered 
* capital gains were taxed at the same rate as ordinary income 

Unfortunately Congress has slowly reinstated loopholes back into the tax code while lowering the tax burden for wealthy people who make money through investments rather than labor. THIS was the basis for Buffett's complaint. 

Now its interesting what the current politicians are saying on both side of the aisles! History is cyclical and in the past few years I keep hearing "isn't that what President Reagan did 25 years ago". Read on this LA Times article....but maybe we should learn from our past. 

Talking CENTS on Tax Reform

In today's LA Times, staff writer Anthony York writes about LA Mayor Villaraigosa's most recent trip to Sacramento. He discussed the "third-rail" issues that many politicians do not want to touch, including himself according to his political record. 

The mayor called
...for changes in Proposition 13, challenging Governor Jerry Brown and state lawmakers to remove business property owners from some provisions of the groundbreaking 1978 law
according to York. The mayor also called on the state's business leaders to "stand up and come forward as coauthors of a long-term solution" to California's ongoing financial problems.

Some of the responses by California's business leaders were not all that positive. The CEO of the CA Chamber of Commerce, Alan Zaremberg called Villaraigosa's speech
...about raising taxes on business. It's exactly the oppposite of what we want to happen to pull California out of recession.

As the LA mayor begins his retoric on "reform and change" for his sites for a possible run for governor, will he actually or anyone for that matter stand up and lead California and the rest of this nation to actual reform? If this interchange of dialogue between the government and business sector is any indication, it unfortunately does not look good! So where is the leadership hiding??