Jim Manzi discusses “Uncontrolled: The Surprising Payoff of Trial-and-Error for Business, Politics, and Society”; Plus: American Dream Goin’ South and California’s Proposed Cigarette Tax, This Week on Gadfly Radio

Join us live Tuesday, 10 a.m. PDT, on CRNtalk.com, CRN1, for another spirited edition of Gadfly Radio with Martha and CalWatchDog.

Martha Montelongo could not stay away from the microphone for long, so she’s returning from her road trip a week early!

In the first half of the program, we’ll talk to Jim Manzi, author of the new book, Uncontrolled:  The Surprising Payoff of Trial-and-Error for Business, Politics, and Society. Manzi, a senior fellow at the Manhattan Institute and the founder and chairman of Applied Productive Technologies, argues “we have much less formal knowledge about society than economists and other social scientists often claim, and that therefore we need to rely predominantly on practical expertise, federalism and trial-and-error learning to make useful progress.” It’s a fascinating book, and should make for a fascinating discussion.

Then, John Seiler, Ben Boychuk and Martha Montelongo will discuss some of the latest developments in California, including the pitch battle over Proposition 29, the “Tobacco Tax for Cancer Research Act.” If approved, Prop. 29 would raise the cigarette tax by $1, with the money ostensibly earmarked for cancer research.

Prop. 29’s backers are trying to portray the measure’s opponents—which do, in fact, include tobacco companies—as objectively “pro-cancer.”  L.A. Times columnist George Skelton flatly asserts that Prop. 29 will save countless lives, and that opponents of the tax increase are simply lying to protect Big Tobacco. And in a column at California Progress Report headlined “The Friends of Lung Cancer,” former Sacramento Bee editorial page editor Peter Schrag writes:

There are lots of good reasons to support Proposition 29, the tobacco tax initiative on the June 5 ballot, not least those named Philip Morris and R.J. Reynolds. Together, the two tobacco giants have so far kicked in about $40 million to the sleazy campaign to defeat it. If you count the nearly $700,000 that the Republican Party contributed to their cause you have yet another reason.

Incredibly, Schrag comes out in qualified opposition to Prop. 29, saying, “Anything that big tobacco is against – or big pharma or big oil – is usually good enough to be for. But let’s save it for a more worthy purpose next time around. There’s a long list of underfunded programs that can badly use the money.” Well, alrighty then!

The problem with Prop. 29—well, one of them, anyway—is that it would create yet another new agency with an unreliable revenue stream in a state beset with a multi-billion dollar deficit. Remember Prop. 71? That was a 2004 bond measure that set up a mostly unaccountable new agency responsible for spending billions on stem-cell research. The Sacramento Bee reported Monday that the California Institute for Regenerative Medicine is now in danger of running out of money.

And as CalWatchDog’s Katy Grimes noted last month, Prop. 29’s backers have plenty to gain if the measure passes: “Don Perata, a former state legislator, has been using the June ballot measure’s election fund as his own personal checkbook. Perata has paid nearly $40,000 to an Oakland City Councilman in order to win a contract for one of his lobbying clients, the San Francisco Chronicle and Contra Costa Times reported.” Grimes also reports that Prop. 29 includes “a clause prohibiting any changes in the spending decision that its politically appointed commission makes, for a full 15 years.”

What’s more, the measure, “is written in a way to exempt the CEO from normal state salary requirements, and why that CEO can hire whomever he wants, at whatever salary he chooses.”

How bad is California’s economy? People are voluntarily returning to Mexico. John Seiler at CalWatchDog lays out the numbers in “American Dream Goin’ South,” which highlights the reverse migration of Mexicans from California. John writes:

Although the official California unemployment rate is 10.9 percent, the real level — including those working part time who want to work more and those who have given up looking for work — is 25 percent, just as during the 1930s, as I have reported.

A difference this time from the 1930s is that Mexico’s economy is not also in a slump, but is a hot tamale:

“First-quarter growth was 4.6 per cent compared with a year earlier, the fastest pace since the third quarter of 2010, prompting several analysts to upgrade 2012 growth forecasts.”

Other items of note: 

  • “California’s salary setting commission is bracing next week to consider a 5 percent pay cut for legislators and other statewide officeholders, in keeping with a similar cut proposed by Gov. Jerry Brown for state workers,” reports Jim Sanders at the Sacramento Bee.
  • Executives at California State University campuses would be prohibited from getting public pay increases during the next two years and then limited to 10% raises during the next four years under legislation approved Monday by the state Senate,” according to the Los Angeles Times. CalWatchDog’s John Hrabe has been on the cutting edge of reporting on the Cal State executive compensation scandal. Read his latest report here.
  • During last week’s episode, Ben and John discussed California’s exploding budget deficit, including the state’s high hopes for billions in new revenue from the Facebook IPO. City Journal contributing editor Joel Kotkin argues at The Daily Beast that Facebook won’t save the Golden State. Meantime, Facebook shares on Monday closed near $34 on the second day of trading—or about $4 below the stock’s initial offering price. Yikes.

