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California economic situation reaches another level of priority!

Original post made by Jackal, Another Pleasanton neighborhood, on Jul 29, 2010

Looks like it is up to the Democrats in the state assembly and the states unions to close the California budget gap.




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Comments (19)

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Posted by new resident
a resident of Another Pleasanton neighborhood
on Jul 29, 2010 at 12:48 pm

OK, what are we going to do?

Public sector pay and pensions and illegal immigrants are making this state completely unsustainable. Meg Whitman is going to be "tough as nails", oh hang on, it's just the ones who do lots of other illegal things and get caught. So legal residents and businesses will be paying even more when life in other states becomes uncomfortable.

The public sector unions would rather that jobs be cut than sustainable pay and pensions be put in place, so again the public suffer because we are ending up having a few people getting paid a lot rather than the right number of people being paid a fair amount.

But who can we vote for? I don't see anyone with answers or an ability to solve these problems. And if they don't get solved, CA goes bankrupt (or borrows money so it goes bankrupt later) or just turns into the kind of place you don't want to live because education will be awful, safely will be awful and taxation is already awful.

What are our realistic choices? Anyone . . . ?


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Posted by radical
a resident of Another Pleasanton neighborhood
on Jul 29, 2010 at 1:02 pm

dunno about you but in the typical lesser of two evils, i would rather support the GOP and Meg saying they will cut state employee headcount and not raise taxes rather than Dems who push for simple majority to pass the budget, openly stating they will raise taxes in a recession to cover the gap given the opportunity


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Posted by Teddy
a resident of Downtown
on Jul 29, 2010 at 1:09 pm

There is another option. The only way out of these union pension deals is for the unions to willingly agree to give them up (very unlikely, actually will never happen) or the state can file for bankrupcy. In bankrupcy, all contracts are null and void and must be renegotiated from scratch. If I were Arnold I would immediately press for the later so as not to burden the future.


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Posted by new resident
a resident of Another Pleasanton neighborhood
on Jul 29, 2010 at 1:21 pm

Isn't it scary though? I recently moved to CA and am so sad to see what is happening to Pleasanton schools and I know we're lucky because it's so much worse elsewhere in CA and our union actually did negotiate to save jobs. Same with the public safety etc.

I agree going bankrupt and re-negotiating everything would actually be a good option for CA, but I think States are not allowed to go bankrupt. Also, it would lead to economic meltdown becuase of all the people that hold bonds etc.

Are there any real options?


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Posted by Teddy
a resident of Downtown
on Jul 29, 2010 at 4:45 pm

I think bankrupcy is the only way out. I believe you are right about the states not having the ability to declare bankrupcy but cities can. I also heard on the news the other night that when the repubs take control of the house it is only a matter of time before legislation is introduced to allow states to file. Think about the pickle we are in? Highest taxes in nation in many areas, off the chart real estate prices, high cost of education, highest employer in the state is the state, highest per capita salary in the state is the state workers, highest and most lucrative pension plan in the nation, deeply in debt and adding to it, no ability to declare bankrupcy, what happens?..............we run out of money and no one gets paid other than with IOU's


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Posted by new resident
a resident of Another Pleasanton neighborhood
on Jul 29, 2010 at 5:11 pm

I've looked briefly at this online and it looks like whilst we can't go bankrupt, we can go into some kind of administration where our debt would be renegotiated (I guess like Dubai?).

Problem with this (as much as I like the idea!)is that given our size, wouldn't it cause another int'l financial meltdown? If we do this it will look bad for the country as a whole and people will stop buying our bonds, treasuries etc. . . So, instead, the Fed gov't might have to bail us out. Though who's going to vote for that - no one! So I guess to make it OK for the non-CA electorate, they'll impose austerity measures on us. And maybe that's a good idea. But then who is going to pay for the big public sector salaries and pensions and entitlements for people who have no legal entitlements? Maybe no one. So you're right, maybe this will work!


