Warren Mosler (a Modern Monetary Theory Founder) explains how money works

 

Sacramento's Supervisorial Candidate: These candidates are vying for 4th district supervisor

by Ariane Lange
alange@sacbee.com  

With Sue Frost retiring  as the supervisor representing  northeast parts of  Sacramento County, her  4th District seat is up for  grabs in the 2024 primary  election on March 5.  

The 4th Supervisorial  District is a boomerang shaped  district that includes  parts or all of Citrus  Heights, Folsom, Orangevale,  Antelope, Rio Linda,  Elverta, Gold River, Rancho  Murieta, North Highlands,  Carmichael, Foothill  Farms and Fair Oaks.  

Three candidates -  Rosario Rodriguez, Braden  Murphy and Bret Daniels  - are campaigning for the  seat.  Though the Board of  Supervisors  doesn't  always  attract the  same level  of attention  as other  local government  bodies, it  wields tremendous  power and  controls a  budget  approaching  $9 billion.  Five  board members  oversee  the  agencies  that provide  health and  human  services for  all county  residents.  

In unincorporated  areas, county agencies  also provide additional  services, such as parks,  road maintenance and law  enforcement via the Sacramento  County Sheriff's  Office. The Sheriff's Office,  which reports to the  board, runs the two county  jails.  

The Sacramento Bee sat  down with each of the  candidates to discuss their  positions on three critical  issues facing the Board of  Supervisors and county  residents. All three called  for an audit of homelessness  spending. Here's  who they are, and where  they stand, with the election  now less than two  months away:  

BRET DANIELS  

Daniels, a registered  Republican in the nonpartisan  race, began his  Citrus Heights political  career in 1999 when he  was elected to the City  Council. He became mayor  in December 2004 and  resigned in November  2005. Although he took  some years off from the  council, he was again  elected to that body in  2016, and he's now serving  as mayor.  He is an Air Force veteran  and a former sheriff's  deputy. He has backed  multiple efforts to prevent  taxes from being raised in  Citrus Heights.  Daniels was censured by  the Citrus Heights City  Council in 2018 after police  reports accused him of  stalking and harassing an  old girlfriend. Police determined he had not committed a crime, and Daniels  denied the woman's  reports, The Bee wrote at  the time. He also told the  council that even if the  woman's reports were  true, it was "a private  matter." When asked late last year about the allegations,  he declined to comment  further.  

BRADEN MURPHY  

Murphy is a political  newcomer. He is registered  as a Democrat and  stressed his commitment  to fiscally responsible  governance.  A Folsom father of four,  Murphy was a presence at  multiple supervisors meetings  in 2023 as he campaigned  alongside unionized  in-home supportive  services workers fighting  for a higher wage. Those  workers provide critical  care for elderly and disabled  people, including  Murphy himself, who has cerebral palsy. Keeping  people out of poverty,  Murphy said, is more  cost-effective than providing  services after people  fall into deep poverty and  possibly become homeless.  

ROSARIO RODRIGUEZ  

Rodriguez, who is registered  as a Republican,  served as mayor of Folsom  in 2023. Voters elected her  to her City Council seat in  2020, and she was  appointed to a one-year  term as mayor by the City  Council in December  2022. She's lived in Folsom  since 2008, where  she also owns Sutter Street  Taqueria in the city's historic  district.  

She is a founding member  of the Folsom Alliance  for the Unhoused. Before  joining the City Council,  she spent three years on  Folsom's Historic District  Commission, and she was  a board member of the  city's Chamber of Commerce.  The outgoing rightwing supervisor, Frost, has  endorsed her.  

WHERE THE  CANDIDATES STAND  

The Bee asked the three  candidates in the race for  the 4th District to address  some of the key issues before  the board.  

Homelessness  

The county has said that for every one person who exits homelessness in  Sacramento County, three  more will become homeless.  

In a recent survey commissioned  by the board,  county residents overwhelmingly  described  homelessness and the high cost of housing as the two  most serious local  problems. The county is  responsible for the services - particularly health,  substance use and mental  health services - provided  to homeless people across  the county, as well as  additional services for  homeless people in unincorporated  areas.  

The board oversaw  $177.5 million in homeless  spending in the 2022-2023  fiscal year.  

[Editorial note: Skyrocketing rental prices remain a top contributor to the rise in homelessness. The report finds that 58 percent of former leaseholders experiencing homelessness lost housing due to economic conditions, most of whom point to high rent costs as the primary cause of their homelessness. Aug 21, 2023 ... So... which candidate talks about rent rises, not "mental health"?]

