In order to "solve" California's massive budget crisis, the tax-and-spend lobby and left-leaning academics are again suggesting that we revise Proposition 13, which changed the state's tax structure in 1978 by lowering property tax rates and limiting annual increases.

Ironically, these new efforts to change the highly popular initiative are based, not on the argument that Proposition 13 has failed California, but on the grounds that Proposition 13 is working precisely as intended.

California's budget problem is a result of unrestrained overspending coupled with unstable sources of revenue.

While income tax and sales tax revenue are way down by double digit percentages, property tax revenues have simply flattened out, notwithstanding dramatic drops in market value. True, some counties will see slightly larger drops in revenue than others, but some counties will actually see increases in property tax revenue. There are few places in all of America which can make that claim.

Here is the real irony. Our sales tax and income tax system has evolved over many years in ways dictated by our political elite and smartest policy advisors. Thus, the volatility that we now complain about has been brought to us by people who are oh so much smarter than the rest of us. Proposition 13, on the other hand, was sponsored by two relatively simple men, Howard Jarvis and Paul Gann, who were seeking, first and foremost, just to protect homeowners.

The Obama plan would give new powers to the Federal Reserve to oversee the entire financial system and would also create a new consumer protection agency to guard against credit and other abuses that played a big role in the current crisis.

Lawrence Summers, head of the president's National Economic Council, said that those who believed this power should not reside with the Fed had the responsibility to make the case for some other agency.

The creation of the new consumer agency is aimed at guarding against the kinds of lending abuses which resulted in many Americans being saddled with far more mortgage debt than they could handle.

Mr. McClelland’s credit card company was calling yet again, wondering when it could expect the next installment on his delinquent account.

He proposed paying half of his $5,486 balance and calling the matter even.

It’s a deal, the account representative immediately said, not even bothering to check with a supervisor.

As they confront unprecedented numbers of troubled customers, credit card companies are increasingly doing something they have historically scorned: settling delinquent accounts for substantially less than the amount owed.

Only a few creditors are willing to confirm the practice. Bank of America and American Express say they decide on a case-by-case basis whether to accept less than the full balance. Other card companies refuse to discuss the subject, but their trade group, the American Bankers Association, acknowledges that settlements are becoming more common.

After a balance has been delinquent for six months, regulations require the card company to reduce the value of the debt on its books to zero. If a borrower has not paid by this point, chances are he never will.

Traditionally, the creditors could play tough with any accounts that became delinquent because the cardholders had assets. The creditors could sue or place a lien on a cardholder’s house.

As the recession grinds on, though, many cardholders have less to lose. Mr. McClelland, 42, is a renter. Since he is self-employed, he has no wages to garnish.

HSBC said it did not comment on individual cardholders and would not discuss its policy toward settlements. “Every customer situation is unique,” said a spokeswoman, Cindy Savio.

The creditors also point out that a delinquency, like a foreclosure, destroys a credit record.

"A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury." -- Alexander Tyler

"Our Constitution is designed only for a moral and religious people. It is wholly inadequate for any other." -- John Adams, 2nd President of the United States

• Get informed.
• Inform those in your sphere of influence.
• Practice fiscal morality.
• Help to elect those who understand these things and have the strength of character to limit their own power for the sake of limited government.

The amount of money for which the government put taxpayers on the hook through bailouts -- undeserved rewards for people who took risks that didn't work out -- went from a shocking $7.7 trillion under George W. Bush to an utterly incomprehensible $12.8 trillion during Obama's brief time in office so far. The anti-bailout majority of Americans are justifiably angry. They were angry when Bush got this mess started and are really angry now that Obama has made it worse. People who played by the rules, took care of their families and paid their taxes are going to pick up the tab for special interests on Wall Street and in Washington.

Bill Maher makes the same mistakes as other pundits when he writes that he doesn't know what the "tea party" protests were all about and then goes on to imply that it is all about President Obama's race.

I went to the protest in Yorba Linda because I am concerned about the inevitable inflation that will result from spending trillions of dollars we do not have to spend.

What is bothering Republicans is the plain fact that they lost the last two elections and haven't a clue what to do to clean up their sorry act.

Instead of acting like grown-ups and working together with the new guy, they can do nothing but pout and rant and call Obama silly names.

Hey, GOP, I've got a flash for you: You were beaten fair and square by Obama, an intelligent, hardworking guy who will get this nation back on its feet, even if you won't lift a hand to help him do it.

One of the new features announced today would enable borrowers with second mortgages -- a situation that describes about 50% of those in danger of foreclosure -- to get a temporary cut in interest rates on both their loans.

...

The other initiative announced today would integrate a new version of the Hope for Homeowners program into the loan modification efforts. That program calls for lenders to write down a troubled borrower's debt until it's a bit less than the value of the house, then refinance the mortgage into a loan guaranteed by the Federal Housing Administration.

There's a factoid one doesn't often hear, that 50% of the 'troubled' borrowers have second mortgages. So now, renters and responsible homeowners will be subsidizing not only people who overextended themselves, but folks who went to DiTech to get money for a jacuzzi or a trip to Hawaii.

So, if/when housing prices go back up, will these borrowers be required to pay back the money to the original lender, or does the homeowner just get to walk away with an equity windfall?

Republicans Stage 'Tea Party' Protests Against Obama
Thousands of demonstrators in Southern California and elsewhere in the nation demand lower taxes and less government spending. But some GOP pollsters warn that the tactic could backfire.

Republicans sought to ignite a popular revolt against President Obama on Wednesday by staging "tea party" protests across the nation to demand lower taxes and less government spending -- but the tactic carried risk for the party.

High school seniors, on average, answered correctly only 48.3 percent of questions about personal finance and economics, according to a nationwide survey released Wednesday by the Federal Reserve.

With home foreclosures at record highs, Fed Chairman Ben Bernanke stressed in a speech that young people must sharpen their financial knowledge so they are in a better position to make sound investment decisions throughout their lives.

In this year's survey, only 16.8 percent correctly answered that stocks likely would offer the higher growth over 18 years of saving for a child's education, while 37.3 percent thought a U.S. savings bond — one of the most conservative investments - would offer the highest growth.

Nearly 53 percent said they would have no liability if their credit card was stolen and a thief ran up $1,000 worth of debt. (Liability is limited to $50 after the credit-card issuer is notified.) Only 13 percent knew they might have to be responsible for $50.

The surveys, done every two years, were sponsored by the Jump$tart Coalition for Personal Financial Literacy, which wants students to have the skills to be financially competent.