For basic background, start with The Weigh-in: The Economy.
State and SF sue Trump administration over sanctuary funding cuts
published Aug 14, 2017
Another day, another lawsuit over the federal government’s immigration policy.
This morning the state’s top prosecutor, Xavier Becerra, and San Francisco City Attorney Dennis Herrera announced that they are filing side-by-side law suits against the Trump administration, an effort to protect federal funding for designated “sanctuary jurisdictions.”
“It’s a low blow to our men and women who wear that badge for the federal government to threaten their crime fighting resources in order to force them to do the work of the federal government when it comes to immigration enforcement,” Becerra said at a San Francisco press conference this morning. “We’re in the public safety business; we’re not in the deportation business.”
These two lawsuits come as a response to an announcement from the federal Department of Justice last July that cities must cooperate with federal immigration authorities in order to receive funding through the Edward Byrne Memorial Justice Assistance grant program. Specifically, cities must grant federal immigration authorities access to local detention facilities and give them 48 hours notice before the release of a suspected undocumented immigrant from local custody.
In a similar vein, Justice Department also sent letters earlier this month to the police chiefs of Stockton and San Bernardino, warning them that funding from a new federal grant program aimed at reducing violent crime could be made conditional on scrapping local sanctuary city policies.
Uploaded by SFGovTV on 2017-08-11.
California cities, counties, and state agencies receive over $28 million from the federal government in law enforcement grants.
Today’s announcement follows a similar bit of litigation filed by the City of Chicago earlier this month. In response to that lawsuit, Attorney General Jeff Sessions said that the administration refused to “simply give away grant dollars to city governments that proudly violate the rule of law and protect criminal aliens.”
“So it’s this simple: Comply with the law or forego taxpayer dollars,” Sessions said in a statement.
Because the Trump administration is attempting to place restrictions on police officers and sheriff’s deputies, opponents have argued that it amounts to the commandeering of state and local officers by the federal government, a violation of the 10th Amendment of the Bill of Rights.
“Immigration enforcement is the federal government’s job,” Herrera said. “Our police and deputies are focused on fighting crime, not breaking up hardworking families.”
While Governor Brown has expressed some skepticism about Senate Bill 54, the so-called “sanctuary state” bill currently before the state Assembly, earlier this month on NBC’s Meet The Press he said that it might be more productive to “resolve this in a judicial form rather than in the rhetoric of politicians talking past one another.”
The battle between California and the Trump administration dates back to the first days of the administration. In late January, the president signed an executive order deeming designated sanctuary jurisdictions “not eligible to receive Federal grants, except as deemed necessary for law enforcement purposes.” That order has since been successfully held up in court by cities, counties, and states across the country—including California and San Francisco.
Two of California's most violent cities may lose crime funds over sanctuary policy
published Aug 3, 2017
Two California cities in the running for a new federal aid program aimed at fighting violent crime received an ominous message today from the Trump Department of Justice: sanctuary cities need not apply.
In a letter sent to the police chiefs of San Bernardino and Stockton, the administration made it clear that participation in the newly created National Public Safety Partnership Program—which will train local police departments on how to better fight violent crime—may be conditional on cooperating with federal immigration authorities.
“Your jurisdiction has expressed interest in receiving assistance through the PSP program,” wrote acting Assistant Attorney General Alan Hanson. “The Department is reviewing your jurisdiction’s commitment to reducing violent crime stemming from illegal immigration.”
The chiefs were asked to demonstrate that the laws of their cities require local police to allow federal immigration agents into city jails, provide federal authorities with advanced notice before releasing an undocumented immigrant from custody, and honor federal requests to detain an undocumented immigrant beyond his or her release date.
The California Trust Act prevents state and local law enforcement officers from keeping non-felons behind bars solely at the request of federal immigration authorities. The Justice Department has deemed this, and related state and local restrictions, to be unlawful “sanctuary” policies.
President Trump has threatened to revoke funding from designated “sanctuary cities” since the first days of his administration. Earlier this year, the Department of Homeland Security began issuing weekly reports identifying cities, counties, and states considered to be out of compliance with federal immigration law. San Bernardino, though not Stockton, made the list. That program has since been suspended.
Last week, the Department of Justice announced that cities failing to cooperate with federal immigration authorities would no longer be eligible for the Byrne Justice Assistance Grant program, which provides state and local law enforcement agencies with funding for personnel, training, and equipment to fight crime.
