California: What do you think about the current economic crisis there? - Tilted Forum Project Discussion Community

Cynthetiq · 07-10-2009, 11:59 AM

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View: The California Budget Crisis - Analyzing the Causes
Source: Politicsoftrust
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The California Budget Crisis - Analyzing the Causes
The California Budget Crisis - Analyzing the Causes

By Senator John Vasconcellos

Recognizing the devastation impending for my beloved California and its people, my conscience no longer permits me to remain silent regarding what accounts for our current budget crisis.

I was recently hospitalized with a life-threatening illness that took doctors several days to accurately diagnose. Until they fully understood the problem -- which turned out to be an antibiotic-resistant staph infection -- they couldn't prescribe the medication that would cure me.

The experience got me thinking about California.

Our state's protracted budget crisis sometimes seems unsolvable. But part of the problem may be that those who are trying to solve it don't fully understand its cause.

I represented the Silicon Valley for 38 years in the Legislature, and I chaired the Assembly Budget Committee for 15 of those years. As a result, I have some insights into our current crisis that may be useful.

As well as anyone, I know the history of our current crisis and believe Californians must understand its root causes in order to make wise decisions to solve it. My purpose here is to offer information which will empower Californians to wisely choose the most promising path forward.

The Current crisis is well-chronicled. The immediate problem, of course, is a $26-billion shortfall, which we must now plug if California is to pay its bills. But before we can fix things, we have to understand how we got to this point and that the consequences of inaction are catastrophic.

In fact, most of the draconian cuts being proposed are only going to cost us more in the long run. Reduced school days equals less learning, reduced higher education spaces and Cal-Grants limits the capacity of our work force to compete in the Global economy, and 81,000 fewer home care workers will send aging Californians into more expensive Nursing homes. Reducing 900,000 kids’ vaccines threatens our public health, eliminating our Cal-Works program makes 500,000 mothers and 1 million children destitute and closer to homelessness.

A combination of many factors has led to this perfect storm.

A good place to start is with the slew of revenue reductions that have hit the state since 1978, when Californians passed Proposition 13. The initiative dramatically reduced most property taxes and resulted in a 57% reduction in property tax revenue during its first year, and its effects continue.

Another revenue drop came in 1982, when voters passed an initiative abolishing the state inheritance tax. Before that, California had taken in nearly $1 billion a year in estate taxes.

And there are vehicle license fees. Starting in 1998, the fees were reduced incrementally as part of a bipartisan agreement to provide a benefit to the people while the state was experiencing good budget years and a surplus. The deal was that the fee reduction would remain in place until such time that revenues couldn’t sustain it, whence it would be restored.

One party reneged on the legislative deal to end the fee reduction after revenues declined significantly in 2003. When Arnold Schwarzenegger came into office later that year, he immediately reversed the hike Gray Davis had initiated administratively-- at a cost to state coffers of about $4 billion each year since then.

Add to that the collapse of the dot.com bubble in 2004 -- which resulted in a drop of several billion dollars in state revenues from capital gains taxes – add to that the current global economic downturn and you start to see how state revenues have suffered continuously and the perfect storm started brewing.

In addition, many leaders held unrealistic expectations regarding the continuing growth in the U.S. economy, which encouraged the Legislature and the people to enact other revenue reductions and tax breaks, even as the state’s population and needs grew.

Next, consider a series of structural complications that hamper the Legislature's ability to come up with solutions.

First among them -- again -- is Proposition 13, which requires a two-thirds vote of both legislative houses to raise taxes. This has meant that a small minority can keep the majority from enacting tax hikes that would help balance the budget. Specifically, the Senate Republican caucus reportedly operates by ‘The Rule of 8’ whereby all 15 of those men follow their caucus majority. The effect is that 8 male Republicans can thwart the aspirations of a majority of 39 million Californians.

Term limits, enacted by voters in 1990, were designed with good intentions. They would, their backers said, allow for more turnover in state government and more opportunity for worthy candidates who wouldn't have a chance against incumbents. But term limits have also meant that many legislators don't have deep experience in the state issues facing them. They also don't have enough time in office to develop relationships and trust among their fellow legislators that are inevitably required for any group to compromise and make tough decisions collaboratively.

The 2002 reapportionment deal further exacerbated matters by creating "safe" districts for Democrats and Republicans, which have largely ensured that people at the liberal or conservative extremes of their party are seated.

So, if those are the basic problems, whom should we hold accountable? Each and all of the following bear responsibility.

1- Our Governor, who despite his good heart and mind, apparently lacks a key capacity essential for becoming a superb Governor; that is the same proficiency in basic mathematics which he himself stated that anyone who believed this budget could be balanced by cuts alone, was lacking.

2 - Our Democratic Legislative Majorities’ failure to create a sufficient rainy day fund when the we were flush with cash, applying one-time revenues to ongoing programs (building the Prop 98 base perpetually), borrowing to protect services for needy Californians and being overly responsive to public employee unions, especially those in public safety.

3 – Our Republican Legislative Minorities’ who contrary to their predecessors who joined Governors Reagan and Wilson in meeting Democrats half way with some cuts and some revenues. All but one has signed the ‘no new tax’ pledge of Washington D.C. crusader Grover Norquist, whose stated ambition is to shrink government to “a size where it can drowned in a bathtub”.

Then after Republican leaders in both houses concluded that some revenues were essential to solving our current crisis, they were dumped by their respective caucuses.

4-6 – Campaign consultants, the media, trade associations and their advocates.

7 – We, the people of California, preoccupied with our own life’s challenges, absent good information, lacking trust in our Legislators, share the apparent lack of mathematics proficiency with the Governor and some responsibility for our crisis. We continue to enact initiatives that inhibit the ability of legislators to control a majority of our state spending, while continually demanding an unsustainable combination of increased services and lower taxes.

The people’s lack of understanding can be shown most recently by the passage last November, in the midst of a major recession and state budget crisis, or expensive initiatives authorizing a California high speed rail system and earmarking funds for Children’s Hospitals, further tying the hands of legislators needing to make tough decisions about spending priorities.

8 – The utter silence of Statewide civic leaders including; business, labor, seniors, faith, educational, and social; sitting on the sidelines voicing little public concern or leadership regarding California’s impending demise.

Finally, we appreciate especially these truths;

1 – Government is counter-cyclical. A good economy provides more taxes and reduces the need for services; a poor economy reverses that equation.

2 – The State of California is a political entity, the most populous of our 50 states. Moreover, California is a powerhouse economic entity, the 8th largest economy in our world. Most basically, California is a social and moral entity whereby we must continuously reevaluate our contract with each other.

3 - We who make our home here constitute a highly diverse, talented and creative community.

4 - There is no such thing as a free lunch! We’re going to get the kind of government we’re willing to pay for.

The cynicism and mistrust of legislators that can certainly be traced directly to the current dysfunction in Sacramento, resulting from systematic problems that have been created, at least in part, by the voters of California. The result has been excessive partisanship, a lack of legislative, institutional and historical knowledge, and the utter absence of trust, both among the legislators and between the public and their elected leaders.

That said, for better or worse, we are all in this together, and we can only prosper individually if everyone does. That means preparing our young people for a fulfilling life and respecting the dignity of our aging population. We cannot sit idly by while our children are left less educated and our elders are left unattended. Let us agree to take the high road and reach for the California dream, recognizing that it all of us working together and supporting each to accomplish it.

Let us choose wisely and act accordingly—and immediately. The State we love so much needs credible action, and soon.

I was born a California Native. I loved it for many years, and as I got older I found that I did not like some of the core politics and policies that were slowly eroding the quality of life that I was seeking.

As I said in a recent blog entry, one cannot run any business, household, or government for very long when the spending exceeds the revenue. It's a simple math formula at it's heart but gets quite complex as you add the different services and revenue streams, but ultimately the outgo cannot exceed the income in any sustainable model.

The cuts in taxes or revenue streams made great headlines, but they don't balance the budget or the books.

I was surprised to consider the idea of term limits making it worse, but I agree as it takes time to understand the politics, process and budget, but the time you really grasp it, your term is over. I have a long held belief that term limits are best handled by the voting booth.

I remember Prop 13 being passed. I remember the services that were cut, one of which was public government displays of fireworks for the 4th of July.

The above article I found via the OpEd in the LATimes today. Does anyone else have any insight or comment?

Willravel · 07-10-2009, 12:14 PM

What do I think about the current economic crisis in California? We overspent. There's not a lot of insight necessary. Politicians enjoyed the strong increase in tax revenue in the late 90s and early 2000s too much, spending more than even the new taxes could cover and not saving for the proverbial rainy day. It's pouring, and we're in a pickle.

The best way to fix this would be to carefully dial back spending after reviewing what money is going where and how efficiently that money is being spent (and legalizing and taxing marijuana couldn't hurt). Unfortunately, California Democrats are against spending cuts completely and California Republicans want California to basically be without a state government, meaning they can't come to a compromise. Because those bumbling fools can't figure out that we can balance the budget if both sides compromise a little, people are now getting IOUs instead of government checks.

All of that being said, I've taken a lot of flack for being a Californian lately and I think it's because people don't really understand that what happens in California generally reflects what's happening to the rest of the country. California has relatively less debt than the federal government, and several other states (New York, Massachusetts, Illinois and New Jersey) are well on their way to going bust right behind us.

hunnychile · 07-10-2009, 02:12 PM

My husband and I moved away from Napa, California 3 years ago because we saw what was "coming down" around us in California and we knew it was only going to get worse.

It has. When we lived there, we loved the natural beauty around us in Marin & Napa Counties & cool insightful people, but knew that the economic bubble was ready to burst. Furthermore, who in their right mind wants to purchase over-valued real estate on top of 4+ major Fault Lines? No thanks. Plus, we became sick and tired of our tax dollars paying for all the illegal alien's babies, welfare families and uneffective healthcare in general. We returned to Ohio (for various family reasons) and at least the cost of living is far more realistic and affordable. Everything is less expensive here & I'm investing in land at this time.

