Tag Archives: Pensions

New website reveals billionaire’s campaign to dismantle retirement security

by Carolyn Constantino

A new website reveals that Enron-billionaire John Arnold has spent up to $50 million of his own fortune to dismantle retirement plans for firefighters, nurses, teachers and other public employees.

The website – Truth About John Arnold – is sponsored by the National Public Pension Coalition (NPPC) and Californians for Retirement Security and traces the wide financial influence that one billionaire has on public pension fights. John Arnold amassed his fortune as an Enron trader, where he earned an $8 million bonus as the company’s collapse decimated $1.5 billion in public pension assets. Arnold turned his $8 million into billions as a Wall Street hedge fund manager.

Dave Low, California School Employees Association (CSEA) Executive Director and Chairman of Californians for Retirement Security explains,

“John Arnold is the second youngest billionaire in America. John Arnold has decided to spend his billions to take hard earned retirement benefits away from school bus drivers, teachers, nurses, firefighters and other public employees. What is in the heart of someone who, having become one of the richest people on the planet, decides to use that wealth to undermine the retirement security of working class Americans who have dedicated their entire careers to public service?”

Arnold’s spending has touched every facet of anti-retirement campaigning, including tainted research, political advocacy organizations, ballot initiatives, journalism, and the campaign coffers of extreme politicians. He is involved in battles to limit retirement security across the country through his foundation, the Laura and John Arnold Foundation, and his political PAC, Action Now.

“Lawmakers, workers, and the public at large deserve to know that the funding to dismantle retirement security for firefighters, nurses, teachers and other public employees across the country can be traced back to one source – Enron-billionaire John Arnold,” said Bailey Childers, Executive Director of NPPC.

The truth about John Arnold:

– In 2013, Arnold was the leading financier of former San Jose Mayor Chuck Reed’s failed effort to put a statewide pension-gutting initiative on the ballot.

– Arnold was the lead financier ($150,000) of an effort to end public pensions in Ventura County. A judge declared the effort unconstitutional.

– Arnold spent more than $1 million dollars on a ballot initiative in Phoenix to close the pension system. That effort was defeated by voters in 2014.

– The Laura and John Arnold Foundation underwrote a PBS series called “Pension Peril.” The PBS Ombudsman declared the $3.5 million contribution inappropriate. The grant was returned and the series pulled from the air.

– Arnold underwrites Pew Charitable Trusts’ pension work with a $4.85 million contribution.

Learn more about John Arnold here.

Cross-posted from CSEA.

Career Politician Teams Up With Enron Billionaire to Gut Californians’ Retirement

by Steve Smith, California Labor Federation

It’s official. San Jose Mayor Chuck Reed, a career politician with backing from a Texas billionaire and former Enron trader, has filed a ballot measure to strip away retirement security from current teachers, firefighters, sanitation workers and other public servants.

According to the Sacramento Bee:

“The Pension Reform Act of 2014” would alter California’s constitution to allow state and local government employers to cut pensions for current workers.

Essentially, this means politicians would have the power to unilaterally slash the retirement of current workers, breaking a promise made to those workers when they were hired. Many of those public workers affected don’t receive Social Security. They have a modest pension that averages around $26,000 per year. They’re not responsible for the financial mess created by the Wall St. collapse, yet politicians like Reed are all too quick to scapegoat them — and out-of-state billionaires like former Enron executive John Arnold are all too happy to exploit them for profit.

This initiative isn’t about giving cities “flexibility,” as Reed and his cronies contend. It’s about blaming the teachers who inspire and motivate our children for a mess that politicians and Wall Street hedge fund managers created. Reed’s flawed initiative won’t bring fiscal stability to troubled cities, but it would drive a lot of talented, dedicated people away from serving our communities. And it unfairly breaks a promise to current workers who often have no other source of retirement.

Reed’s ploy, though, is likely to wither when held up to the light of public scrutiny. Californians don’t like out-of-state special interests like Arnold setting policy for us, nor do we appreciate career politicians with their own agendas pushing flawed proposals.