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Posted by Curious?
a resident of Canyon Meadows
on Jul 29, 2010 at 6:22 pm

Is anyone else wondering how California has one of the top economies in the world and yet we're dealing with this problem? How about the big businesses that are headquartered here and yet have an address in another country to save on taxes (my husband's company comes to mind). When are we going to start penalizing greedy businesses?


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Posted by Patriot
a resident of Another Pleasanton neighborhood
on Jul 29, 2010 at 9:06 pm

All the talk of bankruptcy is just way off. What is most likely to happen is a federal government bailout of California, New Jersey, and many other states. Sure, there will be all the grumbling about moral hazard and fairness, but how is congress going to make the argument that it is OK to bail out AIG or GM, but not California? State and local obligations will be turned into federal debt. Just wait and see.

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Posted by SteveP
a resident of Parkside
on Jul 30, 2010 at 8:35 am

SteveP is a registered user.

Greedy businesses? Maybe some, but did you ever stop to think who is employing people, unless your on the taxpayers payroll?
Without, these 'greedy' businesses (large and small) you'll eventually have 100% unemployment. Especially, when there's no one to pay taxes for your services.

Penalize them? You mean with even higher taxes? Think first before you suggest that short-sighted approach. You'll do one of 2 things -drive them out of the state or they will pass their increased cost of doing business on to the consumer. Which failed plan are you advocating for?


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Posted by new resident
a resident of Another Pleasanton neighborhood
on Jul 30, 2010 at 9:11 am

OK, so we get bailed out rather than going into adminstration (although can you see that getting enough votes in the house / senate?). Do you think it will be with or without strings? Will a bailout make the state gov't start paying more realistic public sector wages / pensions and cut waste? Will they make CA cut debt by using tax income on services for people that legally pay income tax or is it going to be status quo?

Are the fundamental problems going to be tackled by a bailout? And will it be in time to make sure education and public safety don't go further into the cesspit? And I agree, raising taxes is not the answer in CA given the huge taxes we're already paying and the current mis-spending of tax dollars. Though if a company is based here, I agree they should pay whatever taxes they owe for being based here. Though of course then they might decide to move . . .


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Posted by radical
a resident of Another Pleasanton neighborhood
on Jul 30, 2010 at 9:36 am

When are we going to start penalizing greedy businesses?

you have to be kidding me, businesses can already tell you that california has one of the most business unfriendly environments in the USA
besides federal and state taxes, regulation and bureaucracy are also major issues
in case you missed the news, businesses are leaving the state in droves due to the budget and AB32, the global warming legislation passed for CA which will cause the loss of millions of jobs in CA


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Posted by Pleasanton Parent
a resident of Pleasanton Meadows
on Jul 30, 2010 at 2:23 pm

There is no single answer. There is some truth to the "greedy" business allogations however it was primarily driven because of high taxes. Even if we lower taxes on businesses they have no incentive to move the (combined) trillions of dollars that are offshore back. A lower tax rate is still higher than what they pay by having financial headquarters in other tax friendly countries.

Bankruptcy is an option, but a short term one. Even if all union contracts can be renogotiated the "culture/habits" that drove them to where they currently are will not go away and over time, if things are left to develop (i.e. lobbists, union politics, weak/corrupt politicians), they'll be right back where they are again.

I think we have to recognize the jobs we have lost are gone, and they're not coming back. Instead of fighting to bring them back we should instead look forward to the next breakthroughs and cultivate an environment that is attractive and accomodating. First and foremost we must incent foreign students purusing advanced degrees in U.S institutions to stay here once they complete their degree. Previously, this was a given, but with China and India rapidly developing many foreign students see better opportunity abroad. Instead, we need to strap a green card to the best and brightest and keep them here.

Next, higher level education needs to be attainable for all that want it. A highly skilled/educated workforce is an absolute must for emerging technologies/jobs.