So far I think my plans will reward me in the end.

Seaver · 07-10-2009, 05:35 PM

The population was given the direct vote over everything. They voted to lower taxes at every turn and increase spending at every turn. I always liked the Texas Constitution in which the budget for 2 years is set, and is not allowed to go into deficit outside of war. In my opinion, we need a Federal mandate to follow up with the bipartisan "pay-as-you-go" policy (warfare and emergency situations exempting) which unfortunately Bush and Obama both choose to ignore.

Willravel · 07-10-2009, 05:58 PM

You're making the mistake that liberals are often accused of: you're assuming the federal government can succeed in matters that states fail in. Such a federal mandate might be smart, but it would never pass simply because there are too many fiscal conservatives and too many people that stand to profit from the state going deeper into debt.

dksuddeth · 07-10-2009, 06:24 PM

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Originally Posted by Willravel

You're making the mistake that liberals are often accused of: you're assuming the federal government can succeed in matters that states fail in. Such a federal mandate might be smart, but it would never pass simply because there are too many fiscal conservatives and too many people that stand to profit from the state going deeper into debt.

I'm sorry, are you intimating that fiscal conservatism has states budget bankruptcy as part of its agenda?

Seaver · 07-10-2009, 06:33 PM

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Such a federal mandate might be smart, but it would never pass simply because there are too many fiscal conservatives and too many people that stand to profit from the state going deeper into debt.

Um... fiscal conservativism is what saves government from this situation... not what causes it. Republican does not always mean fiscal conservativism unfortunately.

Willravel · 07-10-2009, 06:49 PM

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Originally Posted by dksuddeth

I'm sorry, are you intimating that fiscal conservatism has states budget bankruptcy as part of its agenda?

I'm suggesting that there are two groups that would stand in the way of such legislation, the proponents of state rights and those that are profiting from the situation. I'm not suggesting these are the same people.

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Originally Posted by Seaver

Um... fiscal conservativism is what saves government from this situation... not what causes it. Republican does not always mean fiscal conservativism unfortunately.

Most fiscal conservatives are also strong proponents of state sovereignty. The federal government gaining any control over the state's budgets would be opposed by most conservatives without a second thought. Frankly, I'm surprised you even mentioned it.

Seaver · 07-10-2009, 07:25 PM

I'm not saying the Federal Government should inject in the State Budget. I think all 3 governments, federal/state/local, should be free to decide their own fiscal futures. I just also think it's very dumb to allow any of these go into the red year after year for no reason other than wanting everything and never paying for it beyond IOU's.

Severe emergencies or war are the only reasons to go into debt. And they should be repaid asap to allow a strong economy and never have to fear the purse-strings of those who buy your debt.

Willravel · 07-10-2009, 08:02 PM

OH, were you speaking about the federal budget when you said:

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Originally Posted by Seaver

we need a Federal mandate.....

I thought you meant we needed one for California. I misunderstood.

aceventura3 · 07-11-2009, 10:29 AM

I am one of the 2.5 million who moved out of California between 2005 and 2007, I think about 1.5 moved in, but still resulting in a net loss not including the birthrate and who knows how many illegals. The people who moved out of California tended to be small/medium sized business owners with their businesses and middle class jobs. The state has been moving in the direction of being two classes, the filthy rich and the really poor, with a diminishing middle class. The answer to reversing this trend is simple - stop treating business like the enemy.

Willravel · 07-11-2009, 11:13 AM

We don't generally treat anyone like they're the enemy, including small business. I'm in a "small business" right now and no one is making an enemy of us. We're doing just fine.

Marvelous Marv · 07-11-2009, 04:10 PM

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Originally Posted by aceventura3

I am one of the 2.5 million who moved out of California between 2005 and 2007, I think about 1.5 moved in, but still resulting in a net loss not including the birthrate and who knows how many illegals. The people who moved out of California tended to be small/medium sized business owners with their businesses and middle class jobs. The state has been moving in the direction of being two classes, the filthy rich and the really poor, with a diminishing middle class. The answer to reversing this trend is simple - stop treating business like the enemy.

QFT. What amazes me, although it shouldn't anymore, is the philosophy by our Democratic legislators: "What, people are broke, and businesses are going under? I know, let's raise taxes! No one would consider leaving the state!"

When every successful person/company has left California, maybe it will occur to someone that you can't save every shipwreck victim by sinking all of the lifeboats. You especially can't save the ones who think it's their right to have someone else swim some waterwings out to them, and hold their heads above water until they feel like swimming for themselves.

aceventura3 · 07-11-2009, 04:13 PM

Quote:

Originally Posted by Willravel

We don't generally treat anyone like they're the enemy, including small business. I'm in a "small business" right now and no one is making an enemy of us. We're doing just fine.

There has been a significant exodus from California. Many people ignored the concerns and issues of those of us who left. Now you pretend like there is or was no problem.

California neighbors one state with no state income tax.
California neighbors another state were the typical workers compensation premium for some classifications is/was 50% to 75% less.
Just to formulate an entity in California to do business, like an LLC or a corporation costs close to $1,000 in fees/taxes even if the entity had no profits. Compare that to Nevada.
The minimum wage is higher in California than in any other state.
The income tax rate is higher than in most states.
Regulatory standards are harder to comply with.
Doing business in California meant that it is not a question of if you are going to be sued, but when.
The business owner is treated like shit in unemployment compensation appeals, I never talked to a business owner who won a hearing.

Those points don't even touch on the costs to do business in the state, like higher gas prices, electricity, rents, time lost in traffic, poorly prepared to work employees, and a few other things.

Willravel · 07-11-2009, 05:34 PM

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Originally Posted by aceventura3

California neighbors one state with no state income tax.

You want us to legalize gambling? I don't think most Californians would be okay with that.

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Originally Posted by aceventura3

California neighbors another state were the typical workers compensation premium for some classifications is/was 50% to 75% less.

I'm not quite sure why this is, I'm going to have to check into it.

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Originally Posted by aceventura3

Just to formulate an entity in California to do business, like an LLC or a corporation costs close to $1,000 in fees/taxes even if the entity had no profits. Compare that to Nevada.

Still, starting a business in California means you're entering a much larger and more active market basically across the board. Also, if you don't have $1000 you may not have enough money to start your own business.

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Originally Posted by aceventura3

The minimum wage is higher in California than in any other state.

As are most wages.

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Originally Posted by aceventura3

The income tax rate is higher than in most states.

Overall, yes, but mostly that's because we tax the rich more than other states. And “income taxes aren’t driving the highest income households” from the state.

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Originally Posted by aceventura3

Regulatory standards are harder to comply with.

Can you elaborate on this one?

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Originally Posted by aceventura3

Doing business in California meant that it is not a question of if you are going to be sued, but when.

This seems like hyperbole.

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Originally Posted by aceventura3

The business owner is treated like shit in unemployment compensation appeals, I never talked to a business owner who won a hearing.

You're assuming that these rulings are all unfair simply because they go against your economic principles.

Cynthetiq · 07-11-2009, 05:55 PM

Will, they had been alienating business via higher taxation and regulation.

Are you telling me that Prop 65 is not alienating business and at the same time scaring consumers?

I'm working on a small business now, and if I get to pick between the two states, I'm picking Nevada. Between the tax savings and the savings in labor costs, benefits etc. it's much better.

Quote:

View: Proposition 65 and Food
Source: Abanet
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Proposition 65 and Food
Proposition 65 and Food
You Have Now Been Warned
By Jennifer Yu Sacro
Perhaps you've seen it posted in a California hotel lobby or gas station during a recent business trip:

WARNING: This area contains a chemical known to the State of California to cause cancer and birth defects or other reproductive harm.

You think about the message for a couple of seconds and assume that the chemical referenced is secondhand smoke, petroleum, or some other compound that you already expected to be present in that area. Having seen warnings like this more than once, and in a variety of places, you probably also don't give the warning too much thought.

But what if you represent a company that sells products in California and your client receives a letter from a California private attorney general notifying it that its products contain a chemical known to the state to cause cancer or reproductive harm and that, under California's Proposition 65, the company is required to warn California consumers that its products contain such a chemical. Even worse, what if the products your client sold were food items? In the last 10 years, the issue of Proposition 65 warnings with respect to foods has become an increasingly hot topic of debate and litigation. This article provides a brief overview of Proposition 65 and summarizes key Proposition 65 litigation involving food products.

What Is Proposition 65?
More formally known as the Safe Drinking Water and Toxic Enforcement Act of 1986, Proposition 65 is a California ballot initiative approved by voters that requires businesses to notify California consumers about the presence of certain chemicals in their products and prohibits California businesses from knowingly discharging certain chemicals into sources of drinking water.

The chemicals at issue are those "known to the state to cause cancer or reproductive toxicity" and are identified in a list that is updated and republished by the governor on a regular basis. A chemical is listed through one of several ways: (1) one of the state's two committees of scientists and health professionals—i.e., the Carcinogen Identification Committee (CIC) and the Developmental and Reproductive Toxicant Identification Committee (DARTIC)—finds that the chemical clearly has been shown to cause cancer or reproductive harm; (2) an organization deemed authoritative by either CIC or DARTIC finds that the chemical causes cancer or reproductive harm; or (3) a state or federal agency requires that the chemical be labeled as causing cancer or reproductive harm. Substances identified by reference in California Labor Code § 6382(b)(1) and (d) also are required to be included in the Proposition 65 chemical list, though it is unclear whether the requirement applied only to the initial Proposition 65 chemical list or whether it applies on an ongoing basis to every Proposition 65 chemical list that may be published.

Businesses selling products that expose consumers to a listed chemical must provide a "clear and reasonable" warning to California consumers that the products contain a chemical known to the state to cause cancer or reproductive harm or they must be able to demonstrate one of three things: (1) the existence of a federal law that governs warnings applicable to the exposure in a manner that preempts state authority; (2) that the exposure took place less than 12 months after the chemical in question was added to the Proposition 65 chemical list; or (3) that the exposure is "not significant." If a warning is necessary, it may be issued in various forms—e.g., a label on the product, a sign at the workplace, or a notice in a newspaper—subject to specific requirements listed in the regulations. Businesses that do not provide the requisite warning may be subject to a civil lawsuit by the California attorney general or any individual acting in the public interest and face stiff penalties as high as $2,500 per violation. The state agency charged with implementing Proposition 65 is the Office of Environmental Health Hazard Assessment (OEHHA).