Californians for Retirement Security Chair Dave Low:

Californians have constantly shown their distaste for measures put on the ballot by Texas interests and secret out-of-state contributors, and we expect this flawed proposal to be no different.

This attack on workers must be beaten back. We simply can’t allow opportunists like Reed and billionaires like Arnold to gut the retirement of California workers. Stay tuned to our blog, www.LaborsEdge.com, for more developments and ways to get involved.

Levine Carries Brown’s CalPERS Reform Bill

Reform package would change makeup of board

by Brian Leubitz

Pension reform is always a thorny issue, and when you just defeated the Assemblyman who was supposed to be the chair of the public employees retirement committee, the issue might become a little more salient. And so, it shouldn’t come as a huge surprise that Asm. Marc Levine (D-San Rafael) is spending some of his time on the issue. In this case, he is putting forward a bill on the makeup of the CalPERS board, primarily drawn from Gov. Brown’s 14 point plan he released back in 2011:

Assemblyman Marc Levine, D-San Rafael, an upset victor last fall in a new election process, has introduced a bill containing Gov. Brown’s stalled proposal to restructure the CalPERS board, adding financial expertise and loosening labor control.

The proposal to change the board, which needs voter approval because of a labor-backed initiative in 1992, would double the number of gubernatorial appointees to six, matching the number of labor representatives. (CalPensions)

The bill, as currently proposed, seems unlikely to pass without some discussions with stakeholders, particularly labor. For his part, Gov. Brown has been forced to put aside the pension issue as he has been fighting for Prop 30 and other budget priorities. However, even with its doubtful future status, whether Levine’s bill is a prompt for additional conversation on the issue is an open question.

Madeline Janis: Richard Riordan’s Wrong Ideas Don’t Deserve a Second Chance

From Frying Pan News. Madeline Janis, the author of the post below, is a co-founder of the L.A. Alliance for a New Economy and a former Commissioner for the Los Angeles Community Redevelopment Agency. She led L.A.’s historic living wage campaign during Riordan’s tenure as mayor.

Former L.A. Mayor Richard Riordan has been in the news lately, arguing that city leaders need to take drastic steps to make Los Angeles more business friendly and get the city functioning again. He has blamed public sector unions for every woe facing the region, including the current financial crisis and potholes on his street in Brentwood.

Mayor Riordan is not just crying in the wilderness. His threat to put a draconian pension-cutting initiative on the ballot played a major part in prompting the City Council last month to hastily adopt its own pension-cutting plan – a plan that almost certainly will be thrown out by the courts as a violation of existing collective bargaining agreements.

Riordan’s resurrection as a major political force begs a fundamental question: How successful was he at bringing business and jobs to L.A. and overseeing scarce public resources when he was running the city?

Riordan was, in fact, one of our least effective mayors. During his two terms from 1993 to 2001, he created a mostly ineffectual economic development program that wasted millions of taxpayer dollars on the creation of low-wage jobs and little else. One of his biggest initiatives, the federally funded Community Development Bank, failed miserably. And he created a legacy of insider, backroom deals at the Los Angeles Community Redevelopment Agency, which contributed to the ultimate demise of that institution last year.

In 2000, a Ford Foundation-funded project released a report on the activities of Riordan’s Business Team between 1995 and 1999 (full disclosure: LAANE participated in the study along with UCLA economists and graduate students). Interviews with a randomly sampled list of Business Team “clients” found that the Mayor’s Business Team had grossly exaggerated its record of success, and that only 31 percent of the firms that the Business Team claimed to have helped had actually received any substantive assistance. In addition, researchers were not able to find a single firm that claimed that it would have made a different business location decision absent the taxpayer-funded assistance provided by the Business Team. Despite Riordan’s outrage at the study’s findings, his administration was never able to successfully contradict the results of this comprehensive review of its activities.