Michael Tubbs, the mayor of Stockton, responded with a statement saying that while he looked forward to a “fair and equitable” review of the police department’s application, the city would not be changing any of its law enforcement policies. “Our police will continue the department policy to not stop, question, detain or place an immigration hold on any individual solely on the grounds that he or she may be a deportable alien,” said Tubbs. “This practice is consistent with law enforcement policy throughout the United States.”
Between January and July of this year, 2,158 violent crimes were committed in Stockton, making it the most violent city in the state per capita, according to FBI statistics. San Bernardino came in third after Oakland.
The police chiefs were given until August 18 to respond.
Trump administration amps up move to cut funding for sanctuary cities
published Jul 27, 2017
The Trump administration is increasing its pressure on self-identified sanctuary cities—announcing this week that it would pull some federal grants if cities refuse to notify immigration enforcers when they are about to release undocumented immigrants from local jails.
“So-called ‘sanctuary’ policies make all of us less safe because they intentionally undermine our laws and protect illegal aliens who have committed crimes,” Attorney General Jeff Sessions said.
Cities that receive funds from the Byrne Justice Assistance grant program are the targets of this new policy. In order to comply, cities will have to give 48-hour notice to federal immigration enforcement when an inmate is about to be released, allow agents into local and state jails to pick up undocumented inmates, and comply with a law that requires they not block the flow of information about the immigration status of those arrested.
San Francisco received $1.5 million last year from the grant program, which aims to decrease drug use and help with rehabilitation. City leaders have contended that their policies are already in line with the federal government. Under the guidelines for the grant program, cities already are required to allow federal agents into their jails and to give the government two days’ notice before releasing an inmate in the country illegally. The City Attorney’s office is reviewing the announcement and according to the San Francisco Chronicle said it did not “anticipate it would be successful.”
Critics are reviewing the policy and law experts have said it’s unclear if the president or the Department of Justice can place such unilateral conditions on funding.
Recent court decisions that blocked previous threats to cut off federal funds for sanctuary cities. At that time U.S. District Judge William Orrick III in San Francisco said the push by the administration went beyond the president’s authority.
Trump budget could ax planned earthquake alert system
published May 26, 2017
President Trump has promised to shake things up with his administration’s program-slashing budget proposal—and that could leave California vulnerable when the next big earthquake hits.
The Trump administration’s spending plan would ax funding for a region-spanning earthquake early warning system that is in the process of being rolled out along the West Coast.
“If that funding went away, we would have to lay off a number of the developers, and the development would basically cease,” Tom Heaton, a Caltech professor who works on the project, told the Los Angeles Times.
The program uses strategically located seismological sensors to estimate the magnitude of earthquakes in real time, allowing alerts to be sent to rail systems, hospitals and even smartphone users.
The proposed cut comes as some experts warn that California could be overdue for a major earthquake. A recent federal study found that a section of the San Andreas fault north of Los Angeles tends to rupture every 100 years. The last major quake occurred in 1857.
Feds will OK $647 million Bay Area rail electrification project
published May 22, 2017
After months of hemming and hawing, the Department of Transportation announced today that it will be approving a $647 million grant to fund the electrification of the Caltrain rail corridor that connects San Francisco and San Jose.
That has some California Democrats praising the heavens, if not the Trump administration.
“This is an ‘Alleluia’ moment,” Silicon Valley Congresswoman Anna Eshoo said in a statement. “Today, I am proud that our generation is able to build something worthy of the future of our region.”
The fate of the electrification project has hung in political limbo since mid-February, when Department of Transportation Secretary Elaine Chao announced that she would hold off on approving the money. Caltrain officials applied for the grant in the final months of the Obama administration, and the fate of these dollars has been seen as one of many political flashpoints between California and the Trump administration.
Governor Brown and other California Democrats spent much of the spring lobbying the Department of Transportation, along with high-ranking California Republicans like Kevin McCarthy, to nudge the Trump administration toward approval. It remains unclear whether that charm offensive was responsible for today’s decision, but leading Democrats are already congratulating one another.
“This would have not been possible without the help of the local leaders who pushed for the project and my congressional colleagues who agreed to enact funding,” Senator Dianne Feinstein said in a statement. “This is a win for everyone involved.”
Well, maybe not everyone.
The administration’s decision to hold off earlier this year came weeks after all of California’s Republican Congress members penned a letter asking Chao to wait until the state’s high-speed rail project was subjected to an audit. Though the Silicon Valley electrification project is distinct from the High Speed Rail system, the California bullet train would run along the newly electrified tracks.
Trump tax reform proposal could cost Californians a cherished loophole
published Apr 27, 2017
President Trump is rounding out his first 100 days in office with an ambitious tax reform proposal that threatens to nix a provision that Californians particularly enjoy.
