Guest: co-host Larry Kudlow, CNBC; Phil Izzo, WSJ; Victor Davis Hanson, Hoover.
JOHN BATCHELOR SHOW
Co-host: Larry Kudlow, The Kudlow Report, CNBC; and Cumulus Media radio
Tuesday 9 April 2013 / Hour 1, Block A: Larry Kudlow, The Kudlow Report, CNBC; and Cumulus Media radio; in re: Paul Krugman rearranged historical fact in respect of Margaret Thatcher. "Krugman is no longer a scholar; now he's a political hack." Low taxes, free-mkt economics, stopped the general strikes the labor unions were usig in the 11970's to bring Britain to its knees. Starting in the 1980s, GB annual economic growth shot up to 3%, then 4%. Krugman tried to argue that it was in the 1990s under Blair (who also was Thatcherite) that the significant recovery occurred– which is completely inaccurate. Thatcher took over in May 1979 when Britain was broken: astounding poverty, not enough to eat, living in darkness. She and Reagan were great collaborators. Both followed Friedman and Hayek. Reagan never told Volcker to do anything. They met at one or two mtgs: Reagan said, "You do what you think is necessary to solve and cure the inflation problem." Reagan did not get help from Tip O'Neill, who opposed the Reagan tax cuts ab initio. We politely went the Southern state Democrats ("boll weevils"), who voted for the tax cuts, spending cuts, and defense build-up. Reagan took top taxes from 83% to 48%. I think Krugman's agenda is transparent: he oppose limited govt, lower tax rates for incentive. Go to CNBC website, last show segment tonight, to see the chart n GDP. There should be an ombudsman at the New York Times to confront Krugman about his overtly inaccurate numbers in his outrageous column.
Tuesday 9 April 2013 / Hour 1, Block B: Phil Izzo, WSJ news editor, in re: the "swoon" of 2013: the jobs number last Friday - 88,000 is a nasty number. Doesn’t mean the swoon is here – number gets revised a lot, circumstances shift around. This might be the anomaly. LK: More job openings in February, which undercuts the 88K. PI: More people are quitting – that's bullish. . . . When people drop out of the labor force, they rarely re-enter; becomes a structural problem such as they have in parts of Europe. LK: Rogue trader in KPMG? PI: Looks as though Herbalife was just one company for which there was insider trading [Skechers was the other –ed]
Tuesday 9 April 2013 / Hour 1, Block C: . Victor Davis Hanson, Hoover, in re: Gov Brown called VDH to say that "California's problems are solved, VDH doesn't understand." [Listen to JBS show podcast to hear a litany of what's really occurring in California, and it is not all encouraging.] Elites reserve millions of acres for non-use for their own benefit. The Left is upbeat about policies that do so much damage to the poor and the middle class. Test scores taxes, businesses leaving. Highest gas taxes in the US but 48th in highway maintenance. Brown simply never answers. It’s disturbing. Brown is aiming for Fresno to Corcoran high-speed rail because the elites in Palo Alto didn't want it anywhere near them. Poor people in California are paying the highest electric rates in the world. California's energy resources dwarf those of everywhere else in the US. One per cent of our population pays 50% of the income tax; and it's based on 144,000 people. Departures; $75,000 PA to $300K per annum. Apple just moved a plant to Austin; rumors that HP may leave. Gov Brown castigated me for throwing peanuts at his good works, called me a "declinist" – I told him I was a farmer, but he ddn't much answer.
Politically, California is everything liberals want America to become. Democrats control every statewide elected office, they have two-thirds majorities in both legislative chambers, and the state Republican party is virtually non-existent. Problem is, the policy results liberal Democratic governance has produced aren’t pretty. But don’t worry, says Paul Krugman, all that is changing. In his latest column, Krugman writes, ”Unemployment in California remains high, but it’s coming down — and there’s a projected budget surplus, in part because the implosion of the state’s Republican Party finally gave Democrats a big enough political advantage to push through some desperately needed tax increases. Far from presiding over a Greek-style crisis, Gov. Jerry Brown is proclaiming a comeback.” Krugman does later admit that, “I’m not suggesting everything in California is just fine,” but he never identifies what the problems are in progressive paradise. Here are just a few:
1. California has the nation’s highest unemployment
Krugman does mention that, “Unemployment in California remains high,” but he fails to mention just how high it is. In fact, California is tied with Mississippi and Nevada for the highest unemployment rate in the country at 9.6 percent.
2. California has one-third of all welfare recipients
Krugman asserts that California’s “problems bear no resemblance to the death-by-liberalism story line the California-bashers keep peddling.” But he neglects to mention that California is home to one-third of all U.S. welfare recipients despite housing just 12 percent of all U.S. citizens.
3. California has the nation’s highest poverty rate
Despite all the welfare spending, California still somehow manages to have the nation’s highest poverty rate. Go figure.
4. California has the nation’s highest taxes
Krugman does mention that “serious studies have found very little evidence either that tax hikes cause lots of wealthy people to move or that state taxes have any significant impact on growth,” but he fails to mention that California’s taxes are not just high, but the highest in the nation.
5. California has the nation’s third highest income inequality
California’s already high taxes have failed to adequately redistribute income. Even before the Great Recession, California already had the third-highest income inequality in America (behind New Mexico and Arizona). And according to the Public Policy Institute of California, it only got more unequal during the recession: “Compared to the rest of the country, California experienced larger declines in income at the bottom of the distribution and smaller declines at the top — leading to the largest gap between upper and lower incomes in at least 30 years.”
6. California’s teachers are among the nation’s highest paid while its students are among the least educated
Krugman also claims that “decades of political paralysis have degraded the state’s once-superb public education system.” And it is true: California’s public education system is terrible. In 2011, the state’s eighth-graders finished 48th in reading, ahead of just Louisiana and Mississippi, and 48th in math, ahead of just Alabama and Mississippi. But California is not skimping on teacher pay. It’s teachers are the third highest paid teachers in the nation.
7. California has the nation’s highest energy prices
Krugman does mention the state’s blackout problems in 2001, but blames the entire incident on “deregulation” and “market manipulation.” But California’s failure to build new power plants, refineries, pipelines, and transmission lines is very real. There is a reason California has nation’s the highest gas prices and the among the nation’s highest electricity prices, despite sitting on billions of barrels of oil.
8. California’s budget isn’t balanced
Credit Krugman for noting that California’s budget is only a “projected” one, but he then fails to mention how unreliable California’s tax revenue projections have been in the past. A recent California Common Sense study showed that, since the recession began, the governor’s projections have overestimated revenues by an average of 5.5 percent. Apply that average to Brown’s 2013 projections and California’s budget would suddenly go from $1 billion in the black to $3.9 billion in the red.
9. California is deep in debt
Even if California’s current budget does produce a tiny surplus this year, the state is still deeply in debt. According to the state’s own auditor, California has a negative net worth of $127 billion, about half of which stems from “$57.5 billion in outstanding bonded debt issued to build capital assets for school districts and other local governmental entities.”
Other than that, California’s comeback is going great.
Tuesday 9 April 2013 / Hour 1, Block D: Larry Kudlow, in re: : Pres Obama neglects to hand in the budget on time. $120bil in savings over 20 years? Polls say: it's a reduction in people's benefits and much disliked. Wants $600bil in addtl taxes – a 20% limit on tax deductions.