The country’s economy may be experiencing another stock market crash, and the housing bubble has been bursting, causing a housing market crash.  And this is all happening before the expected recession hits and causes unemployment to increase.  This is grim news indeed for state government budgets.

In particular California just experienced a sharp rise in unemployment.  Saturday’s San Francisco Chronicle reports, California’s jobless rate up sharply,

California’s employment market took a sharp turn for the worse in December, the strongest sign to date that the state’s economy might be falling into recession.

The same say the San Diego Union Tribune reported, State’s jobless rate tops 6 percent,

Despite relatively strong job growth, the unemployment rate in California jumped above 6 percent last month, prompting Gov. Arnold Schwarzenegger to speed up construction projects that would result in the hiring of 5,000 new workers.

According to the story, the Governor is speeding up state construction work to help soften the recession’s blow by providing jobs, which provide income to people who are likely to rapidly circulate those funds to stores and other parts of the state’s economy.

Let me repeat that: the Governor is speeding up state government construction work, because it helps the economy.   Shorter version: Government spending helps the economy.

So why does the Governor understand that this spending increase helps the state’s economy, but not understand that his 10% “across-the-board” spending cut will hurt the economy by cutting jobs and incomes at exactly the wrong time?

Obviously a cut in state spending is exactly the wrong thing to do at this time.  

How do we get out of this mess?  Part of the cause of the coming recession is a concentration of the country’s income and wealth into fewer and fewer hands at the top of the economic scale.  And at the same time that more and more of the income is going to fewer and fewer people, they are paying lower and lower tax rates.  War on Greed is asking for taxes to be increased on the “buyout industry.”  Their statement,

Buyout industry executives with multi-million dollar incomes have been exploiting a tax loophole that allows them to pay a lesser tax percentage rate than most of the workers in the companies they manage.  This is a disgrace!

Another example is hedge-fund managers have a tax loophole that lets them pay less in taxes than their maids.  See this video:

My previous post titled, Do taxes drive California’s economy? concluded by saying,

The prosperity we have experienced comes from public investment and that comes from taxes. Cutting spending is like eating our seed corn. It is taxes that drive the economy. Spending cuts hurt us. Borrowing hurts us. It is time for people and companies that are getting wealthy off of our public investment to pay us back.

Perhaps it is time to start getting some of the money from where the money went.  It is time to close tax loopholes, raise income taxes at the top, and raise corporate taxes.  These are the biggest beneficiaries of our government’s spending – it’s why they’re doing so well!

The massive health care reform plan brokered by Governor Schwarzenegger and Speaker Nuñez has been fraying at the edges a bit in recent weeks.  State hospitals appeared to waver on supporting the fees that would be charged to them under the plan, and hearings in the Senate Health Committee were delayed a week pending an analysis from the Legislative Analyst.  That hearing is currently scheduled for Thursday tomorrow, but State Senator Leland Yee just put a major wrench into that plan.

On the eve of a hearing for landmark health legislation, a spokesman for Sen. Leland Yee said the San Francisco Democrat will oppose the health care measure. The move throws into limbo whether the legislation has the necessary votes to move forward.

“The costs are a big concern for him,” said Adam Keigwin, a spokesman for Yee, regarding the $14 billion health care price tag that coincides with a projected $14.5 billion budget hole […]

Keigwin said Yee conferred with labor leaders in his district over the weekend who were “almost unanimous” in urging Yee “to vote no.”

With Health Committee chair Sheila Kuehl already opposed to the bill, this means that it would be unable to get out of committee without a Republican crossover vote.  And even with moderate (for the GOP) Abel Maldonado on the committee, that is unlikely.

I don’t think this is the end of the bill by a longshot.  Yee or Maldonado could have their arm twisted, or Kuehl could let the bill pass without a recommendation.

What happens next is unclear, though options certainly remain for passage.

For instance, Senate President Pro Tem Don Perata could ask Kuehl to grant the measure a courtesy vote, allowing it to proceed to the Senate floor despite her personal opposition.

In an interview Tuesday morning, Kuehl reiterated her position, saying, “I’ve been very clear with all the advocates and everybody that I do not favor the bill.”

She said she had not been contacted by Perata or his staff to support the bill. Asked if she would consider granting a courtesy vote if she was, she replied that she “can’t answer that.”

“In the Senate, we generally are equal as members,” Kuehl added.

Don Perata could also kick Yee off the committee and replace him, although he hasn’t exactly been wildly supportive of the bill thus far.

What will happen is anyone’s guess.  But for the moment, this is a major blow to efforts to overhaul health care in California.

UPDATE: Frank Russo has more:

There are rumors that the report of the nonpartisan Legislative Analyst’s Office, to be released soon-tonight or tomorrow morning-will not be all that favorable. That report had been sought by Senator Perata in December to further vet and test the assumptions made so that voters would not be faced with a ballot measure with shaky financial underpinnings in a year of a massive budget deficit, cuts in other programs including health, and uncertainties.

Making it even less likely that Perata will act.  But the pressure on him must be intense.