Key Cases Involving Food
Improvements in chemical testing and scientific research on cooking have led more and more enforcement groups to set their sights on the food industry. Indeed, some of the Proposition 65 cases in recent years involve foods that are staples of the American diet—meat, potatoes, fish, and dairy products.

One of the first food items to be implicated in a Proposition 65 enforcement action was cheese. In 1997, the Working Group on Carcinogenic and Immune Suppressing Chemicals (Working Group) issued a Proposition 65 60-day notice of violation against cheese manufacturers and retailers including Altadena Dairy, Kraft Foods, and Sargento Cheese Co. The Working Group alleged that these companies failed to warn consumers that their cheese products contained diethylhexyl phthalate (DEHP). DEHP is a plasticizer commonly used in building products, medical devices, and food packaging such as plastic cling wraps, adhesives, food container seals, and inks. The Working Group alleged that DEHP in plastic wrappers on packaging materials leached into the cheeses that the defendant companies sold to Californians. Although no lawsuit or warning resulted from the notice, the resulting media attention raised public concern regarding the presence of Proposition 65 chemicals in foods.

Bottled water also has come under Proposition 65 scrutiny. In 1999, the Environmental Law Foundation sued water bottlers such as Crystal Geyser, McKesson Water Products, and Vittel because their bottled water allegedly contained some Proposition 65 chemicals, including arsenic. One Proposition 65 enforcement group has theorized that such chemicals got into water supplies from industrial pollution. The notice led to litigation, which ultimately was settled in 2000.

Another food item that has become a focus of Proposition 65 litigation is fish. In 2001, the Public Media Center brought a Proposition 65 suit against tuna canning companies like Tri-Union Sea Foods, Bumble Bee Sea Foods, and Del Monte because their products allegedly contained unacceptable levels of methyl mercury. Methyl mercury, which is a chemical found in the ocean, bioaccumulated in tuna over time. Following a bench trial, the court issued a decision comprised of three key rulings in favor of the tuna canning companies. First, the court found that Proposition 65's warning requirement with respect to methyl mercury in canned tuna conflicted with the Food and Drug Administration's (FDA) "carefully considered" policy of advising consumers about both the benefits and risks of eating fish and recommendations concerning the frequency with which tuna products may safely be consumed by women of childbearing age and pregnant women. By contrast, a Proposition 65 warning would communicate only the risks associated with consumption of tuna and, thereby, frustrate the FDA's more balanced approach to this issue. Because of this conflict, the court held that federal policy preempted Proposition 65's warning requirement. Second, the court found that the tuna canning companies sufficiently demonstrated that the exposure of the average woman of childbearing age and/or pregnant woman to methyl mercury in canned tuna was at levels lower than the maximum allowable dose level for methyl mercury under Proposition 65. Finally, methyl mercury in canned tuna was naturally occurring, i.e., the chemical was not present in the food as a result of human activities and was found in the food at the lowest level currently feasible. For these reasons, the tuna canning companies were not required to warn consumers about methyl mercury in their products and had no liability under Proposition 65. This decision presently is under review by the court of appeal. Meanwhile, another Proposition 65 lawsuit had been filed against large grocery stores and restaurant chains that served tuna, swordfish, mackerel, and other sport fish that contained methyl mercury. This suit, however, has been stayed pending the court of appeal's decision in the tuna canning case.

Then came the candy and vinegar cases. In 2002, the American Environmental Safety Institute (AESI) filed a lawsuit against several chocolate manufacturers including Mars, Hershey's, Nestle, and See's Candies because their chocolate products contained lead. AESI initiated litigation despite a letter from the California attorney general's office in 2001 stating that they have investigated the matter and concluded that no warning under Proposition 65 was required because the lead present in chocolate products was naturally occurring. After over a year of litigation, AESI settled with the chocolate manufacturers.

In 2004, the Environmental Law Foundation, the Center for Environmental Health, and the Environmental Health Coalition filed Proposition 65 lawsuits against manufacturers and distributors of Mexican candies and vinegar. Apparently, various Proposition 65 enforcement groups had commissioned tests that showed that lead also was present in these food items. After a couple years of litigation, those cases settled as well.

Potato products also have become a focus of Proposition 65 litigation. In 2002, Swedish scientists discovered that many foods when cooked formed acrylamide—a chemical compound used in making plastics, grouts, water treatment products, and cosmetics. Acrylamide is found in virtually every item on the breakfast menu—breads, cereals, coffee, fried potatoes, and prune juice—as well as grilled asparagus, cookies, crackers, and canned black olives. A week after the Swedish data were announced, the Council for Education and Research in Toxics (CERT) sent a notice of intent to sue, and eventually sued McDonald's and Burger King for failing to warn consumers that their french fries contained acrylamide. In 2005, the California attorney general filed a separate lawsuit against the two companies as well as additional restaurant chains and potato chip manufacturing companies. CERT and the California attorney general ultimately settled those cases.

More recently, enforcement groups have targeted grilled meats. In 2006, veteran Proposition 65 plaintiff Whitney Leeman and the Physicians Committee for Responsible Medicine filed lawsuits against numerous restaurant chains for failing to warn Californians that their flame-broiled and grilled meat products contained polycyclic aromatic hydrocarbons (PAHs) and PhIP (i.e., 2-Amino-1-Methyl-6-Phenylimidazol[4,5-B]Pyridine). PAHs are chemical compounds formed during the burning of coal, oil, gas, wood, and other organic substances and are used to make dyes, plastics, pesticides, and asphalt. In meats, PAHs are formed when the fat drips onto a hot surface and the resulting smoke, which contains PAH, is deposited back into the food. PhIP, on the other hand, is formed directly in the meat as a result of grilling and broiling. While some of those Proposition 65 cases have settled, other suits remain in active litigation.

Conclusion
The application of Proposition 65 to food items raises concerns for the industry for several obvious reasons. First, no manufacturer, restaurant, or grocer wants to tell its customers that its food products contain ingredients that the state of California believes are cancerous or cause reproductive harm. Second, while most Proposition 65 enforcement actions ultimately settle, resolving such actions—whether through litigation or a settlement—costs both money and time.

Unfortunately, food probably will continue to be a focus of future Proposition 65 litigation. For one thing, the Proposition 65 chemical list is steadily growing. The list, which in 1987 contained approximately 85 chemicals, now has expanded to include roughly 700 compounds. Beginning in 2000, the list has grown at an approximate net rate of eight chemicals per year with approximately 76 chemical compounds being added and only seven chemicals being delisted. Additionally, the technology used to detect different chemical compounds at lower and lower levels has been rapidly improving. Advances in analytical methodologies have made it cheaper, simpler, and faster to analyze a greater variety of chemical compounds in foods at nanogram and picogram levels for larger amounts of samples. Given the increasing number of Proposition 65 chemicals and the technology available to detect compounds at trace levels, there is a good chance that even more Proposition 65 chemicals will be discovered in food items.

What can members of the food industry do to address Proposition 65 concerns?
1. Don't be caught by surprise. Monitor the Proposition 65 list and participate in the regulatory process. Businesses that take a proactive approach to Proposition 65 and take advantage of opportunities to participate in the regulatory process ultimately may be more successful in addressing Proposition 65 issues than businesses that pay little or no attention to Proposition 65 issues until they receive a notice letter from an enforcement group. Proactive businesses, for instance, will be better informed about the current state of food and health science relevant to their products as well as OEHHA's current and anticipated regulatory activities. Greater knowledge in these areas will provide companies with more options in addressing Proposition 65 concerns and a longer time frame within which to consider different business and legal solutions.

With respect to chemicals relevant to their products, companies should consider participating directly or through trade associations in the comment process concerning contemplated listings. Even if CIC or DARTIC ultimately decides to recommend a chemical for listing, it still may be useful for companies to participate in the public hearings in order to develop an administrative record that may later help establish defenses to a Proposition 65 enforcement action.

Companies also should participate in OEHHA's ongoing process of evaluating Proposition 65's continued application to food. In April 2008, OEHHA announced that it was forming a working group comprised of stakeholders to assist it in drafting possible regulatory language to address warnings for exposures to listed chemicals in foods. In December 2008, following conferences with the working group, OEHHA announced that it will begin drafting such regulatory language this year. Companies that have not taken part in the workshops still have an opportunity to participate in the regulatory process by providing input during the notice and comment period.

2. Know the rules. Understand the limitations of Proposition 65, particularly as they apply to food. The warning requirements have some key limitations. For instance, no warning is required for certain chemical exposures caused by "naturally occurring" chemicals in the food. Chemical contaminants that occur naturally are only exempt from the warning requirement if they are found in amounts that are "at the lowest level currently feasible," and much litigation has arisen over the meaning of this phrase. As mentioned above, authorities have applied the "naturally occurring" provision to exempt tuna canning companies and chocolate manufacturers from having to warn consumers of methyl mercury and lead in their products.

Additionally, the regulatory definition of the "no significant risk" level is more flexible in cases where the chemical at issue is produced by cooking necessary to render the food palatable or to avoid microbiological contamination. This alternative standard would apply, for instance, to the carcinogen exposure issues in the grilled meat cases.

Further, a warning is not required when the chemical exists at or below the "no significant risk" level. This level basically is one of two numbers—the "safe harbor" established by the State of California as a default or the level of exposure the company can demonstrate presents no significant risk of cancer or reproductive toxicity. Companies that seek to establish this alternative level, however, must do so using a quantitative risk assessment that meets certain regulatory criteria.