Yesterday, the White House unveiled a long-awaited blueprint to restructure the tax code, a plan that is short on detail, but big on bold proposals. Those proposals include doubling the standard deduction and slashing the tax rate on corporate income and capital gains. To pay for these cuts, the administration plans to plug up some of the tax code’s most expensive loopholes.
But axing the state and local tax deduction, one of the largest tax expenditures on Trump’s chopping block, would hit more prosperous Californians. In fact, in the words of the Sacramento Bee, it would “hurt California more than almost any other state.”
IRS tax data indicates that of the nearly $516 billion that American taxpayers deducted in state and local taxes, Californians claimed $101 billion (or 19.6 percent).
The state and local deduction allows people who itemize on their tax forms to write off some of their payments made to state and local governments. Conservatives have long characterized the deduction as a giveaway to blue states where lawmakers can raise taxes without paying the commensurate political price.
It also comes at a big cost to the federal government. The federal Joint Committee on Taxation estimates that closing the loophole would bring in an average of $100 billion in extra federal revenue each year.
But although the deduction may be beloved by blue states, it disproportionately benefits high-earners. That’s both because low-income filers tend not to itemize their deductions, and because the wealthy typically pay higher state taxes—particularly in California with its progressive rate structure. Californians earning over $100,000 take home 83 percent of the deduction, despite making up 18 percent of taxpayers statewide.
While the average taxpayer in the less affluent, inland counties of Modoc, Imperial, and Tehama claim an average of around $1,500 from the state and local deduction, the average Marin taxpayer reduces their taxable income by $17,000.
Still, rich California need not fret. If enacted—and we’re still a long way from that—President Trump’s tax plan looks like a plum deal for most high earners.
California borrows big for high-speed rail despite lack of Trump support
published Apr 25, 2017
California just made a $1.25 billion bet on the future of high-speed rail.
Last Thursday the state issued its first round of bonds to finance the construction of the state-crossing, GOP-enraging infrastructure project.
That comes as a financial vote of confidence for the controversial transportation scheme that has been dogged by litigation, delays, and other obstacles for years. One of those hurdles comes from the Trump administration itself, which decided last February to hold off on approving a $647 million grant that would have helped electrify a stretch of track slated for future high-speed train traffic.
So far, the state has borrowed roughly $1 billion to fund preparation and design for the project. But these new dollars will be the first to go towards actual construction, which began in 2015. With bond funding held up by litigation, the preliminary work has so far been funded primarily with federal dollars and revenue from the state’s cap and trade greenhouse gas allowance auctions. This new round of borrowing represents a “milestone” for the program, according to Rail Authority spokesperson, Lisa Marie Alley.
In 2008, voters gave the state the go-ahead to borrow nearly $10 billion to fund a 220 mile-per-hour rail network that would connect the Bay Area, the San Joaquin Valley, and Southern California. If all goes well, the San Francisco-to-Anaheim leg will be complete by 2029.
But all may not go well. Federal funding issues aside, a Sacramento County Superior Court will hear the latest legal contest to the project—this one objecting to the state’s ability to spend those newly borrowed dollars—tomorrow.
Federal judge thwarts attempt by Trump to punish 'sanctuaries'
published Apr 25, 2017
A federal judge today blocked President Trump’s executive order that would have kept federal funds from flowing to municipalities that consider themselves sanctuary cities for undocumented immigrants.
The preliminary injunction comes just days after the Justice Department threatened to stop funding for so-called sanctuary jurisdictions, including the state of California, if they did not prove they are cooperating with the federal immigration enforcement in finding and detaining undocumented immigrants.
Orrick, an Obama appointee, wrote that the Justice Department can withhold grants from cities or counties, but is prohibited from “violating the constitution” in its efforts to get compliance. He said there was a strong case that the executive order effectively commandeers local law enforcement resources without clearly defining what is required in order for jurisdictions to comply with the law.
The administration says cities and states, including many California jurisdictions, that act as sanctuaries are thwarting the law. It contends cooperation is vital to keep the country safe.
The move is being seen as another blow to Trump’s attempt to pressure regions through his executive order on immigration enforcement. The city of San Francisco and Santa Clara County argued that the threat of de-funding made it hard to plan their county budget. Other cities have also sued including Seattle and two cities in Massachusetts.
According to the state Attorney General’s office the order only applies to three Justice Department and Homeland Security Department grants.