Should government mandate the purchase of for-profit insurance products, backed up by threats to garnish wages or place a lien on homes?  Or should we move to a guaranteed healthcare system modeled on the single-payer financing that is working in Taiwan, Canada, and most of Europe?  

This very interesting debate is happening simultaneously at the national and state levels-because mandated insurance is the top priority of the insurance industry, and they’re pushing it everywhere they can.  

We’ll take a look below…cross-posted at the National Nurses Organizing Committee/California Nurses Association’s Breakroom Blog, as we organize for GUARANTEED healthcare on the single-payer model.

In California, Arnold Schwarzenegger and most of the state’s insurers have lined up with Assembly Speaker Fabian Nunez to push a mandate law through.  Its future is uncertain.  

At the Presidential level, Sens. Clinton and Edwards are attacking Sen. Obama for declining to endorse their mandate.  Obama rightly argues that people don’t have health insurance not because they don’t want it, but because they can’t afford it.  A difficult argument to make in a sound-bite world, but the right one.

The big Schwarzenegger/Nunez healthcare compromise is going for a hearing and a vote before the Senate Health Committee tomorrow.  No doubt the insurance lobbyists are working overtime to call in their chits.  At least one paper, the San Jose Mercury News, argues the Governor is “misplaying” his hand and “making a bad bet” with his healthcare bill.  Agreed.  They state:

The governor’s proposed budget cuts, which will do considerable damage to a health care system already in crisis, are only exacerbating the political challenge of passing his reforms.

(This editorial has one major factual error-saying that insurance corporations oppose the Schwarzenegger/Nunez bill.  In fact, major CA insurer but one is backing the bill.)

New American Media, a coalition of ethnic news sources, lists the top 5 Reasons ABX11 is a sham, and even reps from the insurance industry thinks it could go down.

Meanwhile, Massachusetts residents are learning what it’s like to live where the purchase of junk insurance is mandated by the power of the state: it’s a kick in the groin:

THE NEARLY 300,000 Massachusetts residents who signed up for health insurance under the state’s new initiative are in for a rude awakening. They may now have some form of coverage, but many of them, even the very poor who used to get free care, are going to be socked with steep medical bills.

Simultaneously, the mandate debate continues to roil the Presidential.  I’ll point out what Sen. Obama won’t–that an individual mandate is the top priority of the insurance industry right now, and that it will end our chance to achieve guaranteed, single-payer healthcare, by giving insurance companies more power and degrading group purchase of insurance.

And Ian Welsh just wants everyone to repeat after him: single-payer is cheaper than what we’ve got now (or would get under mandates.)

Lets not forget that small businesses across the country are being forced into bankruptcy by predatory insurance corporations protecting their huge health insurance profits.  We want more of that?

UPDATE: Please keep an eye out for the announcements from several major California unions that they oppose ABX1.1!

The Governor has continued to assert, and the people largely believe him, that he is somehow removed from the financial troubles that face the state.  And he got an assist from an unlikely source today – former Governor Gray Davis.

So why is California suddenly faced with a $14-billion budget shortfall? Is it because the governor (or the Legislature) did something terribly wrong?

No, the governor of a nation-size state like California can affect the economy, but only on its margins. The reason this deficit is looming is because no one can repeal the business cycle. Just as night follows day, expansionary times will be followed by recessionary times. And yet the overwhelming impulse in Sacramento is to spend every dollar on the table. If a booming economy has the state coffers flush, Democrats say: “There will never be a better time to expand programs than right now.” Republicans counter: “We have too much money. Let’s reduce taxes.” […]

Believe me, Gov. Arnold Schwarzenegger doesn’t want to close 48 parks, reduce education funding or release prisoners. Like all governors, however, he is required to bring expenditures in line with revenues. I don’t agree with all of his suggested cuts, nor do I endorse all of the critical responses from the Legislature.

There is a significant reform suggested by the governor, however, that I fully endorse. It is a constitutional amendment that would require putting aside a portion of surging revenues in good times as a buffer against painful cuts in bad times. I called for such a “rainy day” fund while in office — and recently former Gov. Pete Wilson also spoke in favor of this idea.

Gray Davis is showing the political acumen that made him the most reviled governor in recent California history.  He’s also being massively dishonest.  Schwarzenegger repealing the Vehicle License Fee’s return to 1998 levels had an undeniable impact.  Furthermore, so did his borrowing through bonds, which costs the state billions of dollars per year.

Are Arnold and the California GOP to blame for this? Who else? Nobody put a gun to their heads and forced them to respond to our last crisis with nothing but a toxic combination of demagoguery and tax-cut jihadism. They did it all on their own. I understand the desire to roll up our sleeves and stop sniping about the past, but let’s not actively rewrite history to pretend that our latest crisis “just happened.” It didn’t. Arnold and his party, despite plenty of warnings from nonpartisan budget analysts about what they were doing, deliberately bequeathed it to us.

And, contrary to Schwarzenegger’s belief, he has a great deal of control over state spending, including a line-item veto.  Trying to fault the legislature for “runaway spending” when he has to sign the document is just completely absurd.  The legislature didn’t go on a “spending spree” on its own, nor did they use revenue only for the purpose of spending; there were billions in tax cuts thrown in as well.

