Real Economists on Raising the Minimum Wage

[dales]

California's economy is nothing to crow about.

(it's still in the sh!tter and will be for a long time)

With the exorbitant COLA here in the SF Bay Area, I propose a minimum wage of at least $14/hr.

So there!

[Gob]

In terms of public debt, California is a colossus among the 50 states. By any measure, California is head and shoulders above all others.

"California again trumped other states with a $617 billion debt," reported State Budget Solutions, a nonpartisan organization advocating "fundamental reforms" for state budgets.

The organization says total debt for all 50 states now amounts to more than $4.1 trillion. The tally includes regular debt, 2013 fiscal year budget deficits, outstanding loans for unemployment trust funds loans, unfunded post-employment benefits and unfunded pension liabilities.

California's debt is more than twice second-place New York, the annual report said.

[oldr_n_wsr]

California's debt is more than twice second-place New York

We need to try harder.

[rubato]

Our gross state product is $1.9 Trillion, more than Canada the 2nd largest country in the world in area.

I think we already try harder.

According to Bill Lockyer we owe $73 billion in general obligation bonds. http://www.treasurer.ca.gov/graphs/go.asp I cannot find a reference which supports the higher number (more than 600B) but I do point out that it is far less than half of GSP.

And without better support it looks like they're pulling the number out of their ass.


yrs,
rubato

[Gob]

A cursory glance at Governor Jerry Brown’s new budget could make you believe that California’s days of fiscal gloom are over as he champions a balanced budget and newfound “fiscal restraint.”

California had been floating in debt. Then Brown persuaded voters in November to increase sales and income taxes. Now he releases a budget that, as Brown said at a news conference last week, advances a progressive agenda but does so based on available dollars.

Is California on to something? Is Brown’s formula -- a combination of government idealism, tax increases and tough- minded budget choices -- the answer for the nation, as well?

As tempting as it might be to buy this story line, the answer is no. In reality, the Brown approach is the latest in a series of “kick the can down the road” budgets that ignore the buildup of debts. It rewards public-employee unions with pay and benefit increases -- while shielding them from desperately needed pension reforms -- and ignores deep problems within the state’s economy.

The nonpartisan Legislative Analyst’s Office agrees that the budget is basically balanced, but the agency’s head, Mac Taylor, expressed concern: “It doesn’t pay all of the wall of debt within the time period. It builds up very little of a reserve by the end of that period, and it does nothing regarding our various retirement-related obligations.”

Crushing Burden
Others were blunter about California’s financial health. As the Los Angeles Times reported: “It owes Wall Street more per resident than almost every other state. And it has accumulated a crushing load of debt for retiree pensions and health care, now totaling more than taxpayers spend each year on all state programs combined.”

The Times compares the state’s situation to that of the California cities of Vallejo, Stockton and San Bernardino, which all became insolvent largely because of their inability to pay for public-employee pensions and health care.

State Senate Republican Leader Bob Huff, writing in the Republican-leaning Flash Report, accused Brown of playing a shell game with the tax-increase funds, which were promised to public schools but are now being used to reward public employees. “Pay raises and lifting of the monthly personal leave day without pay for state employees certainly is a payback to the state unions who helped pass Prop 30,” said Huff, referring to the tax increases and pointing to projections that state spending will rise by $25 billion over the next four years.

Voters in November also approved a tax increase for out-of- state businesses in order to fund green-energy projects. Brown includes environmental upgrades at schools as part of the state’s per-pupil spending formula -- something that raised questions from the Legislative Analyst’s Office and others.

The budget indicates that California’s recovery is bolstered by rising home values, better credit conditions, stronger household spending, and modest, but improved, job creation. But this rosy view doesn’t take into account the negative effects of new taxes and regulations, said David Wolfe, the legislative director of the Howard Jarvis Taxpayers Association. California’s cap-and-trade system, the first plan in the nation to combat global warming by imposing costs on greenhouse-gas emitters, will slow manufacturing, he said in an interview.

The state’s forecasters assume that people don’t change their behavior in the face of new taxes and fees, Wolfe said. It’s too early to know the fallout of California’s higher income-tax rate. What if the millionaires move?