Here's what the candidates  said they would do about homelessness.  While each had different  approaches, all of them  called for an audit of  

• Bret Daniels: "One of  the things we don't do in  Citrus Heights is we don't  allow encampments and  stuff like that to form and  to create blight," Daniels  said. "We created what we  call a high-impact team.  Their job is to get out  there and find these  things, contact people.  And then we also have a  navigator team. And that  team gets out there and  finds out: What services  do you need? ... Can we  give you a hand up into  something? Or are you just  a miscreant and need to  go to jail?"  

Although Sacramento  County has interpreted a  court ruling narrowly  enough to allow sweeps to  continue at a steady clip, it  is illegal to criminalize  homeless people for being  homeless in public when  there is no alternative  place for them to go. The federal ruling in Martin v.  Boise came down in 2018.  

Daniels said he was happy that Senate Bill 43  was signed into law by  Gov. Gavin Newsom in  October- the law expands  the definition of  "gravely disabled" to  make it easier to place  Californians with substance  use disorders into  mental health conservatorships,  which generally  put the conservatee's  health care decisions in  the hand of a conservator.  

"That is going to give  them a tool to be able to  use with folks whose addictions  have gotten to  that point to make them  gravely disabled," Daniels  said. "There's no compassion  and allowing people  to walk around on the  streets, when they can't  take care of themselves."  

• Braden Murphy:  "The way to stop the  bleeding on homelessness  is to make sure that low income  renters are able to  stay where they're at,"  Murphy said, referencing  the fact that the county  says people are becoming  homeless three times  faster than they're getting  off the streets.  

Renter protections,  Murphy said, are "the  most fiscally responsible  way to make sure that  people are taken care of  when we're talking about  government dollars. If  somebody's rent is raised,  or they're unjustly evicted  from a low-income apartment,  now they're homeless.  They're going to be  much more expensive to  take care of, to help. And  so when you're in a housing  crisis, you have got to  be making sure that renters  are taken care of. And  the county is not always  siding with low-income  renters. It's amazing to  me, because they're piling  on further to the problem  that they already cannot  deal with."  Murphy said the moment  calls for bold policy.  

"If the housing is specifically  designed for low income  people, then until  we have the amount of  affordable housing or  shelter to house everybody  that's on the streets, rent  should not be able to be  raised at all," he said.  "You may say, 'Oh, that's  a really progressive policy.'  But again, no, that is  the cheapest way." It is a strategy that would avoid  tax increases, he said.  "I know we live in these  left-right hyperpartisan  times," he said. "And I am  proud to say I'm the only  non-Republican in the  race. But also, we need to  be looking at it from a  reasonable standpoint:  The cheapest thing we can  do is keep people off the  streets."  

• Rosario Rodriguez:  Without a coordinated  regional approach, Rodriguez  said, homeless people  get shuffled between  different jurisdictions  without ever getting meaningful  help. She mentioned  the city of Sacramento's  "Incident Management  Team," announced  in 2023. "It  didn't fix the problem,"  she said. "It just shifted  where people went. And  so all right around the  time that the IMT was  beginning to make the  movements and beginning  to move camps, we (in  Folsom) are now seeing a  major influx of transients."  

"We need to look at the  homeless approach from a  perspective of a process of  improvement and identifying  what is working out  and what is not working  out," she said. "But what  we currently have right  now is every city is doing  their own thing. And so all  we do is shuffle the  problem of homelessness."  

She said the entire  homelessness system  needed to go through a  training on Kaizen, the  Japanese business philosophy  of efficiency. She also  said she is "not a fan of  housing-first," which is  the evidence-based principle  that getting people into  stable housing should be  prioritized over other  services and goals, including  mental health  treatment and sobriety.  Housing-first is supported  by the federal Department  of Housing and Urban  Development.  

Jail conditions and expansion  

In August, the Sacramento  County Board of  Supervisors voted 3-2 to  spend close to $1 billion  on a new intake and  mental health annex at the  downtown Main Jail,  which is overseen by the  county. The board cited a  2019 settlement that was  the result of a federal class  action lawsuit as the reason  for the new annex.  The board would have to  take more steps to actually  begin spending that  money. Supervisors Phil  Serna and Patrick Kennedy,  whose seats are not up  for reelection in 2024,  voted against the expansion.  The lead plaintiff in the  class action lawsuit, Lorenzo  Mays, spent more  than eight years in solitary  confinement. As a result  of the lawsuit, the county  must improve conditions  in the jail, particularly  around suicide prevention,  medical and mental health  care, disability accommodations  and the use of  solitary confinement.  But more than four  years after the settlement,  the county is still not in  full compliance. If it remains out of compliance  the county risks seeing the  jail forced into a federal  receivership in which the  court would appoint a  third party to control the  implementation. The  county would then have to  foot the bill for whatever  the appointee deemed  necessary.  

