Saturday, November 19, 2011

Quick Hits - November 19, 2011

We kick off today's Quick Hits with some observations regarding our state of California....

Dan Richard, a member of the California High Speed Rail Authority Board of Directors, makes his case that California has to continue to develop the $98.5 Billion (or is it $117 Billion with contingency) rail network because it will cost the State $171 Billion to support the estimated 2050 population of 54 million residents.  He also notes the 'conservative' passenger estimates which apparently strengthen the business model.  These 'conservative' estimates project that the town of Merced will, in 2030, process more riders per day for this rail network than Amtrak's New York City Penn Station processes today for the NE Corridor.  NYC's Penn Station is Amtrak's busiest station.  Projections like this defy common sense.

Fortunately for the tax payers of California, the House of Representatives passed a spending bill that kills any Federal funding for high speed rail initiatives in 2012.  The US Senate is expected to follow suit.  Will President Obama sign or veto the spending bill?  The project supposedly has funds for the 1st phase in California's Central Valley - but Governor Jerry Brown is still going to the State Legislature to ask for billions from the State for the program.

The challenge for the State of California is that it's own budget crisis is getting far worse as spending outpaces projections and revenues are falling well below their 2011-12 projections.  The LA Times fully embraces the intellectual and economic bankruptcy of the progressive mindset by proclaiming, "Despite looming budget cuts, this is a wealthy state."  Umm, if this was a wealthy state, I don't think we'd be faced with looming major budget (service) cuts and deficits that exceed $20 billion for the foreseeable future.  The basis for the LA Times claim that the state is wealthy despite it's budget crisis?  It's wealthy because the State can tax it's residents and businesses far more than it currently does....specifically around increasing vehicle license fees (increasing these significantly cost Gray Davis his job as Governor) and eliminating Prop 13 which capped the property tax levels in the State.  Doing this will generate the revenue needed to pay out more in entitlements, according to the Times.  By that measure, Greece is the one of the wealthiest EU nations....

California is already places some of the nation's highest tax burdens on its residents and businesses.  Sales Tax in California ranges from 8% to nearly 10% depending on the local additions to the state tax.  The top level income tax, 10.3% kicks in only for those earning over $1M per year, but the next highest level, 9.3% applies to all earning more than $47,000 per year.  Then there is the message that California gives to it's business community - 'GET OUT!' - which businesses are doing in ever increasing numbers.  High business taxes and fees, excessive regulations, excessive litigation and litigation risk drive businesses out.  One of CA's native restaurant companies no longer opens restaurants in CA - it can easily take 2 years and interaction with over 40 government agencies to get the approvals needed - when the same can be done in less than a month in Texas.

Staying with the argument of government and taxes - WSJ's James Taranto's superb 'Best of the Web' asked yesterday which former Enron economic advisor is correct -
"There's obviously a relationship between tax rates and revenue. That relationship is not, however, one-for-one. In general, doubling the excise tax rate on a good or service won't double the amount of revenue collected, because the tax increase will reduce the quantity of the good or service transacted. And the relationship between the level of the tax and the amount of revenue collected may not even be positive: in some cases raising the tax rate actually reduces the amount of revenue the government collects."--from "Economics," by former Enron adviser Paul Krugman and Robin Wells (Mrs. Krugman), second edition, 2009
"In Democrat-world, up is up and down is down. Raising taxes increases revenue. . . . But in Republican-world, down is up. The way to increase revenue is to cut taxes on corporations and the wealthy."--Krugman, New York Times, Nov. 18, 2011
I suppose we can get some solace with the fact that Krugman did know about the Laffer Curve in 2009....

After denying that the Administration supported rationing of healthcare services, the FDA today announced that it would be revoking it's approval for the use of the drug Avastin for the treatment of breast cancer. This drug, used by those suffering from breast cancer as well as other forms of cancer, was found via medical study to extend the lives of Stage 4 cancer sufferers by a number of months - but with an annual cost of over $80,000, the FDA believes the return of a few more months of life weren't worth the high cost.

UNESCO, the UN Agency that is no longer getting US funding because of their granting of full membership to the Palestinian Authority, continues to demonstrate the irrelevancy of the UN as it accepts Syria as a member of its Committee on Human Rights.  This as Syria's dictator uses his military to murder at least 3,500 Syrian civilians.

NYC Mayor Michael Bloomberg noted that America's largest unions were the major force behind Thursday's OccupyWallStreet 'Day of Action'....
“A vast percentage of the people were union members protesting — some private unions and then some municipal unions — and they had, you know, organized signs and leadership and that sort of thing,” Bloomberg said on WOR radio station Friday. “So it really wasn’t the protesters that have been in Zuccotti Park or that you see around the country.”
Bloomberg added, “It was just an opportunity for a bunch of unions to complain or to protest or whatever they want to do.”
The mayor warned that some of those union members, especially the municipal union members — should “step back” and realize that their salaries depend on the city’s ability to attract companies, investors and people who pay taxes.

In the wake of the violence of the Occupy movement, the Associated Press is invoking Orwellian standards to toss down the memory hole the numerous endorsements Democrats made of the Occupy movement.

In Wisconsin this week, we're being asked as to what we should believe - the Medical Board of Wisconsin or our own lying eyes?  This as the Board declined to provide any significant discipline to numerous members of the medical profession who provided union teachers with medical excuses (without examinations) to protect those teachers as they protested the Wisconsin efforts to restore fiscal sanity to its budgets.  These excuses were written and given to the teachers in the midst of their demonstrations - but the Board said there was a lack of evidence that the Doctors did not perform the needed examinations to make the diagnosis.  Thus protected, the teachers were immune from punishment by their School Boards for their wildcat strike which shut down Wisconsin schools for a week. Oh, there is a lot of video showing Doctors handing out excuses to protesters.

The up and down nature of the EU crisis continues to unfold as the organization continues to debate as to how to get the wealthiest EU members send billions to prevent the default of the fiscally irresponsible EU members.  The progressive UK paper, The Guardian, says that both the UK and Germany have to make major sacrifices in order to save the EU.  But it is looking more and more that the expansion of this trade union to include a common currency will instead result in the failure of the European Union as the wealthy decline to give their wealth to the nations which refuse to operate in a responsible and accountable manner.

Big Peace's World View for 19 November, 2011 looks into the financial crisis as Berlin and London deadlock in what to do next, Ireland laments that 'Germany is our new master', and China and the US are set to face off over the South China Sea.

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