Thursday, January 31, 2013




          The old saw tells us that billionaires didn’t get rich by giving away money. But what about paying their fair share?

          In California today, we see at least two of the well-publicized super-rich trying hard not to pay sums that amount to pittances for them. One is Charles Munger Jr., attempting to get legal fees paid by his opponents in a lawsuit he entered voluntarily. Munger, who got most of his money the old-fashioned way – his daddy gave it to him – didn’t cotton to anyone trying to overturn the “top-two” primary initiative largely funded by him three years ago.

          And now comes the reputed richest man in the world, Mexican tycoon Carlos Slim, who made most of his reported $69 billion to $74 billion fortune via a near-monopoly on telephone service in Mexico. Consumer groups there claim repeatedly that Slim’s land-line and mobile phone companies charge exorbitant rates for substandard service, constantly upping his net worth.

          Slim has plenty of interests in this country, too. One is a large minority stake in the New York Times Co. Another is an offshoot of his Mexican mainstay, cellphone service.

          Quick now, name the company serving and selling the largest number of pre-paid cell phones in America. It’s not AT&T or Verizon or Sprint Nextel or the German-owned T-Mobile. It’s TracFone Wireless, with 22 million pay-as-you-go customers nationwide and about 4 million in California – fully 42 percent of the pre-paid mobile phone market. Slim owns TracFone, based in Miami, which recently took over Irvine-based Simple Mobile, another prepaid cell provider.

          Slim’s U.S. company sells telephones and service mostly to lower-income persons whose credit doesn’t qualify them for monthly service plans that are the mainstay of the better-known companies. Customers typically pay about $20 for a phone and 60 minutes of service.

          State officials maintain that like the full-service companies, TracFone must pay California’s “universal services fee,” a charge that funds telephone and Internet service for the poor, deaf and disabled, plus residents of the lowest-income rural areas.

          Estimates from the state Public Utilities Commission and consumer advocates are that Slim’s company owes somewhere between $13 million and $20 million worth of fees it did not collect from customers but should have in recent years.

          The PUC has not yet set a definite amount and TracFone is now in the state Court of Appeals disputing the commission’s finding that it must collect the fee when it sells prepaid phones, even though current law says the fee must be “transparent” and appear on customers’ monthly bills. It has paid the fees under protest since last February.

          Some may infer from this that Slim is opposed to the kind of “lifeline” services subsidized by the universal services fee. Not so. TracFone collects similar fees in 28 states and has taken nearly $38 million from other states to provide those kinds of services. “We want a new law in California that lets us collect transparently at the point of sale,” says TracFone general counsel Richard Salzman.

          But the company does not want to pay anything for fees it did not collect before last February.

“TracFone has failed to pay its share for programs that make telephone service more affordable for California’s working families and hearing impaired,” Juan Jose Gutierrez, leader of the consumer group Two Countries One Voice, said in a press release. Added Richard Holber, head of the Consumer Federation of California, “We have to make sure that as the market grows, companies like TracFone are not allowed to play by their own rules.”

       Responds Salzman, “Our phones are specifically exempt under the law as it now stands. One reason is that the fee is charged only on in-state calls, not calls to other states and we have no way to know how the minutes we sell in advance will be used.”

          All of which means that no matter how much the utility commission and the courts eventually decide Slim’s company owes, the likelihood is he will resist paying.

          This makes it high time for the state Legislature to step in by passing a new law forcing all prepaid cellphone sellers to assess the fee. That would put TracFone and all such companies on notice they must collect the same fees as ordinary cellphone companies or get out of California. Any such law plainly also ought to require those companies to pay any past fees they’ve refused to collect and remit.

Email Thomas Elias at His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, visit




          Almost every California Republican today realizes the party faces a serious dilemma upon whose resolution hinges the very life of the GOP in America’s largest state.

          If the state party changes its long-held stances on things like illegal immigration (absolutely no form of amnesty or path to citizenship), gun control (against), gay marriage (against) and new taxes (none whatsoever), it will be deserting basic, long-held positions. But if it doesn’t make some changes, it will keep on losing because those stances do not square with the current preferences of most Californians.

          Losses have been heavy to date: Democrats now have supermajorities of more than two-thirds in both houses of the Legislature, dominate the state’s congressional delegation by a 38-15 count and hold every statewide office, including the two U.S. Senate seats.

          Into this bleak situation steps Jim Brulte, a former longtime Republican legislator from San Bernardino County who at last notice was unopposed in his quest to become party chairman during the GOP’s state convention in early March.

          But rather than confront the crucial Republican conundrum, Brulte insists he will deal mostly with “nuts and bolts” as chairman, leaving political positioning to the party’s dwindling cadre of elected officials and its candidates.

          “I’m not going to talk issues,” he declared in an interview. “I want to focus on rebuilding the party from the grass roots up.”

          Brulte listed three areas as his top priorities: renewing Republican fund-raising operations, recruiting many more grass-roots volunteers than the party recently has and “rebuilding the party’s bench” by recruiting candidates for legislative and local races who have a chance to win because they “look like, sound like and share the values of the people in their neighborhoods.”

