23 May

Single Payer Price Tag – $400 billion

single payer

One topic we haven’t spent too much time on in depth is the prospect of having a single payer healthcare system here in California. Proponents of such a system have made many arguments in favor of it. It was a major plank in Sen. Bernie Sanders’ presidential campaign platform. There has also been discussion about whether Obamacare was designed to fail to pave the way for a single payer system down the road.

So far, these debates have been happening largely on the national stage with proponents and opponents lobbying Congress one way or the other. With the rise of the American Health Care Act as the fulfillment of a promise Republicans made to their constituents to repeal and replace Obamacare, the prospect of a single payer universal healthcare system seems to be more pie in the sky than ever before.

single payer need not apply

That is, unless you live in California. State Sens. Lara and Atkins have introduced SB 562, the Healthy California Act. This bill would extend healthcare benefits to every resident of California, citizen or not. While the merits of such a bill will likely be hotly debated here in the Golden State, one aspect of it cannot be denied — the cost.

Until just recently, the cost of such a venture was unknown. A single payer healthcare system in a state as large as California has never been attempted in the US. We have nearly 40 million people living here. The economic impact of single payer has always been a major sticking point in practical implementation. Exactly how much is this going to cost us?

$400 billion. That’s billion with a B. And that’s not a one-time cost. That’s an annual cost. To put that in perspective, California’s total annual budget is estimated to be around $250 billion. The legislative analysis estimates that around $200 billion in existing state and federal funds could be used to offset the cost of a single payer healthcare system, but that leaves another $200 billion to be raised through other means.

The government isn't the only one who will pay.

This being California, it’s practically a surefire bet that those other means will inevitably be new taxes. We would be almost doubling our current budget. Double. I suspect most of these increased taxes will be levied against our businesses. The argument will likely be that they will no longer need to pay for employee healthcare plans, so the money they would have spent should be directed to this new tax. I also predict a new affluence tax on individuals and couples making more than $500,000 annually (or maybe $250,000!). The analysis itself proposes one scenario where an increased payroll tax of 15% could foot some of the bill.

The net result will be an ever accelerating free fall to the bottom of the business friendliness rankings and an increased exodus of the middle class to more tax friendly states. After all, around 65% of general fund revenue comes from direct personal income taxes. Don’t worry though. Our legislators will surely find a way to pass this first and then figure out how to pay for it later. I’m sure we will be talking about this a lot more in coming weeks. Be sure to check out our podcast archives to keep up to date on everything going on in California.

11 May

Why Support the Newman Recall?

There has been a lot of debate recently concerning the potential recall of State Senator Josh Newman of California’s 29th senate district. And rightfully so. Recalling a politician is no easy task, even when the impetus behind the recall is something as divisive as a widely unpopular gas and vehicle registration tax. It is an endeavor that oftentimes sees the enthusiasm of supporters and the public at large wane as the process goes on. This is completely understandable. The world of local politics is murky and toxic.

Ling Ling Chang, Suhkee Kang, and Josh Newman (subject of potential recall)

Here there be dragons.

So, why support a recall? The biggest reason for me is we didn’t have a say in approving this tax. Now, if you listen to our interview with Sen. Newman you will find that he believes that we did have a say in the tax. We elected him to the state senate to represent us and our interests. In doing so, we have implicitly given our approval to his actions, whatever they may be. We, in essence, stand behind his votes because they are our votes.

How ridiculous does that sound? That an elected politician would attempt to justify his vote for a controversial (and downright stupid) bill simply because he was duly elected is the height of hubris. Such a stance fails to address the very real concerns people have about the bill. The argument that “we had to do something” just doesn’t hold water. To continue with aqueous analogies, what is the point of bailing out a sinking ship when you have yet to patch up the hole?

There’s a lot of rhetoric out there right now regarding the gas tax. Most of it is moot now that Gov. Brown has signed SB1 into law, but it has bearing on my motivations behind supporting this recall. Here are some facts. California spent $419,090 per state-controlled highway mile in 2013. This put us at 44th of 50 in terms of total spending per mile. In that same year, we ranked 10th in the nation in total state-controlled highway miles at 18,535. That means in 2013 we spent nearly $7.8 billion on California highways only to have them be some of the worst roads in America. (source)

Our daily commute

A typical day on California highways.

We spend more to repair fewer miles of road than several other states. In 2013, Texas had 80,490 miles of state-controlled highways. That’s 4.3 times the mileage of California’s state-controlled highways. Given that fact, one would expect Texas’ cost per mile to be around the same magnitude difference from California’s. Not so. Texas only paid $177,357 per mile. They were able to service over 4 times the amount of mileage California did for nearly 2.4 times less money.

When we asked Sen. Newman about this discrepancy, he stated that there are many differences between Texas and California, which is true. California has a higher cost of living. California wages are typically higher than wages in Texas. Things just cost more here. All of that is true. However, it’s also true that Caltrans may be massively overstaffed. It may also be true that Texas has found cost-effective ways to service its larger state-controlled highway system than we have.

What we needed to do before passing this bill was to take a full audit of Caltrans and determine where and how we can cut costs. That’s just responsible governance. Instead, we get a manufactured crisis that won’t even come close to addressing the infrastructure issues we have in this state. We get a tax and fee increase that will cost working families hundreds of dollars extra per year (or more). We get a bill that has the potential of doing largely the opposite of its stated intention.

