eMeg Will Use Skill Set to Dissect California

Meg Whitman’s plan for the Golden State is too grown-up for its own good

Readers who push through to the final pages of MEG 2010: Building a New California will finally get an answer to the 48-page policy agenda’s most persistent riddle: How did California end up with this Rockefeller Republican running for governor? In the biographical sketch we learn at last, in the kind of apologetic phrasing former eBay CEO Meg Whitman has mastered during this campaign, “Although Meg was born and raised on Long Island, New York…”

All grown up. No shame in that! Many of us come from far away and fall for California. But there must be some explanation, if not geographical maybe sociological, for the Whitman platform’s timid tepidity. If you think extreme times call for meager measures, Whitman is the governor for you.

Book reviews are supposed to put the nice stuff first, so here goes: MEG 2010 [pdf] starts out with a strong rant about California’s abysmal business climate. Whitman does not engage in California exceptionalism and provides helpful comparisons with practices in other states. Whitman promises to impose a moratorium on new regulations and a review of existing regs. She proposes putting overtime schedules on a 40-hour-week basis rather than an eight-hour day. MEG 2010 contains a pledge to defend the two-thirds majority requirement to pass budgets and tax increases. Whitman wants to fire 40,000 government employees. The platform also contains some nice wish-list items that have been kicking around Sacramento for years: matching growth of government spending to growth of the state’s economy; making the legislature part-time; running the state lottery “more like a business” (Gov. Schwarzenegger used to talk about selling it); eliminating most categorical education grants and instead giving the money directly to local school districts, etc.

But while MEG 2010 speaks repeatedly about offering “grown-up” solutions, Whitman’s proposals are pre-pubescent. Faced with a business-strangling tax burden, Whitman starts off her “Create Jobs” blueprint with a column explaining why she won’t consider an across-the-board tax cut. “[W]e have to be strategic and effective in the tax relief we provide” because while “marginal tax cuts do create greater revenue….the state must first start seeing growing state revenue from an economic recovery.” This is bass-ackward. The Laffer Curve was invented to describe situations exactly like California’s, where the revenue-depressive effects of taxation are observable in business deaths and relocations.

Anybody who follows state house shenanigans in this land knows what’s coming next. “Meg has a better, more realistic plan: spark job growth now by quickly enacting targeted tax cuts that are affordable and immediately impact key sectors of our economy to create new jobs.“ Some of these targeted cuts make sense—witness the elimination of the deadly $800 startup tax.

But the collective hodgepodge features all the worst aspects of central planning. Why do the state’s public universities need to be surrounded by new “academic empowerment zones” that will “be focused on hiring workers, promoting research and development, increasing access to state funds and loans and encouraging a close collaboration with universities.” You could get a better result by compelling California’s university systems to sell off some of the vast chunks of real estate that they have acquired around their campuses. The proposed $10,000 home buyer tax credit is scandalous. The tax credits for green tech job creation and water conversation are probably inevitable, but that doesn’t change the central fact about tax credits: They don’t work here or anywhere else [pdf].

“My team and I have dissected the California economy,” Whitman writes, by way of explaining all this micromanagement. But Whitman would do better to channel some of the cold water she threw on Jerry Brown’s green jobs hokum during Tuesday’s debate—when she noted that non-green jobs account for 97 percent of the state’s economy. Yet her plan seems to be to let that 97 percent of the economy keep treading water while building more boutique subsidies for her fellow technocrats—in a state that’s already got plenty of those.

Worse still is the plan to “bring more efficiency to state revenue,” the main plank of which is to “get California’s fair share from Washington, D.C.” It’s true that California is a donor state that receives, according to the Tax Foundation [pdf], only 79 cents in federal spending for every dollar in federal taxes its residents pay. But the state has a spending problem, not a revenue problem. For Whitman to be bragging that she will continue or accelerate the game of Washington lobbying leaves little hope for a governor who will be focused on California. Unlike Arnold Schwarzenegger, Whitman is eligible to become president. (They even let Long Islanders in now.) Which capital—Sacramento or D.C.—would you focus on making friends in if you were in Whitman’s sensible shoes?

This national purview shows up throughout the document. Did you know that the governor of California can issue H-1B visas, complete the construction of the federal government's border wall, and "increase the federal government's investment in new port infrastructure?" I didn't either, but maybe if a governor had superpowers? But then if Whitman had those she'd be making some actual bold proposals. In those places where Whitman's heart is in the right place (an OK education plan and a general acknowledgment that businesses create more wealth than governments do), her ideas are lukewarm. Can you get excited by a "Sunset Commission" to examine old laws (rather than just a sunset law that would automatically terminate laws that don't get reaffirmed)? Then how about an "Economic Development Task Force" staffed by a "dedicated team of development professionals" charged with "selling the state's positive attributes to new businesses and existing ones"?

Actually, there is one area where Whitman seems determined—a punitive statewide immigration plan that contans one good idea (opposing subsidized higher education for illegal immigrants) and plenty of bad ones. The gubernatorial hopeful envisions securing California behind an "Economic Fence" that uses an enhanced e-verification system. And what will the lucky folks on the inside of that fence have to look forward to? Workplace inspections of suspect businesses "modeled after drug seizure raids," seemingly permanent National Guard mobilization, and a lawsuit to get Washington to give Sacramento more money.

Most disappointing of all is Whitman’s proposal for government employee pension reform. Starting from an attractive place—establishing a two-tiered system where new hires come in with 401(k)-style defined contribution plans, and upping contributions by existing employees—Whitman then undermines her own plan by exempting cops and firefighters, who represent about a fourth of the total pension pile and are among the state’s most energetic pension featherbedders. On the stump Whitman talks a good game about the pension crisis; it’s a crowd-pleaser this year. But this could actually be an area where Jerry Brown (whose proposals we'll take a look at in the future) has a more serious read on the situation. (Don't get your hopes up: He still crows about all the endorsements he gets from police associations, so you can be sure he won’t solve the problem.)

Whitman refers to her unique “skill set,” which she says “fits the dire times of our state.” Whatever that is, it has not been visible in her public campaigning. And it is entirely absent from her middle-managerial official policy agenda, a document that is about as trustworthy as work papers signed by Nicky Diaz Santillan.

Tim Cavanaugh is a senior editor at Reason magazine. This column first appeared at Reason.com.

Tim Cavanaugh is Managing Editor, Reason.com





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