From The Examiner, taken aback (as were we) by the President’s recent remarks holding up California as a model of energy conservation and economic leadership. From today’s editorial, “California here we come“:

While promoting his new cap-and-trade energy tax bill, which passed the U.S. House last week, President Obama revealed in a White House address on Monday his model for the nation’s economy - California. “In the late 1970s, the state of California enacted tougher energy-efficiency policies,” Obama said, noting that the state and its residents use less energy today per capita than the national average. “Think about that,” he said, “California producing jobs, their economy keeping pace with the rest of the country and yet they’ve been able to maintain their energy usage in a much lower level than the rest of the country.”

Obama might want to rethink his choice of a model state because it is easy to understand how California has curbed its energy use. Between 2000 and 2007, before the current recession, the state shed nearly 21 percent of its manufacturing jobs, driving down its industrial electrical consumption by 21 percent. California’s industrial users pay electric rates twice as high as their Midwestern counterparts - which helps explain why so much heavy industry has fled the state. In addition to alienating its industry, California has also curbed energy use through exorbitant residential electric rates (50 percent higher than the national average) and massive net out-migration. Between 2005 and 2007, 2.14 million Californians moved to other states, while only 1.44 million people from elsewhere moved to the Golden State, according to the U.S. Census Bureau.

California’s state leaders failed to get a budget in place for the start of the new fiscal year, and state employees may soon be paid in IOUs.

There’s a news peg for the White House press corps to ask a question of Mr. Gibbs today: “Earlier this week President Obama held California up as a model of energy and economic leadership. California is some $20 billion in the red, failed to get a budget in place for the new fiscal year, and is going to issue IOUs instead of paychecks. In what way does the President regard California as leader?”

James Pethokoukis at Reuters’ “Political Risk” blog explains, “Why Europe wants America to raise taxes” by citing the words of Finland’s prime minister. Post global recession, the prime minister wants a coordinated approach in Europe consistent with the goal of “tax harmonization.”

The overall tax rate will have to rise as well over the longer term. In some areas that can be done without much consultation between the countries. … However, raising such taxes can have detrimental effects on economic activity. This is especially so when a country acts on its own: capital and people can respond by migrating to jurisdictions with lower rates. … Parallel measures would help all of Europe: tax competition risk would be reduced and the public finances of individual countries would improve. Such co-ordinated tax changes could set also an important global example. In particular, it might encourage the US – with lower tax levels in most areas – to do what has to be done to address its spiralling budget deficit.

Competitiveness — The Europeans want the United States to raise taxes in order to be less competitive.

Thankfully, the Europeans have not yet consensused themselves into unanimity on the topic. Noel Sheppard at Newsbusters.org notes recent developments and the lack of media coverage, “Media Mostly Ignore German and Hungarian Tax Cuts.”

No coverage? That’s because they’ve already been harmonized.

While promises to increase taxes on businesses, particularly those with operations overseas, may play well on the campaign trail, it’s clear that, when the dust settles, the rhetoric has no basis in reality. 

In today’s Washington Post, columnist Geoff Colvin does a good job of dispelling any notion that U.S. corporations are up to no good when it comes to the tax code.  In fact, the tax changes proposed by the Administration represent a major change in long-standing tax policy designed to “level the playing field” in a global economy where most countries tax business income at a lower rate.  At the end of the day, these proposals amount to a hefty tax increase on U.S. multinational companies.  The international tax changes, combined with other tax increases like the repeal of “LIFO” and the new carbon “tax and trade,”  are bad news for all of us.  As any economist knows, corporations don’t pay taxes, we—customers, shareholders and workers— do.

From Jim Geraghty, The Campaign Spot, “It’s Easy To Cut the Budget When You Have No Other Option“:

New Jersey Governor Jon Corzine is touting the fact that by signing the budget [Monday], he “became the first Governor of New Jersey in over six decades to reduce, two years in a row, the size and cost of state government.”

Except that he really didn’t have too much choice in the matter, as the state is facing a “historic tax-revenue collapse” and the state constitution requires a balanced budget. And the revenues started plummeting in the first months of the budgetary year last year.

