President Obama Tries to Energize America, with Heavy Deficits

As I write this, and pull together opinions and facts from various segments of our business community, our national economy is confronting some grimly historic challenges, with painful cutbacks, deep revenue loses and chronic uncertainty plaguing almost every industry imaginable.  From real estate to retail, to banking, the auto industry to the trades works of carpenters and road pavers. American businesses have seen massive drops in sales, employment, investment and consumer confidence. The Conference Board Consumer Research recently announced that February reached another all-time low, while unemployment continues to climb.

The decline driven by worsening business conditions and a rapidly deteriorating job market, suggests that overall economic conditions have weakened even further this quarter. Let’s not overlook that the turmoil in the housing, stock markets now also, threatens the retirement security of tens of millions of baby boomers that looked to their houses and investments as sources of retirement wealth.  America needs to get back on sound fiscal footing that we had prior to the Sept 11th terrorist attacks.

President Obama stated to Congress and the country, in his call for optimism in seeking to ignite us to move away from doom and gloom that “Now, is the time to act boldly and wisely — to not only revive this economy, but to build a new foundation for lasting prosperity. Now is the time to jumpstart job creation, re-start lending, and invest in areas like energy, health care, and education that will grow our economy.” Business Life agrees, now more than ever, business and consumers need to hear that we are seeking to “Be Open for Business.” Consumers need to know that products and services remain as vital and affordable to them as possible. They need to know that Americans are not quitters, that we will redouble efforts to “Do Business.” Our goal should be to build confidence in America. 

At the same time, while we see business downsizing, we look at our government at all levels increasing and expanding their payrolls, pensions, benefits, perks and more. Have we seen the staff’s of our Congressional, Senators, Assembly City Hall representatives being reduced (salaries and expenses)?

Small business and others have tightened their operating cost to survive. However, it seems that our government representatives are on a spending and tax binge. In this economic climate, it should go without saying that added taxes on business and residents, in any form, would only make matters worse.  The state budget has now been passed. Is anyone aware where the $11 billion of borrowing comes from, however, the budget deal includes about $15 billion of higher taxes. That’s matched by about $14 billion of cuts in spending. Tax, Tax, Tax is not the way to help our economy. When will our legislators learn that this is not the answer to our crisis?  We must grapple with the situation at hand and we would be well served to not use the present downturn, as an obstacle to further divide us and more as an opportunity to work together constructively to strengthen our country, state, county and cities.

California Businesses are struggling under skyrocketing operating costs and the toughest conditions they’ve seen in decades. All indications are that our economy is in a decline unparallel in the last 80 years. Such a crisis calls for our Country, State, County and Cities to take a broader look at the financial condition that impact us all. No question, we are facing a meltdown in all areas. We cannot sit back and do nothing!

NFIB/California Issues Statement on Budget Agreement
“The recent budget deal that the State Legislature passed contains more than $13 billion in tax increases on Main Street, working Californians and families, all while doing very little to help small businesses keep their doors open and people employed during these challenging times. It is now time to get back to the business of growing California’s economy,” said John Kabateck, NFIB/CA executive director. “We are encouraged by the silver lining of a small business hiring tax credit that promises to help businesses once they are in a position to grow, and hope that it will be a sustainable incentive one day for small employers who are presently reducing shifts and laying people off to make ends meet. Small business also recognizes efforts by our state leaders to negotiate a cap on growth in state spending in an attempt to ward off future financial famines, but remains cautiously optimistic about a formula that could in fact allow for future adjustments to account for tax increases.” “While there appears to be some marginal inroads in the direction of economic stimulus, our state leaders unfortunately missed a golden opportunity to shorten this recession for small business. With onerous new cost burdens, direct benefits to big business and few concessions from organized labor in this deal, it is now time for the Legislature to make a serious and valiant effort to support and protect California small businesses.” For information about NFIB visit: www.NFIB.com/newsroom.

