California Here We Come

The Democrats raised taxes. That’s no surprise. The moment the November election results were in giving the Democrats the super majority necessary to increase taxes, the die was cast.

And when the governor and the Democrat leadership announced that there would be no “compromise” on retirement and healthcare benefits for the public employee unions — in other words, those benefits would remain outrageously high — you knew that there would be no serious attempt to curtail spending. After all eighty-five percent of the budget is for salaries and benefits for government workers and if salaries and benefits are removed from the equation, there isn’t much left to cut — certainly not the $4 Billion by which the budget exceeds revenues.

Oh sure, there is the possibility that the legislature will eliminate 1,500 government jobs. The public employee unions are always willing to give up jobs rather than benefits because they know the minute that the revenue picture improves the government will hire everyone back and then some. In contrast, a loss of a benefit will require a much greater length of time to recover. Even at that, the loss of 1,500 government jobs is a pittance given that government employment has increased by 6,000 jobs over the last twelve months, while private employment has seen a nearly 100,000 job loss.

And when the Oregonian, the left’s unofficial media spokesperson, editorialized that the Democrats should avoid the “mistakes” of their counterparts in California by avoiding referral of any tax increases to the voters, you knew they would bypass the electorate.

And when you read that despite a $4 Billion deficit, the Democrats intended to expand government funded healthcare to another 135,000 people you knew that rationality had left the building. Nowhere in all of the debates over government spending, including education, welfare and healthcare spending, is there any attempt to improve efficiency — not even the simplest measure of removing from the numbers of recipients those who are in the United States illegally.

And finally, when you read that, despite Vice President Biden’s comments that healthcare costs are crushing the American economy, the intention of the national Democrats was to increase that burden by taxing healthcare benefits, and Oregon Democrats to tax healthcare providers you began to wonder whether rationality in government will ever return.

The tax increases passed by the Democrats to date amount to nearly $750 Million and they aren’t done yet. More importantly, even when they are done they still won’t be done because the legislature anticipates that the revenue forecasts for second, third and probably fourth quarter will be for a continuing decline and the budget will no longer be in balance. Oregonians can expect that the legislature will reconvene in February of 2010 amid further destruction of the Oregon economy and will again raise taxes.

Among the current tax increases are an increase of nearly twenty percent on those earning over $125,000 per year. At that level you are dealing with virtually every small businessperson in Oregon that employs a person beyond the owner. And because capital gains are taxed at ordinary income levels, this increase means that the tax on capital gains has also increased at the very time when Oregon should be looking for new capital infusion to recover from the economic downturn.

But here is the stunning part. Oregon has the second highest unemployment rate in America. It trails Michigan (hard hit by the collapse of the automobile industry) by tenths of a percentage point. At 12.4% unemployment, Oregon has exceeded its highest recorded levels of unemployment. Oregon is a small business state. It does not have a massive industry that can dramatically effect its employment picture. When there is a 12.4% unemployment level in Michigan you can look squarely at the auto industry and know the cause. When there is 12.4% unemployment in Oregon you know that it is diversified and affecting virtually every element of employment — except for government employment.

That means that the problem is structural — not industrial. There is something fundamentally broken in Oregon’s economic structure. It is the reason that Oregon, in good times and bad times, leads the rest of the nation by one or two percentage points in unemployment. It is the reason that Oregon’s working men and women have one of the lowest per capita incomes in the nation. It is the reason that the job losses, when they occur, fall disproportionately on the high-end job categories and minimally on the minimum wage employment.

Oregon has a tin ear when it comes to business and private sector employment. The preservation of government and government employment is not only paramount but virtually singular among Oregon’s governing class. Oregon’s government is run by the public employees unions and for the public employees unions. The election of the Democrat majority is paid for by the public employee unions.

The massive amount of government jobs, the handsome salaries and benefits for those government employees, and the insulation against any economic rectification because of the financial power of the public employee unions has already ruined California. California is on the verge of economic collapse because the public employees unions run the state and local governments — and run them much like they do in Oregon — with total disregard for those who must foot the bill for their excesses.

Oregon is not far behind and when it occurs, Oregon voters will have only themselves to blame.

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Posted by at 06:00 | Posted in Measure 37 | 14 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Matt Evans

    The Oregonian and the Legislature may wish to “avoid the electorate” but they are not going to be allowed to do so. Americans for Prosperity – Oregon and partners such as the Taxpayers Assn of Oregon and FreedomWorks will be collecting signatures to refer tax increases to the ballot. With more than $2 billion in new taxes and fees, it is what the military might call a “target-rich environment.”

    If you’d like to protest the Legislature’s actions and sign up to help with AFP’s volunteer effort, please visit

  • Freddie

    I am a state worker and resent all the negative slant toward us and our benefits. I work hard and want to know I will be OK when I retire. Why is that bad?
    I need my benefits to live in a healthy way.
    If I work hard why is that bad?
    I am glad the governor is looking out for us.
    He is strong.
    And brave.
    I support him and always will.

    • Taxpayer

      Enjoy your overly generous benefits while you can trough feeder. After the joke of a Governor and state governments tax increases fail, you’ll be lucky to be employed!

      Once the liberals who dropped their pants on to many times to the voters are routed next election, judgement day will be here for the public unions!

