I published a report last week: “California has Drawn Down 85% of its Credit Lines”; where we first reported the State of California has a $13 billion budget short-fall and has already pulled 85% of their available credit lines. I warned the state might start short-checking schools and local government in an attempt to avoid laying-off politically active state unionized employees. But I had no inkling that a big County with an upside-down budget would be the first to rip-off schools to shield powerful union friends.

Orange County has a dicey history when it comes to playing games with other-peoples-money. In 1993, I discovered that the County was trying to cover a $180 million budget short-fall by leveraging the County and the local school’s payroll accounts by 500% and speculating in the wild and woolly world of derivatives. When I confronted the County they claimed what they were doing was “perfectly legal”. I tried to get the FBI, the Controller of the Currency, and the State Attorney General to stop this egregious activity. I was told that: “Government makes laws to regulate the people, not to regulate themselves.” A year later Orange County filed the largest bankruptcy in U.S. history. Of the $2 billion in losses, local schools portion was $93 million.

In 2006, I ran and was elected as Orange County Treasurer to succeed Republican John Moorlach; now a Supervisor. When I came in office I discovered the $8 billion County pension plan was leveraged with $22 billion of derivatives. It turns out that the County had granted their unions the highest public pension benefits in the nation by spiking their pensions. To avoid having to actually pay for the higher costs of the benefits spike; the pension plan was secretly taking conspicuously bad investment risks. It took me a year of battling with County officials to get the pension to drastically reduce risk in 2007. Had the County not sold the derivatives, they would have suffered $2 billion in losses in 2008 Credit Crisis.

Supervisor John Moorlach rationalizes ripping-off schools as a method to force the replacement of a $49 million state revenue stream eliminated in last year’s budget crisis:

“We must keep our $49.5 million and we rightfully deserve the additional $24 million. The schools must be backfilled by the State. The State has to figure out how to come up with the $73.5 million. Had the Legislature and the Governor simply left the OC alone, it would have been $24 million ahead. Now we have to wait and see how Sacramento responds to our having informed them that we are following the law. Let’s hope they agree and we can all move on.”

The power of public employee unions is well-known across the U.S. But what isn’t known is how politicians mouth an ultra-conservative position, while cutting side deals for union support. It is said: “The less the people know about how sausages and laws are made, the better they sleep in the night”. Unfortunately, the County of Orange’s rip-off of schools is now in the public eye. The schools will file a law suit and in three to five years win and get paid back. But during that delay, the Supervisors will have generated some very un-conservative rich and powerful friends.

Feel free to forward this Op Ed and follow our Blog at www.chrissstreetandcompany.com

Thank you all the success of Chriss Street’s latest book: “The Third Way”; now available on www.amazon.com and available through Barnes & Nobel on November 28.

The recent police-related deaths of 43-year-old Allen Kephart in Lake Arrowhead, California and 37-year-old Kelly Thomas in Fullerton, California have sent shockwaves through the their respective communities. Indeed, both are being investigated by the Federal Bureau of Investigation.

The death of Thomas, a homeless schizophrenic beaten into a coma by Fullerton police, is also being investigated by the Orange County District Attorney’s Office. His case is not the first time Orange County law enforcement has been accused of applying excessive force to a mentally ill homeless man.

In October 2007, 28-year-old Michael Patrick Lass was living on the streets of Santa Ana when police stopped him for having an open container of alcohol. At the time of his arrest he was alcohol-dependent, schizophrenic, bipolar, and had a history of seizures.

The altercation that led to Lass’s death took place at the Orange County Central Jail, where Lass was sentenced to serve five days after pleading guilty to public intoxication. The day Lass would have been able to leave he felt ill and asked for medical attention. Lass was ordered to leave his cell and after repeatedly looking over his shoulder while being directed by a deputy, he was tackled to the ground and a melee ensued.

“He wasn’t fighting or anything and he was already in a contained area, locked in a contained area,” Lass’s father Frederick, says of the incident. “Immediately there was a second deputy there, a third deputy, a fourth, a fifth, and on and on it went. There was so many deputies that you couldn’t count how many deputies were there.”