3. Stay ahead of enforcement groups. Know your product. It is prudent for businesses to stay abreast of relevant scientific developments and periodically reevaluate previous conclusions they may have reached regarding their product's contents. Products that contain known Proposition 65 chemicals normally should undergo some type of Proposition 65 compliance assessment.

4. Stay in touch with the FDA. If a company believes that a Proposition 65 warning would be misleading as it relates to a particular food product, it should consider discussing its concerns with the FDA or another federal agency with appropriate expertise. The FDA obviously has expertise over food and health issues that likely will be given some deference by OEHHA and California courts. In connection with the canned tuna case, for instance, the then-FDA Commissioner, Lester Crawford, wrote to the California attorney general to convey the FDA's view that there is no scientific basis for requiring warning labels on tuna products and that the lawsuits could have "adverse public health consequences." The letter ultimately helped secure a trial victory for the tuna canning companies.

Seaver · 07-11-2009, 07:39 PM

Quote:

'm not quite sure why this is, I'm going to have to check into it.

It has to do with Cost of Living. I got a 50% pay raise (yeah, I was pretty happy) when my company promoted/moved me from Texas to Chicago. Well, after everything was factored in it was only a 10% take home increase.

Cost of living was a $9k/year difference.
No Income Tax in Texas, 2nd highest in nation for Illinois
Cost of goods increased significantly on all products as a result of higher CoL.

Same for Cali. A Micro-Test would be compare El Centro Cali (used to live there) to San Diego. Don't just factor rent/mortgage, but look at cost of goods. It's very significant between the two, much like states bordering Cali are even more so.

Slims · 07-11-2009, 07:50 PM

It has to do with paying for things they cannot afford.

When I get hit with unexpected expenses, lose my job (though it hasn't happenned recently), etc. I stop spending so much money.

Instead I spend my money on conserving what I already own, basic necessities, and on finding a new job.

The same principle *Should* apply to California and the country as a whole.

---------- Post added at 11:50 PM ---------- Previous post was at 11:50 PM ----------

It isn't like this is a sudden, over night surprise. California has been going downhill because their leadership lacks the backbone to stand up against the blathering masses who have realized they can vote for anything they want...for a while.

Cynthetiq · 07-12-2009, 09:40 AM

After taking up the ass in California, small business owners that actually do business with the State, are bending over yet again.

Times are already lean and it used to be said, you can count on government to commit to it's debts always. Doesn't seem like it that much. Waiting from July until October is enough to kill any small business.

Quote:

View: California vendors fight for their cash
Source: CNNMoney.com
posted with the TFP thread generator

California vendors fight for their cash
California vendors fight for their cash
Small business owners plan layoffs and furloughs if they're saddled with hard-to-redeem IOUs.
By Maggie Overfelt, CNNMoney.com contributing writer
July 12, 2009: 10:00 AM ET

NEW YORK (CNNMoney.com) -- As if struggling to stay afloat during a faltering economy isn't difficult enough, hundreds of small business vendors that rely on contracts with California are facing another hurdle: There's a good chance the state won't be paying any of their invoices this month.

After the state legislature failed to agree on budget solutions earlier this month to close a $26 billion gap, California started issuing IOUs for a variety of payments it owes -- including most of its vendor bills, personal income tax refunds, and funding for local governments. "This means that the state is casting off its cash-flow problems onto hundreds of families and small businesses in California," says Jacob Roper, a spokesman for the state controller's office.

So far, California has mailed $354 million worth of IOUs and plans to issue a total of $3 billion by the end of July. Around $140 million of the warrants are expected go to small business owners. While the state controller's office won't say exactly how many small companies will be affected, it's likely to be a big number: The state's department of general services says it holds $2.7 billion worth of annual contracts with at least 14,000 small companies, most of them California firms.

Affected business owners say they're in uncharted territory.

"We've never seen this before -- never had anything happen where we didn't get money from the state," says Gary Button, vice president of Redwood Debris Box Service in Burlingame, Calif., a firm that provides garbage and recycling containers for the state's department of transportation. State work only accounts for about 3% of Redwood Debris' business, but Button is expecting an IOU any day, which he says he will hold on to until it matures.

"I'm not going to cash it in for less than it's worth," says Button.

The state plans to redeem the IOUs, with a 3.75% annual interest rate, on October 2, or earlier if a budget deal is signed. But many small firms -- especially those that do the majority of their business with California -- can't wait that long.

"We've already been delayed by six months in payment from the state -- and now we're expecting one of those IOUs," says Gloria Freeman, owner of Staff USA, a firm in Rocklin, Calif. Contracts with the state account for 80% of her firm's annual revenue. "The real problem is not knowing how long it will take them to resolve this issue."

Staff USA provides medical staffing for various state-run divisions, and Freeman says that California owes her hundreds of thousands of dollars, much of that for services she rendered early this year. In anticipation of receiving an IOU instead of money, Freeman has laid off five employees. Searching for a new cash stream, she recently launched a new online auction business, Auction Ten, that helps consignors sell antiques and collectibles.

While she hopes that Auction Ten sales will help supplement her income, Freeman has found another use for the site. "I'll be auctioning off IOUs for people who don't want or can't redeem them via the bank," she says.

Most small businesses hope to cash in their IOUs at a bank, a process that's turning out to be difficult. Initially, all major California banks said they would honor the IOUs by charging customers a small processing fee, paying out the face value, then taking over the interest. However, the state's largest banks, including Bank of America (BAC, Fortune 500) and Wells Fargo (WFC, Fortune 500), later imposed a deadline. They stopped accepting the IOUs on Saturday.

That's a big problem for small vendors who had no hope of making the deadline because they haven't yet received the warrants they're owed. The state controller's office says there's no pecking order for issuing them; the state pays them out as bills come due.

By enforcing a deadline, the big banks hope to pressure California to make progress fast. "The message that they're sending is that the budget needs to be solved sooner rather than later," says Beth Mills, a spokeswoman for the California Bankers Association. "These banks don't want to be seen as enabling the Legislature."
Redemption options

A number of California's community banks and credit units plan to accept the IOUs indefinitely, but in many cases, the terms are tough.

"My community bank will redeem the IOU for a fee, but I have no choice but to do it," says the owner of an 11-person firm who asked not to be named. "It's not worth my while to wait for this thing to mature. I'd be losing money." His company, which does $10 million in annual business with the state, has been providing goods to prisons, state hospitals, and schools for more than 20 years. This is the first time he's been confronted with an IOU.

"If this situation continues to force us to take losses, I'll have to look into furloughing employees and laying some off," he says. Even before the latest crisis, California was firing off distress flares: Last month, he received a letter from the state asking if he would consider voluntarily reducing his company's charges by 15%.

The California Credit Union League reports that most of its member unions are willing to honor the IOUs, but at many branches, new clients would have to open an account to be able to cash in the warrant. The unions say they're offering as much flexibility as they can: Some are considering modifying the terms of loans they're made to small businesses affected by the IOU situation.

"We're a little different from banks," says Jim Ott, CEO of UNCLE Credit Union, a mid-size union based in Livermore, Calif. "We want to be able to help our members."

As a last resort, cash-strapped companies may be able to redeem the IOUs at check-cashing storefronts or via online marketplaces such as Craigslist or eBay (EBAY, Fortune 500), but small business advisors warn against that because of the large fees and face-value discounts that would be incurred.

"I would automatically find a bank that will redeem the IOU for 100 cents on the dollar rather than taking a haircut by going to a check-cashing facility," says Donna Childs, a business consultant and author of Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses. While businesses selling the IOUs might be able to haggle and receive close to face value, the California State Treasurer's office has mandated that the transactions must be accompanied by a notarized bill of sale signed by the payee whose name appears on the IOU.

For vendors that need cash sooner rather than later, losing a few bucks due to exchange fees might be the least of their worries. If California doesn't resolve its budget crisis soon, many more small companies will end up caught in the political crossfire.

"The level of rhetoric between the governor and the legislature has been very high," says Peter Iannone, a director at the Los Angeles office of CBIZ MHM, a national accounting firm that consults for many small businesses. "So far I haven't seen a lot of indication that they know how to figure this out."

aceventura3 · 07-12-2009, 10:23 AM

Quote:

Originally Posted by Cynthetiq

Will, they had been alienating business via higher taxation and regulation.

Are you telling me that Prop 65 is not alienating business and at the same time scaring consumers?

I'm working on a small business now, and if I get to pick between the two states, I'm picking Nevada. Between the tax savings and the savings in labor costs, benefits etc. it's much better.

I remember when I was in California there was Prop. 65 scam being done by some dishonest attorneys. I don't remember all the details, but it was based on the assumption that most businesses could not possibly be in compliance, they would send thousands of randomly generated letters to business owners threatening a lawsuit (because anyone could file a lawsuit), or to settle out of court.

Quote:

"Without the warnings on listed products, private legal bounty hunters can sue those companies in violation of Prop 65, even though no harm from the products is ever demonstrated, and exact enormous legal and other costs.

CA Prop 65

Even a landlord, a person who rents apartments or homes is subject to posting Prop 65 notices or could be in violation of the law. Of the list of "chemicals" on the list, you could not find many, if any, commercial activities not subject to Prop 65. Even to this day, I would bet the vast majority do not even know they have an obligation or are at risk of a lawsuit.

---------- Post added at 06:23 PM ---------- Previous post was at 06:14 PM ----------

Quote:

Originally Posted by Willravel

I'm not quite sure why this is, I'm going to have to check into it.

Work comp. fraud, and the rules in the state that are unfairly favorable to those who want to exploit the system. And let's not forget the lawyers. They take about 1/3 of a settlement, even in cases were they add no value. there are also rings of lawyers, clinics, doctors, vocational rehab programs, etc, that scam, not only insurance companies, but every honest person in the state pays a cost for it.

Willravel · 07-12-2009, 10:38 AM

Quote:

Originally Posted by aceventura3

Work comp. fraud, and the rules in the state that are unfairly favorable to those who want to exploit the system. And let's not forget the lawyers. They take about 1/3 of a settlement, even in cases were they add no value. there are also rings of lawyers, clinics, doctors, vocational rehab programs, etc, that scam, not only insurance companies, but every honest person in the state pays a cost for it.

