When the Governor looks around and sees a mortgage crisis, a potential $10 billion dollar shortfall in the state budget, and failures to deal with pressing economic problems and instead push the problem off to the next generation, he always falls back on worker’s compensation reform.  This was the centerpiece of his economic agenda upon coming into office, it’s what he always touts as the first step on getting California business moving again.

And it was based on discrimination.

A state appeals court ruled Monday that a 76-year-old Sacramento woman can’t have her permanent disability benefits reduced because of her age.

The decision by the 3rd District Court of Appeal in Sacramento represents a small but significant victory for injured workers who argued for years that their benefits have been slashed by Gov. Arnold Schwarzenegger’s overhaul of the workers’ compensation system three years ago.

For the first time, the court said the injured workers are protected by the state’s anti-discrimination laws. In this case, insurers and doctors can’t use a worker’s age, race or gender in determining permanent disability awards.

The road to economic solvency for Arnold Schwarzenegger was based on this; trying to take money from the permanently disabled because of their age or race or gender.  We should all feel a little bit ashamed.

Now the job of the legislature is to permanently fix this injustice to put it in legal working order.  Frank Russo has a lot more, but here’s a taste:

Yesterday’s decision by three judges of the California Court of Appeals that the so-called “reform” of workers’ compensation laws–the law that Schwarzenegger demanded and the legislature enacted in 2004–cannot be used when it leads to discrimination based on gender or race is just the latest example of how badly that law was written. The legislature bought a pig in a poke when they were stampeded into adopting at a 3 a.m. committee hearing followed by floor votes of a complicated 75 page bill which almost none of them had read–or really considered.

Workers have been paying for this ever since.

Looks like that Dec. 5 deadline for voting on a health care proposal has been extended, after the power play of scheduling it on the day of the Republican Assembly retreat was justified by the Speaker’s office by saying “Deadlines are deadlines.”  Until they aren’t.

And now, there’s talk of a third special session, this one on the subprime mortgage crisis.  I guess the inaction on the first two was not sufficient; we need a third.  And I appreciate efforts to stop predatory lending, though I’m not sure how this would make a dent in what is a national credit lending problem.

I’m still not sure we have a housing “crisis” or just a housing market downturn, but I am pretty sure that nothing the Assembly is going to do in a special session this year is going to affect it one way or the other. Well, they are probably capable of making it worse. But I don’t think they can or will do anything to increase the value of my home, and while I’d love the help, I don’t particularly think they should try.

I’m not as dismissive as Dan Weintraub; this is most definitely a crisis.  But I’m not really sure what the Assembly can do.  The bills they have proposed would only apply to new loans.  That’s important, but they would not do a whole lot for those facing foreclosure.  And anyway, those entering into new loans would have to be deaf, dumb and blind to agree to some no-money-down ARM at this point.  And this bit from the press conference is flat-out embarrassing:

In an illustration of the complexity of the crisis, though, one of the homeowners presented at the press conference as a victim said the house he lost was actually one of two that he owned.

While many owners have lost homes they occupied, others were investors who saw the real estate run-up of the past decade as an investment opportunity.

Sacramento resident Carlos Villegas said he was forced into foreclosure when monthly payments on the house he bought in 2005 shot up from $2,200 to $3,550.

“They gave me three days to move,” he said. “I feel frustrated with the system.

In response to questions from reporters, Villegas said after the foreclosure, he moved back to a smaller house he had purchased 10 years earlier, which he had been renting out.

Of all the people with foreclosure problems, you found a guy with another house?!?

The credit mess is a national problem, and state solutions are nice, but they’re not going to work.  Perhaps driving down the costs of healthcare through a new reform would be the BEST way to help those struggling with home payments.

UPDATE: CPR has a summary of Democratic legislative proposals, and I have to say that the steps to address the current crisis are fairly weak tea.  Some of these, like foreclosure consultant reform, are already illegal; others, like facilitating reporting on workout agreements and increasing talk between homeowners and creditors, should have been initiated months ago.  The only substantive policy I see here is shoveling $10 million dollars to credit counselors.  The federal plan being worked out by the Treasury Department, to freeze teaser rates for some mortgages, would do a hell of a lot more good.