Lass was shocked with a Taser nine times and the county’s autopsy said he had multiple contusions on his body, “involving the head, neck, torso and extremities.” The struggle was captured on film. “I can remember viewing the film and at one point while they are beating him Michael tells them, ‘You’re killing me.’ Literally: ‘You’re killing me’,” says Frederick Lass.

Frederick Lass sued Orange County and six deputies involved in the incident. Although neither was found liable in that case, Orange County later revised its Taser policy so that deputies would not be able to use Tasers on restrained suspects unless they display “overtly assaultive behavior.”

While an improvement, the American Civil Liberties Union of Southern California says the policy didn’t go far enough. Executive Director Hector Villagra sent a letter to Sheriff Hutchens in January 2009 urging still-stricter use of Tasers, pointing to five people who have died since 2005 after being stung with the weapon.

Like the cases of Allen Kephart and Kelly Thomas, the death while in custody of Michael Patrick Lass raises troubling questions about police procedures – and the power of surveillance videos to shine a bright light on the workings of the criminal justice system.

The following video includes graphic violence and viewer discretion is advised.

Written and produced by Paul Detrick. Camera: Paul Detrick, Zach Weissmueller, and Alex Manning; edited by Detrick.

Special Thanks: Frederick Lass.

Music by Audionautix.com.

Go to Reason.tv for downloadable versions of this and all our videos, and subscribe to Reason.tv’s YouTube Channel to receive automatic notification when new content is posted.

1,200.

That’s right, well over a thousand hours.  Plus, you’d have to pay thousands of dollars to cover the cost of your classes and pass a written exam.  Only then will the government give you a license—that is, permission to cut hair.

Now what happens if you’re already a successful barber but didn’t have a chance to stop working and jump through all the hoops needed to get that license?

Armed government agents could raid your business and handcuff you in front of your clients. Indeed, this is already happening.  Institute for Justice economic-liberty expert Paul Sherman explains:

According to the Orlando Sentinel:

As many as 14 armed Orange County deputies, including narcotics agents, stormed Strictly Skillz barbershop during business hours on a Saturday in August, handcuffing barbers in front of customers during a busy back-to-school weekend.

It was just one of a series of unprecedented raid-style inspections the Orange County Sheriff’s Office recently conducted with a state regulating agency, targeting several predominantly black- and Hispanic-owned barbershops in the Pine Hills area.

In “sweeps” on Aug. 21 and Sept. 17 targeting at least nine shops, deputies arrested 37 people — the majority charged with “barbering without a license,” a misdemeanor that state records show only three other people have been jailed in Florida in the past 10 years.

The operations were conducted without warrants, under the authority of the Department of Business and Professional Regulation inspectors, who can enter salons at will. Deputies said they found evidence of illegal activity, including guns, drugs and gambling. However, records show that during the two sweeps, and a smaller one in October, just three people were charged with anything other than a licensing violation.

Barbers with years of experience and lots of satisfied customers are being subject to harassment, embarrassment, and hundreds of dollars in fines, simply because they cut hair without having gotten permission from the government.

This is not an isolated incident.

The Institute for Justice recently launched a nationwide “city studies” investigation examining barriers to entrepreneurship in eight American cities.  We found that government at every level is harassing more and more citizens and forcing ever-increasing numbers of people to get government permission just to earn a living.

We also profiled a series of entrepreneurs in a campaign called The Power of One Entrepreneur.   These reports demonstrate the amazing and positive effects that a single entrepreneur can have on their community.  And yet, government barriers around the country are kicking entrepreneurs out of work and preventing countless others from ever realizing their American Dream.

As Institute for Justice President Chip Mellor explains in the USA Today:

America was once known as the Land of Opportunity. It could be again, but not until state and local officials get out of the way of entrepreneurs trying to fulfill their dreams of new business and new prosperity for themselves and their families.

If the government is serious about creating jobs in this jobless recovery, perhaps it should put away the handcuffs and start allowing entrepreneurs to put themselves and others to work.

Join IJ online at facebook, You Tube and twitter.

Are we now witnessing another such moment in Orange County California?

Democratic Rep. Loretta Sanchez appeared on Spanish-language Univision to appeal to her most important voting base:  Latino voters.  Perhaps with a false assumption that only Latinos from the left were listening, she let slip an offensive and patronizing charge:  The Vietnamese are trying to take the seat from Latinos.

