Welcome to California

WELCOME TO CALIFORNIA....I see in my morning paper that California cities are engaging in ever more sleight of hand to fund local improvements. Here's a typical arrangement, concocted by John Kim, an advisor with a Los Angeles investment bank. Be sure to read closely:

Oxnard is one of Kim's clients. In 2007, the city wanted to issue bonds to finance part of its $150-million street repaving project, using its share of state gas tax revenue to repay the debt. But the state Constitution says local governments can't issue debt against that revenue.

That's where Kim came in. His plan: The Oxnard City Council would sell the streets to the Oxnard Finance Authority, which consists of the council and mayor. The Finance Authority would issue bonds to raise money for the improvements and repay the bondholders by selling the streets back to the city.

Where would the city get the money to buy the streets? From its gas tax revenue.

So: the left hand isn't allowed to issue a bond, so it sells the streets to its right hand. The right hand issues a bond, then pays off the bond by selling the streets back to its left hand. Everyone's happy!

Needless to say, this costs more than just issuing a standard bond in the first place, but California cities do it because they know voters won't approve a normal bond issue. Welcome to fantasyland, aka the Golden State, in which voters over the years have convinced themselves that it's possible to have lots of services, great roads, and wonderful schools without paying taxes. And to make it even worse, the taxes we've cut back most heavily on (property taxes and vehicle license fees) are the ones that are the steadiest sources of revenue in varying economic climates — unlike things like capital gains taxes and income taxes, which are highly sensitive to economic conditions. As a result, state revenues bounce around wildly when the economy goes up and down, and every few years we find ourselves in yet another crisis, each one worse than before.

This year's, of course, is the mother of all crises, and we're just about out of smoke and mirrors. 2009 promises to be a very, very un-fun year here.

Chart of the Day - 12.31.2008

CHART OF THE DAY....The latest Pew poll shows that this year, for the first time, more people say they get "most" of their national and international news from the internet than from newspapers. Obviously this is slightly misleading, since internet largely means newspaper web sites, but it's still sort of a bellwether statistic.

My question: what happened this year? For the past three years the number of people who got their news mostly from the internet stayed (surprisingly) pretty level at a little over 20%. Then, suddenly, this year, it skyrocketed to 40%. Is this solely because of the presidential election, which became an internet phenomenon? Maybe, although the election came in at a weak #4 in the top news stories of 2008, so that doesn't seem like enough to account for it. In any case, the bulk of the switch appears to been among the young:

For young people [] the internet now rivals television as a main source of national and international news. Nearly six-in-ten Americans younger than 30 (59%) say they get most of their national and international news online; an identical percentage cites television. In September 2007, twice as many young people said they relied mostly on television for news than mentioned the internet (68% vs. 34%).

The percentage of people younger than 30 citing television as a main news source has declined from 68% in September 2007 to 59% currently.

So among young people, TV has gone from a 68-34 winner in 2007 to a 59-59 tie in 2008. That's a huge change in only 12 months.

Best Art: Hillary's Prayer and More Design Picks

After you check out our Photo Editor's Favorites of 2008, check out the Society of Publication Designers' favorite art. The 43rd Publication Design Annual hit the mailboxes of art directors across the country this week, and sure enough, MoJo was amply represented. The SPD runs arguably the most prestigious juried competition for visual journalism in the world. Created by design firm Weapons of Choice, the book is a tour de force of design about design, not to mention eye candy to art junkies everywhere.

Mother Jones is represented by three Merit Award winners. Here's what they loved:

"The Hidden Half", a moving photo essay on women in contemporary Afghanistan by Lana Šlezi?.

Steve Brodner illustrates the Office of Special Counsel head Scott Bloch's ignoring of the whistleblowers his organization was supposed to protect in art for "Don't Whistle While You Work."

Andy Friedman imagines Hillary at the Last Supper, sitting at Jesus' right hand, in "Hillary's Prayer."

Mother Jones was also honored in the SPD's Spots competition:

iBreath, Your New Year's Eve Drinking Buddy?

The newly released iBreath, an alcohol breathalyzer accessory that attaches to your iPod and iPhone, is the newest addition to the list of Apple-friendly alcohol apps and devices (you know, Drunk-Dial and Taxi Magic?) and I think it's pretty brilliant. The iBreath, created by David Steele Enterprises Inc., sells for $79. It claims it can measure your alcohol content within two seconds and within .01 percent accuracy—and it even doubles as an FM transmitter. (The marriage of personal science with FM transmission capability seems a little odd, but what the hell.) What's next: an iSugar glucose meter? Maybe an iClean personal STD test?

Laura Dean-Mooney, national president of Mothers Against Drunk Driving, has come out against the iBreath, telling the Los Angeles Times that kids will just use it for drinking games and no one should drive with any alcohol in their system no matter what, and we should all just take public transportation. If you are falling down drunk, obviously calling a cab is the only thing you should be doing. But this device could be useful for those who have two glasses of wine at dinner, or two cocktails at the bar, and might not realize that even if they don't feel tipsy, it's not too hard to surpass .08 percent blood-alcohol content. And until public transportation in many cities is more widely available after last call, and kids start thinking that Monopoly is more fun than drinking (i.e., never), iBreath fills an intereresting gap.

—Kathleen Flynn

Year's Best Culture Interviews

From John Cusack banter to Joss Whedon podcasts, MoJo talked with some fascinating culture-makers this year. Below, six of our favorite culture interviews of 2008.

Obama Defuses a Racial Bomb Ignited by Bobby Rush

It was supposed to be just another absurd day in the absurd life of Illinois Governor Rod Blagojevich. Then Bobby Rush showed up.