And while the current budget does include some spending cuts, it also makes up the gap with $2 billion in federal stimulus money and raises taxes on wine and hard liquor, tobacco, and top earners. Oh, and if you win the lottery, the state is now taxing those winnings, too.

Which reminds us again of the Wall Street Journal editorial on the Albany-Trenton-Sacramento disease, with the second headline, “How three liberal states got into deep trouble with ‘progressive’ ideas.”

From President Obama’s remarks Monday on energy and cap-and-trade legislation, offering California as a model for the rest of the country:

Think about that. California — producing jobs, their economy keeping pace with the rest of the country, and yet they have been able to maintain their energy usage at a much lower level than the rest of the country.

From the weekend, “Controller: IOUs signal Calif fiscal mismanagement“:

SACRAMENTO, Calif. (AP) — Thousands of Californians will be hurt and it will cost millions if the state is forced to hand out IOUs instead of payments next week, the state controller said Friday. The IOUs could come as soon as next Thursday, yet lawmakers remained no closer to a budget compromise.

State Controller John Chiang (CHUNG) said Gov. Arnold Schwarzenegger and lawmakers need to come up with a complete solution to the state’s $24.3 billion deficit instead of making a political statement.

Some government entities are so strapped for cash, they’re thinking of taxing marijuana sales.

• KGTV, San Diego, “Possible Alcohol Tax Increase By 10 Cents In California”
• Sarasota Herald-Tribune, “Raise the alcohol tax“
• Salt Lake Tribune, “Proposed beverage taxes face stiff opposition“
• Boston Herald, “Package stores say new alcohol tax could cost over 3000 jobs“

There are lots more of this sort of story. And a letter to the editor in the Asbury (N.J.) Park Press, “Restaurant tax will harm many,” contending, “For the state to add a 25-cent tax on wine and liquor for licensed restaurants would be devastating.”

Meanwhile, in France…

Diners and quaffers in France will get a welcome boost on Wednesday July 1st when VAT on bills in restaurants and cafes is slashed from 19.6% to 5.5%. France hopes to encourage tourists and locals to dine out more bringing extra employment to the catering industry.

Or is it Ministry of Plenty?

From Olympia Business Watch, the blog of the Association of Washington Business, “Oregon becomes first state to pass union ‘gag rule’ bill“:

Oregon became the first state in the nation to pass the national AFL-CIO’s model “Worker Freedom Act,” the gag rule bill known in Washington the last several sessions as the “Worker Privacy Act.”  It purports to rebalance federal labor law in unions’ favor by restricting employers’ ability to effectively communicate with employees about labor issues during organizing and bargaining campaigns.  The Oregonian reports here, with statehouse coverage here….[snip]

If the measure is signed, expect a court fight.  One of the reasons it took national unions so long to find a state willing to pass the bill is its extremely dubious legality. Especially in light of the U.S. Supreme Court broadly striking down a similar California measure aimed at employer speech about unions, these proposals have been viewed as attempting to take away rights that employers clearly enjoy under federal labor law — something states are pre-empted from doing.

The bill is SB 519. It’s the latest in a series of anti-jobs, anti-employer measures the state’s leaders have embraced. As the Albany Democrat-Herald’s editor describes it:

The job situation in Oregon keeps going downhill, and the majority in the legislature keeps making things worse. How? By making life tougher for employers and refusing to encourage things that might generate more private-sector jobs, such as the BLM timber management plan.

Also, among other things, it has voted to raise taxes and fees, and it is poised to approve a field burning ban that will harm the grass-seed segment of Oregon agriculture.

In order to expand the state health service, the legislature will tax providers in a way that increases costs for all. It also has voted to punish employers if they insist on communicating with workers on labor issues.

Oregon now has the highest increase since last year in the welfare case load, the Wall Street Journal reports. That distinction goes along with Oregon’s second place, behind Michigan, in the rate of unemployment.