As for Riordan’s record with the city’s redevelopment agency, I saw firsthand when I was appointed to the CRA Board of Commissioners in 2002, the dangerous culture of secrecy and backroom deals that the Riordan administration had created. In project after project, key records were missing, major contracts were unsigned and “deals” had been negotiated in ways that clearly favored developer interests over the interests of the taxpayers funding the projects. While there were clearly well-meaning people who served in the Riordan administration and who worked hard to achieve results for the City’s taxpayers, the culture of insider dealing and lack of standards and accountability seemed to come from Riordan himself.

Riordan and his defenders have pointed to several large-scale development projects greenlighted during his tenure-such as the Staples Center, LA Live, NoHo Commons and Hollywood and Highland – as evidence that the former mayor successfully used taxpayer resources to create jobs and economic development. However, those seminal projects – which included hundreds of millions of dollars of public subsidies – were turned into good taxpayer investments because of vigorous organizing by coalitions of community, labor and environmental organizations, and the active support of City Council members and responsible developers. Riordan was not helpful in ensuring that the huge public investment in those projects resulted in strong benefits to the communities around them.

Even worse, Riordan vigorously opposed several city laws designed to give workers and communities the benefit of city investment in economic development. This included a city Worker Retention Ordinance, enacted in 1995, the city’s first Living Wage Ordinance, enacted in 1997 and amended in 1998, the City’s Equal Benefits Ordinance, enacted in 1998, and the City’s Responsible Contractor Ordinance, enacted in 2000. Mayor Riordan actively opposed all of these laws, vetoing the key ones like the Living Wage Ordinance and refusing to sign the others.

Richard Riordan got a lot of things wrong when he was mayor. Current elected officials should be wary about taking the former mayor’s advice today.

Oh the Pensions! (Breathe?)

Massive Pension Reform Plan emerges from the Horseshoe

by Brian Leubitz

The California legislative session is the longest in the nation, but yet somehow it always comes down to the last week. We get a bunch of gut and amend bills and bam! It’s on like donkey Kong.  We’ve seen that with CEQA and workers’ comp in the last few weeks, and now it is pensions. There a number of moving parts, but here are a few points:

Starting next year, most newly hired public workers would be eligible for retirement with full benefits at age 62 instead of the current 55. Local police and firefighters hired on or after Jan. 1 would be eligible for full benefits at age 57, while currently employed public safety workers would still be able to retire with full benefits at age 50. (SF Chronicle)

This all has some serious consequences. But, once again, let me process nerd this one out. In short, the process was entirely lacking. The Governor and the Democratic legislative leaders kind of plopped this thing down a few days before the end of the session. While there has been a lot of pension discussion, there haven’t been the traditional collective bargaining that is traditional of these types of concessions. CTA’s Dean Vogel had this to say:

We have been working in good faith with the governor and Legislature to obtain pension solutions that will move our state forward. This plan does not achieve that goal. This process has not been transparent, it does not recognize the tremendous cuts that have already been made to our schools, and it does not respect the disproportionate impact it will have, largely on women working in our classrooms. Instead, it will make it more difficult to attract and retain experienced educators to our classrooms.

Look, I don’t think that it will surprise anybody to hear that pension changes are something of a fait accompli at this point. But as this happens, we need to make sure we are doing it the right way. With the right process and the proper consideration for our public employees, nurses, teachers, firefighters that do some very demanding jobs.

Why Republicans Really Wouldn’t Compromise

And no, it’s not their fear of seeing their heads on a stick. And don’t believe that the ransom list had anything to do with their real issues. Restoring 23 million in cuts to rural state fairs? Please.

Republicans never wanted to agree to pension reform because it was the only single issue where the public agrees with them.

If Republicans were at all serious abut solving problems, they would have jumped at the deal that Jerry Brown had negotiated.

There was a  significant package of reforms agreed to by the Brown Administration that would have made a huge dent in California’s pensions problem. And let’s make it clear that there is no crisis but there are some serious problems, particularly with the unsustainable costs of public safety pensions for local governments.