Obviously, state infastructure, spending, compensation has to be restructured from the ground up focusing on the next 100 years to come. Just with the private sector, the state too, must learn to become more efficient and do more with less. Raising taxes to continue current level spending is not an option.

And the state does need to identify ways to collect taxes due. I myself love purchasing items over the internet because of the lack of sales tax. While this is a benefit I, and many others enjoy, it is one that we need to realize probably does more collective harm than benefit.


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Posted by new resident
a resident of Another Pleasanton neighborhood
on Jul 30, 2010 at 3:49 pm

Great post Pleasanton parent, really interesting thoughts there!


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Posted by Patriot
a resident of Another Pleasanton neighborhood
on Jul 30, 2010 at 5:22 pm

"think we have to recognize the jobs we have lost are gone, and they're not coming back. Instead of fighting to bring them back we should instead look forward to the next breakthroughs and cultivate an environment that is attractive and accomodating. "

I don't think that will be enough. I think we also have to think about levying a tax on off-shored labor. Silicon Valley legend and former CEO of Intel Corporation recently made such a proposal. I posted this on another forum, and am posting it again here, because I think Grove has unique perspective and understands technology innovation and investing better than most.

Web Link


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Posted by Pleasanton Parent
a resident of Pleasanton Meadows
on Jul 30, 2010 at 10:37 pm

Patriot,
That may be part of the solution. I however tend to worry about "protectionist" acts, instead of "punishing" companies from using off shore labor, I would prefer to leverage the postive strengths of our country to keep businesses here.

One of the reasons I highlighted emerging technologies is because of the high R&D investment companies must make, and want to protect. One of this country's biggest selling points (and problems ironically) is our strong legal protectionisms.

Another example.... I see a huge market for "made in the USA" young children's toys/products. With all the negative incidents regarding quality controls in China I could see an entire re-imergence of "made in the USA" children's toys targeted at parents wanting to take every precaution to ensure their children's safety. These consumers are willing to pay more for peace of mind that comes with knowing the controls in the United States are strong (and again, the threat of legal recourse keeps companies in line).

I think we have other options to "market" the United States to being business friendly before having to turn to additional taxes.


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Posted by Teddy
a resident of Danbury Park
on Jul 31, 2010 at 8:05 am

California has a large economy not because we make anything here or employ many here but only because we ae the point of entry for most goods being imported, Long Beach port, Las Angeles, Oakland, and San Diego. Walmart imports into Long Beach port and it is a staggering number of ships coming in daily. Bankrupcy is a very viable option and a federal bailout is out of the question and we all know it. Our only way out is to reduce regulation in the state, reduce taxes, give energy and tax brakes to manufacturers who are willing ot move into the state. Business is our lifeblood and anything who thinks otherwise needs a real healthy review of their education.


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Posted by Patriot
a resident of Another Pleasanton neighborhood
on Jul 31, 2010 at 8:54 am

" federal bailout is out of the question and we all know it. "

Read what Warren Buffet said. It is the most likely outcome. There will probably be some strings attached. We had bailouts for financial, insurance, and car companies. It makes sense that this will be next.


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Posted by Pleasanton Parent
a resident of Pleasanton Meadows
on Jul 31, 2010 at 1:08 pm

Teddy,
My eyes hurt after reading your post......I can understand why you think education is key. *smirk*


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Posted by Gary Schwaegerle
a resident of Downtown
on Oct 22, 2010 at 1:23 pm

Gary Schwaegerle is a registered user.

We must be Grateful to Meg; many are saying she will not Win. So let us say "Thank You very much for providing her portion $162 million dollar "Stimulus Package" contribution to "The Kalifornia Economy" For those that work in Political campaigning, Media, printing, air time, photographers, News People, Fuel, tires, Restaurants, Motels & more. "THANK YOU! Meg Whitman for Giving Back to California where Dreams can Come True!" Sincerely, Gary Schwaegerle


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