The Governor, and his predecessor, are writing a history of government in California that doesn’t have an executive branch.  This is a falsehood that can only be met with laughter.

I watched the debate this evening following my reading of news articles that John Edwards should drop out of this election because his continuing presence is divisive to the Democratic Party.  The debate demonstrated that Senator Clinton and Senator Obama are clearly capable of being divisive on their own, while John maintained the dignity of the forum and was by far the most Presidential of the three.  In fact, it is John Edwards who has led the way ensuring that the Democratic Party ideals of equality and fairness for all, giving the economically disadvantaged a fair chance at the American Dream, and restoring the moral integrity and leadership of the United States are the issues being discussed in the campaign for the Democratic Presidential nomination.  Many “political experts” have said that John Edwards has shaped the issues of the Democratic Primary and Caucus campaign.  In accordance, we, as Americans and Californians, need John Edwards to stay in this race to the end (and I hope into the White House).

I have spoken at many Democratic Club meetings over the past few months on behalf of John Edwards, as well as tabled at shopping centers and street fairs.  I am very concerned about the focus of the media and what I have been hearing in the debates in the context of what I have heard when speaking and/or tabling in the Coachella Valley about the reasons people are voting for a particular candidate.  Everyone knows that it is politically incorrect to advocate voting for Senator Clinton merely because she is a woman or Senator Obama merely because he is an African-American, and thus such comments are not expressly made in this context.  However, the subtle message I continue to hear is real change will come from a woman in the White House or real change will come from an African-American in the White House.  These under the radar views are ignorant and damaging to We The People of the United States of America because real change will come only from Progressive Democratic ideas put forth by someone who is willing to fight to implement and follow through with the Progressive Democratic ideas.  Obviously, I am a John Edwards supporter, and thus feel that JRE is the best Democratic candidate to accomplish this real change because of (a) His life experiences growing up; (b) His professional life experiences as a trial attorney taking on the “Big People” and always battling for the “Little Person” in the courtroom, at the UNC Poverty Center, and on the streets of America; (c) His leadership of ideas coming out first with a Universal Health Care Plan, an Economic Stimulus Package, a Global Warming Plan, and the list goes on and on; and (d) His unwillingness to take money from PAC’s and lobbyists because he knows the fight that lies ahead is a fight for middle class Americans and below and not about compromising their interests.  I appreciate and respect that you may disagree with me that John Edwards is the best Democratic candidate to accomplish such real change provided that you are basing your decision on the position of your candidate of choice on the issues and ability to implement and follow through in this regard, rather than because your candidate is a female or an African-American or because the corporate mainstream media told you who to vote for, either expressly or implicitly by limiting the coverage of a candidate relative to the two (2) celebrity and glitz candidates.  

I will close my remarks with a story that I think is so essential because what I hear from people who I am out talking to about John Edwards is that they want “bullet-point” literature on the issues because the 80 page “The Plan To Build One America – Bold Solutions For Real Change” by John Edwards is too much reading.  I ask these people if you were going to have surgery, or buy a home, or make an investment, then would you want “bullet-point” information or all of the information and details available.  This next election is more important than surgery or buying a home and you are making the biggest investment of your life, and the lives of your children and grandchildren, because of the issues at stake resulting from the past decades of Presidential Policy.  My son, a junior in high school, is a typical teenager and like most teenagers is aware of but not very interested in the upcoming Presidential Election.  However, on New Year’s Day I was watching a CSPAN recording of John Edwards speaking before the Iowa Caucus and my son was in the same room, laying on a couch reading a book (“Eragon”).  I caught my son, out of the corner of my eye, put down the book and proceed to watch John Edwards.  I kept waiting for my son to stop watching JRE and return to reading his book.  Instead, my son watched the entire speech (approximately 45-60 minutes) and when John Edwards had finished his speech my son, spontaneously and without any solicitation or comment from me, says “How could you not vote for the guy?”  The following week I am tabling at the Palm Springs Street Fair where all of the Democratic Presidential Candidates who have a representative are present.  Near the end of the four (4) hour evening, a Hispanic family consisting of a mother, father, and middle-school aged boy approach the Senator Obama representative next to me.  The mother and father ask about buttons, bumper stickers, etc., which they are provided with.  The Senator Obama representative asks the middle-school aged boy if he wants a button and the boy politely responds “No”.  The Senator Obama representative asks “Why not” and the boy responds he “likes John Edwards”, which perked up my ears.  I asked the boy “Why do you like John Edwards?” and he responded “I saw him on C-Span and I liked what he had to say.”

If a middle-schooler and a high school junior have the attention span to watch C-Span, then the least that we adults can all do is take the time to visit the web sites of each of the candidates and see what they have to say, as well as hear each of the candidates out when they speak, rather than follow the mainstream media like a bunch of sheep or vote for someone because they are the first woman or first African-American with a legitimate chance to be the President of the United States of America.  Do not cheat yourself by doing anything less and you owe it to your children and grandchildren to give them a better country then was given to you.