I’m a car guy. Most of you know this. However, I’ve recently become the housing guy in Washington. This is not due to any direct background or experience. I have only bought 3 and sold 2 houses in my life, all of in which the captivating Mrs. Campbell and I have lived. It is partly because I serve on the committee that deals with such issues. But, it is mainly because I know we never go into recessions without housing and cars leading us in, and we never recover without housing and cars leading us out. These two industries are just too big a part of the economy and too important to the psyche of consumers. The car business is doing better of late, but housing is not. There are many reasons our economy stinks, but one of them is certainly because the housing market is still in a decline. The economy will not be strong again until we turn it around.

When you have a sick patient, the first rule is, “Do no harm”. The housing market is sick. Much of what is causing this sickness is the fact that the housing finance system, anchored by Fannie Mae and Freddie Mac, failed. We have to replace that system. As many of you know, I have a… Read More

As regular readers of this missive know, I am a lifelong Republican. Accordingly, I have never been to a Democrat campaign rally. That is to say at least until last week. Last Thursday, I attended one…..on the floor of the United States House of Representatives. President Obama made a special request to speak to a Joint Session of Congress and I assumed it would be a major policy address. Far from it. It was a campaign speech. There was scarcely little serious policy content present. The first indicator of this was when Obama asked us to “pass this right away”, a line which appears on the first page of an 8 page speech, before saying what was in his plan. That’s like demanding that someone buy something inside a box without telling them what is in the box. Another indicator of lack of substance was his repeated assertions that the $450 billion one-year cost of the bill would be “paid for”. He also made this assertion on the first page of his address. Three pages later he says, “It will be paid for. And here’s how: The agreement we passed in July will cut government spending by about $1 trillion over the next 10 years.… Read More

So, you haven’t heard from me in a while. Maybe you thought my computer crashed or I don’t love you anymore. But, neither is true.

The whole debt limit debate and compromise was very tense, very sensitive and very important. Going “over the cliff” was simply unacceptable. As I have explained before, we were never in danger of default. The government was going to pay interest on the debt and could issue new debt to pay off maturing notes. But, it would have required a 50% reduction overnight in non-interest government spending, which would have been very difficult to do. But, more importantly, fear heading towards panic was showing up in markets. That panic would have led to another financial meltdown, maybe not as bad as 2008, but certainly bad enough to plunge the nation and the globe back into deep recession. But, this time it would be completely government-made.

We could not let this happen. But, neither could we just extend the debt limit without showing the markets that we were making progress towards getting these deficits under control. If we did that, the markets would set their own debt limit by not lending us any… Read More

Today, economic issues dominate the scene in America. We have record-breaking, unsustainable deficits and face credit downgrades and a looming debt crisis. We are supposedly in the middle of economic recovery, but no one can really feel it. Unemployment is stubbornly high and shows no signs of coming down any time soon. Inflation is now running over 3%, which is relatively low, but since savings accounts pay essentially nothing, the wealth of Americans is being eroded. Europe and, yes, even China have economic challenges. Decisions about issues as diverse as national defense, the environment and immigration are all now impacted by the economic prospects and our current fiscal situation.

President Obama has been the major contributor to these problems. He has massively grown spending, deficits and debt in a misguided and failed Keynesian attempt to fix the economy. His strong and very liberal ideology continues to churn out job-killing policies in the areas of health care, energy, finance and manufacturing. He claims to love the jobs created by these industries, but his administration does whatever it can to restrict the products that these industries make and to punish… Read More

The “Qualified Purchasers Program” was created by the State Legislature, when it approved Assembly Bill X4 18 in 2009. I was serving as a Senator at the time and voted against the legislation. I continue to believe this new use tax collection program is a costly mistake.

To date BOE has identified more than 500,000 businesses as “qualified purchasers” and has automatically registered many of them with a “use tax” account. A qualified purchaser is defined as a service enterprise with more than $100,000 in gross receipts per calendar year that is not already registered with the Board of Equalization.

Most people are understandably confused about ‘use tax.’” The use tax applies to all Californians when you purchase items from a retailer who is not located in California and not registered to remit tax to California. Prior to the creation of the Qualified Purchaser Program, there were already two different ways for Californians to report use tax—(1) BOE Form 79b and (2) a dedicated line on state income tax forms.

My review of this new… Read More

Last week, the House voted down a debt limit increase without any conditions by a vote of 97-318. Not a single Republican voted for it. Then, last Tuesday, the President invited the entire Republican caucus to the White House for a discussion on the debt limit. Frankly, all the President succeeded in doing was angering us. His arrogance, haughty nature and his unwillingness to say anything other than his campaign talking points left us all quite discouraged about any potential agreement. Still, the debt limit looms. Treasury Secretary Geithner says that we have already technically hit the ceiling, but that he is raising cash using “extraordinary measures” until August 2nd, at which he point he predicts we will be at the end of our financial rope and run out of cash. Conveniently, that day is just a couple of days before the House and the Senate are scheduled to go on summer recess. The potential to have to cancel that recess will focus negotiators in Washington.

So, what happens if we breeze past August 2nd without increasing the debt limit? Virtually every media outlet would have you believe that we will default on our debt. Even the… Read More

Things are not so good out there. The unemployment rate, already stubbornly high, climbed even higher in May. Economists are revising economic growth predictions downward. Housing prices continue to drop, thereby further reducing household wealth. Real returns on bank deposits and Treasury Bills are negative. The dollar is dropping. Gas prices are up, inflation is up. There are some bright spots, certainly, but the overall picture is that of stagnation. Unfortunately, none of this is a great surprise given what the government has been doing of late. We are printing money and artificially holding down interest rates to try and spur recovery. But, this is creating those negative real (after inflation) interest rates, which are distorting capital flows. Most of the country’s tax policies expire in 18 months, so no one can do any long-term investment planning about taxes with any certainty. The government is retarding the development of almost all forms of economical energy (oil, gas, coal, nuclear), while subsidizing expensive wind and solar. We continue to run record deficits, which divert capital from other more productive uses and create the massive public debt overhang… Read More

Overtaxed Californians will find little to cheer in the Governor’s revised budget proposal.

Despite the Governor’s concession to postpone higher income taxes for a year, he continues to push for legislative approval of higher sales taxes and car taxes this year.

And although the Governor dropped his effort to abolish enterprise zones—and the jobs they create—he continues to miss the big picture: Californians need jobs, not higher taxes.

Our best hope for new revenues isn’t higher taxes, but new jobs fueled by a recovering economy. Unfortunately, the Governor has yet to truly lift a finger in the fight for California jobs.… Read More