After looking into it, it seems Seaver's explanation stands up to scrutiny better than your systemic fraud theory. Looking at wc rates across the country, they seem to change based on the cost of living. Unless you're going to suggest that California workers are simply more corrupt than workers from other states—which is an offensive and (more importantly) unsupportable position—I think you have to look at cost of living to explain the cost of wc.

Cynthetiq · 07-12-2009, 10:58 AM

Quote:

Originally Posted by Willravel

After looking into it, it seems Seaver's explanation stands up to scrutiny better than your systemic fraud theory. Looking at wc rates across the country, they seem to change based on the cost of living. Unless you're going to suggest that California workers are simply more corrupt than workers from other states—which is an offensive and (more importantly) unsupportable position—I think you have to look at cost of living to explain the cost of wc.

I don't know about him, but the entire process is corrupt.

Here's an LATimes Article from 2000 that describes the issues from the previous decade. If anything, it has not been fixed in the great state of California.

Quote:

View: Public Fraud Unit Favors Those Who Privately Fund It
Source: LATimes.com
posted with the TFP thread generator

Public Fraud Unit Favors Those Who Privately Fund It

Public Fraud Unit Favors Those Who Privately Fund It

By TED ROHRLICH, TIMES STAFF WRITERS and EVELYN LARRUBIA, TIMES STAFF WRITERS
August 06, 2000

The Los Angeles County district attorney's office has for nearly a decade operated with a built-in potential for a conflict of interest stemming from its acceptance of private money to pay for public prosecutions of workers' compensation insurance fraud.

When defense lawyers challenged this use of private funds, which was authorized by the state Legislature, prosecutors said not to worry: Their judgments were independent. Appellate courts agreed with prosecutors that there was no actual conflict of interest.

However, a review of prosecutors' performance shows that their decisions--on whom to investigate and on whom to prosecute--have consistently favored those who provide them with money.

The money originates with the state's employers and is handed out by employers and insurers. It is supposed to combat workers' compensation fraud in all its forms--whether committed by employers, insurance companies or workers.

But the district attorney's office has downplayed employer fraud and repeatedly ignored evidence of possible crimes by insurance companies. At the same time, it has cracked down hard--and sometimes unjustly--on the workers whom insurance companies and employers accuse of lying about on-the-job injuries.

A case in point is that of Indravadan Jayaswal.

The district attorney's office had the middle-aged clerk handcuffed at work and taken to jail after he filed a workers' compensation claim for his aching back, arm and neck.

Jayaswal was experiencing classic symptoms, one of his doctors said, of a "clerical workers' sickness" caused by the repetitive stress of spending all workday, every workday, typing on a computer. He was, therefore, his doctor said, entitled to workers' compensation benefits.

But Jayaswal had not at first claimed that his ailments were work-related.

He said he was afraid he would be fired if he claimed to have been injured on the job. So, when pressed, he said he told his doctors initially that he had experienced pain lifting his garage door.

An insurance adjuster seized on the garage door statement as evidence that Jayaswal was lying when he later attributed his injuries to work.

Without asking him to explain, prosecutors charged him with the felony of lying to collect benefits.

Compare that to the way prosecutors handled what they regarded as lies under oath by some of their benefactors.

District attorney officials said they collected evidence that seven insurance company executives had perjured themselves in reports to state regulators.

The executives overstated the extent to which their companies were financing their own legally required efforts to ferret out fraud. The district attorney's office was almost wholly dependent on these efforts as the source of its workers' compensation fraud cases.

Although the head of the D.A.'s anti-fraud effort routinely prosecuted workers for lying under oath, he said it did not occur to him to apply the same standard to the insurance executives.

He did not see them as his targets. Nor did his office.

The extent to which prosecutors had abandoned even the possibility of going after insurers was made clear in a 1998 job advertisement for the workers' compensation anti-fraud unit. "The suspects we investigate," said the ad, issued by Chief Deputy Dist. Atty. Robert P. Heflin, "include workers, employers, doctors and lawyers."

The ad did not even mention the possibility that insurance companies could be charged with crimes.

The unit's priorities are evident at a glance:

In eight years, it has spent $38 million in private funds.

It has prosecuted more than 250, mostly low-paid workers, fewer than 20 lawyers, doctors or other medical personnel and about two dozen employers, all of them small or medium-sized.

It has prosecuted exactly zero insurance companies.

Good Intentions

The idea behind using private funds to fight workers' compensation insurance fraud was to put unscrupulous doctors and lawyers behind bars.

These doctors and lawyers bilked a system designed to speed benefits to injured workers. Workers could pick any doctors they wanted. Employers, through their insurance carriers, were stuck paying the bills.

Doctors were making a mint because of unique California laws that gave them special incentives to inflate their bills and required insurers and employers to pay for initial evaluations whether workers turned out to be injured or not. Doctors in California collected five to six times what they did in other states for these evaluations.

That wasn't enough for some doctors and lawyers, who paid recruiters to troll unemployment insurance lines, telling laid-off workers that they would be better off if they claimed that they had been injured on the job.

Insurance companies rarely challenged these fraudulent claims, electing instead to pay them and pass the costs along to their employer-customers.

These activities caused a genuine fraud crisis in Southern California in the late 1980s and early 1990s, resulting in steadily increasing insurance premiums for businesses already struggling in a recession.

Employers organized and got the attention of state legislators by screaming that they couldn't afford to pay these higher premiums and threatening to leave California if something wasn't done.

Then-state Sen. Robert Presley (D-Riverside) took the lead in writing legislation aimed at putting the unscrupulous doctors and lawyers out of business and behind bars.

Workers were never the target, said James Morris, an aide to Presley. "Everyone realized that the workers in this context were kind of the sheep in this whole thing," he said.

Presley's legislation, which passed in 1991, was unusual in that it required employers, rather than taxpayers in general, to pay for investigations and prosecutions through a surcharge collected on their insurance premiums.

There were two reasons Presley took the private money approach. The state was in the red and Presley said any general fund appropriation would not pass. County prosecutors were unwilling to use tax money already assigned to them. They had higher priorities: violent crimes.

Morris, the Presley aide, recalled speaking to several county prosecutors, including representatives of the Los Angeles County district attorney's office who told him: "Unless we see any money, we're not going to be prosecuting this type of case."

Employers are now assessed a statewide total of $30 million a year. In the Legislature's scheme, the money is divided between the state Department of Insurance for investigations and the various county district attorney's offices. Prosecutors apply for the money annually to the insurance commissioner, who doles it out with the consent of the state's Fraud Assessment Commission, which consists of two insurers, two self-insured employers and one otherwise insured employer. The Los Angeles County district attorney's office has historically gotten the lion's share of the funds.

The private dollars paid for a slew of prosecutions, proving, said Stanley Zax, chief executive of Zenith Insurance Co., that district attorneys are like anybody else: "When they are incentivized to go after something, they go after it."

Medical Mills

In the early days of the program, Los Angeles County Dist. Atty. Gil Garcetti announced that he was going to focus on the doctors and lawyers involved in the medical mills. "Our goal has to be to put some of these people in prison," he said in 1993.

But the medical mill prosecutions turned out to be quite difficult. (Garcetti, locked in a reelection battle with one of his deputies, declined to discuss such cases or any aspect of the workers' compensation anti-fraud fight for this story.)

The district attorney's office won only one of its big mill cases, against a psychiatrist named Mark Kaplan, whose frauds were also documented by television news people operating undercover.

The office lost the other three such cases it pressed to conclusion. Part of this was because prosecutors ineffectively presented evidence, jurors and defense lawyers said. Part was because jurors had trouble distinguishing between fraudulent actions and actions that were lawful--just greedy.

The operators of a large chain of clinics who were accused of systematically overcharging insurers and performing unnecessary tests offered lawful greed as their defense.

"They charged the absolute maximum that was available under the law," said defense lawyer Michael Chaney. "Charging too much isn't fraud. It's just excessive." Jurors agreed.

The second in command of the district attorney's workers' compensation unit also agreed. Deputy Dist. Atty. Richard Rosenthal advocated abandoning his own prosecution of another large string of clinics called Primedex. He concluded that its alleged insurance company victims were not really victims; they were more like accomplices in that they had willingly paid Primedex's bills and passed the costs along to employers.

"It is obvious that Primedex exploited the workers' compensation system," Rosenthal wrote to his superiors in a confidential memo. "It is obvious that Primedex ordered medically unnecessary procedures. But it is also obvious that the insurance companies and [state workers' compensation judges] allowed the acts to occur."

They all participated in what amounted to "a giant quasi-legal Ponzi scheme with citizens of this state on the losing end," he said. Rosenthal declined to comment for this story.

Although he repeatedly recommended giving up on Primedex, his superiors would not allow it. The district attorney's office had spent millions in private funds on the mammoth prosecution and had repeatedly promised the Fraud Assessment Commission that arrests were imminent.

Five years after Rosenthal recommended dumping the case, former Primedex executives are still awaiting trial. The prosecutor who inherited the case, Deputy Dist. Atty. Robert Foltz, thinks it is going to be a tough sell.

"The amount of provable fraud in the case is really in question," he said in an interview, "because basically the law allowed what they were doing."

Primedex itself went out of business long ago, as did many of the clinics specializing in workers' compensation cases. They folded, in some cases, because they were spooked when the district attorney's office obtained search warrants to seize their files and, in other cases, because the Legislature clamped down on the billing excesses that had made the clinics so profitable. The Legislature imposed a schedule that limited fees for the first time in 1993.

The medical mill prosecutions saved insurance companies millions of dollars. Primedex alone claimed that it was owed $159 million for medical services when it shut down. Under ordinary circumstances, the company's internal memos say, it could have expected to collect $135 million. Once the district attorney's office alleged fraud, however, insurance companies were able to settle for less than $10 million.

See No Evil

While prosecutors aligned themselves with insurers in going after doctors, they elected not to investigate complaints by doctors that dozens of insurers committed fraud against them.

