Freedom Line Blog

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez. 

View more of Michael Ramirez’s cartoons on CFIF’s website here.

It’s an interesting time to follow California politics.

Last month, Democratic Governor Jerry Brown announced that, thanks to the voter-approved tax hikes from last November, the state looks poised reap budget surpluses for the first time in years.

But instead of using those projections as an excuse to restore funding for programs pared back by budget cuts, Brown is promising to set aside the money in a rainy day fund.

Moody’s and S&P rewarded Brown’s announcement by upgrading California’s credit rating.

Now Brown faces an even bigger test.

There’s an estimated 15.4 billion barrels of oil in California’s Monterey Shale formation, or four times as much as North Dakota’s Bakken Shale reserves.  Another way to put it is that California is home to two-thirds of America’s projected shale oil reserves.  Opening it up would be a game changer for the nation’s oil security and California’s economy.

But here’s the rub, according to Walter Russell Mead:

The intrigues in this drama are many. Does California’s Democratic Party come down on the side of low income Californians, who desperately need the jobs and state services new oil extraction will fund? Or does it come down on the side of a green lobby that is heavily backed by some of the wealthiest people in the state? To what extent does the wealthy coastal elite control the future of the inland poor in California? Can the GOP use the issue as a wedge to rebuild its credibility in a state it once dominated? Will black gold bail out big blue California?

Bring lots of popcorn. This is going to be a terrific show.

A Governing.com blog post by finance writer Liz Farmer includes a little history lesson for conservative governors looking to swap income tax cuts for higher sales taxes.  In order to avoid a massive drop-off in tax revenue in such a scenario, states would be obliged to not only increase their sales tax rate, but expand it beyond goods to include services as well.

But an example from Florida’s recent past gives reason to pause:

Expanding the sales base to include services would address both of those issues. However, getting that idea past the powerful lobbies that advocate for the affected industries is another question. In 1987, the Florida Legislature enacted an expanded sales tax on services like including advertising, legal, accounting and construction services. The move was met with enormous outcry. Major corporations like Coca-Cola and Procter & Gamble canceled or reduced their advertising in the state to protest the tax while business groups canceled at least 60 conventions they had booked in the state. The tax lasted just six months until it was repealed and the legislature instead voted to raise the sales tax from 5 percent to 6 percent, a rate that is still in effect today.

It’s worth noting that a tax expert quoted in the blog confirms that income taxes are the most destructive tax because they create a disincentive to build wealth.  However, as the experience in Florida shows, a workable sales tax runs the risk of becoming quickly unpopular once consumers start seeing the true cost of government on every commercial transaction.

Assuming some states do enact the income-for-sales-tax swap, maybe the sticker shock will prompt another round of reform; one that perhaps lets third-party vendors compete for government contracts to deliver services at a fraction of what it costs to fund a bureaucracy.

When a serial prevaricator, plagued also by incompetence and petty corruption, blasts other people for “refus[ing] to face the facts,” it is almost beyond parody. Yet that’s what Hillary Clinton, taking time from busy life trading cattle futures, has done in a parting shot at her critics as she (thank the Lord) leaves her post as Secretary of State, where she left a footprint about as big as a pigeon’s.

As she repeatedly blamed a video for an attack the video had nothing to do with, as her own Department repeatedly refused requests or ignored recommendations for stepped-up security, as she provided evasive testimony on the whole situation, she nonetheless found the sheer gall to blame others for her own pathetic failings. Worse, by acting as if she, the prevaricator, were the one guided solely by the facts, while the others supposedly ignore the facts, she dives so far down the rabbit hole — or so far back into George Orwell’s 1984 — as to no longer have any capacity herself even to understand the difference between fact and fiction.

As she leaves the scene with bizarrely high approval ratings, she merits a full column reminding the public of her incredibly sordid history and of her utter failure to actually advance U.S. interests. Perhaps she will receive it in this space in the coming days — although here’s hoping that some other brave soul will provide such a column, and that it will contain the full, devastating litany of Mrs. Clinton’s perfidy through the years.

Hillary Clinton has been a plague on the body politic for four long decades. One only hopes her retirement from public life will be permanent.

Earlier this week, the federal government reported that our economy contracted for the first time since the last recession.

Today it reported that unemployment rose to 7.9% last month, up from 7.8% the month before.

Analysts had expected the rate to remain at 7.8%, already a terrible number nearly four years after the last recession ended.  Moreover, the 157,000 new jobs added fell below analysts’ expectations of approximately 170,000, which itself is significantly below the 200,000 per month necessary to keep pace with population growth and substantively reduce the festering unemployment rate.  So Obama II inherits a higher unemployment rate from himself than Obama I inherited from Bush, but with the added burden of $6 trillion wasted deficit spending.

This has ominous broader implications, as noted by The Wall Street Journal:

The labor market looks anemic 3½ years into an economic recovery.  At last count, there are 134 million employed Americans, or four million less than the month before the recession began.  At the same point after the prior recession in the early 2000s, despite what was then called a jobless recovery, there were 5.3 million more workers…  Whether it is retirees, the unemployed, “discouraged” workers or people claiming disability that explain the difference, though, the ratio of “makers” to “takers” in society has dropped.  That has implications for tax revenue and spending and helps explain why, following weak growth data on Wednesday, this is the slowest economic recovery in modern times.”

Hardly the “Forward” that Obama promised.

In an interview with CFIF, Patrick Louis Knudsen, senior budget expert at The Heritage Foundation, discusses the latest in the debt ceiling fight and what lies ahead for America in the next few months with the implementation of costly new ObamaCare policies, the $1.2 trillion sequestration deadline and other issues.

Listen to the interview here.

In this week’s Freedom Minute, CFIF’s Renee Giachino uses data and facts to cool the heated rhetoric of global warming alarmists.