Orrick ruled that the order, “by its plain language, attempts to reach all federal grants, not merely the three mentioned at the hearing.” He went on to say, “The rest of the order is broader still, addressing all federal funding. And if there was doubt about that scope of the order, the president and attorney general have erased it with their public comments.”
Trump demands proof California's cooperating on immigration—or else
published Apr 21, 2017
Following through on a pledge to undermine so-called sanctuary cities, the Trump administration today demanded that nine jurisdictions provide proof that they’re cooperating with immigration enforcement—or risk losing some federal grants.
The California Board of State and Community Corrections received one of the U.S. Justice Department’s letters. Others went to officials in Cook County, Ill., Chicago, Las Vegas, Miami, Milwaukee, New Orleans, New York and Philadelphia.
President Trump has repeatedly threatened to cut all federal funding for sanctuary cities, but the Los Angeles Times reports it’s doubtful that Congress would go along with such an aggressive punishment. So far, the administration has only proposed cutting off cities’ Justice Department grants, meaning the $20 million the California Board of State and Community Corrections received last year and shared with counties and the state prison agency could be withheld.
California officials are railing against the letters.
“It has become abundantly clear” that U.S. Attorney General Jeff sessions and the Trump administration “are basing their law enforcement policies on principles of white supremacy – not American values,” Senate President Pro Tem Kevin de Leon said in a statement. De Leon is the author of Senate Bill 54, which would declare California a sanctuary state.
California Attorney General Xavier Becerra issued a statement accusing the administration of threatening public safety, and he vowed to defend the state’s policies. “Federal threats to take away resources from law enforcement or our people in an attempt to bully states and localities into carrying out the new administration’s unsound deportation plan are reckless and jeopardize public safety,” he said.
Both Becerra and Trump’s Attorney General Jeff Session are appearing Sunday morning on ABC’s “This Week” to talk about immigration policy.
The U.S. Justice Department has asked the jurisdictions to respond to the letters in writing and document their cooperation with immigration officials by June 30.
If feds dump the estate tax, California may get one of its own
published Apr 11, 2017
As President Trump and Congressional Republicans plan to reconfigure the federal tax code, the estate tax—defended by liberals as a vital check on inequality and reviled by conservatives as fiscal punishment dealt to the recently deceased—may not be long for this world.
But if the controversial tax should meet its untimely end this year, Democratic state Sen. Scott Wiener of San Francisco wants California to introduce an estate tax of its own.
Senate Bill 726 would place a measure on next year’s California ballot asking voters whether the state should be allowed to place a tax on property transferred “by reason of death.” State and local governments are currently barred from doing so, thanks to a proposition passed by voters in 1982.
The Senate Governance and Finance Committee will take their first look at the issue later this month. The federal estate tax currently generates more than $4 billion from California each year. If the state introduces its own version, those funds would go to Sacramento rather than D.C.
The political battle over the estate tax long predates the Trump presidency. For decades, conservatives have railed against the “death tax,” and plans separately introduced by both House Republicans and President Trump call for the full elimination of the estate tax.
“No family will have to pay the death tax,” Trump told the Detroit Economic Club last August. “American workers have paid taxes their whole lives and they should not be taxed again in death.”
In fact, most workers do not. Because the tax is only applied to the value of an estate that exceeds $5.45 million, only 0.02 percent of property owners end up paying the IRS for the luxury of dying—although of course it’s their heirs who actually forego some of their inheritance. And for all the political controversy it arouses, the tax isn’t a particularly important source of federal funding, generating approximately $20 billion every year, or roughly half of one percent of all federal revenue.
If SB 726 passes and voters approve the measure, California would not be alone in applying its own tax to inherited wealth. Currently, 19 other states impose some form of estate or inheritance tax. But Wiener is presenting the tax as a direct response to the Trump administration and vows to withdraw the measure if the federal estate tax is left untouched.
Amicus from the AG: Sanctuary City-by-the-Bay gets new friend-of-the-court
published Mar 29, 2017
In the case of San Francisco v. Trump, the City by the Bay just got itself a powerful new ally.
This afternoon, California Attorney General Xavier Becerra filed a “friend-of-the-court” brief in U.S. District Court, siding with San Francisco in its lawsuit against President Trump’s executive order to defund sanctuary cities.
“California has a sovereign right and responsibility to protect the safety and the constitutional rights of its residents, including by adopting laws and policies that place appropriate limits on the ability of the federal government to use state and local resources for the enforcement of federal immigration policy,” the brief reads.
This isn’t Becerra’s first anti-Trump amicus. Last week, the state attorney general put in a good word on behalf of Santa Clara County in its own legal challenge against Trump’s executive order from last month.