Blagojevich held a mid-afternoon press conference Tuesday to name former Illinois Comptroller and Attorney General Roland Burris to Illinois' vacant Senate seat, an act that stood in defiance of both the stated wishes of every Democratic senator in Washington and Majority Leader Harry Reid's threat to refuse any Blagojevich appointee entrance into the Senate. The appointment, which the Secretary of State of Illinois stated he would not certify, would likely create weeks of legal wrangling and prolong the sideshow atmosphere surrounding Blago. So far, so bizarre, so good.

Then Congressman Bobby Rush of Illinois' 1st district stepped to the mic in support of Burris, who is black, and said, "I will ask you to not hang and lynch the appointee as you try to castigate the appointer." Lynch. That's crazy even by Blago standards.

Let's have no doubt: In a different world and at a different time, Burris would have legitimate claim to the seat. The first black man to win a major statewide office in Illinois, he served three terms as comptroller (beginning in 1979) and one as attorney general (beginning in 1991). In his era, he was popular throughout the state. He managed to serve for 16 years without scandal, which may be a record in Illinois. But despite his accomplishments, Burris cannot hope to untangle himself from the web of scandals woven by Blagojevich. And even if those scandals were not so all-consuming, few prominent politicians in Illinois would stand up for Burris: half want the seat he has been appointed to fill, and the other half would rather endorse someone who will be a future power player, someone who could repay the favor down the line. Few would see the sense in supporting a man who, though a distinguished public servant, is in his seventies and hasn't held public office in over a decade.

Yet More Cap and Tax

YET MORE CAP AND TAX....A couple of days ago I mentioned that a generic carbon tax would raise the price of gasoline by only a little bit, and since gasoline use is pretty inelastic this means it wouldn't reduce consumption much. Because of this, we probably need more than just a carbon tax if we seriously want to cut gasoline use. David Roberts comments:

Kevin Drum grasps this basic problem, but for some reason the separate policy he favors is ... a higher gas tax.

But if a price signal is blunted by low elasticity, is the best solution simply to jack up the price?....If we are so hell-bent on getting people out of inefficient vehicles — and we certainly should be — why don't we take a more direct route? Why don't we try to directly increase elasticity of demand by creating more low-carbon alternatives? Build the crap out of public transit. Buy gas guzzlers off the road through junker programs. Issue a new ruling that the government will only buy plug-in hybrid or electric vehicles. Raise CAFE standards to 60 mpg and pay the Big Three off with stimulus money (they're probably going to get it anyway).

Just for the record, I pretty much agree. Price signals are important as a backbone policy (you can think of them as sort of like a tailwind that helps everything else along), and since gasoline use responds slowly to price hikes I think a mixed carbon trading/gas tax policy that raises the price of gasoline heavily is a good idea. Still, it's absolutely true that you often need more than just a tailwind. If you want better gas mileage, you can get it way faster by increasing CAFE standards than you can by jacking up the price of gasoline. Getting rid of gas guzzlers is another good idea, and I'm also a fan of a revenue neutral feebate that's based on gas mileage (you get a rebate when you buy a car with exceptionally good mileage and pay a fee on cars with exceptionally bad mileage). There are probably plenty of other good ideas out there too, many of which I haven't even heard of.

Still, generally speaking, taxes and carbon trading are more efficient regulatory mechanisms than command and control, so the more you can rely on them the better. For that and other reasons, I remain in favor of trying to increase carbon prices fairly heavily, and gasoline prices even more heavily. It's true that you have to do this carefully to avoid making the price hikes into a de facto regressive tax, but there are pretty good policy mechanisms available for achieving fairness. It's time to get started.

We get a lot of exceptional photo essays submitted each week. It's hard to pick just one per issue, and even with the expanded outlet of the website, there's still not enough room for everything worthy that passes across my desk. Between the photo essays that ran in the magazine in 2008, and those that found a home on the Mother Jones website, this was a bang-up year for picture stories here.

That said, below are my five personal favorite MoJo photo essays of 2008.

At a Loss for Words

AT A LOSS FOR WORDS....In case you're wondering what I think about Rod Blagojevich having the balls to appoint a replacement to Barack Obama's Senate seat, I don't really have the words for it. I mean, what can you say about something like this? Blagojevich is obviously living in his own personal looking-glass land these days.

Still, the silver lining here is that maybe this will give the Illinois legislature the kick in the butt it needs to get cracking on impeachment. Maybe.

Housing Market Continues to Suck

HOUSING MARKET CONTINUES TO SUCK....Housing prices are still plunging:

Home values in 20 large metropolitan areas across the country dropped at a record pace in October as the fallout from the financial collapse reverberated through the housing market, according to data released Tuesday.

...."October was clearly the free-fall month," said David M. Blitzer, chairman of the index committee at Standard & Poor's. "Everything was going against us in October, without exception."....Prices are falling at the fastest pace on record, a sign that the housing market is a long way from recovery.

The housing market is obviously in terrible shape, but for what it's worth, I think the idea that October was uniquely bad is slightly miscast. As you can see in the Case-Shiller index at right, housing prices began plunging at a rate of 2-3% per month in October 2007, moderated a bit starting in May 2008, and then resumed their 2-3% monthly decline in September. It's not so much that we're suddenly seeing record declines, as it is that the record declines that started last year got interrupted for a few months this summer and are now back in business. But this is no surprise: the Case-Shiller index is still only down to 158, and we've always known that it's not going to stop much before it gets into the 100-120 range. What's more, rapid declines aren't entirely bad news. We're probably better off getting to 100 sooner rather than later, since economic recovery almost certainly can't start until housing prices bottom out.

In the meantime, of course — and I say this as someone currently trying to sell a house — the news is grim every direction you look. Even at 2-3% per month, we've got at least another year before the housing market starts to reach its natural level. Until then, we're screwed.