How drug warriors made the ‘opioid epidemic’ deadlier

According to the lawsuits that four drug companies agreed to settle last week, the “opioid epidemic” was caused by overprescription of pain medication, which suggests that curtailing the supply of analgesics such as hydrocodone and oxycodone is the key to reducing opioid-related deaths. But that assumption has proven disastrously wrong and revealed how prohibition makes drug use deadlier.

Per capita opioid prescriptions in the United States, which began rising in 2006, fell steadily after 2012, reflecting the impact of government efforts to restrict and discourage medical use of these drugs. Yet in 2019, when the dispensing rate was lower than it had been since 2005, the U.S. saw more opioid-related deaths than ever before.

Last year, according to preliminary estimates from the Centers for Disease Control and Prevention, that record was broken once again: Opioid-related deaths jumped by almost 30%. As opioid prescriptions fell, the upward trend in fatalities (which typically involve more than one drug) not only continued but accelerated.

That perverse effect was entirely predictable. The crackdown on pain pills drove nonmedical users toward black-market substitutes, replacing legally manufactured and reliably dosed products with drugs of unknown provenance and composition.

While that was happening, illicit fentanyl became increasingly common as a heroin booster or replacement, making potency even more variable and unpredictable. In 2020, according to the CDC’s projections, “synthetic opioids other than methadone” — the category that includes fentanyl and its analogs — were involved in 83% of opioid-related deaths, up from 14% in 2010.

Nowadays, fentanyl is showing up in black-market pills sold as hydrocodone or oxycodone and even in stimulants such as cocaine and methamphetamine. Its proliferation is a response to the very supply control measures that were supposed to reduce drug-related deaths.

To the extent that the government succeeds in exerting pressure on the supply of illegal intoxicants, it encourages traffickers to distribute more potent drugs, which are easier to conceal and smuggle. Since fentanyl is far more potent than heroin, a package weighing less than an ounce can replace one that weighs a couple of pounds.

Synthesizing opioids is also a less vulnerable and much cheaper process than production that relies on poppy crops. RAND Corporation researchers estimated that heroin is at least 100 times more expensive to produce than fentanyl, adjusting for potency.

Black-market drugs were already iffy because of prohibition; the prohibition-driven rise of fentanyl has made them even more of a crapshoot. And these are the substitutes that nonmedical opioid users resorted to after drug warriors succeeded in reducing the supply of pain pills.

That policy also has hurt bona fide patients by depriving them of the medication they need to make their lives bearable. Last week, the American Medical Association again urged the CDC to revise its opioid-prescribing advice, which has been widely interpreted as imposing hard caps on daily doses.

“Patients with pain continue to suffer from the undertreatment of pain and the stigma of having pain,” AMA Board of Trustees Chair Bobby Mukkamala wrote. “This is a direct result of the arbitrary thresholds on dose and quantity contained in the 2016 CDC Guideline.”

Although “physicians have reduced opioid prescribing by more than 44% since 2012,” Mukkamala noted, “the drug overdose epidemic has gotten worse.” The government mistakenly assumed that the availability of particular intoxicants was causing drug-related deaths, which is clearly not true in light of the social, economic and psychological factors that plausibly explain last year’s surge, such as financial insecurity, emotional stress, isolation and disengagement from meaningful activities.

The COVID-19 pandemic magnified those problems, but it did not create them. A 2019 Joint Economic Committee report on “deaths of despair” noted that “drug-related deaths have been rising since the late 1950s.”

The increase in opioid fatalities is the latest manifestation of that long-term trend. By now it should be clear that when it comes to drug-related “deaths of despair,” the root problem is the despair, not the drugs.

Jacob Sullum is a senior editor at Reason magazine, a syndicated columnist and a drug policy blogger at Forbes.

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Gov. Newsom can’t tie recall to GOP in voter guide, lawsuit says

By KATHLEEN RONAYNE | The Associated Press

SACRAMENTO — Top supporters of the recall against California Gov. Gavin Newsom want to block him from branding the contest as a Republican effort in the official election guide that will be sent to voters ahead of the Sept. 14 contest.

His contention that the effort is led by Republicans seeking to overturn the 2020 presidential election and an “attempt by national Republicans and Trump supporters to force an election and grab power in California” are “at best misleading, at worst flat-out false, and in all events a hyperbolic outrage,” according to a lawsuit filed Friday by two Republican activists who led the campaign to get the recall on the ballot.

The case is scheduled for a court hearing Wednesday afternoon.