Budget Deal A Missed Opportunity: Los Angeles County Fifth District Supervisor Antonovich calls State Budget “Raw Deal” for Taxpayers
“What was missing was a comprehensive package of structural reforms including eliminating or consolidating overlapping departments and high-paying political commissions— limiting stipends for members of necessary commissions to $150 per meeting. Also needed is a 2-year state budget, a part-time legislature and abolishing term limits.  Imposing one of the highest tax rates in the nation is a tax-and-spend orgy that further drives businesses, individuals and jobs out of state. It is also another raw deal for County and state taxpayers who are currently subsidizing excessive state spending, government growth, entitlement programs. The total cost for illegal immigrants to Los Angeles County taxpayers far exceeds $1 billion a year – not including the millions of dollars for education. Figures from the Department of Public Social Services show that children of illegal aliens in Los Angeles County collected $450 million in welfare and food stamps in 2008 – an increase of $25 million from the previous year.”

California Chamber of Commerce President and CEO Allan Zaremberg issued the following statement on the Legislature’s approval of the budget package:
“The budget solution just passed by the Legislature is a painful but necessary response to the economic recession and years of living beyond our means. California needed this plan to avoid going over a financial cliff. We have an obligation to provide Californians with essential and necessary services including public education and public safety and to maintain a safety net for those in need even as we face rising unemployment and increased tax burdens. With the Governor’s signature, this plan will be stimulative to the economy by providing the cash for tax refunds, infrastructure projects, and to pay bills. “This compromise solution offers a balanced approach that includes deep cuts and does not use new revenue to grow government. In fact, this solution will shrink state government and roll back state spending to 2006 levels. It is important to note that the new taxes included in this plan are temporary and not targeted at any particular industry making them the least damaging to our long-term economic health.

Libertarian Party of California Chair Kevin Takenaga issued the follow statement regarding the budget deal agreed to by the California legislature:
“The budget package passed by the California legislature this morning is an absolute travesty. It shows just how little concern the Democrats and Republicans in Sacramento have for ordinary, hard-working individuals and businesses in California. “And make no mistake, even those Republicans who voted against it today share the blame. The state’s fiscal mess didn’t just happen overnight. It took years of arrogance, neglect, ignorance and willful disregard for taxpayers by both major parties to reach this point. The state’s $40 billion deficit was utterly predictable. Both parties were copartners in crime in approving ever-larger spending plans that far outstripped the state’s rising revenues. Despite a slowing economy, the state still separated taxpayers from a record amount of their money last year.

“And even with record revenues, the state has fallen further behind in quality of life compared to low-tax states like Nevada, Arizona, Texas and Florida. Our government-funded educational system ranks near the bottom of the 50 states, our traffic is among the worst in the nation, we have more state employees per capita than we ever have, and Democrats and Republicans still think the problem is ‘not enough revenue.’

Howard Jarvis Taxpayers Association
Huge tax increases have passed the Legislature with the bare minimum two-thirds vote required by Proposition 13.  These unprecedented increases are kicking California taxpayers while we are already down. While we have not completed the final calculations due to last - minute changes to the tax increase bills — the proposed gasoline tax increase has been replaced with additional income taxes — this much is clear:We will pay higher sales taxes in the state that already has the highest sales tax in the nation. We will pay higher income taxes in the state that already has the highest income tax rate in the nation.
 

We will lose the tax exemption for children. The car tax will nearly double. The spending limit is phony — the new budget results in no meaningful reform. Most of the cuts are cuts in scheduled increases, not an actual reduction in current spending on programs.

As soon as May — just three months from now — we are likely to see revenue fall short again as the new taxes further depress economic activity and as more taxpayers vote with their feet and move to other states. Then, to protect public employee unions and other special-interest allies, some lawmakers will try to further accelerate our economic death spiral by raising taxes again.
Howard Jarvis Taxpayers Association, Southern California Office, 621 South Westmoreland Avenue, Suite 202, Los Angeles, CA 90005, Phone: 213-384-9656