      • rural resident

        I doubt that “Freddie” is a real state employee. There’s a much too common tendency on Oregon Catalyst for people on the right to put words in the mouths of those on the left, and to couch those statements in ridiculous terms, so that other blog posters can come along and attack them.

        If people on the left have something to say and want to say it here, they will. They don’t need a bunch of philosophical opponents to say things for them. This blog will work much better if people who post here say what they really think. Making up ridiculous comments from the other side only makes those on the right look like they’re not capable of fielding actual arguments from the other side.

        • Freddie

          First you want to take away my raise and my PERS and now you say I am not even real?

          I work in the at the DMV where I pride myself on my work. I am an operation and policy analyst. I am always on time for work, work hard each day (8 full hours except for 1 hour lunch and two 30 minute breaks). I don’t make a lot (about $7,000 per month) considering how hard I work. I am salaried, too, so if I have to work extra a few minutes some days I don’t get paid any more for that effort. I get four weeks paid vacation and 12 paid holidays per year, which is not really that much. My medical is all paid for and my PERS account is, too. So, I am not complaining. I am just saying that what I make is fair and just because I work for the state some people say I should not get a raise. If things cost more and I don’t get a raise then it is like I am working for less and that is simply not right. All I want is to at least stay even with inflation and such.

          If I worked for Eddie Bauer and got a raise no one would say a thing. This is what is so unfair. State workers, for the most part, are just like workers everywhere. We work hard and at the end of the day we know we have earned our pay and perks.

          • rural resident

            Sorry, “Freddie.” No sale. DMV workers don’t make $7,000 a month. Too many things there just don’t add up. As I said before, whoever you are, just come out and say what you mean — that you think state workers are overpaid and underworked. The blog loses credibility when people assume the identity of someone with an opposing viewpoint to try to make that side look ridiculous. Knock it off, folks.

          • valley person

            I suspect “Freddie” is actually “Jerry” Rural Resident. He often posts in faux identity using similar verse form, and consistently posts facetiously.

            And you are absolutely correct in your plea for folks here to state their own views and engage in a respectful dialogue. But don’t hold your breath. Catalyst has more than its share of phony posters and people who have nothing better to do than character assasination.

          • Freddie


            Boy, I wish I was as smart as you guys. DMV workers don’t make 7K a month?? This is a posting for the same position I have. Chcek it out.
            Wow. No wonder we are in so much trouble….these people vote.

          • rural resident

            This is a management position, Jerry. The duties include, but are not limited to policy analysis for the DMV. The analyst will do work for other parts of ODOT. It certainly isn’t a line position in a local DMV office serving the public, which is what “Freddie” supposedly has.

            The bigger problem is people who either don’t read things thoroughly before talking about them, and/or who seek to mislead based on incomplete information, using the most extreme elements to support their position.

    • Dian

      That is not bad, but you are getting yours at the expense of the rest of us. We don’t count in the eyes of government, just you employees. That is why we resent it

  • maxgramm

    How is a 1.8% increase only on income over 250K households (they pay the regular 9% on everything below) a 20% increase. Larry, do the math. that increase is way less than you indicate.

  • valley person

    “And when the Oregonian, the left’s unofficial media spokesperson…”

    As a card carrying member of the left, I can assure you we don’t view the Oregonian as our spokesperson, unofficial or otherwise.

  • anonymous

    “And finally, when you read that, despite Vice President Biden’s comments that healthcare costs are crushing the American economy, the intention of the national Democrats was to increase that burden by taxing healthcare benefits”

    Actually Larry, this was McCain’s proposal in the 08 election. Obama was against it.

    And to defend McCain here, taxing the benefits is viewed by many experts as one way to help control costs, because employees and employers would be less likely to substitute overly expensive health care benefits for actual salary increases.

  • rural resident

    The “twenty percent” is overly simplistic, since the new law changes the tax brackets and the way some additions and subtractions to federal adjusted gross income (the starting point for an Oregon individual tax return) are determined. Mr. Huss’ is way off the mark at the $125,000 level. Based on the new 10.8% (between $125K and $250K) and 11% (over $250K) rates, a taxpayer’s income tax liability wouldn’t increase by “20%” until the taxable income is somewhere in excess of $500,000. The calculation is a little difficult because the actual percentage increase will depend upon the taxpayer’s specific tax situation, as changes have been made to items used in calculating Oregon taxable income.

    That said, the legislature tucked some other goodies into HB 2649. For one thing, it created an Oregon version of the Federal Minimum Tax that applies to taxpayers starting at the $125K level. It also changed the existing 5% and 7% brackets, which weren’t very large to begin with. The 5% bracket used to go from $0 to $3,050; now it’s $2,000. The 7% bracket used to apply to taxable income from $3,050 to $7,600. Now it’s $2,000 to $5,000. In this sense, almost EVERY Oregonian will see some increase in personal income tax liability.

    It also reduced the standard deduction for single people, which will lead many residents to have slightly more taxable income. In addition, the deduction for federal taxes paid is reduced.

    One “positive aspect” (if you’re looking for silver linings) is that the new law doesn’t apply to 2009 returns. It starts with the returns most individuals will file beginning in 2011 (2010 tax year).

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