Rep. Sanchez district has seen an enormous influx of Vietnamese immigrants over the past two decades.  There have often been tensions between the Latino population and the new arrivals from Asia.  Because the vast majority of Vietnamese immigrants arrived here seeking refuge from a communist, totalitarian regime, they tend to lean more to the right than their Mexican counterparts.

Rep. Sanchez’ opponent is Van Tran, an impressive and inspiring figure who is living the American dream.  He is a role-model to his community and he represents the values and economic philosophies of the Republican party as well as anyone.  And, he is on the verge of defeating Sanchez.

This video could provide Mr. Tran with his “Scott Brown Moment”.  Let’s hope he has an opportunity to remind Ms. Sanchez that California’s 47th Congressional District is not Sanchez’ seat and not the Democrat’s seat and not the Latino’s seat.

It’s the people’s seat.

If U.S. Rep. Alan Grayson were a rock star, his latest PR blitz — a DVD sent to tens of thousands of Central Florida residents — would be called Grayson’s Greatest Hits.

The 90-minute disc features video highlights from his first term in office, including one of him grilling Fed Chairman Ben Bernanke and another in which the Orlando Democrat preaches on the need to teach schoolchildren about the U.S. Constitution.

The DVD comes wrapped inside a mailer covered with promotional slogans: “Congressman Alan Grayson, Hard at Work for You,” “He works hard. He pays attention. He gets things done,” and “Video DVD Inside: Watch Congressman Grayson in Action!”

In many ways, it’s the perfect campaign video — with one key difference.

Thanks to perks given to all members of Congress, it’s not Grayson’s campaign but taxpayers who footed the nearly $73,000 bill to produce and mail the DVD to 100,000 homes in Grayson’s district of Lake, Marion, Orange and Osceola counties.

It’s a stunt that drew howls from Republicans, who complained that Grayson was abusing the congressional privilege of franking that allows lawmakers to send taxpayer-paid newsletters and other mail to residents.

“This is an outrageous abuse of taxpayer dollars, and it goes to show that Alan Grayson is completely out of touch with Central Florida,” said state Rep. Kurt Kelly of Ocala, one of seven Republicans looking to unseat Grayson this fall.

“This is just ridiculous behavior. What congressman would do this in the face of a huge budget deficit?” he asked.

Continue reading here. Color us unsurprised.

The good news: The unions might have a nearly endless source of cash in the form of employee dues, but they don’t win every battle. On Tuesday, in an election that holds nationwide lessons, a pension-reforming candidate for OC supervisor withstood a million-dollar-plus union onslaught and lived to tell about it. A county Republican Party chairman, put to the test over his “manifesto” to fellow GOP officials, is now taking his lessons to other counties.

In January, Chairman Scott Baugh berated Republicans who side with union benefit-enhancement deals and declared that no GOP candidate for office would receive party support if the candidate did not eschew union support. OC GOP support is a big deal in that still-overwhelmingly Republican county.

The showdown came this week in a contest to replace a supervisor, Chris Norby, who went on to the state Assembly. Fullerton Councilman Shawn Nelson took party chairman Scott Baugh’s pledge to refuse union funds seriously as he sought election to the powerful county board. Nelson was named the county GOP Elected Official of the Year after he blew the whistle on a retroactive pension deal in his city. He displayed the courage Baugh said he is seeking in Republican elected officials.

Nelson’s top opponent, Anaheim Councilman Harry Sidhu comes from the go-along, get-along wing of the party. He signed the “no union support” deal, but then he sat back and said nothing as the county’s major public employee unions dropped upwards of a million dollars on his behalf – including for vile smear ads against Nelson, depicting him as a friend of child molesters because his law firm does criminal defense work. Sidhu also promised that, as supervisor, he would drop a county lawsuit challenging the retroactive portion of a past pension increase.  It was almost unbelievable the number of mailers and TV and radio ads the unions paid for – something bordering on overkill for this type of county race.

Baugh knew that his manifesto was on the line. If the unions won, then GOP candidates would know that the GOP’s demands were to be taken less seriously than the union’s threats. The county GOP mailed its own pieces on behalf of Nelson, but they went only to GOP voters and were far fewer than what the unions mustered. Nelson supporters reminded voters that all the ads were sponsored by the county’s self-interested public-sector unions. That might have been the key.