Property Taxes
As California’s real-estate market rebounds, Democratic legislators are already talking about eroding the protections from Proposition 13, enacted in 1978. That measure capped taxes at 1 percent of the sales price of a property (plus voter- approved local bonds and parcel taxes), with tax increases limited to 2 percent a year until the property is sold. Fiddling with that law will probably push property values lower.

Some Democratic legislators want to start with a ballot initiative that would remove Proposition 13 protections from commercial properties, while leaving them on homes. Governor Brown might not want to deal with the potential implications of such a measure during his re-election bid in 2014, according to the San Jose Mercury News, but the newspaper sees efforts to soften Proposition 13’s protections against local parcel taxes - - a form of across-the-board property tax -- heating up this year. “The third rail of California politics may not be as deadly as once thought,” the Mercury News concludes.

This touches on perhaps the biggest challenge to the state’s fiscal health: Democratic supermajorities in both houses of the state Legislature, combined with Democratic control of all constitutional offices. With Republicans now irrelevant, Democrats can raise taxes and ramp up spending at will, meaning that the cycle of artificially produced fiscal crises will speed up, with a legislative majority committed to the endless growth in government and the protection of public-employee pay and privilege at all costs.

Until California’s leaders tackle the state’s enduring debt issues and view the private sector as the generator of economic growth, rather than as a means to fund government, California’s next fiscal crisis will always be just around the corner.

(Steven Greenhut, a Bloomberg View contributor based in Sacramento, is vice president of journalism at the Franklin Center for Government and Public Integrity. The opinions expressed are his own.)

To contact the writer of this article: Steven Greenhut in Sacramento at steven.greenhut@franklincenterhq.org.

[rubato]

Jerry Brown has been a terrific governor. The best governor since ... the last time he was governor.

yrs,
rubato

[oldr_n_wsr]

From what Gob posted, you get to pay more and get less.

I think we already try harder.

I was talking about NY being number two.
as in

California's debt is more than twice second-place New York

[Guinevere]

Our gross state product is $1.9 Trillion, more than Canada the 2nd largest country in the world in area.

I think we already try harder.

According to Bill Lockyer we owe $73 billion in general obligation bonds. http://www.treasurer.ca.gov/graphs/go.asp I cannot find a reference which supports the higher number (more than 600B) but I do point out that it is far less than half of GSP.

And without better support it looks like they're pulling the number out of their ass.


yrs,
rubato

Gob's article references State Budget Solutions (http://www.statebudgetsolutions.org), and it includes unfunded pension liabilty -- debt which is on the books, but which is theoretical, at least until it gets drawn upo -- which make up the largest chunks of the debt. From their web site:

http://www.statebudgetsolutions.org/pub ... trillion-2

Data is available from the link at the bottom of the press release. You'll have to read and decide for yourself, I don't have time right now to dig any further, or check the original sources.

[oldr_n_wsr]

Our gross state product is $1.9 Trillion, more than Canada the 2nd largest country in the world in area.

It doesn't matter how much money you/they generate or take in, if they spend more than they take in it is a deficit. Try doing that with your personal finances and see how far you go. Only the gov (be it local, state or feds) gets away with it.

Have you sent any extra money to the gov (local/state/federal) to help cover their spending on great causes you like to tout?

[rubato]

Our gross state product is $1.9 Trillion, more than Canada the 2nd largest country in the world in area.

It doesn't matter how much money you/they generate or take in, if they spend more than they take in it is a deficit. Try doing that with your personal finances and see how far you go. Only the gov (be it local, state or feds) gets away with it.

Have you sent any extra money to the gov (local/state/federal) to help cover their spending on great causes you like to tout?

You seem to be having trouble keeping track of whether you are talking about the DEBT or the DEFICT. The DEFICIT in Calif. is projected to be zero next year (and very small this year) because we did the right thing and both cut spending and raised taxes. The DEBT in this case (as Guin points out) is not actual DEBT (which is only 60B) but the total projected debt based on pension liabilities &c; which are subject to change.