The package that Brown had agreed to would have made major progress towards reducing long-term pension costs and bringing some of the worst-hit pension funds into balance quickly. Judging from the Republicans’ release of their ransom demands, here are the pension areas where there was agreement;

o No purchases of Air-Time (Admin: OK)

o Highest 5-year average. (Admin: Highest 3 year average, with CalSTRS exception for 25 years of service)

o Base pay [salary only – no vacation, overtime, car allowance, uniform allowance, etc.] used for determining final retirement benefits. (Admin: Base benefits on regular, recurring pay)

o No Double-Dipping /Revolving Door (Admin: Allow retired annuitants (cost effective for state), but forbid drawing a full-time salary and a pension from the same employer).

o Cap Final pension amount (Admin: Ok w/Cap of $106K w/COLA – same as Social Security – and additional 12.4% for non-SS employees.)

The biggest of these, if applied statewide, would be the use of regular recurring pay without overtime in calculating pensions rather than adding in overtime. A pension cap would also save real money, and move higher-paid employees into a hybrid plan if they wanted to maintain their income in retirement. Rank and file workers and teachers are protected. Overly generous benefits for public safety come back down.

So why wouldn’t Republicans agree to fix the biggest problem?

The answer is very easy. Anger about overly generous public employee pensions is the only single issue where the Republicans’ messaging polls well.

Without pensions as a rallying cry, Republicans are left with a series of positions that are wildly unpopular with Californians;

   Gutting environmental regulation and increasing off shore drilling

   Bigger tax breaks for the largest corporations at the expense of small business

   Massive cut backs to public education and public safety

   Maintaining a judicial-prison-industrial complex that most Californians want to cut

   Immigrant bashing

Republicans could have eliminated the most obvious form of waste and corruption, redevelopment agencies and enterprise zones. While both of these have supporters, and occasionally have great results, they are tremendously inefficient and frequently just result in a race between cities as to who can come up with the worst deal for taxpayers as they scramble to lure big box retailers, auto malls, the hotels near convention centers, and businesses located in nearby cities.

The savings that local governments would have had on pension reforms would have more than made up for any of their losses from new pet redevelopment projects.

Cynical Republican politicians have never wanted to eliminate waste or corruption or reform pensions. They only want to be able to win enough elections to exercise a minority veto power over what most Californians want.

Lies, Damn Lies, and PowerPoint in Costa Mesa

Costa Mesa is ground zero for the California war against public employees, the bloody tip of the spear.

The Orange County GOP has chosen this middle-class burg as their laboratory and given pink slips to 213 employees, even before making any analysis of whether his planned outsourcing makes any fiscal sense.

Mayor Pro Tem Jim Righeimer has been beating his chest on John and Ken and appearing all over the local news in Southern California.  

Riggy’s spiel always includes his description of the pension crisis in Costa Mesa, which he describes like this, “Ten years ago Costa Mesa paid 5 million for public pensions. Now we pay 15 million a year, and CalPERS projects that five years from now we will be paying 25 million. His allies point to this scary, scary graph that was presented at a study session in Costa Mesa in February.

There’s only one problem. It’s phony as a three dollar bill. Click “There’s more” to see an honest graph.

 

When I first saw that graph, it just seemed screwy, so I went to the City of Costa Mesa web site to see the back-up documentation. Surprisingly, there was none. I made a visit to Costa Mesa City Hall to see what was in the agenda packet. “Only the Powerpoint”, the City Clerk told me.

I persevered with requests under the Public Records Act, talked to current and former Council members in Orange County, got comparative figures from other cities, and remained mystified.

Of course it made sense that pension costs had increased since 2000. Back then, Costa Mesa had superfunded pensions and didn’t even have to make the employer’s share of the contribution. Lately, pension rates have increased, but Costa Mesa has also cut over a hundred employees, including police and fire.

In October 2010, Costa Mesa employees agreed to pay an additional $3.6 million a year in pension costs that are just now going into effect. That’s why the expenditures for 2011-2012 decrease even while there was a marked increase in CalPERS rates used in the City’s projections.