• Bret Daniels: Regarding  the $1 billion investment,  "It's impossible for  me to say to the level of  appropriateness," he said.  "It sounds like it goes too  far. But that's not part of  my life - I'm not intimately  connected to, are  they doing what they were  told they have to do, or are  they doing something  above and beyond?"  

Daniels, who used to  work for the Sheriff's  Office, said, "It should not  be the jail's responsibility  to deal with people who  are mentally ill. They  shouldn't even be in jail,  probably. They probably  did something that went  to the level of a crime,  obviously. But the real  problem isn't that they want to be a criminal. The  real problem is they're mentally ill, and sitting in  a jail is not gonna get  them better. And so they  need to be in some other  type of facility."  

That point has been  raised by many supporters of the Mays litigants: Significantly reducing the jail  population and diverting  many mentally ill people  into treatment facilities  would go a long way toward  meeting the requirements  of the consent decree,  they argue. But Daniels  does not believe that  the county should stand  up such a facility, although  the county is responsible  for mental health services  under the law. "That  shouldn't be on the shoulders  of the county," he  said. "That's a societal  problem. That's a state  issue."  

The Bee informed Daniels  that the county is  formally responsible for  mental health services.  Daniels said again that the  responsibility should fall  on the state.  Daniels also noted that  he is against sentencing  reform that has kept many  people out of jail. He said  he is so frustrated with  California's criminal justice  reforms, including  those that reduced punishment  for certain drug  offenses, that it's contributed  to his desire to move  out of the state.  

Reducing the number of  people in the jail is a key  part of compliance with  the Mays Consent Decree.  The Board of Supervisors  has already formally  adopted jail population  reduction plans in response  to the decree. Multiple  parts of the plan  include mental health  treatment, including diverting  people to the county-run Mental Health  Treatment Center, a 50-bed locked facility.  

• Braden Murphy:  "They're taking out a  billion-dollar loan for the  jail expansion - a billion  dollars they don't even  have that's gonna go on  the backs of middle class  taxpayers to pay for a  bigger jail that they don't  even need," Murphy said.  He referenced the connection  between poverty,  homelessness and incarceration:  A 2022 Sacramento  County Jail Study  found that 30% of people  being released from the  jails were possibly  homeless. Homelessness prevention he said, would help reduce the jail population by keeping people's lives on track. "We need to avoid having  people go to jail by allowing  them to stay in their  apartments where they're at."  

He also said that voters  should question the priorities  of a supervisor who  would direct so much  money toward expanding  the jail.  "If we are going to (get  a loan for) a billion dollars,  we should use that billion  dollars to build affordable  housing and/or mental  health facilities in Folsom  and Citrus Heights and  Rio Linda where people  need them, so that they  don't have to get arrested  and go to jail to get the  services they need," he  said.  His plan, he said, would  lead to "saving taxpayers'  money, getting people off  the streets, and really,  frankly, sanity at the same  time. I mean, people  should ask themselves, do  they want elected leaders  that are supporting raising  their middle-class taxes to  expand the jail size? Or  should we elect somebody  working to keep people  from going to jail in the first place by stopping that  from happening with common-sense services?"  

• Rosario Rodriguez:  Rodriguez was not sure  whether $1 billion was an  appropriate amount of  money to spend on expanding  the jail. "I'm a  data-driven person," she  said. "I need data to make  that decision."  

But she did have  thoughts about diverting  people with mental illness  away from the jail. The  2022 Sacramento County  Jail Study found that 55%  of people in the jail had  behavioral health conditions,  and people with  serious mental illness  specifically made up a full  third of jail bookings. A  full quarter of people with  a serious mental illness  were also homeless. Rodriguez  observed some of  that firsthand.  

"I did a tour of the  county jail a couple of  months ago," she said in  December. "And this is  what I walked away with:  There are people with  severe mental health issues that are homeless  that are negatively impacting  public safety and the jails."  

"One of my big wish  lists as I work through homelessness is to identify  those with severe schizophrenia,  severe psychosis,  and get them off the  streets," she said.  The government has a  legal mandate to house  disabled people under its  care in the least restrictive  setting possible. The U.S.  Supreme Court ruled in  1999 that "unjustified  institutional isolation of  persons with disabilities is  a form of discrimination."  

Rodriguez's dream, she  said, would be to create a  mental health institution  at the Boys Ranch, a remote  property near Rancho  Murieta which used to  hold a juvenile detention  treatment facility. "I think  it's our responsibility as  government," she said, "to  ensure that we have them  in a place where they are  not going to harm themselves  or others."  