Today, Seattle filed its own lawsuit against the President’s sanctuary city order as well.
Will California get defunded over its sanctuary policies? Maybe, but just a little.
published Mar 27, 2017
Finally, the other shoe drops.
For months President Trump has been threatening to defund “out of control” California and the “sanctuary cities” within its borders for policies that he considers violations of federal immigration law. These challenges from the Oval Office have raised the hackles of state Democrats, just they have raised questions among legal scholars wondering how—and to what extent—the President plans to unilaterally pull federal funds from uncooperative cities and states.
Attorney General Jeff Sessions offered an answer to those questions today.
At a press conference at the White House this morning, Sessions announced that the Department of Justice would begin to consider withholding grants from so-called sanctuary cities and states.
The Trump administration defines a sanctuary jurisdiction as those that violate Title 8, section 1373 of the U.S. Code. That section bars cities and states from regulating if and how local, state, or federal government officials share information with Immigration and Customs Enforcement.
“The (federal government) will require that jurisdictions seeking or applying for Department of Justice grants to certify compliance with 1373 as a condition of receiving those awards,” said Sessions. He also warned that the department would “take all lawful steps to clawback” grant funds that have already been awarded to designated sanctuary cities.
Last year, California law enforcement agencies received $132 million in grant money from the Department. Sessions said that the Department plans to award $4.1 billion in such grants across the country this coming year.
High-profile sanctuary cities like San Francisco, which Sessions called out specifically during his speech, deny that they are in violation of Section 1373. Nevertheless, California Democrats are responding to Sessions remarks as a provocation.
“The announcement today by Attorney General Jeff Sessions is nothing short of blackmail,” said Senate President Pro Tem Kevin de León in a statement.
Likewise, Senator Kamala Harris took her response to Twitter:
California won't deny access to public safety, public health, or public education because of threats from this administration. https://t.co/yqe324c1FE
— Kamala Harris (@KamalaHarris) March 27, 2017
And in a press release issued this afternoon, California Attorney General Xavier Becerra called it a “low blow to our brave men and women in uniform to threaten to withhold public safety funding that they have earned unless Donald Trump gets his way on immigration.”
Even so, the Attorney General’s statement today may come as a relief to some California lawmakers. President Trump’s earlier statements left it unclear whether the administration intended to strip all federal funding from sanctuary jurisdictions (something that many legal scholars say courts would consider an overreach) or to simply cut off grants that directly relate to local and state law enforcement.
The Attorney General’s announcement this morning amounted to a threat to withhold roughly $130 million from California. That isn’t peanuts, but it’s less than one-twentieth of one percent of the $368 billion that the state receives from D.C. every year.
What will a $6 billion cut to HUD mean for California's housing woes?
published Mar 16, 2017
If California was looking to Washington for help in tackling its housing crisis, it got a firm response from the White House today: enquire elsewhere.
In a proposed budget released this morning, President Trump requested a $54 billion budgetary reshuffle that would see a significant spike in defense spending and deep cuts for just about every other discretionary program. If enacted, the “Budget Blueprint to Make America Great Again” would affect virtually every aspect of California policy. But amid a worsening housing and homelessness crisis, the proposed $6 billion (13 percent) cut to the Department of Housing and Urban Development would come at an inopportune time for the Golden State.
Trump’s “skinny budget” is a wish-list—a starting point for Congressional budget negotiations. But even as a declaration of presidential priorities, it has many California housing agency heads and progressive advocates worried.
Yesterday, as rumors of the ten-digit spending cut were circulating, the Sacramento Bee reported that the cuts might mean that no additional vouchers will be awarded this year to those awaiting Section 8 housing support in that city. Similar concerns echoed across the state.
Though the President’s preliminary budget is short on detail, the bulk of the proposed cuts would fall upon housing development grants, rather than on programs that provide direct rental aid to those who need it. It would zero out the following:
- Community Development Block Grant Program
- HOME Investment Partnership Program
- Choice Neighborhoods
- Self-help Homeownership Opportunity Program
- Section 4 Capacity Building for Community Development and Affordable Housing
Of those, the loss of the Community Development Block Grant would hit the state the hardest. Last year, California received $357 million dollars through these grants. They’re awarded to cities and counties and then channeled to affordable housing and public space development initiatives, small business loans, community beautification projects, and even general assistance programs like Meals on Wheels. The scope is broad by design, based on the idea that locals are in the best position to know how to solve local problems. But what some call flexible, others see as scattershot. In its budget proposal, the Trump administration says that the program is “not well-targeted to the poorest populations and has not demonstrated results.”