I’ve emailed back and forth with the new $3,000 a week communications director, Bill Lobdell, who promises to get back to me next week.

So finally, I pulled out the October 2010 actuarial valuation reports that I had received from the City of Costa Mesa, and made my own projections and graph. Here’s what it looks like over a six year period. The numbers through 2011-2012 come from the City’s report. The next two years are my projection.

Image Hosted by ImageShack.us

Not so scary, eh?

There’s one huge difference. The City’s projection includes a notation that says, “includes employee reimbursement from current contracts only”. I am assuming that the employees of the City of Costa Mesa will continue to pay the same share of the pension contribution that they are paying now.

Really, could anyone believe that Costa Mesa’s radical Republican City Council is going to negotiate new contracts that involve picking up a bigger share of the pensions.?

Following are my assumptions. I am challenging the City of Costa Mesa to show theirs.

*2012-2013 projection based on October 2010 CalPERS reports that projects increase in city’s share of pension costs using actual 2009-10 investment returns.from

**2013-2014 projection based on October 2010 CalPERS report where CalPERS projects five different rates based on FY 2010-2011 investment returns, which are quite good so far this year.

FY 2013-14 projection is based on blended rate between 3rd scenario with 7.75% return (47th percentile) and 4th scenario with 16% return (75th percentile)for this fiscal year.

(Appendix D-1 of each report.)

Assumption of compensation subject to pension for each pool (estimates) used to calculate increase in City’s share of pension costs

For FY 2011-2012 with no changes for 2012-13, 2013-14

Sworn fire 13 million

Sworn police 18 million

Everyone else 20 million

Wisconsin Comes to Costa Mesa, CA

As documented at Pacific Progressive and in local Costa Mesa blog, A Bubbling Cauldron, Costa Mesa is at the bloody tip of the spear in California Republicans’ war against public employees.

Newly-elected Council Member Jim Righeimer and recently-appointed Council Member Steve Mensinger are leading the ideologically-driven jihad, with an agenda item to give notice to 250 Costa Mesa employees that their jobs will be outsourced. This represents a third of the city’s public employees in a wide range of departments. Without any study of the problem, Righeimer has also used local columnist Frank Mickadeit, to float an ill-conceived idea to privatize paramedic service in this column.

Their notice fails to take into account the opinion of Costa Mesa’s City Attorney, which required that notice be given after a decision has been made to outsource, not based on a vague idea to study outsourcing. But, in a move that some see as directly related to the direction of the new City Council, the City Attorney has resigned and the City Manager abruptly retired.

As in Wisconsin, Republicans are battling a phantom “budget crisis” which is disappearing after Costa Mesa residents approved an increase in the hotel tax in November to protect public services and as revenues from sales taxes return.

A massive phantom gap in future pension costs for public employees is forecast, although the cost to the city has been flat for years as public employee unions have picked up part of the cost.

You may not recognize Jim Righeimer’s name, but he has been one of the movers of Republican politics in Orange County for decades, managing Dana Rohrabacher’s Congressional campaign in 2008, as a founding member of the Education Alliance, and as a co-author of prop 226. Righeimer and his brother-in-law Mark Bucher have led movement conservatives through groups like the Family Action PAC. Support by Riggy and his regressive allies helped elect wacky movement conservative Don Wagner (R-Irvine), Assembly leader of the Taxpayer Caucus.

State news sources don’t reach behind the Orange Curtain, and the local newspaper, the Orange County Register, uses their near-monopoly for almost daily attacks on public employee pensions, not just with commentary but with daily slanted headlines and news coverage.

Costa Mesa is the beachhead, but other Orange County elected Republicans attended OC Republican chair Scott Baugh’s Pension Boot Camp, and are ready to go on the attack against public employees.

Update As expected, the Costa Mesa City Council voted Tuesday night to issue lay-off notices to over 150 workers and study privatizing paramedic service despite overwhelmingly negative testimony from city residents. Basically saying, “You’re Fired, but come back to work tomorrow”, the six-month notices will only go into effect if the Council approves outsourcing in 18 separate city departments, based on approval of $200,000 to study reorganization of all city services.