Ariane Lange:  916-321-1039,  @arianelange

[One added note...even if mental illness is not the primary cause of homelessness: " After the deinstitutionalization movement began in California in the 1960s, many state mental health hospitals closed, forcing many folks who needed a lot of care onto the streets. Without those facilities, many mentally ill people ended up in jails and prisons which are not set up to provide safe, compassionate care for brain illnesses. But in 1981, when President Ronald Reagan deinstitutionalized the mentally ill and emptied the psychiatric hospitals into so-called “community” clinics, the problem got worse." from here]

Supervisor Frost Strikes Out Again

 (c) by Mark Dempsey

Having just received Supervisor Sue Frost's recent newsletter, I'm shaking my head in disbelief that anyone could propose such counter-factual, counter-productive senselessness. Frost is a fear-monger--and apparently only Sue can protect us! 

The opening paragraph of the newsletter reads "I’m weary of news reports about criminals who prey on our citizens...." and the email goes on to tout legislation that would increase incarceration--she's "tough on crime" despite generations of evidence that incarceration and increased policing does nothing to prevent crime, and ignoring the fact that despite the panicky headlines, crime has been declining in recent years.

Ms. Frost has allied herself with police/sheriffs and would increase the estimated 70% of the county's budget that's already "justice-related," most recently by voting to spend nearly a billion dollars to enlarge the County Jail. And...bonus!...she's "Fiscally Responsible™"..."No new taxes" was her campaign slogan. And if you believe spending a billion dollars on a jail won't impair the County's ability to fix damaged roads, or deal with health and climate crises, well, I've got some floodplain in Florida to sell you.

True the jail is full, but 60 - 80% of those detained are guilty of nothing more than being unable to afford bail. That's right, it's not "innocent until proven guilty" in Sacramento County, it's "guilty until proven wealthy." Does Ms. Frost consider programs like supervised release, or no-cash bail, or decriminalizing drugs despite such programs' proven successes elsewhere? Nope.

US population increased 42% from 1982 to 2017 while spending on police increased 187%--yet Ms. Frost doesn't appear to feel more than four times safer. The US is the world's champion of incarceration too, with 5% of the world's population, it has 25% of the prisoners. That's five times the world's per-capita average, seven times Canada's per-capita incarceration, and Canadian crime is insignificantly different from US crime.

What is different about Canada, and most other lower-incarceration rate countries is that they don't have medical bankruptcies. The US has more than a half million such bankruptcies per year. There's even a Netflix series where a high school chemistry teacher starts cooking meth to pay his hospital bills. Could treating people better actually reduce crime? There are certainly studies that say so--see "New study shows welfare prevents crime, quite dramatically" for one.

I've cited this before, but it bears repeating:

"If you want policies that actually work, you have to change the political conversation from 'tough candidates punishing bad people' to 'strong communities keeping everyone safe.' Candidates who care about solving a problem pay attention to what caused it. Imagine a plumber who tells you to get more absorbent flooring but does not look for the leak." (from "The Root Cause of Violent Crime Is Not What We Think It Is," NY Times) 

Despite Hollywood's "copaganda" that says police solve all crimes and only bad people go to jail, "today, less than half of violent crimes in California are cleared. For property crimes, only one in ten reported incidents leads to an arrest. While California's rates are better than those nationwide, an unsettling proportion of crime in our state goes unresolved." (from here) Consider one community's experience: from 2010 to 2021, San Francisco's police budget increased by 15%...and although reported offenses were up (+28%) crimes cleared (-33%) and total arrests (-41%) both declined. Knowing this should make the public at least skeptical of the effectiveness of those massive investments in punishment.

Doing the same thing repeatedly and expecting a different outcome is the definition of insanity. That's why I'm recommending counseling for Ms. Frost.

Today's Bee Letter: About National Debt

RE the Bee's (republished Bloomberg) editorial 1/17/24 "US Debt is now $34 trillion, but don't worry. Seriously." p. 10B

Finally, the Bee published an editorialist who is not a deficit scold! Claudia Sahm, a former Federal Reserve economist reminds us that "[t]he government can service its debt because of its unlimited taxing authority and ability to issue more U.S. Treasury securities to repay maturing securities. Conversely households can't just increase their incomes to a desired level at will...."

"Politics is the real threat, not the level of borrowing. A country that prioritizes the size of the federal debt  has bad priorities."