What we have is an unacceptably large pile of unanswered questions. The answer to those questions was not to pass a tax increase on the working and middle classes. Our elected officials owed us more than that. They still do. Josh Newman ran on being fiscally conservative. It’s part of the reason I voted for him. His actions have shown that he cares more about voting in lockstep with the Democrats in Sacramento than he does actually serving our district.

That is my main reason for supporting this recall. He has betrayed out trust. We didn’t have a voice in Sacramento when he voted for this tax and fee increase. We must use our voice now to recall him and elect a true advocate for our interests.

06 May

Episode 2 – Josh Newman Interview

State Senator for District 29

Here it is — our interview with California State Senator Josh Newman. He graciously sat down with us to discuss a couple of pressing issues for the 29th District and California as a whole. Specifically, he discussed his vote for SB1. While we had some issues with the live stream audio, the quality of our recording here is pretty darn good. Hopefully, this information will help his constituents understand whey he voted the way he did, for better or worse.

18 Apr

Lead Us Not Into Temptation

As a child, you’re taught to trust authority figures. Inherently. Implicitly. These people — your parents, your teachers, your pastors and priests — are the guiding forces in your young life. They teach you right from wrong. Good from evil. They protect you from the all ills of this and any other world. They look out for you because you don’t know any better. They always have your best interest at heart. Or at least they should. Otherwise, your life turns into one very long and very sad choose-your-own-adventure book where each new page ends in tragedy.

Choose your own adventure

The only thing they all have in common is death.

At each new stage of life we encounter new authority figures. We transfer our trust to these new vessels with the hope that they will steer our fragile little lifeboats to the next safe harbor. Among these new stewards of our trust and goodwill are our elected political representatives. These are people we choose to voice our concerns because they (hopefully) share our values. Living, as we do, in California, this sentiment seems fairly widespread. Our elected leaders are given a wide berth to conduct the business of government as they see fit because we trust them to do what is right for California and, in turn, Californians. However, as anyone who has been in an abusive or toxic relationship can attest, trust, once broken, is nearly impossible to regain.

I no longer trust our leaders to do the right thing for us.

Not that I trusted them all that much in the first place. However, it is now clear to me that a politician’s word can never be trusted. Ever. Actions are the only true test of someone’s character. What he or she says they will do is meaningless and should be treated as such. The latest example of this is, of course, State Senator Josh Newman. He ran his campaign on a message of hope. He was an outsider who wanted to do some good in Sacramento. He was ostensibly a champion of regular people. He bucked the label of politician in favor of public servant. He claimed that, while running as a Democrat, he would not be some party stooge that blindly voted for anything and everything sponsored by a Democrat.

And I believed him.

So far he has gone back on this pledge. Twice, in fact, on major legislation that affects all of California. Arguably, the most egregious of these two bills is SB1, which raised, among other things, the gas tax and vehicle registration fees. I will get into more detail in later posts, but suffice to say this bill is a raw deal for everyone involved. This is a direct tax on the working and middle classes of this state — two groups that have struggled to stay afloat in an ever deepening sea of inequity that is California. It is also predicated on the lie that we do not already have the financial means to address these issues. The fact is we do. What we lack is the political resolve to actually perform the essential tasks of government. This is because of a number of issues, not least of which is the influence of special interests in Sacramento who wish to guarantee continued funding for various pet projects up and down the state. The money to fix the roads is there, believe me.

But it doesn’t just stop at the state level. If we drill down to the county and city level, we can see where Sen. Newman’s vote really put the screws to both his district (CA-29) and his community. Overall, by my own basic math, SB1 will cost the taxpaying drivers of Orange County somewhere in the neighborhood of $500 million for the first year. This calculation was done assuming $5.2 billion in estimated revenues per year would be derived from California’s 25.5 million drivers, minus the ones too old to drive or too young to be expected to pay for gas or vehicle registration out of their own pocket. But do not fret, dear taxpayer. You shall be greatly rewarded for your generous contribution to the welfare of California’s roads. Well, not rewarded like Sen. Anthony Cannella was, of course. No, he received something tangible for his support of SB1.

Anthony Cannella – Politician, engineer, swindler.

Our own Sen. Newman did not secure such favors. Instead, we will receive increased funding for our local transportation projects. The return on investment seems a bit paltry, to say the least, as most cities in his district will be paying far more in new taxes than they receive in new funding. In Sen. Newman’s own town of Fullerton, drivers can be expected to pony over nearly $24 million dollars to receive a mere $3.2 million in new funding. Now, I’m no CPA, but I’d say that was a pretty bad investment for the people of Fullerton.

And that is just for the first year of the law’s existence. Each year, taxes on gasoline and diesel will increase with inflation, meaning you will likely pay more at the pump year over year. Every year. From now until the day you die. Because, honestly, when was the last time the state legislature let a “temporary” tax expire in California? The answer is never. Or almost never. Basically never. And there’s no provision in this bill for the increases to ever end. This is why our elected leaders passed this bill the way they did. It was and is a bad bill for taxpayers. And taxpayers never would have passed it themselves. But our leaders know better. They do. They know what’s right for us, even if we don’t know it ourselves.

As I said earlier, authority figures serve a very important purpose in our lives. They teach us to do what’s right. In this instance, they can also force us to acknowledge uncomfortable truths. They help us learn and grow.

It’s time for California to grow up. This is a journey we all need to take together.

Though wise men at their end know dark is right,
Because their words had forked no lightning they
Do not go gentle into that good night.

Dylan Thomas