Likewise, the end of the HOME Program would mean the phasing out of the largest federal block grant system aimed exclusively at local and state affordable housing development. Last year, the state received $129.5 million through this program; since 2012 HOPE has funded the construction and renovation of 7,391 units.
Choice Neighborhoods is a legacy of the Obama administration that has supported public housing revitalization projects in San Francisco, Sacramento, and Los Angeles. The Self-Help Homeownership Opportunity Program goes towards housing construction nonprofits like Habitat For Humanity.
Taken at face value the budget appears to leave many of HUD’s more high-profile programs, such as the Low Income Housing Tax Credit program and the Housing Choice (Section 8) program, largely intact. But some policy analysts and advocates are skeptical.
The cuts to HUD come at a time when many housing advocates are urgently calling for more spending. The Center on Budget and Policy Priorities estimates that if current spending levels are maintained, housing agencies across the country would be forced to issue 100,000 fewer housing vouchers for low-income families, as rising rents mean that there is less rental assistance to go around. Nearly 15,000 of those lost vouchers would be in California. Speaking to the Washington Post, Douglas Rice of the center said that the proposed HUD cuts would double that shortfall to 200,000.
Policy makers across the state have offered similar reactions. Butte County is contemplating cutting assistance to 250 to 300 households. This morning, Los Angeles Congresswoman Karen Bass warned that eroding support for Section 8 could undercut the city’s new voter-affirmed plan to tackle homelessness.
Low-Income Housing Tax Credits appears to be safe for now—but with Republicans clamoring for tax reform, many housing advocates worry that future cuts to the corporate income tax could reduce demand for such federally issued credits. Housing developers have already noted a reduction in demand for such credits as businesses anticipate facing lower rates before too long.
Those concerned about housing in California shouldn’t panic yet. The presidential budget proposal is only the opening bid in what is sure to be a long, tedious debate, and already there are signs that even the President’s allies in Congress may not have the stomach for such spending reductions. But for those who were hoping that D.C. might chip in to help California address the housing crisis, this isn’t an encouraging first step.
Trade War: What is it good for? Two economists say "absolutely nothing."
published Mar 9, 2017
From the campaign trail to the Oval Office, President Trump has offered a consistently uncompromising message when it comes to trade: “We will only make great trade deals that put the American worker first.”
But two of California’s most prominent economic prognosticators are now warning that Trumpian trade policy might not be so great for the Golden State.
In dueling economic forecasts released over the last few days, both the UCLA Anderson Forecast and the Fermanian Business & Economic Institute warned of dire consequences for the state should President Trump’s policies steer the country into a trade war.
“The administration’s outspoken hostility to the North American Free Trade Agreement (NAFTA), especially with respect to Mexico, risks a major disruption in economic activity,” said David Shulman, a senior economist at UCLA.
Jerry Nickelsburg, another Anderson School forecaster, warned that “deportations of unskilled workers will impact food harvesting and food processing,” a concern shared by at least some farmers across the state.
The warning from UCLA echoes one offered a late last week by Lynn Reaser, who provides economic forecasts for the Fermanian Business & Economic Institute in San Diego and is also the chief economist on the state Treasurer’s Council of Economic Advisors: “A trade war runs the risk that everyone would see lower growth.”
While Trump hasn’t declared all out war on our trading partners, he has assumed a more pugilistic stance than his predecessors. One of his first presidential moves was to pull the country out of the Trans-Pacific Partnership (TPP), a trade agreement that would have eased trade restrictions and standardized environmental, labor, and intellectual property standards between the United States and 11 other countries across the Pacific Rim.
During his campaign, the President also threatened to impose a 45 percent tariff on Chinese imports. More recently, the administration floated the idea of slapping a 20 percent tax on the goods that Americans buy from Mexico as one possible way to pay for his proposed border wall.
Trump argues that such tariffs will jumpstart domestic job growth by protecting industries that produce goods grown or manufactured more cheaply abroad. Defenders of Trump’s trade policies also envision using tariffs as a means of punishing countries like China, which the administration has accused of artificially depressing the value of its currency to make its goods cheaper on world markets. The director of Trump’s National Trade Council, UC Irvine economics professor Peter Navarro, is the co-author of Death by China, a book that lays the blame for much of the county’s economic woes on the “predatory” behavior of our largest trading partners.
Most economists, however, do not share this zero-sum view of trade. Placing taxes on imported goods make many of the things that consumers and businesses rely upon more expensive—and they risk provoking retaliatory tariffs. Roughly 46 perecent of all international goods purchased in California come from Mexico and China with a total value of $190 billion.