          “The neighborhoods are changing, and we need to change, too,” he conceded.

          But he didn’t go so far as to say he would push the GOP to change any longstanding platform planks or even recommend anything to bring the party more in line with what polls and recent votes show most Californians believe today.

“To the extent you want to discuss issues,” he repeated, “I will refer you to our members of the Legislature and Congress and our candidates.”

          Brulte says his projected rebuild has immediate potential for bettering the GOP’s electoral fortunes with or without changes on any issues.

          “We lost three or four seats where the outcome really hinged on nuts and bolts,” he said, citing several legislative races decided by fewer than 2,000 votes each.

          But election returns reveal that the GOP won almost as many very tight races as it lost, one example being the 1,018-vote margin by which Republican Assemblyman Mike Morrell beat Democrat Russ Warner in a far-flung San Bernardino County district.

          The same returns show Democrats won by wide margins in most races, indicating that merely fixing nuts and bolts won’t bring Republicans near parity anytime soon.

          But Brulte is plainly correct that the party needs less posturing and more hard work. One change he says he’ll make right away is to stop sending out ideology-driven press releases anytime almost anything happens, as the last two GOP state chairman have done.

          “You resort to press releases when you don’t have much else,” Brulte said. “We will rebuild a bench of potential candidates by recruiting well and winning city council, school board and local district elections all over California. The party has not had an active recruiting campaign in some large areas of the state. The (San Francisco) Bay area is one. Even in heavily Democratic regions, there are areas within those regions where we could do well. We can attract people who favor small government and oppose a permanent welfare state.”

          But that’s as close as Brulte comes to discussing actual policy. “I will be the most boring chairman the party has had in a long time,” he said. “I’m not going to do talk radio or pontificate on issues. I want to do the hard work.”

          He guesses bringing the GOP at least close to even with Democrats will take about six years.

          It remains to be seen how long Brulte can ignore issues and focus on the strictly practical parts of party-building. For as even he implies, unless Republicans move themselves more into line with public sentiment on major issues, it won’t matter how much money the party raises or how many volunteers and candidates it recruits.

          In short, no matter how reluctant Brulte and other GOP leaders may be, they will have to address their party’s big dilemma or risk becoming perpetual losers.

Email Thomas Elias at His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, visit

Thursday, January 24, 2013




It’s hard to find any government program that helps both the physical and financial health of many Californians and also fattens the state’s own coffers.

          But a new study from UC Berkeley indicates that’s how parts of the federal Affordable Health Care Act may play out, in spite of all its vocal detractors.

The controversial law, shunned by governors and legislators in most of the 23 states where Republicans enjoy full control, already has seen more than 450,000 young adults in California gain insurance coverage and state residents on Medicare save upwards of $600 million on prescription drugs, compared to what they paid in 2009-10.

          But the really big benefits for California are yet to come, says the report, authored principally by policy analyst Laurel Lucia of Berkeley’s Center for Labor Research and Education. The study does not consider Obamacare’s effects on businesses or on individuals who already have health insurance, nor does it include a $674 million federal grant awarded in mid-January to help set up the “Covered California” insurance exchange.

          “The state has the chance to improve the health of its residents by greatly expanding health care coverage at a relatively minimal cost,” Lucia said. “This expansion would also translate into much-needed new jobs for many Californians.”

If forecasts in the Berkeley study ( prove correct, it will also provide a yet-unknown cash boost for hospitals and trauma care centers that have long had to eat at least some costs of “safety-net” coverage for the poor.

That’s because at least 750,000 low-income, under 65 Californians who lacked health insurance before Affordable Health passed, but were able to get no-cost (to them) emergency treatment are expected to have enrolled in Medi-Cal by 2019, solely because of Obamacare’s expansion of Medicaid eligibility. About 500,000 have already signed onto county low-income health programs over the last two years, almost all of them likely to switch to Medi-Cal by the end of 2014.

As many as 1 million more low-income Californians are newly eligible but not yet signed up for Medi-Cal, the state’s variant of Medicaid. Not all will enroll even though the federal government will pay all their medical costs in 2014-2016 and 90 percent after that.

          Those who do get insured will cost the state less than $75 million, below even the amount of state tax revenue likely be created by the 100,000 new healthcare jobs the Berkeley researchers estimate the new health insurance system will spawn.

          Meanwhile, 85 percent of whatever it costs to inform and sign up new Medi-Cal patients will be paid by the federal government. The 15 percent state contribution may be less than what it now pays for emergency care to the uninsured.

          So enticing are these benefits that even Arizona’s ultra-conservative GOP Gov. Jan Brewer reversed course and decided to take her state into the new system’s expanded Medicaid setup.

          Even before new Medi-Cal enrollments begin in earnest, reported Anthony Wright, executive director of the Sacramento-based consumer advocate group Health Access, California was getting a net benefit of $500 million per year from Affordable Health. That money was one reason Gov. Jerry Brown could propose a balanced new budget this year.