And even their theoretical number is small vs GSP which is the rational comparison. Household DEBT for example is only large, or small, versus income. it is a relative number.


yrs,
rubato

[rubato]

[quote="Guinevere"

Gob's article references State Budget Solutions (http://www.statebudgetsolutions.org), and it includes unfunded pension liabilty -- debt which is on the books, but which is theoretical, at least until it gets drawn upo -- which make up the largest chunks of the debt. From their web site:

http://www.statebudgetsolutions.org/pub ... trillion-2

Data is available from the link at the bottom of the press release. You'll have to read and decide for yourself, I don't have time right now to dig any further, or check the original sources.[/quote]


Thank you Guin. I had seen the website but there was no primary source for their conclusions about long-term obligations which was what I was complaining about. I looked at the CA state websites with no benefit.

yrs,
rubato

[Guinevere]

Our gross state product is $1.9 Trillion, more than Canada the 2nd largest country in the world in area.

It doesn't matter how much money you/they generate or take in, if they spend more than they take in it is a deficit. Try doing that with your personal finances and see how far you go. Only the gov (be it local, state or feds) gets away with it.

Have you sent any extra money to the gov (local/state/federal) to help cover their spending on great causes you like to tout?

Just for the record, cities and towns in Massachusetts are not permitted to run deficits. Every budget must be balanced and we can only spend what we appropriate and only appropriate what we have in the kitty to spend. You can increase revenue from taxes or other fees (but the amount is circumscribed to no more than 2.5% per year without approval in the voting booth). We also can issue debt (via bonds) but cannot leverage that debt and this make additional monies.

[Rick]

Arkansas is constitutionally obligated to operate with a balanced budget...

[rubato]

Which explains why Arkansas is the paragon of good government today.

yrs,
rubato

[rubato]

CEPR report reviewing dozens of studies on the effects of raising the minimum wage.

http://www.cepr.net/index.php/publicati ... employment

In short, there is either no effect on unemployment or it is too small to measure.

Read article for fuller explanation. But you can see when all of the studies were plotted together the net effect is Zero:




yrs,
rubato

[oldr_n_wsr]

You seem to be having trouble keeping track of whether you are talking about the DEBT or the DEFICT. The DEFICIT in Calif. is projected to be zero next year (and very small this year) because we did the right thing and both cut spending and raised taxes. The DEBT in this case (as Guin points out) is not actual DEBT (which is only 60B) but the total projected debt based on pension liabilities &c; which are subject to change.

Debt is what you already owe, deficit is what you "will" owe. So next year you will owe no new debt however, you still owe whatever debt you already had. Unless you pay down the debt, you will continue to owe that debt and the interest will continue to take money away from things you might like to fund.

And even their theoretical number is small vs GSP which is the rational comparison. Household DEBT for example is only large, or small, versus income. it is a relative number.

Debt is debt. Doesn't matter if you earn X or 2X, you still owe that money. What matters if you are willing (and able) to pay that debt off. Only when you pay it off, do you have no debt and then all your money (your earn, or in the gov's case take from the tax payers) is yours.

The only thing that income coming in factors into is how easily you can pay off the debt (if you choose to) and how much more debt you can run up (credit power).

[Rick]

Which explains why Arkansas is the paragon of good government today.

yrs,
rubato

Means we can't write hot checks...

[Lord Jim]

LMAO! (I missed this one... )

As a good empirical scientist

I tell you what rube...

Why don't you give us the benefit of your considered judgement as a "good Caribbean Pirate" or a "good six foot tall white rabbit", or a "good double 0 spy," or a "good rodeo clown" ?

Since you have as much experience being any of those things as you do being, "a good empirical scientist"...*

(Okay, well maybe that's not entirely fair... you probably have more experience as a rodeo clown...)






* (I'm sorry, I can't even type that without giggling...."rube the good empirical scientist"...that's about as nonsensical a concept as, "Lord Jim, Queen of the Rose Bowl Parade".. )

[rubato]

Drinking makes you wittier and more interesting.


yrs,
rubato

[Lord Jim]

It doesn't seem to have that effect on you...

It just makes you even more obnoxious....

ETA:

All drinking seems to do in you case is make you go nuts with the exclamation points, cause you to ratchet up the obscenity ratios in your posts, (with particular emphasis on on oral-anal references, ) and get you to start doing an impersonation of Elmer Fudd.....

None of which qualifies as particularly witty or interesting....