Flashing RR signal: What to make of Trump administration's delay on funding for Caltrain electrification?
published Mar 1, 2017
When it comes to good old-fashioned, earth-cleaving infrastructure projects that create jobs and make legacies, President Trump and Gov. Brown share a mutual fondness. These may be fractious times, but surely we can find common ground over breaking ground, right?
Well, maybe not.
Which is why you might want to keep an eye on what’s happened since Trump’s Transportation Secretary Elaine Chao decided to kick the can on whether to approve a $647 million grant to help electrify the Caltrain rail corridor between San Francisco and San Jose. According to a statement from Caltrain, the decision will be put off until the Trump administration puts together its budget for the next fiscal year.
Even so, the regional rail operator is treating the development as a mere delay rather than a deathblow. The contract with electrification workers, who were due to get working this week, has been extended through June 30. That extension may add another $20 million to the project’s cost.
The Trump administration’s decision to delay approval of the project followed a letter last month in which 14 Republican members of Congress from California asked Chao not to fork over any more federal money to their own state’s rail projects until California’s costly high-speed rail project—a pet project of Democratic Gov. Brown—receives a full audit. Given the billions of dollars in cost overruns facing that project, they write, handing more rail money to the Golden State would be “an irresponsible use of taxpayer dollars.”
Still, many critics wonder at the connection between the political lightning rod that is high-speed rail and Caltrain’s electrification plans. As Slate’s Henry Grabar notes, California’s future bullet train is envisioned to one day speed along Caltrain’s modernized tracks. But otherwise, the projects are distinct. Caltrain has been planning to electrify its tracks—and in so doing, boost ridership capacity through one of the state’s busiest commuter stretches—since 1999.
A delay from Chao doesn’t mean that the prospect of an electrified Caltrain is dead. But should the project become the newest casualty of the word of words (and tweets) between the President and state Democrats, it will be proof that, as Grabar put it, “the state’s outspoken political opposition to the Trump administration might come with a price.”
A $647 million price, to be exact.
The make-a-wish building list: Will Trump and California hug this one out?
published Feb 27, 2017
Cozying up to the new administration might not be a good political look for most state Democrats—but if President Trump wants to make due on his campaign promise to direct up to $1 trillion towards new infrastructure projects, well, California lawmakers might just make an exception.
Gov. Brown has submitted a list of ten “high-priority” infrastructure projects to the White House to be considered for regulatory fast tracking. Projects on the gubernatorial wish list, as detailed by the Silicon Valley Business Journal, include emergency repairs for the Oroville Dam spillway; demolition of the defunct eastern span of the San Francisco-Oakland Bay Bridge; half a dozen highways slated for various types of widening, fixing, and upgrading; and, of course, Brown’s high-speed rail system.
The governor’s wish list comes in response to an executive order issued on January 24, in which the president invited state governors to submit their favored shovel-ready infrastructure projects to the White House Council of Environmental Quality for prioritized federal regulatory consideration. A boost in federal dollars would be welcomed: California faces a $136 billion backlog on highway and local road repairs, prompting Gov. Brown and Democratic leaders to agree to an April 6 deadline for a transportation funding deal.
Earlier this month, the White House passed along its own list of 50 “Emergency & National Security Projects” to be considered by the National Governors Association. Three of the 50 have California connections—two private water projects here and one region-spanning electricity transmission system that aims to connect wind farms in Wyoming to homes in Southern California.
Could Trump take away one of Californians' biggest tax breaks?
published Feb 9, 2017
With the Trump administration and Republicans in Congress gearing up to make America’s tax code great again, one of California’s biggest tax breaks might be on the chopping block: the deduction on state and local taxes.
House Speaker Paul Ryan has supported eliminating the deduction in the past. And while the President himself hasn’t come out firmly in favor of scrapping the provision altogether, his campaign tax plan did propose something that might the deduction more difficult to take, given that Trump proposed capping the amount of total individual tax deductions.
Under current law, taxpayers can write off a portion of the income, sales, property, and real estate taxes they pay to their state and local governments. According to the Tax Policy Center, that comes at an annual cost to the federal government of more than $50 billion, making it the 9th largest write-off.
Not surprisingly, this is a loophole with plenty of fans. In California, where state income taxes are on the high end, roughly 34 percent of all households make use of the deduction. According to another report by the Tax Policy Center, eliminating it would result in an average tax increase of $3,218 for Californians, though that average figure might be a little misleading. The deduction goes disproportionately to those who have the most income to deduct—that is, the very rich.