This means the hand-wringing about Social Security and Medicare, all the doomsaying about how this debt will crush future generations is baloney.  It marks a new era when people understand that government can actually help people. After all, 65% of retired seniors have only Social Security and Medicare to fund their retirement, and there is literally no obstacle to increasing those benefits and lowering the FICA payroll tax.

The US Debt Is Now $34 Trillion. Don't Worry. Seriously.

[This is the first editorial ever published by the Sacramento Bee that doesn't describe national debt as a problem. Note: the Bee's editorial is heavily edited, omitting, among other things, any mention of Modern Money Theory's Stephanie Kelton. This is the complete text from Bloomberg]

Fiscal hawks who say borrowing is out of control only undermine a constructive conversation about the right priorities for the country.
January 12, 2024 at 2:00 AM PST

By Claudia Sahm
Claudia Sahm is the founder of Sahm Consulting and a former Federal Reserve economist. She is the creator of the Sahm rule, a recession indicator.

It’s a world of debt.

US federal government debt ended 2023 at a record $34 trillion. The worries are bipartisan, with both Republicans and Democrats hearing about out-of-control borrowing from their constituents. In fact, almost six in 10 Americans say reducing it should be a top priority, according to a survey by the Pew Research Center. So, it’s not a surprise that Congress is moving closer to passing a budget for fiscal year 2024 that would cap spending at $1.59 trillion which is a bit less than the $1.7 trillion in fiscal 2023.

But many of reasons why lawmakers and voters have concerns about the size of the nation’s debt – concerns that have been around for many decades - are misguided and undermine a constructive conversation about the priorities for the country. Debt is neither inherently good nor bad. As such, the question is not what’s the right level of borrowing, but rather what’s the economic return on the borrowing or the societal goals it advances.

Take the child tax credit. When the Biden administration increased borrowing to expand the deduction to as much as $3,600 per child from its previous amount of $2,000, the child poverty rate tumbled to as low as around 5% in 2021 from almost 13% in 2019, making it easier for families to provide the basics, such as food, clothing and school supplies. When the program expired at the end of 2021, the rate shot up to 12.6%. Or consider the tens of billions of dollars in grants and contracts the government handed out help fund the development of mRNA technology that was used in the Covid-19 vaccines. The return on that investment to society is incalculable. And would the economy have been so surprisingly strong the past few years without the extra borrowing, avoiding a damaging recession that would have thrown millions out of work?

For an example of deficit spending that might be viewed as bad, research suggests that tax breaks for companies, which decrease tax revenue and thereby increase the budget deficit, may exacerbate income inequality rather than the intended outcome of encouraging companies to boost capital spending to strengthen their businesses and the economy.

Regardless, the amount of US debt must be put in context. Yes, $34 trillion is big number, but $142 trillion is even bigger and much more important because it represents the total wealth of Americans —a massive resource that helps fund government debt and deficits.


 

The pessimists will counter by pointing to the amount of interest the government is paying to service its debt. In fiscal 2023 that ended Sept. 30, the figure was also a record - $882.6 billion, to be exact. Again, context matters. Although the amount has doubled since 2016, it was a manageable 3.4% of gross domestic product, less than the 4.3% level of the late 1990s when the government was running budget surpluses instead of deficits like now, according to data compiled by Bloomberg.

Sure enough, whenever there’s a debate about government borrowing, it’s inevitably put in the context of the financial constraints faced by households. But the correct context for how the federal government makes decisions about debt is not the same as how households make decisions about debt. Stephanie Kelton, professor of economics at Stony Brook University, rightly argues that this is one of the many “myths” embedded in the discussion about the federal debt. The government can easily service its debt because of its unlimited taxing authority and ability to issue more US Treasury securities to repay maturing securities. Conversely, households can’t just increase their incomes to a desired level at will.

Rather than the level of borrowing, political gamesmanship over the federal debt is a far greater risk to the economy. The United States has earned what’s known as an “ exorbitant privilege” in the post-World War II era, meaning that there is always demand from investors around the world for US Treasuries in good times and bad. That privilege was earned by the US promoting a dynamic economy, adhering to the rule of law and being a stable democracy. As such, the dollar accounts for around 60% of global foreign-exchange reserves, three times that of the No. 2 reserve currency, the euro.


More important than reducing the debt or balancing the budget would be efforts by lawmakers to protect the US’s exorbitant privilege. Those in Congress creating high drama over the nation’s borrowing and budgets have caused some to question whether Treasuries are really the world’s safest assets. In stripping the US of its AAA credit ratings, both S&P Global Ratings and Fitch Ratings cited concern about rising political dysfunction following several debt-ceiling standoffs.


Politics is the real threat, not the level of borrowing. A country that prioritizes the size of the federal debt has bad priorities.