The Big Lie at the Little Hoover

How far do you have to get into the Little Hoover Commission report on pension reform to start questioning its results?

How about the graph on page ii that shows the percentage of funding of major pension funds in California.

It looks pretty bad, but then when you look closely, the numbers just don’t look right.

CalPERS, the last time I looked, had around 230 billion dollar invested in a broad portfolio of assets, but the handy chart that shows that CALPers is only 61% funded has a value on the graph that looks like it’s around 180 billion.

A quick check of the footnotes shows that the chart was based on numbers from the end of the fiscal year 2008-2009, not the most recent fiscal year.

How important is that?

Well, the value of CALPers investments as of June 30th, 2009 was $178.9 billion. By the date that the Little Hoover report was released, that number had increased by 50 billion dollars. Even using numbers from the end of FY 09-10 would have been much more honest, but the rebound from market bottoms is only mentioned in passing in the body of the report.

This is not a trivial difference, and CALPers is not unique in posting large gains since the market bottom. CALStrs is the second largest pension fund in the state and covers teachers and community college professors. Since March 2009, when markets bottomed after a global financial Great Recession, the CalSTRS investment portfolio has rebounded by more than $34.8 billion to $146.4 billion.

Little Hoover = Big Lie.

More on this later.

Schwarzenegger vs. Whitman — Could the Future of California Be Even Worse Than the Present?

Governor Schwarzenegger leaves behind a legacy of devastating budget cuts and huge tax giveaways for corporations. In the last two years  alone, Schwarzenegger has slashed $32.5 billion from the state budget– and now our schools and roads are crumbling, public safety is at risk,  and vital state services have been decimated. And while state workers  have endured deep wage cuts, corporations have enjoyed massive new tax  breaks.

Now, Meg Whitman is on a mission to ratchet up the pain on  working people in California — above and beyond the misery that Governor Schwarzenegger has already imposed.

State Workers’ Jobs

In February, Schwarzenegger announced two-day-a-month furloughs for state workers, which  effectively reduced worker pay but did little to help our long-term  economic crisis. In fact, economists report that the furloughs will result in a loss of $503 million over the subsequent years. When asked at the time what she would do to balance the budget, Whitman said that she would double the furloughs to four days a week, even though the furloughs actually caused the state to lose money.

When Schwarzenegger increased  the furloughs to three days a month (resulting in a 12.8 percent pay cut and loss of an estimated $2.1 billion in wages and benefits for hundreds of thousands of state workers), Whitman went one step  further. She announced that she plans to fire 40,000 state workers because she believes the state is “over-staffed” (In fact, California ranks second to last in the number of state workers per capita, and the ratio of all government employees to population in California is 28 percent below the national average.) This mass layoff would cause unemployment in the state to spike a full percentage point.

Public Employee Pensions

Schwarzenegger  has made pension takeaways a major issue and has threatened to not sign a budget without reforms. But despite his rhetoric the Governor has been forced to negotiate directly with unions representing state workers to get agreement on any changes to current pension benefits and contributions.

Whitman supports Schwarzenegger’s proposals, which include raising the retirement age, increasing what workers pay into the pension and ending defined-benefit pensions for new hires and sticking them in risky 401(k)-style retirement plans. But she doesn’t stop there. She’s willing to circumvent collective bargaining, and the elected legislature, by putting a pension cuts initiative on the ballot, and using her personal fortune to fund the ballot measure.

Regulations and Worker Protections

Schwarzenegger has continually attempted to roll back vital workplace protections including daily overtime and meal breaks, and he recently vetoed a bill  that would give farm workers overtime rights. But Schwarzenegger did institute some regulations to protect outdoor workers’ health and  safety. In 2005, after four workers died from heat-related illness while  working outdoors, Schwarzenegger ordered emergency regulations  for workplace standards for heat-stress prevention and treatment, making California the first state in the nation to adopt such  regulations.