Orrin Heatlie and Mike Netter are asking a judge to strike portions of Newsom’s ballot statement and edit other parts. Newsom, a Democrat, was unable to get his party affiliation listed on the ballot because of a filing error and has sought to brand the recall as a power grab by right-wing activists in the nation’s most populous state.

He makes that argument in two campaign ads, one of which features video of people storming the U.S. Capitol on Jan. 6. It’s aimed at motivating Democrats, who outnumber Republicans significantly in the state and strongly dislike former President Donald Trump.

Heatlie and Netter argue that the effort is not a “Republican recall” because its supporters come from various political parties and more than half of the 46 candidates vying to replace Newsom are not Republicans. They want the word “Republican” stripped from the statement in all but one place. In that instance, they suggest Newsom’s language that the effort is led by “national Republicans who fought to overturn the presidential election” should be changed to say “the recall’s supporters include national Republicans.”

Every registered voter will be mailed a copy of the voter guide, which includes statements from Newsom and Heatlie arguing over the merits of the recall and from candidates looking to replace him if the recall succeeds. County election officials will start mailing the ballots on Aug. 16. The guidelines to Newsom and Heatlie stated their arguments could not include “any demonstrably false, slanderous, or libelous statements.”

State elections officials take no position on the issues raised about the text of the arguments, according to a response filed Monday by Attorney General Rob Bonta. They asked the court to make a ruling before Friday, when the text of the voter guide must be finalized.

The recall supporters also want the court to remove a sentence in Newsom’s statement that characterizes the effort as an abuse of the state’s recall laws. The recall organizers collected the roughly 1.5 million signatures required under state law to place the question on the ballot.

Voters will be asked two questions: Should Newsom be recalled, and if so who should replace him. He will be removed from office if more than half of voters say yes on the first question.

Newsom campaign spokesman Nathan Click called the arguments “totally baseless,” noting that the effort was launched by Republicans, including Heatlie, and has raised money from the Republican Party.

“Republicans know they can’t win in a normal election year, so they are trying to force a special election and grab power,” he said in a statement.

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Gov. Newsom can’t tie recall to GOP in voter guide, lawsuit says

By KATHLEEN RONAYNE | The Associated Press

SACRAMENTO — Top supporters of the recall against California Gov. Gavin Newsom want to block him from branding the contest as a Republican effort in the official election guide that will be sent to voters ahead of the Sept. 14 contest.

His contention that the effort is led by Republicans seeking to overturn the 2020 presidential election and an “attempt by national Republicans and Trump supporters to force an election and grab power in California” are “at best misleading, at worst flat-out false, and in all events a hyperbolic outrage,” according to a lawsuit filed Friday by two Republican activists who led the campaign to get the recall on the ballot.

The case is scheduled for a court hearing Wednesday afternoon.

Orrin Heatlie and Mike Netter are asking a judge to strike portions of Newsom’s ballot statement and edit other parts. Newsom, a Democrat, was unable to get his party affiliation listed on the ballot because of a filing error and has sought to brand the recall as a power grab by right-wing activists in the nation’s most populous state.

He makes that argument in two campaign ads, one of which features video of people storming the U.S. Capitol on Jan. 6. It’s aimed at motivating Democrats, who outnumber Republicans significantly in the state and strongly dislike former President Donald Trump.

Heatlie and Netter argue that the effort is not a “Republican recall” because its supporters come from various political parties and more than half of the 46 candidates vying to replace Newsom are not Republicans. They want the word “Republican” stripped from the statement in all but one place. In that instance, they suggest Newsom’s language that the effort is led by “national Republicans who fought to overturn the presidential election” should be changed to say “the recall’s supporters include national Republicans.”

Every registered voter will be mailed a copy of the voter guide, which includes statements from Newsom and Heatlie arguing over the merits of the recall and from candidates looking to replace him if the recall succeeds. County election officials will start mailing the ballots on Aug. 16. The guidelines to Newsom and Heatlie stated their arguments could not include “any demonstrably false, slanderous, or libelous statements.”

State elections officials take no position on the issues raised about the text of the arguments, according to a response filed Monday by Attorney General Rob Bonta. They asked the court to make a ruling before Friday, when the text of the voter guide must be finalized.

The recall supporters also want the court to remove a sentence in Newsom’s statement that characterizes the effort as an abuse of the state’s recall laws. The recall organizers collected the roughly 1.5 million signatures required under state law to place the question on the ballot.

Voters will be asked two questions: Should Newsom be recalled, and if so who should replace him. He will be removed from office if more than half of voters say yes on the first question.

Newsom campaign spokesman Nathan Click called the arguments “totally baseless,” noting that the effort was launched by Republicans, including Heatlie, and has raised money from the Republican Party.

