With no shock and awe and little pomp and circumstance, China has declared war on the world.  Having watched the Gulf Wars on CNN, Americans are accustomed to wars fought with jets, battleships, tanks and infantry.  We constantly are on the look out for foreign enemies on our soil and the vigilance of our citizens has thwarted numerous terrorist attacks.  Unfortunately, Americans are not accustomed to recognize international weapons of economic mass destruction.  In the modern world, exports, deflation and economic competiveness are weapons far more powerful than cruise missiles.

Naive to this new deadly threat, the US government has launched wave after wave of assaults on the competiveness of American business.  Healthcare and financial service “reform” is driving business operating costs higher and credit availability down.  The soon-to-expire tax cuts will result in the largest tax increase in American history.  It should not be surprising that China would use tactics akin to economic guerrilla warfare to attack when our nation is most vulnerable.

China’s supply of young workers entering the labor force is peaking this year and will decline by one third over the next dozen years due to decades of population control.  But big increases in rural farm productivity are pushing huge numbers of the young off the farms and into the factories on the coast.  With factory worker suicides rampant and labor striking over wage rates too low to buy food, China panicked last year and increased its money supply by a spectacular 40% to quell dissent.  Given the threat from a sinking economy creating a revolutionary environment at home, communist China chose to invade world markets by exporting almost 40% of its gross domestic product.

Statistics just released have obliterated any hope that a meaningful economic expansion is under way in Europe, Japan or the US.  Business confidence, factory orders, auto sales and consumer product purchases are plummeting.  Meanwhile, Chinese exports grew a blistering 22% rate for the second quarter of 2010.  With their exports equaling 5% of the world’s gross domestic product (GDP), China’s capture of another 1% of the world’s economy will force producers in other countries to cut employment by approximately 10 million jobs.

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In what is becoming a perennial affair, the California budget deficit is projected to be over $21 billion in the coming year – including a $6 billion hangover from this year.  With the same degree of regularity, in pursuit of stable education funding (a good idea), educators in California are calling for tax rate increases (a bad idea) and blaming Republican legislators for blocking those increases (an unproductive idea).   Rather than call for more tax rate increases – one of the causes of our current problems –educators should call for policies that will increase private sector jobs so we have more people paying taxes – not less.

At first blush, it may be hard to believe that we have another deficit.  After all, in 2008, expenditures were far in excess of $100 billion.   Expenditures for the upcoming fiscal year were just over $90 billion.  With all that cutting, shouldn’t we have a balanced budget?  The answer is no – because budgets are a two-part equation: deficit/surplus = spending – revenues.  In California’s case, revenues have plummeted faster than expenditures – and continue to do so at a perilous rate.  Worse yet, California’s Legislative Analysts Office projects huge deficits for years to come.

Nevertheless, Democrats and many educators are calling for ever more tax rate increases in a dangerous game of economic roulette with California jobs.  Keep in mind that California already has the 6^th highest tax rate in the Country.  Why not shoot for number #1?  Three reasons:

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