If the Trump administration pushes to scrap this deduction as part of a larger tax package—and that’s still a big if—they can expect serious push back from high-tax states, most of which happen to be Democratic strongholds. But alongside hints that the administration may want to cap the mortgage interest deduction, it’s clear that the President is serious about plugging up loopholes—even the most popular ones.
Building big stuff—can Trump and California hug this one out?
published Feb 9, 2017
Infrastructure may be one of the rare opportunities for the Trump administration and California to clinch each other.
President Trump has signaled support for spending up to $1 trillion on an infrastructure initiative, and California officials already have sent a $100 billion wish list of 51 projects for federal funding to repair roads and bridges, improve transit and water storage, and update military and emergency facilities.
Topping Gov. Jerry Brown’s wish list is help for California’s high speed rail, a controversial train that California’s congressional Republicans are trying to defund. The Democratic governor tweeted “California’s ready” in response to Trump’s comment about a lack of fast trains.
Any extra help is being welcomed. California faces a $136 billion backlog on highway and local road repairs and Gov. Brown has agreed with Democratic lawmakers to an April 6 deadline for a transportation funding deal.
Trump suggests yanking fed dollars if California's a 'sanctuary'—can he do that?
published Feb 6, 2017
The burgeoning political standoff between California and the Trump administration took another step into unprecedented terrain this week when, on a pre-Super Bowl televised interview, the President denounced California as “out of control” and contemplated cutting its federal funding. The threat came in response to moves by the Democratic-controlled Legislature toward providing additional legal protections for undocumented immigrants and labeling California itself a “sanctuary state.”
But with President Donald Trump issuing an executive order to defund sanctuary jurisdictions, and San Francisco suing to have the order declared unconstitutional, a number of questions remain—not the least of which is “can the President really defund an entire state?”
State Democratic leaders pushed back, noting that California pays more in than it receives back from Washington.
Said Senate President Pro Tem Kevin de Leon (D-Los Angeles): “President Trump’s threat to weaponize federal funding is not only unconstitutional but emblematic of the cruelty he seeks to impose on our most vulnerable communities.
Despite all the controversy, there is no single definition of what a sanctuary jurisdiction actually is. Broadly speaking, a city, county, or state is considered to have sanctuary status if it puts some restrictions on the degree to which its law enforcement officials can enforce immigration law. Opponents call this obstruction of federal law; sanctuary city defenders counter that it’s not the job of state and local police to enforce federal immigration law.
Ironically, California’s best defense against de-funding here might be that favorite legal claim of conservatives: state’s rights. And courts have ruled that federal funding options can’t be so coercive that they pass the point where “pressure turns into compulsion” and they deprive local or state governments of any real choice about policy decisions. For example, the federal government makes a small fraction of highway funding contingent on each state maintaining a legal drinking age of 21. The Supreme Court has held that this restriction wasn’t unduly coercive because of the relatively small stakes involved. But what about a threat to take away all federal funding?
Through his executive orders and in other ways, President Trump is likely to test the limits of these precedents. Read the full CALmatters story:
Out with TPP—where does that leave Pacific Rim trade?
published Jan 31, 2017
On his first day in office, President Trump signed an executive order to withdraw from the Trans-Pacific Partnership, a pact that involved 12 Pacific Rim countries to lower or eliminate tariffs and promote exports. He has also vowed to renegotiate the North American Free Trade Agreement, a deal between the U.S., Mexico and Canada to remove trade barriers.
Many California business interests say scrapping the TPP could hurt Silicon Valley as well as the Central Valley by losing out on growing their businesses. Trade advocates have also argued that trade-related jobs pay 15 percent to 18 percent higher wages than workers whose companies only sell domestically. Trump also brings uncertainty for tens of thousands of workers in California’s shipping industry. For example, the ports of Los Angeles and Long Beach make up the largest port complex in the Western Hemisphere and handles 30 to 40 percent of containers that flow into the country.
But other Californians welcomed the President’s tougher stance against U.S. trading partners, and say his trade policies will act as a better buffer for American workers against competition from low-wage countries like Vietnam and Malaysia.
Trump also pledged to penalize American businesses that move jobs overseas by imposing a 35 percent tax on products they sell back in the U.S.—a move that supporters say will keep or bring back jobs. That could benefit California workers and also state revenues, which depend in part on income taxes.
In late January, Trump floated a 20 percent tax on Mexican imports to finance a wall along the U.S.-Mexico border, but later clarified that it was just one option amid uproar that American companies and consumers would bear the cost.