“Republicans know they can’t win in a normal election year, so they are trying to force a special election and grab power,” he said in a statement.

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Will Donald Trump be spoiler as California GOP seeks Gov. Newsom recall?

By MICHAEL R. BLOOD | The Associated Press

LOS ANGELES  — California could witness a stunning turnabout in a nation of deeply polarized politics if the liberal state dumps Democratic Gov. Gavin Newsom and elects a Republican to fill his job in a September recall election.

With the country’s political center largely vanished, it’s rare to see governors win elections on adversarial ground, making the notion of a Republican upset in one of the nation’s Democratic strongholds seem implausible. Republicans haven’t won a statewide race in California since 2006.

But there are exceptions: Republican governors have defied the odds in solidly Democratic territory — Vermont, Massachusetts and Maryland. Their success looks even more striking when considering those states delivered the largest percentage victories for Joe Biden in the presidential election last year.

That could provide a dose of encouragement for Republican recall candidates, but the circumstances don’t square neatly with California, starting with the unavoidable shadow of former President Donald Trump.

Vermont Gov. Phil Scott, Massachusetts Gov. Charlie Baker and Maryland Gov. Larry Hogan emphatically distanced themselves from Trump. Scott said he voted for Biden last year, Baker left his ballot blank and Hogan said he voted for Ronald Reagan, the former president who died in 2004.

“All three of those governors are pretty significant critics of Donald Trump,” noted Kyle Kondik, an analyst at the University of Virginia Center for Politics.

In California, the leading GOP candidates have supported or have ties to Trump, who is widely unpopular in the state outside his conservative base. Trump lost California to Biden by over 5 million votes.

Newsom’s campaign is anchored to the slogan “stop the Republican recall” — an attempt to cast the election as a solely partisan effort, which it is not. Newsom’s chief political strategist routinely tweets a 2019 photograph of Republican candidate Kevin Faulconer, the former San Diego mayor, beside Trump at his desk in the Oval Office.

In California, “I think it would be hard to pitch yourself as a national kind of Republican” with Trump still exercising broad influence, Kondik added.

Marshall Cohen, political director at the Democratic Governors Association, said the California race is entirely different than the elections in Vermont, Massachusetts and Maryland.

Those governors “have been able to strongly push back against Trump and create political profiles outside the modern Republican Party,” Cohen said.

The Trump conundrum — he remains popular with the GOP base — is perhaps best witnessed in Republican California candidate Caitlyn Jenner, the former Olympian and reality TV personality.

Jenner supported Trump in 2016 but later clashed with his administration over transgender issues. Yet Jenner’s advisers have included former Trump campaign insiders. At her first news conference in July, she said she didn’t want Trump’s endorsement.

“I hope the Republican Party comes to me and becomes more inclusive,” she said.

Other top Republicans, including conservative talk radio host Larry Elder and businessman John Cox, who lost to Newsom in 2018, also were Trump supporters last year.

In an interview, Cox disputed that Trump was a force in the recall election, saying momentum to oust Newsom is coming from frustration with rising crime rates, water and energy shortages and the return of coronavirus restrictions.

“I’m my own person, and this race is not about Trump,” Cox said, arguing that Newsom is trying to use the former president as a political wedge “to get people angry all over again.”

Elder, who is Black, has said that to Newsom’s campaign, “everything is racism, dividing Americans.”

In Massachusetts, Baker, a social moderate who supports reproductive rights, has sought to avoid the divide of national politics and work across the political aisle, said his political adviser, Jim Conroy.

In an era of harsh partisanship in Washington, “it’s that difference that makes him appealing to people,” Conroy said.

With many voters unsettled by the pandemic and the status quo in Sacramento, Conroy thinks Republicans have an opening in California. If a candidate pairs a fiscally conservative agenda with calls for bipartisan solutions, “anyone can win with that message,” he said.

Vermont’s Scott also supports reproductive rights, while Hogan has made his mark by focusing on taxes and the economy, largely steering around entanglements on social issues.

Among leading Republican candidates in California, their core message is reversing the progressive policies on school choice, virus restrictions and just about everything.

Some, however, also have spoken out on cultural issues: Elder and state Assemblyman Kevin Kiley have derided critical race theory, which centers on the idea that racism is systemic in the nation’s institutions and that they function to maintain the dominance of white people in society.

There are other differences with California. Despite Democratic leanings, Eastern states have a history of electing moderate Republican governors, while California has been growing increasingly Democratic. GOP voter registration has withered to 24% statewide.

There also are quirks to the California recall election that could set the stage for an unexpected finish.