(Bumped to move the 2 budget diaries together. – promoted by Brian Leubitz)

The Schwarzenegger era will be remembered as the era of “blockbuster politics,” where the Governor took the same marketing techniques that made his movies popular and transferred them to the political stage.  He wouldn’t just make an issue a priority, he would structure the entire year around it.  “The Year of Reform!”  “The Year of Education!”  “The Year of Healthcare!”  “The Year of The Environment!” As an actor he only put out one movie a year, so one legislative initiative a year sounded about right for the average attention span.  The details of governance would be pushed backstage; the thrust would be to go big on one issue and hope the goodwill gained from success would mask whatever failures occurred.  This has not been a slam dunk; the year of reform crashed badly, other signature issues have yielded fruit.  Now, with this year’s blockbuster on the rocks due to Republican resistance, legal challenges, initiative politics and structural roadblocks, the inattention to the small problems that weren’t on the big agenda are starting to consume the state.  In an excellent editorial, Assemblyman John Laird, Chairman of the Budget Committee, explains how our current mess of a $10 billion dollar shortfall could have been easily avoided if the Governor would have paid attention to something other than staging the next blockbuster.

… [T]he chronic boom-and-bust budget cycle is rooted in a simple problem: Californians generally believe in government and want it adequately funded — so much so that they repeatedly have voted for laws or constitutional amendments that lock in guaranteed spending for, say, education or transportation. At the same time, the state’s revenue system is antiquated and volatile. It is heavily reliant on income taxes, for instance, and so the pains of an economic downturn have a magnified effect on state revenue.

The short-term solutions that get us through on a year-to-year basis all have been tried — and tried. It’s time for bipartisan hard work to bring California’s long-term spending demands into balance with long-term revenues. It won’t be easy, but the easy paths have been taken, and they’ve left the state awash in red ink.

Wingnut conservatives are calling on the Governor to declare a fiscal crisis.  It’s one of their own doing.  When California could have eliminated the constant catastrophes of the budget process by restructuring the revenue offsets to services the population desires, instead the Governor floated a $15 billion dollar bond in 2004.  The result is $3 billion a year extra in debt, every year, to repay the costs of a senseless short-term fix.  If sound Republican budgeting means “put the problem off to children and grandchildren,” then we’ve got a lot of sound budgeters in Sacramento:

On paper, it may look like spending has increased in recent years, but that is largely driven by the expiration of earlier budget-balancing tricks — such as temporarily shifting school funding to local governments, shifting costs to special funds and the multibillion-dollar temporary cut to education.

There really haven’t been significant program spending increases, with three exceptions: public safety, the result of various court cases regarding our prison system and implementation of “Jessica’s Law” to track sex offenders; debt service, primarily the annual $3-billion payment on the $15-billion deficit bond; and local government funding, a result of the vehicle license fee cut because billions from that fee used to go to cities and counties.

Sacramento does not have a spending problem.  It has a denial-of-reality problem.  The cuts are always accommodated in the state budget, like this year’s delay of COLA (cost of living adjustments) for elderly public assistance, and the $1.3 billion in transportation funding.  The revenue increases are always blocked.  Stopgaps that run out and increases in population wipe out the cuts.  We’re left on an unsustainable track.

The state is rapidly headed toward bankruptcy if it continues down this stupid, temper-tantrum approach to the budget.  if Arnold Schwarzenegger wants to leave a lasting legacy, and let’s face it, that’s all he wants to do, he can work hard to fix the structural problems that will always put the state’s financial picture in peril.  That would require sitting in his office and doing his job, not holding big speeches behind backdrops that say “The Year of the Tiger!” or whatever he’s trying to peddle to the electorate.

So now we learn that the implementation for Jessica’s Law is completely impossible and will likely never happen.

Law enforcement leaders who pushed for a ballot initiative requiring sex offenders in California to be tracked by satellite for life are now saying that the sweeping surveillance program voters endorsed is not feasible and is unlikely to be fully implemented for years, if ever […]

The difficulties include the impracticality of tracking sex offenders who no longer must report to parole or probation officers, the lack of any penalty for those who refuse to cooperate with monitoring and the question of whether such widespread tracking is effective in protecting the public.

The biggest issue, however, is that the law does not specify which agency or government should monitor felony sex offenders — and shoulder hundreds of millions of dollars a year in related costs.

That said, these same law enforcement officials claim that the law is worthwhile, mainly because they don’t want the egg on their face for the next 20 years, and they can quietly put the whole thing to rest once everyone forgets about it.

In truth, the unworkability of this law, which trades liberty for security and provides neither, making it far more difficult to track sex offenders while beginning a slippery slope toward lifetime surveillance of anyone who commits a crime we collectively decide not to like in the future, was obvious from the beginning.  It was written poorly, and maybe some of that can be fixed.  But the restrictions on housing have caused ex-cons to live under bridges, which seems to me to set the table for them to commit more crimes so they can get some shelter.  The lack of reporting to parole officers, too, just drops these offenders off the map – when the point is supposed to be to FURTHER track them so they don’t molest again.