The Don, Career Politician Exposed in Proposition 29

            While Proposition 29 proponents trot out charities like the American Heart Association and celebrities like Lance Armstrong, there’s a far more ominous force behind its drive to create a brand new tax of about $1 billion per year.      

            Don Perata, a career politician and failed candidate for Oakland Mayor, has just been outed by the Oakland Tribune in an investigative report that ran Friday. As the Tribune reports:

            Perata’s “Hope 2012” ballot-measure committee began raising money for what’s now known as Proposition 29 way back in 2009, and has transferred $488,500 to Californians for a Cure – the primary committee backing the measure… Now Perata himself has received $5,792.17 since July from Californians for a Cure, including $2,607.19 for “meetings and appearances” and $2,508.36 for travel expenses.

            Digging through campaign disclosure forms, the Tribune finds, “The rest of Californians for a Cure’s expenditure list reads like a who’s-who of former Perata aides and consultants.”

            It seems the self-dealing that will no doubt flow if Proposition 29 is passed has already started. By creating a brand new spending commission staffed with political appointees, it’s almost guaranteed to excel at taking money from taxpayers and placing it into the pockets of special interests. With Proposition 29’s 15 year lock-box on funds, not even the Governor nor the state Legislature can step in even in cases of waste, fraud and abuse.

            The same sort of ugly political self-dealing that’s sure to result if California voters were to pass Proposition 29 has already begun within its campaign. It’s one thing for them to do it with their own money, but something entirely different if they’re allowed to get their hands on ours.

Get ready for the onslaught of Props to part you with your money: Proposition 29 is the first step in a tax hike deluge

            Anyone who’s been following the news in recent weeks knows that the tax-and-spend lobby is planning to unleash of horde of new tax hikes at the ballot box this election year. Three major hikes, which altogether would raise taxes by tens of billions of dollars annually, are all currently jockeying for a spot on the November 2012 ballot. However, flying under the radar is an equally abhorrent tax increase that creates a nearly $1 billion per year spending program dominated by special interests with no accountability to the public.

            Proposition 29, the so-called California Cancer Research Act, raises taxes to create a massive new spending program run by a new commission with six political appointees. The decisions of this commission, which has the authority to spend hundreds of millions of dollars each year, are unchangeable by even the Governor and the State Legislature for 15 years, even in cases of fraud or waste. Worse yet, the commission can spend the taxes from Californians outside California!

Leading fiscal conservative and anti-tax groups are weighing in strongly against the measure.  As David Spady of Americans for Prosperity wrote here on Flash Report, “The last thing California should be doing is creating a brand-new billion-dollar special-interest spending program at a time when we can’t even fund critical state programs like education and public safety. After all, isn’t that a big part of what got us into this budget mess in the first place?”

This election season, voters have a chance to tell the spending lobby that they’re sick and tired of higher taxes and rampant special interest spending. Saying no to Proposition 29 in June should be a prelude to rejecting the tax hikes coming in November.

Non-Partisan Analyst Exposes California High Speed Train’s Flawed Finances

     As often happens when pipe-dreams collide with reality, the California High Speed Train project has just experienced its second major set-back in just the last month. After cost projections for the train-to-nowhere were doubled just a few weeks ago, a new report from the non-partisan Legislative Analyst’s Office found that the high-speed rail plan “does not comply with key provisions of a ballot measure that voters approved,” according to the Los Angeles Times. The audit found that high speed rail officials must “must complete an environmental review and identify a corridor, a usable segment, all sources of committed funds and a schedule for the receipt of financing,” before any of the $9 billion that voters approved in 2008 can be requested, the Times reported.

Of course, none of these major failures were among the selling points when this boondoggle was pitched to voters three years ago. Similarly, no such prognostications of rapidly inflating costs and rapidly deflating benefits are being pitched with a similar ballot box boondoggle, the so-called California Cancer Research Act. This project, funded by a nearly $1 billion annual tax hike, duplicates existing programs, but still adds a brand new $16 million bureaucracy to California’s already bloated public sector. What’s worse is that this project’s spending continues year after year, regardless of whether the state can afford it or not.

     At a time when California is facing record level deficits, doubling down on the out-of-control spending that drove the state into the ground is surely not the way to go. Like working families across the nation, California bureaucrats should learn to live within their means.