On the other hand, Whitman stated in an editorial board meeting, “On my first day in office, I want to put a moratorium on all new regulations.” That means that regulations to protect workers, consumers, the environment and governing almost all aspects of the state would be put on hold so that Whitman could make a political point. And she’s also expressed that she will continue to push for worker takeaways on meal  breaks and overtime pay.

High-Speed Rail

Schwarzenegger didn’t do much in terms of job creation during his time as Governor, and subsequently unemployment has shot up to Great Depression-era highs.  But Schwarzenegger has done one positive thing on jobs — he whole-heartedly supports  construction of California’s high-speed rail, which would create more than half a million new jobs, speed the movement of goods and people throughout the state, reduce pollution and lessen our dependence on foreign oil.

But unlike Schwarzenegger, Whitman has voiced her unequivocal opposition  to the high-speed rail system in California, which was approved by  California voters in 2008. She claims that California “can’t afford” the high-speed rail project, even though the costs for the project wouldn’t come out of the state’s budget, and any delays could jeopardize over $2.2 billion in federal stimulus money.

While high-speed rail would seem like a no-brainer for a candidate for Governor, a closer look at Whitman’s opposition to the project reveals a potential ulterior motive. Whitman lives in a multi-million dollar home in the  wealthy enclave of Atherton, which has led the charge  against the planned high-speed rail project. Along with other wealthy  cities, Atherton has even filed suit to halt the project, despite the  clear economic benefits and broad support, simply because they don’t  want train tracks in their ritzy town.

Capital Gains Tax

Schwarzenegger pushed some very unpopular changes to California’s tax code in the last year. His tax commission recommended a plan that would flatten the personal income tax  and give the wealthiest Californians a massive tax cut while shifting a  larger share of taxes onto the middle class. The commission’s recommendations were largely opposed by labor, business and most  legislators, though he has tried to resurrect the idea of extending the  sales tax to services and reducing personal income taxes.

None of Schwarzenegger’s proposals, however, have been as blatantly self-serving as those that Whitman is proposing. She wants to completely eliminate the tax on capital gains,  which is money that wealthy investors rake in on things like stock  dividends, bonuses or property sales (as opposed to the payroll income tax that the rest of us pay).

The Los Angeles Times called  Whitman’s capital gains tax proposal “a pure handout, and a costly one, to the wealthy, a group that includes the billionaire Whitman herself”, concluding the Whitman plan would do little, if anything, to create jobs,” (and) is “just offering a menu of handouts to favored industries and  the rich.

According to the Franchise Tax Board, 82% of the $56  billion in capital gains earned by California residents were reported by  the top 1% of income earners (those making about $500,000 or more) in  2008. George W. Bush pushed through a similar tax cut, which went into  effect in 2003, that didn’t create jobs or save the economy from  collapsing in 2008. Whitman’s proposal would mean that she and her wealthy friends would get a massive tax break that would cost the state $10.8 billion.

Whitman  repeats the false Republican claim that cutting taxes for the wealthy  will increase investment in new jobs, but according to a broad coalition of economists and academics, that just isn’t true. In an open letter to Californians, economist Michael Reich wrote:

Eliminating  the state capital gains tax would do very little to spur investment in  the state. Most California investors’ portfolios are diversified  nationally and internationally. Consequently, the vast majority of  private income retained by investors would be spent on stock purchases  of companies outside the state.

We’ve seen what Schwarzenegger’s polices have done to our state. Once the envy of the  nation for our schools, infrastructure, world-class universities and  booming economy, California now is at the bottom of many measures of  quality of life, as public funding for the most basic services are  slashed and more tax breaks are given to multi-national corporations.  Whitman would take the pain to a whole new level by eliminating taxes on the very rich, halting regulations to protect workers, slashing jobs and pensions.

The future of California is in our hands this November 2. Don’t forget to  vote, and be sure to remind everyone you know what’s at stake in this  election.