From the Publisher / Arnold G. York

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All around the World

Tuesday was Election Day, primary day in some places, final in others but it all points the same way. Money! Money! Money!

California

The results may be a harbinger of the impact of a new political map, or more of the same. We just don’t know yet and may not know for a couple of elections. We’ve made two major changes in the California rules. We are now a “top two” state, and an independent commission drew the new district lines from the last census information. In both state and federal elections, the two top vote-getters go to the finals in November (except the presidency), whether they are two Republicans, two Democrats or some other combination. Also, there is a group of incumbents running in districts where they didn’t get to draw their own lines. So, you end up with a Valley Congressional district where two liberal Democrats, Howard Berman and Brad Sherman, are running against each other, and each is spending a fortune on the race. The question is: will this produce more centrist candidates, or just some very expensive contests with candidates even more dependent on special interest money to win? No one knows yet.

Proposition 29 would add a one-dollar-per-pack tax onto the price of cigarettes, with the money to go to research on cancer or tobacco-related disease. On one hand is that great advocate of public health the Philip Morris Tobacco Company, and a major contributor to this campaign to defeat Prop. 29. On the other side the American Cancer Society and the American Lung association, with very little money to spend. We haven’t passed a raise in tobacco taxes in close to 20 years. Anyone want to bet on the outcome?

In November, we’re going to get a chance to vote to raise our taxes primarily to protect education. If we vote “no,” then the education budget from elementary school to higher education is going to be cut. What the proposed proposition calls for is a raise in the sales tax for a few years and a raise in the taxes on the richest of our state. What it doesn’t include is an oil severance tax. Many states have an oil severance tax, like Alaska and Texas, both good red states. Alaska gets three-plus billion in oil severance taxes, and Texas two-plus billion.

Is our legislature and Jerry Brown just soft on oil? The legislator probably yes, but not the governor. The governor left them out because he knew that if the November proposition to raise some taxes included an oil severance tax, the oil companies would pour money into the election. How much do you think they’d be willing to spend to defeat something that might cost them one to two billion a year? $100 million, $200 million, $1 billion? Who knows but, rest assured, if they spend that kind of money the proposition loses. So Gov. Jerry cut a deal. My guess is that it’s, “I’ll leave you out if you keep your checkbook closed.”

The nation

The biggie is Wisconsin, where they’re trying to recall the governor. Whatever the outcome, because Wisconsin is a battleground state—one of those must-win states in the November presidential contest—the pundits are going to be out reading the tea leaves on this one, and what they say is going to be close to meaningless. If the Republican primary proved anything, it’s that the American voting public has a memory of about 20 minutes, and it’s whatever happens in November that really counts, because no one is even going to remember June anymore than they remember the primary fights in January.

The world

There was a time that the world didn’t matter when it came to American domestic politics, except in wartime or potential war. That’s not the case anymore. Apparently, Spain has entered front and center as one of Europe’s really big problem countries, and the question appears to be whether or not Germany is going to bail them out. I must confess that the entire thing has me totally confused. If the Spanish banks propped up by the Spanish government owe a group of German banks or the European Central Bank, propped up the German government, a large amount of money, what happens if they don’t pay it? Do the German banks just foreclose as they did on the Sudetenland or the Danzig Corridor? Suppose the debtor nations say, look we owe you a whole bunch of money we can’t pay back, and what you expect us to do is roll over the loans with a whole bunch of fees and extra interest, which you’re going to take off the top. So, finally we end up owing you even more money which we can’t pay back, so why bother. Please don’t talk to us about austerity because, we’ve all been austere for a couple of years and Spain’s unemployment is running 25% overall and 50% among the younger generation and they’re practically rioting in the streets.

Sometimes I feel this is a big game of chicken to see who blinks first. George Soros, in a recent speech, suggested that far from being the savior of Europe, Germany may be getting the best deal from the European Union because it keeps their exports cheaper. I certainly don’t know.

This all impacts us because we sell a lot to Europe and they invest a lot here, and a poorer Europe is a poorer USA. And besides, in ways that are hard to understand, we seem to be all linked together economically. The way the world handles this brewing crisis, and Obama’s role in it, whether he is perceived as a savior or a goat, may very well determine if he wins or loses in November.