The doctors charged in civil lawsuits that insurers illegally conspired to tar them as fraud mill operators and drive them out of business without bothering to assemble any evidence that they were in fact committing fraud.

As proof of a conspiracy, the doctors cited an account by a former executive for Golden Eagle Insurance who said insurers decided to engage in a little vigilantism to control costs.

In a letter to lawyers for some of the doctors, the executive, Hy Bates, said he attended a secret meeting in 1991 with representatives from three dozen other insurers active in the Los Angeles area.

"The gist of the strategy," he said, "was to target the [medical] facilities with the highest dollar volumes . . . and then utilize any technical or legal argument available to them to deny or delay payment."

Deputy Dist. Atty. Edward Feldman, who headed the workers' compensation fraud unit from its inception in 1992 until the end of 1996, said he was skeptical about the lawsuits because he suspected that some of the doctors were crooks. He said he had never heard about the secret meeting Bates described.

The district attorney's office also did not investigate the finding of a civil jury in Los Angeles Superior Court, which concluded that the state's largest workers' compensation insurer defrauded an employer of hundreds of thousands of dollars.

The insurer, the quasi-public State Compensation Insurance Fund, tricked its prospective customers, jurors concluded. Its sales force told employers that their premiums would be based on a realistic assessment of what claims by injured workers would cost, jurors found, but instead the premiums were based on the highest possible cost.

Court of Appeal justices upheld the jury verdict of civil fraud and ordered the insurer to pay a $5-million punitive damage award, asserting: "There was substantial evidence that senior management personnel at SCIF . . . intentionally misled prospective insureds."

For the district attorney's office, prosecuting the State Compensation Insurance Fund would have meant biting the hand that fed it--in more ways than one. The fund's president is a permanent member of the Fraud Assessment Commission, which decides how big a chunk of the anti-fraud funds the Los Angeles County district attorney's office gets each year. The fund, prosecutors say, is also the most cooperative insurance company in providing information that leads to cases.

Feldman said that had nothing to do with the decision not to go ahead with a criminal probe. He said that the fund's misconduct was called to his attention but that he had higher priorities, particularly since his efforts would be duplicative: A civil jury had already punished the insurer. That, Feldman suggested, seemed punishment enough.

Hear No Evil

The district attorney's office has never prosecuted an insurance company for defrauding injured workers by not paying them benefits.

It's not that the unpaid benefits involve insignificant sums, said Casey Young, the former head of the state Division of Workers' Compensation.

Year after year, insurers on average shortchange one of six injured workers by $900 apiece, according to random audits performed by the division.

Young told a legislative panel in 1998 that this rate of shortchanging translates statewide to $84 million per year. "This is not money that's disputed, I want to underline," he said. It's money that insurers acknowledged that they owed but were caught keeping for themselves.

Young's estimate did not include additional sums that insurers saved by not notifying workers when they were eligible for vocational rehabilitation benefits, as required by law.

The same audits showed that, year after year, insurers failed to inform nearly half of all injured workers who had been out of work for 90 days that they were eligible for job retraining.

Cora Lee, who is in charge of the audits for Southern California, once testified in a deposition that up to 80% of the files checked at some insurance companies have showed money owed. "We've had some really nasty companies," she said.

Officials in the Los Angeles County district attorney's office, including Feldman and the current head of the workers' compensation fraud unit, Deputy Dist. Atty. Philip Wynn, acknowledged that a criminal investigation might be appropriate to determine whether these patterns of shortchanging workers were intentional.

But these same officials and their supervisor, Director of Special Operations Allen Field, said they had never launched one because they had never heard of the audits, which were mandated by the Legislature in 1989 and have been the subject of legislative hearings, news releases and trade press reports. Summaries of the 150 audits conducted to date are available on the Internet at DWC Audit and Enforcement Unit.

Not everyone in the office was in the dark. Kristie Hutchinson, then and now the unit's special assistant, said she knew about the state auditors, though not about the audit results. David Guthman, who headed the unit for one year in 1997, said he learned about the audits when the Division of Workers' Compensation approached him for help during one particular audit, of the Fremont Compensation Insurance Group of Glendale. Fremont marketed itself as a company that could save employers money by rooting out worker and doctor fraud. It advertised on more than 600 billboards around the state that showed cheating workers behind bars. Its slogan was "Fraud Doesn't Work Here."

It was wrong about that.

Auditors alleged that Fremont employees, spread among all three of its California claims-adjusting locations--Glendale, Fresno and San Francisco--backdated about 10,000 documents between 1990 and 1996. Auditors alleged that the backdating, which sometimes saved Fremont late-payment fees to workers and doctors, was sufficiently widespread as to constitute a general business practice.

To settle an administrative case that could have cost it its license, Fremont agreed to pay $525,000 without admitting wrongdoing and promised to spend an additional $200,000 to train employees to play by the rules. It also agreed to change its computer system to make backdating impossible. Fremont said settling the case was cheaper than fighting it.

Fremont reported six of its employees to prosecutors. Two from its Fresno office were convicted of fraud-related charges. Four from its San Francisco office were never charged. Jacqueline Schauer, the lawyer for the auditors, ridiculed the extent of Fremont's housecleaning, saying that apparently more than 150 Fremont employees in the San Francisco office alone were involved. Fremont did not refer any of its Glendale headquarters employees to the Los Angeles County district attorney's office.

While investigating the backdating allegations in Glendale, however, auditors had approached the district attorney's office for help. The auditors said through a spokesman that they wanted the district attorney's office to grant immunity to some Glendale employees so they could question them. But they said the district attorney's office declined.

Deputy Dist. Atty. Adalbert Botello, the supervisor who was the primary person dealing with the auditors, said he thought they merely wanted legal advice on immunity procedures, which he gave. He said he did not see their inquiry as a reason to assign his unit's investigators to probe for possible criminal acts by Fremont or its employees.

Employer Fraud

The district attorney's office has prosecuted few employers, explaining that cases of employer fraud are rarely called to its attention.

Yet fraud committed by employers is probably more costly than that committed by workers, according to assessments by prosecutors in Los Angeles and elsewhere.

Some employers save money by lying to their insurers about the nature of work their employees perform. Insurance premiums for dangerous jobs such as roofing can run one-third of payroll or more. If a roofing contractor falsely claims that his work force is clerical, identical coverage runs only about 1% of payroll.

But the district attorney's office says that, with a few exceptions, insurers don't want the reputation of nailing their own customers.

Deputy Dist. Atty. Barry Gale--the only one of the unit's 16 prosecutors who handles employer fraud--said he has been frustrated because he has been unable to get insurance companies or others to refer him cases. Only eight of the state's approximately 300 workers' compensation insurers have done so, he said.

Gale said he tried to open an investigation into employers who illegally operate without insurance. Taxpayers pay more than $20 million a year in benefits to injured workers whose employers don't have insurance.

But the state Insurance Department blocked him with a legal opinion. Its conclusion: Private industry pays his salary to prosecute insurance fraud, and people who do not have insurance, by definition, cannot commit that crime.

Some of the state's large employers qualify to insure themselves. They have the same responsibility to handle claims fairly as insurance companies, and the same auditors who check insurance companies also review their practices and sometimes find them wanting.

Ralphs Grocery Co. of Los Angeles set a new record in 1998 for "amount in penalties in one audit." The total: $217,530. Ralphs had shortchanged about half of 154 injured workers whose claim files were checked--by a total of $106,000. Auditors also found that Ralphs failed to investigate some claims and denied benefits in others without saying why. Ralphs did not respond to an invitation to comment.

District attorney officials never looked into these allegations to determine whether the short-changing was intentional. They said they learned of the Ralphs audit for the first time while being interviewed for this article.

'Low-Hanging Fruit'

Workers are the defendants in four out of five of the cases handled by the district attorney's special unit. This mirrors statewide and national trends.

Cases against workers are easy. The overwhelming majority of workers who are charged plead guilty, are placed on probation and are ordered to pay restitution. Prosecuting them is known in the trade as picking the "low-hanging fruit."

In its most recent grant application, the Los Angeles County district attorney's office said the workers it goes after commit outrageous fraud: "supposedly bed-ridden claimants [who are] playing tackle football."

It produced records of two cases it said were typical. One involved a $5-an-hour temporary laborer who hurt his heel but exaggerated his injury and was caught on videotape rehearsing a limp with a cane in a doctor's parking lot. The other involved a bartender who said he hurt his back on the job; he was collecting disability while secretly working as a bartender elsewhere.

Those records did not provide a full picture.

The district attorney's office also picks off people such as:

* George Solis

At age 56, Solis was run over by a hit-and-run driver as he crossed a street carrying a crate of jalapeno peppers for the family restaurant he managed.

He suffered brain damage, said he couldn't work and was paid $126 per week in workers' compensation benefits.

But after several years, the Fremont insurance firm, which was looking at paying a potentially much larger settlement for permanent disability, decided to see for itself just how well Solis' brain worked. The insurer hired a private detective who videotaped Solis playing flag football, race-walking and driving a car. Solis had told an insurance company doctor that he could not live independently and could not drive. The doctor looked at the videotape and said it proved that Solis was a malingerer.

The district attorney's office had Solis arrested. Agents carted him off during an early morning raid on his Huntington Park house as his 80-year-old mother screamed: "You can't take my son. My son is no thief!"

Deputy Dist. Atty. Eleanor Daniels did not dispute that Solis had been injured. She told Los Angeles Municipal Judge Elva Soper that he was arrested for exaggerating: "The impairment is not as extensive as 100% disabled."

Soper made her own observations and took an unusual step early in the case. She appointed a specialist on the mental effects of brain injuries to examine Solis for the defense at public expense.

Dr. Robert Brook looked at the secretly recorded videotapes and concluded that they proved Solis was gravely disabled.

An average adult takes far less than a minute to tie his shoelaces, he said. A videotape showed that Solis took three minutes.

Another tape showed that when Solis was playing flag football, he seemed to be playing by himself, Brook said. Neither his teammates nor his opponents paid him any mind.

