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.

Richard Rider calls Prop 29 a new high speed rail

California’s high-speed rail is a massive spending boondoggle from the 2008 ballot.  Its cost nearly doubled to about $100 billion while not a single mile of track has yet been laid?

Well, if you liked high-speed rail, you’ll love Proposition 29, coming to the California ballot this June.
High speed rail, said Richard Rider, Chairman of the San Diego Tax Fighters, at a recent appearance on San Diego’s NBC affiliate, “promised in writing that it was going to operate under certain restrictions and now does not.”

That’s because special interests, with no accountability to voters or to taxpayers, hijacked the process doling out favors to political cronies and driving up the cost. It’s a reminder, Rider explained that “the idea that we should be budgeting money at the ballot box has not worked well for us.”

Like high-speed rail, Prop 29 creates an unaccountable commission packed with political appointees. The decisions this commission makes over the nearly $1 billion in annual new taxes it will administer are untouchable for 15 years, not even in cases of waste, fraud or abuse. That means that even though California schools are laying off teachers, this special interest spending commission can dole out favors as it pleases, with no strict controls over spending. The fact is Prop 29 does nothing to fix California’s $10+ billion budget deficit but does everything to make sure that the reckless spending that got California into the fiscal mess it’s in will continue unabated.

Californians have a choice this June. Hopefully they’ll come to realize that decades of unsustainable spending on questionable projects put California in the sorry state it is today. Prop 29 is just more of the same for California—something the state just can’t afford.

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.

Boondoggle Projects Threaten California with Third World Status

Gov. Jerry Brown has an interesting definition of “third world.”

In an interview with a San Francisco radio station last week, Brown said California would become “a Third World country” unless the state builds a ghastly $100 billion high-speed rail line that’s been fraught with mismanagement, cost overruns and shaky ridership projections.

It’s an odd claim, considering many third-world nations are characterized by crumbling infrastructure, failed boondoggle projects and constant budgetary trouble. In much of the third-world, a new leader will pour massive amounts of a nation’s fortune into a single prestige project, only to have it fail when poor planning, bureaucratic incompetence and malfeasance slowly eat up all the funds.

By this definition, California seems currently on track to become America’s third-world state. Just like high-speed rail, the same spending lobby is promoting a nearly $1 billion per year tax hike so that a politically appointed panel can dole out favors to cronies. The $1 billion in new taxes under Proposition 29 goes into a lockbox that only this politically-influenced commission can access. Not even in cases of waste or abuse can the Governor or the Legislature make any changes! Proposition 29 sounds like it was plucked straight from the playbook of some Latin American dictator or Middle Eastern sheikh.

Jerry Brown ought to find the nearest dictionary. Pouring money into boondoggle projects while neglecting vital services like education and public safety is the surest way for California to join the third-world. Until California can figure out how to pay for what it already has, voters need to say no to more new spending.