Reckless Spending Initiative Just Perpetuates California’s Dysfunction

By Martha Montelongo

The big “news” from Sacramento this week is that the state budget is in trouble again. According to the nonpartisan Legislative Analyst’s Office, the state is going to come up $4 billion short of revenue projections this year. Now, massive cuts are on the table, including lopping off a full week of the school year.

But this week’s news wasn’t surprising: anyone who’s paid any attention to California’s budget drama already knew the $4 billion wasn’t going to show up. The state Legislature needed to pass a budget to start collecting their paychecks again, so they conjured up an extra $4 billion in projected revenue at the last second to meet the virtually useless requirement that they pass a “’balanced” budget. The budget – and the magical $4 billion – was just the latest way to kick the can down the road and refusing to deal with our state’s biggest budget problem: wasteful spending.

Decades of reckless overspending have put California in the dire position it’s in today. A Politicians and bureaucrats have fed at the public trough for years and years, larding up the state’s budget with perks, entitlements and wasteful spending programs. Making things worse, special interests have duped voters into creating countless new programs and spending mandates through the initiative process. The special interests pitch voters on the benefits of programs like stem cell researchor high speed rail, while very intentionally the neglecting to mention the rampant spending and bureaucracy these measures lock in, or the impact on our ability to pay for existing critical programs like education or public safety.

The latest ballot measure boondoggle is the so-called California Cancer Research Act, a ballot measure that’s going before voters this June. This measure would raises taxes by nearly $1 billion a year, just to duplicate programs that already exist. What’s worse, it mandates a whole new bureaucracy that can spend $16 million a year on overhead and $117 million every year on new buildings and facilities. This spending continues year after year, regardless of whether California can afford it or not.

Even worse, this new massive spending program is overseen by a new bureaucracy run by political appointees. But that isn’t surprising either: the measure is being pushed by a longtime career politician who used to run the state Senate. Who could be surprised that former legislator was the one to come up with a new spending program run by political appointees?

But the massive spending and bureaucracy in this boondoggle ballot measure is just the tip of the iceberg. Though this measure requires Californians to pay billions of dollars in new taxes, it doesn’t actually require the money to be spent in California! Our state already suffers from the worst business climate and some of the highest unemployment and tax rates in the nation, and now we’re being asked to pay more just to ship that money out of state? Of all the asinine policy prescriptions for the state, shipping California’s money across state lines has to rank near the top.

This measure has all the trappings of other projects sold to voters as magical cures to myriad woes that quickly devolved into good old-fashioned California money pits. Like high-speed rail and stem-cell research – or even the measure created First 5 LA, there is virtually no accountability and no guarantees that the new spending program has to deliver results. The fact is that this measure is just like the state’s lottery, where voters may never really know how much of the money goes into actual research not bureaucracy.

Our state didn’t find itself in our budget crisis overnight. Rather, California’s newfound standing as America’s Greece is the result of one boondoggle spending program piled on top of another. Politicians, in the thrall of the myriad special interests that run Sacramento, are only too happy to raise your taxes and spend more of your money. The only solution is restore fiscal discipline and sanity so that the state can begin to extract itself from the mess it’s in. Saying no to the latest ballot measure boondoggle next June ballot and this measure is a good place to start.


Voters beware the Salesmen who come with hat in hand, pitching shiny or miraculous services and benefits for a bargain bottom price and the promise of a profit–Your Wallets and blank checks are their target.

With a ballooning price tag and doubts about federal funding, it is increasingly obvious that voters were sold a bill of goods by the backers of California’s high-speed train to nowhere… 

“More grim news on $99 billion high-speed rail plan, as showdown looms”San Jose Mercury News

  “…the price tag for this risky transit gamble is now nearly $100 billion—more than twice the original estimate,”FoxandHoundDaily.com

George Runner, a member of California’s Board of Equalization and a former state Senator, in a post on an influential California political blog on Tuesday–“The new number is greater than California’s entire annual state budget. To fund the entire project today, every Californian, including men, women and children, would need to write a check for more than $2500.”  

When backers of high speed rail pitched the idea to California voters in 2008, they told Californians this project would pay for itself and even turn a profit in a few years. Today, three years and $60+ billion in higher cost projections later, it’s pretty clear backers weren’t being straight with California voters.

A similar dynamic exists with another measure, this one on the June 2012 ballot.

The so called California Cancer Research Act would increase taxes by nearly a billion dollars on Californians, to pay for another new government spending program and brand new bureaucracy to oversee it.

The CCRA’s backers – including one career politician who is behind the measure – are making a bunch of promises about the measure’s benefits.

Sound familiar?

Whether it’s high-speed trains or the latest tax and spend program with big-time benefits promised, Californians should have learned one thing about ballot measures by now: the promises are almost always too good to be true.