Still another tape showed that in a race-walk, he couldn't master the fundamental stride, the doctor said. He was disqualified.

"It was a rather sad vignette," Dr. Brook testified.

He said the only kind of work Solis could do would involve "simple, concrete, repetitive activities under constant supervision."

Over the D.A.'s objections, Soper dismissed the case. She also dismissed a companion case against Solis' brother Austin, who had been accused of fraud for allegedly lying to doctors about his brother's limitations.

* Edgar Huaz

Huaz, a 35-year-old father of four from Guatemala, was working the graveyard shift as a chicken deboner at a food plant in Vernon when an industrial-size soap dispenser fell on his head in the men's room while he was washing up, he said.

Huaz wound up in a hospital complaining of headaches. Within a month, a neurosurgeon, Dr. Harley Deere, operated to relieve pressure from a bruise on his brain.

But the food plant's insurer, Fremont again, fought Huaz's claim about the work injury. It uncovered evidence that Huaz had been in a fistfight with a co-worker off the job site shortly before he had had brain surgery.

Fremont inferred that the fight--not the incident with the soap dispenser--was the real cause of the injury and that therefore the insurer and Huaz's employer should be let off the hook.

The D.A.'s office agreed and charged Huaz with insurance fraud.

But its case fell apart when Dr. Deere testified that it would have been a physical impossibility for the fight to cause the injury he saw when he opened Huaz's head.

The district attorney's office dismissed the case.

* Indravadan Jayaswal

Jayaswal, a data entry clerk for Blue Cross, had first visited a doctor for what he said was work-related neck, back and shoulder pain in 1991.

He said in an interview that he did not file a claim at that time because a co-worker warned him that people who filed such claims were fired.

His pain remained manageable until early 1995, he said, when production quotas were increased and he had to spend more time at the computer. He visited his own doctor, who referred him to two specialists. He told the specialists, according to their notes, that he had experienced a pulling sensation lifting a garage door. He did not mention that he thought his pains were work-related, although one of the doctors told him he should take a break from working. This doctor and Jayaswal signed a state disability form, checking off a box that said explicitly that the ailment was not work-related.

When Jayaswal returned to work with restrictions on using a computer, records show, a supervisor referred him to Blue Cross' health and safety department. He then filled out a workers' compensation claim, stating that his pains were work-related.

A claims examiner for Blue Cross' workers' compensation insurance carrier, a Kemper company, became suspicious.

When an insurance company-hired doctor told the claims examiner that she was on to something, Kemper referred the case for investigation and prosecution to the state Department of Insurance and to the district attorney's office.

In doing so, Kemper officials said Jayaswal was known to file false claims--an assertion they later admitted they could not support, according to court records. They also suggested that he fraudulently filed for workers' compensation benefits to pay for his medical care because he had no group health insurance. In fact, he had used his group health plan to pay for his treatments.

The Department of Insurance investigation into whether Jayaswal's injuries were related to his job was woefully incomplete.

"What is his job?" the case investigator was asked at a preliminary hearing.

"I really don't know," he said.

He told a judge, however, that he had spoken to the specialists who had treated Jayaswal initially and that both had told him that Jayaswal's ailments could have been caused by his job.

At Jayaswal's trial one of the same doctors went further. He testified that, not only could Jayaswal's problems have been work-related, they probably were.

The prosecutor said this did not matter. Deputy Dist. Atty. Robert Wallace argued that fraud hinges on a state of mind. He contended in court that whether Jayaswal was entitled to benefits or not was irrelevant. If he merely tried to collect benefits while believing that he was not entitled to them, that would be enough for a conviction.

Superior Court Judge Michael Tynan did not need to hear any more. He acquitted Jayaswal before the defense put on any witnesses.

Jayaswal sued the insurance company for malicious prosecution and settled with Kemper for an undisclosed sum.

But he could not get his old job back. He said he could not even get a job in the same industry.

"They destroyed all my life," said Jayaswal, now 61. "I was just interested in why I had pain. I had a good job. My company was paying a lot of overtime. . . . Why should I go to workers' compensation? I wasn't going to get [much money]. I only wanted the pain to go away."

System Defended

District attorney's officials assert that the insurance industry is not their boss, nor even their partner. The insurance industry merely directs their attention to possible cases, they say, and the district attorney's office alone determines whether these cases are worthy of prosecutions.

"No deputy who has ever worked in this program heard us ever, ever say we were doing anything to serve the insurance companies," said Feldman, the former head of the unit.

Insurance companies don't pay the bills, the district attorney's office points out. They merely have a say in how the funds are handed out. The district attorney's office says it is insulated from influence by individual employers since all employers are obligated to pay a surcharge on their insurance premiums--whether they like it or not.

Trial and appellate courts have reviewed these funding arrangements and have agreed with the district attorney's office that no conflict of interest exists.

District attorney's officials added that they would gladly look into allegations that insurers were ripping off workers if someone would just bring them the evidence.

The officials said they have repeatedly asked, in vain, that lawyers who represent injured workers seeking benefits bring them cases of suspected criminal wrongdoing by insurers or employers. Prosecutors said their appeals for cooperation have been made at functions put by on by these workers' lawyers, who are known as applicants' attorneys.

There are three applicants' attorney groups in Los Angeles County. A member of one said he had a client who contacted the district attorney's office and found officials receptive to looking into a complaint about possible insurer fraud. No action has been taken in that case.

But presidents of the other two applicants' attorneys associations said they were dumbfounded by the district attorney's office assertion that it had tried to get them to refer cases.

"I must live on a different planet," said Larry Stern, president of the Southern California Applicant Attorneys Assn. "Applicant attorneys have given up writing to the D.A.'s office, because they don't respond. . . . It's a waste of 33 cents."

Conflict of Interest

The actual conflict of interest between the district attorney's office as public prosecutor and the office as an institution dependent on private industry can be seen in the way it passed prosecuting some of the insurance companies that fed it with cases.

Few insurance companies bothered to meet their legal responsibility to refer suspicious claims.

In fact, only one in 10 insurers sent over any, said Feldman. And the industry's lack of cooperation made "a mockery of fraud enforcement" and took "the heart out of the system."

As Feldman struggled to keep the district attorney's workers' compensation unit going with "two hands . . . tied behind our back," his special assistant called to his attention evidence that executives of some of the precious few firms that were cooperating had committed perjury.

The special assistant, Hutchinson, said the executives had made "material misrepresentations" under oath, overstating the extent of their anti-fraud efforts in reports to state regulators.

Feldman acknowledged that filing perjury charges against them would have been possible--even that it would have had "nice symmetry" given his unit's custom of charging alleged worker cheats with perjury. But he said that arresting the executives never crossed his mind.

Pressed to explain, he said that even if it had occurred to him to prosecute, it would have been counterproductive.

The insurance carriers involved were among the few that were bringing any cases to the unit.

If he had filed charges, Feldman said, they would have stopped.

And if that happened, he added: "We'd have to close down our shop."

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Funding Up, Interest Down

California's effort to root out fraud in the workers' compensation insurance system started with a modest $3-million annual law enforcement budget that shot up rapidly to $25 million, then $30 million.

*

Statewide Insurance Company Reports of Suspected Fraud

Meanwhile, few insurers bothered to report suspected frauds, although they were required to do so. What interest there was among insurers fell off rapidly after the effort's early years.

*

Sources: California Dept. of Insurance, California Workers' Compensation Institute, California Commission on Health, Safety and Workers' Compensation

*

Monday: How the push against fraud provided cover for rolling back benefits for injured workers.

*

MILLION-DOLLAR BONUS

The D.A.'s office netted $1 million from a doctor's workers' comp fraud plea bargain. A28

aceventura3 · 07-12-2009, 01:31 PM

Quote:

Originally Posted by Willravel

After looking into it, it seems Seaver's explanation stands up to scrutiny better than your systemic fraud theory. Looking at wc rates across the country, they seem to change based on the cost of living. Unless you're going to suggest that California workers are simply more corrupt than workers from other states—which is an offensive and (more importantly) unsupportable position—I think you have to look at cost of living to explain the cost of wc.

Here is an article from 2001, giving some history and perspective also illustrating that the cost of living had little to do with the escalating costs. In 1995 the state enacted massive reforms, according to the article the corner stone was letting the market establish rates. Premiums declined. However, as the article states the average claim in 1994 was $18,000. then it went past $34,000 by 1999. The industry in essence became insolvent. Rates went up accordingly. When you look into the factors that drove those costs up, it had everything to do with fraud and medical control of the claim going in favor of the injured worker. Injured workers with medical control were able to greatly take advantage of the system. Keep in mind "injured worker" in some cases could mean "stress" and no actual physical injury. So a person gets a doctor to say, the workplace "stress" is an injury.

Quote:

Several factors lie behind the increases, which come as businesses face higher costs for another necessity, energy:

* Insurers lose money on workers' comp. According to the Assn. of California Insurance Companies, workers' comp insurers pay out $1.56 in claims and other costs for every $1 they collect in premiums in California.

* The cost of the average workers' comp claim shot past $34,000 in 1999, the most recent year for which numbers are available, compared with about $18,000 in 1994, according to the association.

* The benefits payable to injured California workers rank among the lowest in the country, and the state Legislature probably will increase them substantially before its current session ends.

The losses among workers' comp insurers were severe enough to force one carrier, Superior National Insurance Co., into receivership last year and send a second, Fremont General Corp., reeling in the same direction--and the carnage may not end with those two.

Workers' comp premiums dropped rapidly in 1995 when the state ceased controlling how insurers set rates. This spawned a fierce competition for market share among workers' comp insurers. But although multi-line carriers--those selling other lines of property-casualty insurance in addition to workers' comp--made up for the losses with profits on their other lines, specialty workers' comp insurers couldn't.

The free-for-all was good for employers, of course; after years of turmoil and ever-increasing costs for the California workers' comp system in the 1980s and early 1990s, costs finally came down.