This is also about the dangers of ballot-box budgeting.  With the vague nature of the funding in the law, everyone’s trying to force payment on somebody else.

Gov. Arnold Schwarzenegger and state law enforcement leaders, who were allied in backing the measure, are engaged in a standoff over who should bear its financial burden.

“I don’t know of any agency that has the resources to track and monitor . . . in real time,” said Vacaville Police Chief Richard Word, president of the California Police Chiefs Assn. “You’ll need an air traffic controller to track these folks.” […]

Corrections analysts estimate that it costs the state up to $33 a day in equipment and labor to monitor a sex offender by GPS, and it would take nearly $90 million a year just to track the 9,000 now on parole if all were subject to Proposition 83.

Once offenders are discharged from parole, the state will no longer monitor them electronically, Corrections Secretary James Tilton said last month, because his department lacks jurisdiction at that point. The agency also is overextended, with an overcrowded prison system under review by the federal courts.

Nick Warner, a lobbyist and spokesman for the California State Sheriffs’ Assn., said the state’s refusal to monitor sex offenders after parole “passes the buck to local law enforcement, who are not equipped to handle them.” He said the state was “setting up communities to fail” and predicted that the matter would end up in court.

Schwarzenegger, who faces a $10-billion state budget gap next year, said through spokesman Bill Maile that he would wait for the sex offender board to address the question of who should fund lifetime GPS tracking before taking a position on the issue.

The law is clearly unworkable and unsuccessful.  Yet it got 70% of the vote because these flaws were hidden from public scrutiny.  And as a result, everyone is afraid to say we should scrap it, due to political factors.

Welcome to your direct democracy in action!

See also:
Jessica’s Law Tag
What California should learn from the Genarlow Wilson case (but almost certainly won’t)
 

With home prices sinking, and expected to drop another 20% after already falling 12% in just a few months, I think this deal between Arnold Schwarzenegger and mortgage lenders smacks of desperation more than anything.

Four major subprime lenders promised to give a break to California homeowners who cannot afford escalating mortgage payments, under a plan announced Tuesday by the lenders and Gov. Arnold Schwarzenegger.

Countrywide, GMAC, Litton and HomeEq – which collectively service more than one quarter of subprime loans to people with poor credit – agreed to maintain the initial, lower interest rate for some subprime borrowers whose rates are scheduled to jump significantly higher. To qualify, borrowers must occupy their homes, have made their payments on time and prove they cannot afford payments with the higher interest rate.

These lenders obviously think that they would rather get less money than no money at all.  Of course, we’ve substituted “subprime mortgages” for “mortgages that people can’t afford.”  Actually the problem is as widespread in million-dollar-plus mortgages, which aren’t subprime at all.  The lending companies basically offered lots and lots of money to anyone who was able to sign their name, and are now feeling the sting of consequences.  Will they offer the same relief to homeowners with million-dollar homes?  That seems unlikely.

So while I applaud any effort to keep people in their homes, somehow this deal makes me more worried about the long-term consequences of this runaway mortgage crisis than ever.

UPDATING THE UPDATE: We’re apparently all indirectly paying to bail out Countrywide:

Countrywide Financial Corp. fell more than 10 percent in New York Stock Exchange trading after U.S. Senator Charles Schumer urged the regulator of the Federal Home Loan Bank system to probe cash advances to the largest U.S. mortgage lender.

Schumer said he was alarmed by the volume of advances the system’s Atlanta bank has made to Countrywide considering “the rapid deterioration” in the credit quality of some of the Calabasas, California-based company’s mortgages. Schumer expressed his concerns in a letter sent today to Federal Housing Finance Board Chairman Ronald Rosenfeld.

The Atlanta bank has made $51.1 billion in advances to Countrywide as of Sept. 30, representing 37 percent of the bank’s total outstanding advances, Schumer wrote, citing U.S. Securities and Exchange Commission filings.

No respectable company would assume 37% of Countrywide’s debt.  The Federal Loan Home Bank system, however, isn’t a company at all.  It’s as close as you can get to a federal bailout.

The Federal Home Loan Bank is what the British call a quango – a quasi-non-governmental organization. Although it isn’t legally backed by taxpayer money, it’s widely perceived as having an implicit federal guarantee. And at first glance, it appears that taxpayers’ trust is being used to bail out one of the biggest bad actors in the subprime story.

More here.