Recent polling suggests the race is tightening. Those surveys also point to a vexing trend for Democrats, whose voters appear to be blasé about the election.

In a recall, voters will be asked two questions: First, should Newsom be removed, yes or no? The second question will be a list of replacement candidates from which to choose. If a majority of voters approve Newsom’s removal, the candidate who gets the most votes on the second question becomes governor.

With 46 replacement candidates on the ballot, it’s possible a winner could emerge with as little as 20% of the vote should Newsom be recalled — a fraction of what a candidate would need in a typical statewide election.

It’s also allowed Republicans to largely target their campaigns at Republicans and right-leaning independents, which could provide a sufficient coalition to win in the Sept. 14 election.

Cox, a multimillionaire real estate investor who opposes abortion, says he sees himself in the mold of Hogan or Baker who “ran for governor as business guys.” California is under siege from homelessness, the rising cost of living and energy shortages, and “those are not cultural issues,” he said.

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Senior Living: Though millions are at risk for diabetes, Medicare struggles to expand prevention program

By Harris Meyer,

Kaiser Health News

Damon Diessner tried for years to slim down from his weight of more than 400 pounds, primarily because his doctors told him he was at risk of developing Type 2 diabetes. His hemoglobin A1c level, a blood sugar marker, was 6.3%, just below the diabetes range of 6.5%.

Then, two years ago, one of his doctors helped get him into a YMCA-run Diabetes Prevention Program not far from his home in Redmond, Washington. The group classes, at first held in person and then via Zoom during the coronavirus pandemic, were led by a lifestyle coach. He learned how to eat better, exercise more and maintain a healthier lifestyle overall. He now weighs 205 pounds, with an A1c level of 4.8%, which is in the normal range.

“This has been a life-changing program,” Diessner, 68, an environmental consultant, said. “My cardiologist said you have clearly beaten diabetes. I tell everyone who has blood sugar issues or just wants to lose weight that this is the thing to do.”

Over the past decade, tens of thousands of American adults of all ages have taken these diabetes prevention classes with personalized coaching at YMCAs, hospitals, community health centers and other sites. But out of an estimated 16 million Medicare beneficiaries whose excess weight and risky A1c level make them eligible, only 3,600 have participated since Medicare began covering the two-year Medicare Diabetes Prevention Program in 2018, according to the federal government’s Centers for Medicare & Medicaid Services.

Researchers and people who run diabetes prevention efforts said participation is low because of the way Medicare has set up the program. It pays program providers too little: a maximum of $704 per participant, and usually much less, for dozens of classes over two years. It also imposes cumbersome billing rules, doesn’t adequately publicize the programs and requires in-person classes with no online options, except during the pandemic emergency period. Most of the private Medicare Advantage plans haven’t promoted the program to their members.

Now, the Centers for Medicare & Medicaid Services has proposed a rule change to address some but not all of those problems. It predicted the changes would reduce the incidence of diabetes in the Medicare population and potentially cut federal spending to treat diabetes-related conditions.

Last month, the agency proposed shortening the program to one year, starting in 2022, because providers complain that too few beneficiaries complete the second year. That and other changes proposed by Medicare would modestly enhance reimbursement to providers. The government is also planning to waive a one-time $599 fee that groups offering the classes must pay Medicare to be part of its program. The rule changes would make it easier and more attractive for MDPP providers, including YMCAs and other local community organizations, to participate, Medicare & Medicaid Services said.

While providers have welcomed the proposed revisions as marginally helpful, they criticized the agency for not letting them provide classes and counseling to Medicare beneficiaries through online methods, including apps, videoconferencing and texting. Many health insurers covering people under age 65 offer similar diabetes classes online, and say success rates are comparable to in-person classes.

“Virtual access would improve access and reduce disparities for people who have barriers such as transportation and distance,” said Dr. Liz Joy, senior medical director for wellness and nutrition at Salt Lake City’s Intermountain Healthcare.

A bipartisan bill in the U.S. House and Senate, the Prevent Diabetes Act, would let virtual providers certified by the U.S. Centers for Disease Control and Prevention participate in the Medicare Diabetes Prevention Program. The bill’s sponsors say virtual programs are needed to better serve lower-income, minority and rural Americans.

The diabetes prevention initiative is just one of several programs that have been found effective in reducing or treating chronic medical conditions but have been underused because of the U.S. health care system’s lack of focus on disease prevention. Medicare’s coverage of personal nutrition counseling for people with diabetes or kidney disease, for example, is used by fewer than 1% of the 15 million beneficiaries with those conditions. Insurers, hospitals and doctors lack adequate financial incentives to offer preventive services.