Just wondering if this is the change that Oregon voters last fall had in mind. (hh)

Oregon’s unemployment rate in May was 12.4 percent, the highest unemployment level in the state since November 1982. (November, 1982? Why, that was the month your correspondent moved out of Oregon to look for a job.)

Rather than target a single successful, homegrown industry — microbreweries — with a 1,900 percent tax increase, Oregon’s legislative majority has decided to be more inclusive, hitting a broader swatch of industry — especially small businesses. The political strategy is not to tax wage-earners, it’s to tax the people who pay the wages.

From The Associated Press, “Oregon lawmakers nix increasing beer, cigarette taxes in ’09“:

SALEM, Ore. – Proposed beer and cigarette tax increases have been shelved by Democratic legislative leaders who say they don’t want to increase the tax burden on working class people in these tough economic times.

But there’s another issue at play here – lawmakers also don’t want beer and cigarette tax hikes to drag down the big income tax increase package they’ve already passed to balance the next two-year budget.

The $733 million tax increase on corporations and upper-income households is central to the Democrats’ strategy to keep state services afloat by making some cuts, using reserves and stimulus dollars and trying to avoid raising taxes on lower- and middle-income Oregonians.

For more details on hefty increases on business and individual incomes, see the Corvallis Gazette-Times, “Businesses say tax hike will stifle recovery.” And the Wall Street Journal editorialized on the Legislature’s destructive course, “The Oregon Travail,” noting, “Another revenue raiser will tax hospitals and private health insurance premiums. That’s a good way to encourage private employers to drop their health coverage for workers.”

Back in the late ’60s and ’70s, Oregon Governor Tom McCall earned national attention for his generally good-natured anti-California campaigns. He told a CBS reporter, “Come visit us again and again. This is a State of excitement. But for heaven’s sake, don’t move here to live.”

McCall was guarding against the social and government costs brought by rising populations, but turns out it wasn’t the social ills or the pressure on schools and infrastructure that were the real danger. It was bad public policy, exported north from California.

Speaking of which, “California’s unemployment rate climbs to record 11.5 percent“:

LOS ANGELES (AP) - California’s unemployment rate climbed to 11.5 percent in May, the highest in modern record-keeping, the U.S. Department of Labor reported Friday…[snip]

Only four states had higher rates: Michigan, Oregon, Rhode Island and South Carolina. Indeed, Oregon’s 12.4 unemployment rate in May was the second highest in the nation.

Highly recommended, Daniel Howes’ column, Detroit News, “U.S. letting manufacturing slip away“:

Forget the bailouts and the billions of taxpayer dollars pumped into the rescue of Detroit’s auto industry — the crisis in American manufacturing is far from over.

“We’re absolutely still falling behind,” Richard Dauch, chairman of American Axle & Manufacturing Holdings Inc., told me in an interview Tuesday, day two of the National Summit at the Marriott Renaissance Center. “We’re now immersed in a global war and we simply need to learn how to compete again in America.”

But America, judging by the government-imposed burdens weighing on its manufacturers and the headlong rush toward a green promised land that may or may not deliver as advertised, increasingly looks like a country unsure whether it wants to fight to preserve the jobs that countries around the world want because they create wealth — now.

Howes highlights corporate taxation — second highest statutory rates in the world — as working against competititiveness, and there are many other damaging policies being pushed at the same time U.S. manufacturing slips, e.g. “Made in America” protectionism and the Employee Free Choice Act.

To help the Washington Post sustain its powerful on-line site, www.washingtonpost.com, we cite these ads, which popped up in searching for a story on health care.

And in relevant stories …

• CBS News, “Daschle: Tort Reform ‘On The Table‘”
• Fox News, “Obama May Consider Malpractice Reform in Bid to Win Doctor Backing on Health Care Plan“
• New York Times, “Obama Open to Reining in Medical Suits“

Interesting that cruises are No. 1 on the featured advertiser links. The American Association for Justice, i.e., the trial lawyers, certainly sees cruise line companies as a target for lawsuits of all sorts.

The Barbara Boxer link goes to her 2010 campaign website.