"If Schwarzenegger comes out with a real brave plan to take on fiscal problems and take on the regulatory state in California, then he deserves some conservative sympathy," Lowry explained.
I was totally for Arnold until he hired Warren Buffet yesterday as economic advisor. Buffet is a guilt ridden, tax and spend liberal, for MORE tax rate progressivity, for the death tax. He will no doubt recommend a tax increase which in my opinion will cause more business exodus.
A true conservative plan would include an attempt to raise revenues by eliminating the tax and regulatory hostility to business, becoming more attractive to business and industry, while at the same time rooting out fraud, and yes, having the balls to cut programs. Buffet will not like any of the above.
What do you want to bet he's on staff to find ways to raise the junk bond ratings of California's bonds so that debt financing costs can be reduced. He may also be on staff so Arnold can twist his arm about Workmens Comp to lead him to find that was a bad idea for a time like this when California was deep in debt. Who knows, but its a certaintly you dont KNOW why he choose him or what his advice will be.
The Clinton tax hikes, engineered by Bob Rubin, helped drive the dollar higher. This is what those in the world of stocks and bonds, like Buffett and Rubin, want. It creates a whirlpool that sucks capital from around the world into the US stock and bond markets. Carried to an extreme, it even helps create financial bubbles like the Clinton bubble, which creates an opportunity for those who are in on the game (e.g., the silicon valley con artists who backed Clinton for this very reason, to make their dot com options valuable).
What has been missed by many is that, in a historic reversal, the Democrat party has become the strong dollar party and the Republican party is the weak dollar party. A complete reversal from the days of William Jennings Bryan.
A moderately weaker dollar is part of a program to relieve the financial distress facing manufacurers and farmers. The Republican base of support is in rural America. The sky high dollar was absolutely killing farmers. A weaker dollar helps hold up commodity prices. Bush knows what he is doing, and so does Buffett. They are just looking out for opposing interests.
In Cali, I expect buffett to advise spending cuts. On a state level the important thing is business climate, and state tax and spending policies have no effect on macro issues dear to buffett's heart like the level of the dollar.