“Patients might change providers next year, so why would a company invest in prevention if they don’t know that they’ll reap the benefits?” said Maria Alva, an assistant research professor at Georgetown University who has studied the MDPP. “And doctors are paid more for prescribing diabetes drugs than taking the time to recommend the diabetes prevention program.”

When Medicare & Medicaid Services started paying for the diabetes prevention program, the agency estimated doing so would save Medicare $182 million over 10 years by reducing diabetes. The federal agency had projected 110,000 beneficiaries would enroll.

But an evaluation of the program by the research group RTI International, published in March, found there aren’t enough enrollees to determine whether participation improves health outcomes or lowers Medicare costs. The agency needs to prioritize signing up more providers, RTI said; about 200 organizations provide MDPP classes at 762 sites nationwide, a small percentage of the approximately 1,900 organizations certified by the CDC to offer diabetes prevention classes.

A key factor limiting providers’ participation up to now is that the federal government has tied a bonus payment to beneficiaries’ losing at least 5% of their body weight, which only a minority of participants achieve. But studies show that weight loss of just 2% to 3% can significantly reduce A1c levels and the associated risk of developing diabetes.

In contrast, the CDC recently updated its certification standards for Diabetes Prevention Programs to include two alternative measures for successful completion of the program — a 0.2% decrease in hemoglobin A1c levels, or a 4% weight loss combined with at least 150 minutes a week of physical activity.

But under Medicare’s new proposed rule, MDPP providers would receive up to $635 if a participant hit the 5% weight loss target and attended 13 sessions over one year, or $661 if the person lost 9% of body weight. Providers’ payments would be capped at $338 if a participant fell short of the 5% weight loss goal.

Researchers and providers say that payment model hurts organizations that serve low-income and minority groups, whose members are less likely for a variety of reasons to attend all the sessions and achieve 5% weight loss but who still can benefit from the program. Even without the penalty for not hitting the 5% target, Medicare’s payment rate doesn’t come close to covering the cost of running in-person classes, experts say.

“Five percent is a stretch goal, and 9% is laughable,” said Dr. Amanda Parsons, who previously headed the MDPP program at New York City’s Montefiore Health System, which serves mostly low-income Black and Hispanic beneficiaries. “I want to know how many folks are coming anywhere close to achieving that.”

Asked to comment, the Centers for Medicare & Medicaid Services said CDC standards require providers to meet performance targets but did not explain why it didn’t adopt the public health agency’s alternative success measures. On the issue of online classes, Medicare & Medicaid Services said MDPP was originally intended to provide primarily in-person services.

Diessner, who far exceeded the 5% weight loss goal, said he was inspired to get into MDPP by watching his young grandson’s brave efforts to cope with Type 1 diabetes. Despite Diessner’s determination, his doctor had to lobby YMCA staff members over several months to get him a slot, because the few available classes were full. He was shocked when told the low number of participants nationally.

“I see lots of people out in the street who could use help with this,” he said. “The idea that so few people are taking advantage of it is a travesty.”

Kaiser Health News is a nonprofit news service covering health issues. It is an editorially independent program of the Kaiser Family Foundation, which is not affiliated with Kaiser Permanente.

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Newsom is sometimes his own worst enemy

Gov. Gavin Newsom blames right-wing extremists for the drive to recall him, and there’s no doubt that they want him gone.

However, the recall would not have qualified for the ballot, nor would polling indicate that the issue is in a virtual tie (47% of likely voters in favor, 50% opposed) if only die-hard Trumpies were supportive.

The polling by UC Berkeley’s Institute of Governmental Studies indicates that a very sizeable segment of California’s voters dislike or distrust Newsom. In fact, just 50% of all voters, not just those planning to vote on the recall in September, approve of how he’s managed the state, with 42% disapproving. The latter number is nearly twice the Republican share of the registered voter pool, so it obviously includes a fair number of Democrats and no-party-preference voters.

Newsom’s popularity soared during the first months of the COVID-19 pandemic, hitting 64% approval in the Berkeley IGS poll in September of 2020, but has been slipping ever since.

The factors in that decline may be as individual as fingerprints, but there’s little doubt that Newsom’s character is one of them. Many Californians see their governor as slippery, and he continues to say and do things to bolster that image.

The best known example, of course, is his now-infamous attendance at a dinner party of lobbyists, celebrating the birthday of one, without wearing masks even though he had issued a mask-wearing order and urged Californians to avoid social gatherings.

Newsom apologized after photos of the party emerged, but his approval rating plummeted from 64% a few weeks before the November 2020 event to 46% a few weeks afterwards in the Berkeley IGS poll.