Then the insurance market as a whole hardened in the last half of 2000 and multi-line insurers no longer were willing to countenance the losses on workers' comp.

It's anybody's guess how far premiums will go up. State officials expect the legislation now pending in Sacramento could cost employers $1.6 billion to $2.3 billion, depending on how the increases in benefits and the cuts in costs are calculated.

This would push overall costs from about 1.75% of payroll at present to something like 2%. Although that might seem reasonable, the increases in costs could match the premium increases slapped on many employers in California beginning last summer--20% on average, more for many companies.

Employers Probably to Be Hit With Higher Workers' Comp Costs - Los Angeles Times

In 2004 there was more Work comp reform, but for many it was too little too late. I don't follow the current conditions.

StinkyFinger · 07-21-2009, 03:59 PM

look at it like this- Let's say that every time you leave your house and are gone, some unknown stranger sneaks into your house. While you are out this douchebag that sneaks through a hole in your fence and in your back door eats all your food everyday, drinks all your beverages, drives your second car around town with no license or insurance and gets in accidents, deals drugs and commits violent crimes, uses your identity for goods & services, puts his kids through school on your dime Etc. etc. etc. and each day it gets a little worse. Each day he brings more freinds and the party just keeps getting bigger and you are stuck paying all the bills.

How long do you think you could keep your house in order under these circumstances? How long could you continue before you were flat broke?

Welcome to California!!!

It seems there is a big fat illegal alien mexican elephant in the room and nobody dares talk about it.

I'll talk about it.

Sneak through a hole in the fence like an animal in the night and you are vermin.

Stand in line like all the law abiding immigrants and observe the legal entry process we have and you are welcome with open arms to become an american.

Speak english.

There is NO SUCH THING AS AN "UNDOCUMENTED WORKER." This is just a liberal ploy to assign victim status to criminals.

Baraka_Guru · 07-21-2009, 04:41 PM

StinkyFinger, what does all that have to do with the economic crisis other than the fact that "illegal alien Mexican elephant worker vermin" offer a pool of cheap labour and have kept overall unskilled labour costs down for the state?

How many "legal Americans" in California would be willing to fill the hundreds of thousands of crappy job openings that would crop up if they got rid of them?

How many of those jobs would evaporate once the "illegal employers" realize they'd have to actually pay minimum wage (and overtime pay) and maybe even offer benefits and a safe working environment before anyone would even consider it?

Just trying to help you contextualize your rant for this thread.

07-10-2009, 02:12 PM	#3 (permalink)
hunnychile Alien Anthropologist Location: Between Boredom and Nirvana	My husband and I moved away from Napa, California 3 years ago because we saw what was "coming down" around us in California and we knew it was only going to get worse. It has. When we lived there, we loved the natural beauty around us in Marin & Napa Counties & cool insightful people, but knew that the economic bubble was ready to burst. Furthermore, who in their right mind wants to purchase over-valued real estate on top of 4+ major Fault Lines? No thanks. Plus, we became sick and tired of our tax dollars paying for all the illegal alien's babies, welfare families and uneffective healthcare in general. We returned to Ohio (for various family reasons) and at least the cost of living is far more realistic and affordable. Everything is less expensive here & I'm investing in land at this time. So far I think my plans will reward me in the end. __________________ "I need compassion, understanding and chocolate." - NJB Last edited by hunnychile; 07-10-2009 at 02:19 PM..

07-10-2009, 05:35 PM	#4 (permalink)
Seaver Junkie Location: Fort Worth, TX	The population was given the direct vote over everything. They voted to lower taxes at every turn and increase spending at every turn. I always liked the Texas Constitution in which the budget for 2 years is set, and is not allowed to go into deficit outside of war. In my opinion, we need a Federal mandate to follow up with the bipartisan "pay-as-you-go" policy (warfare and emergency situations exempting) which unfortunately Bush and Obama both choose to ignore. __________________ "Smite the rocks with the rod of knowledge, and fountains of unstinted wealth will gush forth." - Ashbel Smith as he laid the first cornerstone of the University of Texas

07-10-2009, 07:25 PM	#9 (permalink)
Seaver Junkie Location: Fort Worth, TX	I'm not saying the Federal Government should inject in the State Budget. I think all 3 governments, federal/state/local, should be free to decide their own fiscal futures. I just also think it's very dumb to allow any of these go into the red year after year for no reason other than wanting everything and never paying for it beyond IOU's. Severe emergencies or war are the only reasons to go into debt. And they should be repaid asap to allow a strong economy and never have to fear the purse-strings of those who buy your debt. __________________ "Smite the rocks with the rod of knowledge, and fountains of unstinted wealth will gush forth." - Ashbel Smith as he laid the first cornerstone of the University of Texas

07-11-2009, 10:29 AM	#11 (permalink)
aceventura3 Junkie Location: Ventura County	I am one of the 2.5 million who moved out of California between 2005 and 2007, I think about 1.5 moved in, but still resulting in a net loss not including the birthrate and who knows how many illegals. The people who moved out of California tended to be small/medium sized business owners with their businesses and middle class jobs. The state has been moving in the direction of being two classes, the filthy rich and the really poor, with a diminishing middle class. The answer to reversing this trend is simple - stop treating business like the enemy. __________________ "Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

07-11-2009, 07:50 PM	#18 (permalink)
Slims Eccentric insomniac Location: North Carolina	It has to do with paying for things they cannot afford. When I get hit with unexpected expenses, lose my job (though it hasn't happenned recently), etc. I stop spending so much money. Instead I spend my money on conserving what I already own, basic necessities, and on finding a new job. The same principle Should apply to California and the country as a whole. ---------- Post added at 11:50 PM ---------- Previous post was at 11:50 PM ---------- It isn't like this is a sudden, over night surprise. California has been going downhill because their leadership lacks the backbone to stand up against the blathering masses who have realized they can vote for anything they want...for a while. __________________ "Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery." - Winston Churchill "All men dream: but not equally. Those who dream by night in the dusty recesses of their minds wake in the day to find that it was vanity: but the dreamers of the day are dangerous men, for they may act out their dream with open eyes, to make it possible." Seven Pillars of Wisdom, T.E. Lawrence

07-10-2009, 12:14 PM	#2 (permalink)
Willravel ... a sort of licensed troubleshooter.	What do I think about the current economic crisis in California? We overspent. There's not a lot of insight necessary. Politicians enjoyed the strong increase in tax revenue in the late 90s and early 2000s too much, spending more than even the new taxes could cover and not saving for the proverbial rainy day. It's pouring, and we're in a pickle. The best way to fix this would be to carefully dial back spending after reviewing what money is going where and how efficiently that money is being spent (and legalizing and taxing marijuana couldn't hurt). Unfortunately, California Democrats are against spending cuts completely and California Republicans want California to basically be without a state government, meaning they can't come to a compromise. Because those bumbling fools can't figure out that we can balance the budget if both sides compromise a little, people are now getting IOUs instead of government checks. All of that being said, I've taken a lot of flack for being a Californian lately and I think it's because people don't really understand that what happens in California generally reflects what's happening to the rest of the country. California has relatively less debt than the federal government, and several other states (New York, Massachusetts, Illinois and New Jersey) are well on their way to going bust right behind us.

07-10-2009, 05:58 PM	#5 (permalink)
Willravel ... a sort of licensed troubleshooter.	You're making the mistake that liberals are often accused of: you're assuming the federal government can succeed in matters that states fail in. Such a federal mandate might be smart, but it would never pass simply because there are too many fiscal conservatives and too many people that stand to profit from the state going deeper into debt.

07-11-2009, 11:13 AM	#12 (permalink)
Willravel ... a sort of licensed troubleshooter.	We don't generally treat anyone like they're the enemy, including small business. I'm in a "small business" right now and no one is making an enemy of us. We're doing just fine.

07-21-2009, 03:59 PM	#24 (permalink)
StinkyFinger Upright Location: Western New York, soon to be fifty first state!!!	look at it like this- Let's say that every time you leave your house and are gone, some unknown stranger sneaks into your house. While you are out this douchebag that sneaks through a hole in your fence and in your back door eats all your food everyday, drinks all your beverages, drives your second car around town with no license or insurance and gets in accidents, deals drugs and commits violent crimes, uses your identity for goods & services, puts his kids through school on your dime Etc. etc. etc. and each day it gets a little worse. Each day he brings more freinds and the party just keeps getting bigger and you are stuck paying all the bills. How long do you think you could keep your house in order under these circumstances? How long could you continue before you were flat broke? Welcome to California!!! It seems there is a big fat illegal alien mexican elephant in the room and nobody dares talk about it. I'll talk about it. Sneak through a hole in the fence like an animal in the night and you are vermin. Stand in line like all the law abiding immigrants and observe the legal entry process we have and you are welcome with open arms to become an american. Speak english. There is NO SUCH THING AS AN "UNDOCUMENTED WORKER." This is just a liberal ploy to assign victim status to criminals. __________________ I am NOT prejudiced, I fucking hate everybody EQUALLY so don't go getting a big head about yourself there, dork vomit...

07-21-2009, 04:41 PM	#25 (permalink)
Baraka_Guru warrior bodhisattva Super Moderator Location: East-central Canada	StinkyFinger, what does all that have to do with the economic crisis other than the fact that "illegal alien Mexican elephant worker vermin" offer a pool of cheap labour and have kept overall unskilled labour costs down for the state? How many "legal Americans" in California would be willing to fill the hundreds of thousands of crappy job openings that would crop up if they got rid of them? How many of those jobs would evaporate once the "illegal employers" realize they'd have to actually pay minimum wage (and overtime pay) and maybe even offer benefits and a safe working environment before anyone would even consider it? Just trying to help you contextualize your rant for this thread. __________________ Knowing that death is certain and that the time of death is uncertain, what's the most important thing? —Bhikkhuni Pema Chödrön Humankind cannot bear very much reality. —From "Burnt Norton," Four Quartets (1936), T. S. Eliot Last edited by Baraka_Guru; 07-21-2009 at 04:47 PM..