Going into Election Day, the Sidhu forces were confident, but they never came close. Nelson won 29.9 percent to 18.4 percent, with several other candidates in this supposedly nonpartisan race receiving the rest of the vote. Sidhu wasn’t too far ahead of a couple of the other low-spending candidates, which showed how little the union money had bought him. Nelson fills the seat immediately because it is vacant and then Nelson and Sidhu face off in the November election. It seems unlikely the unions will invest that much again given the results from Tuesday. Other candidates will be sure to take note.

The lesson is as clear in California as it is in New Jersey, where Gov. Chris Christie is fighting against the unions: Candidates can take on labor and. Maybe the tide is turning.

Yet even as unlikely sources (former Assembly Speaker Willie Brown, Treasurer Bill Lockyer and California Public Employees’ Retirement System chief actuary Ron Seeling) recognize the grave threat outrageous pension deals pose to the state’s long-term fiscal health, the state’s unions and Democratic leaders continue to operate as if there is no problem. The public seems increasingly agitated by the injustice of a situation that requires private sector workers to work late into life to pay the higher taxes needed so that public sector workers can retire in their early 50s with six-figure, cost-of-living-adjusted deals. But to the politicians, the unions still rule.

In my old haunts of Orange County, Calif., a particularly nasty race for the Board of Supervisors has been unfolding in the past month. On June 8, voters in that heavily Republican and generally anti-union county will fill the slot of a supervisor who has since been elected to the state Assembly.

Back in January, party leader Scott Baugh threw down the gauntlet after watching one Republican after another sell out to the state’s unions. In what has been referred to as the Baugh Manifesto, Baugh slammed Republicans for their role in expanding debt. He promised to use the party to hold Republicans accountable. He called for the party to do more than just endorse those with an “R” after their name. He made two specific demarcations: No Republican will get party support without backing a now-dead Paycheck Protection Initiative, which limits the ability of unions to use dues for political purposes. And no Republican will get party support “who receives contributions from public employee unions.”

It was tough stuff and the party has stuck to these demands.

In the supervisor’s race, the party and Baugh backed Fullerton City Councilman Shawn Nelson, a conservative who earned party kudos for his efforts to halt a 25-percent retroactive pension increase for Fullerton city workers. Nelson had contacted me, an editorial writer at the Orange County Register at the time, and let me know that the council was meeting behind closed doors to discuss the massive pension boost. Other Republicans appeared to back the deal and the establishment was furious at Nelson for blowing the whistle. His critics claimed, incorrectly, that he violated the state’s open meetings law for telling a reporter about the closed-door negotiations. Actually, the Brown Act requires cities to tell the public the general subject of the discussions, which is all that Nelson did.

So the unions have come out blazing. So far, they have spent more than $900,000 in a barrage of negative hit pieces against Nelson and favorable pieces about their hand-picked candidate, a malleable Anaheim City Councilman named Harry Sidhu who has already promised to drop the county’s lawsuit against a retroactive pension deal granted to deputies in 2001. Both Nelson and Sidhu signed the Baugh pledge, but Sidhu has sat back and said nothing as unions spend nearly a million bucks (expected to hit $1.2 million by Election Day) on a race that generally draws about a quarter of that level of spending.

The unions see this as an attempt to throw Baugh’s manifesto back in his face and to rebuke a line-in-the-sand anti-union candidate.

Every serious budget person in California knows that the state cannot continue lavishing these pensions on public employees. Gov. Arnold Schwarznegger’s pension adviser, David Crane, gave a special word recently at a Capitol hearing to his fellow Democrats: “One cannot both be a progressive and be opposed to pension reform. The math is irrefutable that the losers from excessive and unfunded pensions are precisely the programs progressive Democrats tend to applaud.”

The Reason Foundation’s new study succinctly captures the depth of California’s public-employee problem. We’re not talking only about ungainly pensions, but exorbitant health-care costs being paid to a class of government workers whose ranks get larger even as the state budget implodes.

But the unions don’t care about the math. You stand up to them and you pay a price. If they win in Orange County, then expect the Baugh manifesto to fade away and expect fewer politicians in California who will stand up to union bullying.