A new example of how Newsom is sometimes his own worst enemy surfaced last week.

He has ordered that when children return to public schools, they must wear masks. The order also applies to children’s camps.

However, a group opposed to the mask order acquired and circulated a photo of Newsom’s 10-year-old son posing with other kids at a summer camp. All were unmasked.

“This is in clear violation of his own mask mandates,” the group, Reopen California Schools, tweeted. “Why can his kid be maskless, but not ours?”

“The Newsoms were concerned to see unvaccinated children unmasked indoors at a camp their children began attending yesterday and after seeing this, removed the kids from the camp,” Newsom spokesperson Erin Mellon said in a statement. “The family reviewed communication from the camp and realized that an email was missed saying the camp would not enforce masking guidance. Their kids will no longer be attending this camp.”

That seemed to be that, but in a CBS News interview soon after, Newsom seemingly contradicted what Mellon had said, shunned responsibility and played the victimization card.

“If you want to come after me, come after me, and don’t come after nine- and ten-year-olds,” Newsom said. “You know, he was there for one day and said they wanted to take a picture so he took off the mask, he had a mask in his hand, and they’re attacking and weaponizing my son. I watched network news last night and they’re weaponizing my son. He was sitting there crying with me last night. You want to come after me, come after me. He did nothing wrong. We pulled them out of that camp, basketball camp. Want to come after me? Come after me, not my kids.”

The two versions of the summer camp incident are completely incompatible, thus giving Californians another reason to question Newsom’s credibility and character.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more stories by Dan Walters, go to calmatters.org/commentary

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California now criticized from the left

California being what it is – a very large state with a complex social and economic matrix and a unique political structure – generates an endless stream of analysis and criticism.

In recent decades, as California veered to the left politically, it drew fawning attention from like-minded media, portraying the state as a harbinger of the nation’s future.

California’s politicians such as Gov. Gavin Newsom fed the notion. “California is what America is going to look like,” he has boasted. “California is America’s coming attraction.”

Naturally, plaudits from the media-left generated backlash from those on the right, who depicted California as a miserable, failing dystopia whose politics, if implemented nationally, would destroy America.

This year, however, the left-right media jousting over California took a new turn – very sharp criticism from pundits and publications ideologically attuned to the state’s deep blue politics.

New York Times columnist Ezra Klein, a Californian by birth and choice, set the new tone in February with an article that catalogued the state’s many social and economic disparities.

“It’s a remarkable place where tomorrow’s problems and tomorrow’s solutions vie with each other for primacy,” Klein wrote. “California drives the technologies, culture and ideas that shape the entire world. But for that very reason, our failures of governance worry me.”

While California professes to seek progressive goals, it has failed to match its words with effective action, Klein concluded.

“California, as the biggest state in the nation, and one where Democrats hold total control of the government, carries a special burden,” he wrote. “If progressivism cannot work here, why should the country believe it can work anywhere else?”

The Atlantic, a magazine usually filled with pro-progressive and anti-conservative articles, has joined the chorus of California’s leftish critics.

One recent article by Caitlin Flanagan castigates the University of California for dropping standardized testing as an admissions factor in the name of racial equity.

“It’s a move so widely hailed by administrators and faculty that you know someone’s getting hustled,” Flanagan writes, “and in this case the marks are the state’s low-income Black and Latino students – the very ones whom the new policy is supposed to help.”

The action, she contends, just covers up the shocking failures of California’s public education system, which she describes as “state-sponsored discrimination” that has “robbed students of 13 years and given them little in return.”

California-based Atlantic writer Conor Friedersdorf offers a broader and even harsher critique of the state in an article entitled “The California Dream is Dying.”

Despite the state’s many attributes, he writes, “I fear for California’s future.” The generations that benefited from California’s dizzying ascent into global prominence, he says, “should be striving to ensure that future generations can pursue happiness as they did. Instead, they are poised to take the California Dream to their graves by betraying a promise the state has offered from the start.”

While California publicly celebrates diversity and inclusion, Friedersdorf continues, “the state’s leaders and residents shut the door on economic opportunity,” citing a chronic shortage of housing, high poverty, poor educational services, homelessness” and other factors that limit upward mobility.

Echoing Klein’s earlier screed, Friedsdorf warns that “blue America’s model faces its most consequential stress test in one of its safest states, where a spectacular run of almost unbroken prosperity could be killed by a miserly approach to opportunity.”