          Once the system is fully operational next year, he said, the net benefit to California should be upwards of $1 billion, compared with previous state health care spending.

          Wright and Lucia both said that while neither they nor anyone else can yet pinpoint the exact amount of California’s fiscal Obamacare bonanza, “there is the opportunity for a lot of additional savings.”

          Beside the benefits to newly-eligible Californians, more than 2.1 million over-65 Medicare patients in the state are already getting free preventive services like mammograms, pap smears and colonoscopies, or free annual visits with their doctors. That’s in addition to 6 million state residents who stopped forking over co-pays for such preventive services when the first parts of the Affordable Health Care Act became effective in 2011.

          All is certainly not perfect in this rosy Obamacare picture. Even if everyone eligible enrolls, there will still be more than 1 million of the uninsured living in California, with counties and hospitals mostly on the hook for their emergency room care.

          Ex-Gov. Arnold Schwarzenegger famously claimed that each of them costs everyone who pays for health insurance $200 per year, calling it a “hidden tax.” His figure was pretty close to accurate, says Wright, who adds this means health insurance buyers will stay on the hook for about $200 million – much less than before, but still a considerable amount.

Disputes over who should fund this safety-net care will continue through the spring and into future budget-writing seasons, keeping politicians busy.

          But it’s high time to recognize the minimum that Obamacare offers California: Coverage for many hundreds of thousands of the previously uninsured, plus savings both to low-income individuals and the state that together will mount well into the billions.

        Email Thomas Elias at Elias is author of the current book "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government's Campaign to Squelch It," now available in an updated fourth printing. For more Elias columns, go to




          From the moment it became clear last fall that Democrats won supermajorities of slightly more than two-thirds in both houses of the California Legislature, Proposition 13 has been in the political crosshairs.

          That’s a sea change for the landmark 1978 initiative that limits property taxes to 1 percent of the 1975 assessed value or 1 percent of the latest sales price, allowing yearly increases of no more than 2 percent to adjust for inflation.

          No one has seriously proposed going back to the pre-13 system of taxing properties based on their current market value, which often saw levies double or triple over the space of less than five years in times when housing and land prices mushroomed.

          The change most commonly proposed is the so-called “split roll,” which would see commercial and industrial property taxed at a higher rate than residential. So far, no one has settled on what that new rate might be.

          Whatever rate the change advocates (they like to call themselves reformers, but one person’s reform can be another’s abomination) might settle upon, the mere consideration of a split roll will surely spark vocal outrage.

          You can count on the Howard Jarvis Taxpayers Assn., namesake of Proposition 13’s prime author, to bombard homeowners with direct mail warning of a threat to raise their taxes by thousands of dollars per year. Split roll, of course, poses no such threat. But that won’t change the fury, which could dominate the November 2014 election campaign if this issue reaches the ballot.

          Although the idea has been around for decades, the split roll concept never got serious consideration before because everyone in Sacramento knew it could only occur via another ballot proposition, and the Legislature would need a two-thirds vote of both houses just to put one on the ballot.

          That’s a possibility now, with Democratic supermajorities in both houses, but only a slim one because Democrats are not nearly as lockstep a party as Republicans. Dissenting Democrats are rarely the targets of recall campaigns or serious primary election opposition, something that frequently befalls Republicans who deviate from the party’s steadfast no-new-taxes platform.

          But there is a way to reform Proposition 13 without a ballot initiative and without any need for a two-thirds vote anywhere. That’s to change some of the assessment rules and definitions adopted by legislators (all now termed out or deceased) in 1979, just after 13’s passage.

          Those rules allow some commercial and industrial properties and apartment buildings to escape reassessment when they are sold. While residential property taxes rise immediately upon sale because homes generally pass directly from one owner to another, things can be more complex with other types of property.

          The 1978 rules do not consider a property to have changed hands so long as no one individual controls more than a 50 percent stake in it. This can allow limited partnerships, for one type of ownership, to save big money on their tax bills.

          The same rules also apply to other types of partnership, like one infamous sale of a vineyard to the Gallo wine family, in which several persons got major new stakes, but no one controlled a majority. The rules are outlined on page 42 of the state’s handbook for assessors (

          Various estimates place the funds state and local governments could get by changing these assessment rules at anywhere from $5 billion to $12 billion yearly. A change, then, could produce about as much revenue as the tax increases in last fall’s Proposition 30 without any need for an expensive, contentious initiative campaign.

          This would surely be a lot easier than trying to force a split roll on resisting businesses. When such assessment changes were first proposed almost 10 years ago by former Democratic state Sen. Martha Escutia, they were essentially hooted down by politicians afraid of political suicide.

          But with split roll on the table, assessment rule changes may look a whole lot less threatening to business property owners.

          So here’s a hint to the new Democratic supermajorities: Choose your fights wisely. Be incremental. When you can make a major improvement to the fairness of Proposition 13 with relatively little pain, why insist on getting into a war you might lose over something much tougher and more sweeping?

       Email Thomas Elias at His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, go to