While Newsom still sees California as “America’s coming attraction,” it’s jarring that writers who share his ideological orientation are joining those on the right to warn the nation against emulating the state.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more stories by Dan Walters, go to calmatters.org/commentary

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2 things that derail most sale-leasebacks

You’ve opted to own the location from which your company operates. A great move by the way! A limited liability company was formed and owns the building. Presumably, the LLC’s members are similar to that of the occupants.

You struck an agreement with the resident – your enterprise – to pay the LLC an amount of money each month for the use of the address. In effect, you’re paying yourself. It’s a beautiful thing! Tax benefits are afforded for the owners of an LLC, such as depreciation of the asset, write-offs for any mortgage interest, property taxes, and operating expenses. Over time, the LLC’s investment appreciates.

Your occupying business pays rent just as it would to a landlord who has no stake in the company. Plus, because the owner of the real estate and operation are synonymous – if business ebbs and flows – so can the rent you pay yourself monthly. We are fortunate to have such a situation.

We own the building from which we ply our brokerage. Each month Lee & Associates Orange – the occupant – pays Taft Lee LLC – the owner – a dollar amount that provides a nice return on our investment. However, during the term of our ownership, we have deferred rent increases, banked reserves for a new roof, and kept the rent commensurate with market conditions. We can do this because we are the landlord AND the tenant.

Generally, a business or ownership transition will create a commercial real estate decision. As an example, if you acquire a competitor, will the real estate you own and occupy adequately house the marriage? Conversely, if you sell the business, does the buyer of the business have their own location? Thus making your asset an excess?

An election to move your enterprise out of state requires some time to facilitate and turn the equity in the real estate to buy your new location. In all cases, as you can surmise, you’ll make a decision. Keep the building or sell it.

When selling is chosen, one of the strategies employed is a sale-leaseback. By definition, a sale-leaseback inserts an investor to replace the LLC ownership. The group – your company – stays in the building, and in the leaseback, pays rent to the investor.

With that as a backdrop, let’s discuss what can derail most sale-leasebacks.

The operating company cannot afford market rent.

Remember. One of the reasons you own your business location is to provide flexibility during tough times. Maybe the amount allowed to your operation to pay is well below what comparable rents are. This is done because your two interests – business and building – are satisfied.

In order to maximize the value of your investment, however, you’ll need to shore that delta. Someone buying your real estate – and relying on rent – is only concerned with a return on their money. Therefore, the price an investor will pay you is based on a formula known as a capitalization rate or cap rate.

A cap rate is determined by net income (rent less expenses) divided by purchase price. The relationship is inverse: the lower cap rate, the higher the price. But, the higher the rent, the higher the price … within reason. If the company housed cannot afford market rent, the sum an investor will pay will result in a lower value.

As a seller, you’d like to max your sale proceeds but don’t want to saddle the business with an unsustainable monthly rent. A true dilemma!

What to do with the proceeds?

Your ownership LLC with a related company paying you is a tidy investment. If you sell the real estate, where can you reproduce the return? Remember, you’ll need to accomplish a tax-deferred exchange into another income property or be faced with a whopping tax bill.

In the three transitions above – acquire a competitor, sell the business or move out of state – a sale-leaseback could ensue. However, each presents complexity.

Buying a competitor is easy, especially if you need more space. No lease-back is needed. You simply sell the smaller and exchange into a larger. Boom.

A business sale – especially if the business buyer doesn’t need your real estate – is challenging. You’ll have to fill a vacancy by selling or leasing. The timing of an out-of-state move works great for a sale-leaseback. Simply, point A is sold. A lease is created for two years. Point B is bought and rented short-term while you prepare to move your enterprise. The lease expires on Point A and the relocation to Point B is completed.

More on these later.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104. 

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Supreme Court has an opportunity to clarify extent of Second Amendment

The opening brief has now been filed in what could be a landmark Supreme Court decision on Second Amendment rights.

The justices will hear the case of New York State Rifle & Pistol Association Inc. v. Corlett during their October 2021 term. The question to be decided is whether New York’s denial of applications for concealed-carry licenses for self-defense violated the Second Amendment.

Thirteen years after the Supreme Court established, in District of Columbia v. Heller, that the Second Amendment’s guarantee of the right to “keep and bear arms” meant individuals have the right to possess a handgun in their homes, the New York case could establish that it also means individuals have the right to carry a weapon outside the home for self-defense.

Two individuals who are petitioners in this case, Robert Nash and Brandon Koch, passed all required background checks and met all qualifications required by New York to have a license to carry, but under state law, special permission is required for an “unrestricted” license that allows a gun owner to carry a weapon for self-defense. New York requires “proper cause,” defined as a special need for self-defense that distinguishes the applicant from the general public.

According to a brief filed by public defense organizations including Black Attorneys of Legal Aid and The Bronx Defenders, New York’s law in practice has meant the criminalization of racial minorities in particular for exercising their constitutional rights.

“Each year we represent hundreds of indigent people whom New York criminally charges for exercising their right to keep and bear arm,” they write. “For our clients, New York’s licensing requirement renders the Second Amendment a legal fiction. Worse, virtually all our clients whom New York prosecutes for exercising their Second Amendment rights are Black and Hispanic.”

This case has implications for every state. Many laws excessively burdening the rights of gun owners are still on the books because until the Heller decision, the Supreme Court had never stated clearly that the Second Amendment protects an individual’s rights, unrelated to service in any militia. That left room for lower courts to allow restrictive laws to stand.

Justice Clarence Thomas has repeatedly called out his colleagues for giving Second Amendment rights second-class status and refusing to hear cases in which lower courts essentially ignored the ruling in Heller. The court agreed to hear this case after Justice Amy Coney Barrett succeeded Justice Ruth Bader Ginsburg.

In an amicus brief submitted by the California Gun Rights Foundation, the group calls on the Supreme Court to issue a ruling that provides clear guidance and puts a stop to the “free-wheeling and deferential balancing used in lower courts to dilute Second Amendment rights.”

We hope the Supreme Court rejects New York’s unreasonable law and makes clear that constitutional rights, all of them, are enforceable limits on the power of government. People should not be criminalized nor demonized for merely exercising their constitutional rights. Period.

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Water shortage, fire threat move to the top of Californians’ environment concerns

This second year of drought has helped push water supplies and wildfires to the top of Californians’ list of environment concerns in a new Public Policy Institute of California survey.

While climate change, last year’s No. 1 environmental issue, fell to third place in the latest poll, most respondents linked their current top concerns of wildfires and water to climate change.

“Most Californians believe that the effects of climate change have already begun, and that it is contributing to the current drought and wildfires,” said Mark Baldassare, the institute’s president and CEO. “Six in ten are very concerned about more severe droughts and wildfires as a result of climate change.”

A quarter of adults polled listed drought and water supplies as the most important environmental issue, followed by wildfires (17%), climate change (13%) and air pollution (6%). In 2020, climate change, at 18%, topped the list.

A significantly higher percentage of Californians (68%) than Americans nationwide (59%) believe the effects of climate change are already happening. And while only 44% of the state’s Republicans think those effects are happening, most Republicans in the state do prefer expanding renewable energy to expanding than fossil fuel extraction (56%), and a majority in the GOP also oppose new fracking (56%) and offshore oil drilling (55%).

Among state Democrats, 82% believe the effects of climate change is occurring, 72% oppose more oil drilling, and 63% oppose expanding fracking.

Water worries

Southern California water supplies are holding up well so far, thanks the Metropolitan Water District of Southern California’s aggressive policy of increasing reservoir and aquifer storage. The district has reported that it started the year with record amounts of stored water from northern California and the Colorado River, and says it expects to have enough to get through another year of drought without mandatory restrictions.

But the drought is taking its toll elsewhere throughout the West. While Southern California was not included in Gov. Gavin Newsom’s current declarations of drought emergency, 50 of the state’s 58 counties were — and the state is calling for people to voluntarily reduce their water use.

That geographical disparity is reflected somewhat by the new poll, with 70% of San Francisco Bay area adults saying water supply is a big problem in their area, followed by 67% of those in the Central Valley, 60% in Los Angeles, 59% in the Inland Empire and 57% of those polled in Orange and San Diego counties.

“About four in 10 residents say their households have recently done a lot to reduce water use in response to the current drought,” Baldassare said. There is less regional difference in those results, which range from a high of 43% in Los Angeles to a low of 38% in Orange and San Diego counties.

Trust issues

On the heels of California losing a record number of acres to wildfires in 2020, this year’s fire season started early with major wildfires in northern California and Oregon.

That’s not gone unnoticed by residents of northern California, 55% of whom say the threat of wildfires is a big problem in their part of the state. About the same portion of Southern Californians say that threat poses a big problem in their counties.

But residents aren’t so sure government is prepared to deal with fires. Just one in three have “a great deal of confidence,” while 52% have “some confidence.”

Meanwhile, general approval of the governor and president on environmental issues is solid, with 59% approving of Newsom’s handling of those issues and 61% supportive of President Joe Biden. However, when it comes to state and federal governments overall, far more trust the state “just about always” or “more of the time” on those issues (48%) than they trust the federal government (33%).

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