Archive for 2009

Feinstein Deals Major Blow to Landmark Labor Bill

Sunday, March 29th, 2009

Senator Dianne Feinstein’s office put out a low-ball statement Friday making clear she won’t be supporting the Employee Free Choice Act, the labor movement’s top congressional priority, at least in its present form.

The little-noticed move makes Feinstein the only Democrat in the California congressional delegation to withhold backing for the Employee Free Choice Act.

As a policy matter, the measure would make it easier for employees to organize unions; as a political one, it would give President Obama, who campaigned in support of the legislation, and majority Democrats in Congress, a visible achievement on behalf of workers at a time of seething public anger at CEOs and corporations.

A co-sponsor of the legislation in the last Congress, Feinstein in recent days has been the target of an organized netroots campaign to pressure her into coming out in favor of the bill. The online effort came during a three-day Capitol Hill lobbying effort by the Teamsters, which sent a delegation to her office Thursday.

While Feinstein does not face re-election until 2012 as a senator, her flip-flop on labor’s most crucial legislation would be problematic in a contested Democratic primary for governor — another sign that she is unlikely to enter the race for governor next year.

Given the political stakes of Feinstein’s action, it’s surprising how little notice it received, no doubt one of the reasons her statement was released on a Friday afternoon. Beyond a few liberal blogs, James Oliphant of the L.A. Times Washington bureau was the only mainstream media reporter to file on it, in a piece his editors played inside the A section.

“I have thought for some time that the way to approach this issue is by trying to see if there can’t be a compromise between the business community, the agriculture community and labor,” Feinstein’s statement said. “This is an extraordinarily difficult economy, and feelings are very strong on both sides of the issue. I would hope there is some way to find common ground that would be agreeable to both business and labor.”

Merits of the legislation aside, Feinstein’s can’t-we-all-get-along statement is breathtaking in blithely ignoring a) what some might term, uh, the fundamental contradiction between capital and labor and b) the fact that the “extraordinarily difficult economy” is a key reason organized labor is pushing for the free choice act, which was introduced on March 13. According to the AFL-CIO’s home page blog, “(W)orkers who belong to unions earn 28 percent more than non-union workers. They are 52 percent more likely to have employer-provided health coverage and nearly three times more likely to have guaranteed pensions.”

As a communications matter, business and corporate lobbyists won the framing debate on the issue. They succeeded in short-handing the bill as “card check” and in focusing media attention on a provision of it that would allow a union to be certified without an election if a majority of employees signed union cards. The bill also would increase penalties for firing workers for participating in an organizing campaign and require companies to submit to arbitration if they could not reach agreement on a contract with a newly certified union after four months. The latter is perhaps the biggest concern for business.

Feinstein’s move came one day after Pennsylvania Senator Arlen Specter announced on the Senate floor that he would not support the labor law reform. Taken together, the loss of the two Senators is a major tactical defeat for its sponsors, because they need 60 votes to move it out of the Senate to the House, where it was expected to pass more easily. Specter was the one Republican that labor hoped to get to vote in their favor, in addition to all 59 Democrats (assuming Minnesota’s Al Franken gets seated sometime this century).

A proposed “third way” compromise was put forward last week by executives from Whole Foods, Costco and Starbuck’s, but labor leaders denounced it as a pro-business gutting of their proposal.

Feinstein’s position is in sharp contrast to Senator Barbara Boxer, who gave the kickoff speech last week at a Washington convention of Teamster organizers who gathered to lobby Congress on the free choice act.

Boxer was introduced by Teamster President Jim Hoffa as “our friend” and one of 41 senators who have signed on to the bill as co-sponsors. “For me, it’s a family thing,” Boxer said, adding that her husband’s father had been a Teamster. She said she was behind the bill “for the good of the country and for a strong middle class.”

5 Questions: What Budget Mess Means for California’s Private Sector

Saturday, March 28th, 2009

Bill Watkins, PhD, is an economist who served at the Board of Governors of the Federal Reserve System before becoming executive director of the Economic Forecast Project at the University of California Santa Barbara in 2000. He and his team recently accepted an offer from California Lutheran University in Thousand Oaks to expand CLU’s economic forecast program and launch a graduate program in economic analysis and forecasting. We caught up with him during his transition to ask him about the real-world impacts of the state’s budget meltdown.

Calbuzz: As a practical matter, what difference does the budget mess in Sacramento make to private sector businesses in California?

Bill Watkins: Unfortunately, the budget is pro-cyclical and reinforces the economic decline. That is, as the economy declines, government spending is declining and taxes are increasing. This is the exact opposite of an economic development program. The other issue is that until there is a permanent solution to the budget, businesses’ future tax environment is uncertain. Since businesses avoid uncertainty that is just another reason businesses may not invest in California.

CB: What is the fallout from cuts in education on the private sector?

BW: California’s schools, including higher education institutions, will shrink, decline in quality, or do both. The decline in education will negatively feedback to economic activity.

CB: What about the tax increases in the budget deal?

BW: Tax increases always increase cost and decrease the volume. The retail tax is particularly questionable given the multi-year decline in retail sales, the ease of purchasing out of state, and the ascendancy of the internet.

CB: The governor and legislative leaders cast the February budget agreement as a momentous step in turning around state government’s long-running financial woes. What’s your view?

BW: After years of financial mismanagement, California’s government is finally being forced to confront its structural deficit. The plan completed in February was inadequate. While some hard decisions were made, the Governor and Legislature still resorted to bailout funds, borrowing and rosy projections. It was recently announced that we have another $8 billion problem, and the ink hadn’t dried on the most recent budget.

CB: Bottom line?

BW: Most economists would agree that cutting state spending and increasing taxes in a deep recession is not a prescription for stimulating economic growth. Quite the contrary, it is a prescription to slow growth. California is compounding the problem. Tax increases and spending cuts were unavoidable after years of profligate fiscal policy. Imposing new regulations that make California increasingly uncompetitive with other states is not necessary. However, California is proceeding to implement increasingly onerous regulations on business. The result will be a very weak economy for years, perhaps decades.

Friday Fishwrap: Gossip on Who’s Hot, Cheap Shots, Three Dots

Thursday, March 26th, 2009

Who’s better on Prop 1A? Steve Poizner gained a step on Meg Whitman this week in the Republican primary race to the right, with his aggressive moves aimed at grabbing the mantle of Leading Scourge of 1A. Poizner put together a nice cross-platform bit of political marketing that combined his ”Not Another Dime” website (join the Facebook group!), an Orange County campaign event and suck-up drop-by appearance on the John & Ken show that sent a clear message aligning him with anti-1A conservatives. Ms. Meg meanwhile seemed content to rest on the, um, laurels of her dozzzzzzy old op-ed on the subject in the Sac Bee; hasn’t anyone told her newspapers are dead? Key question remains: which of the zillionaires will be the first to throw down big bucks of their own for the air war against 1A? . . .

Visual scoop of the week: Shane Goldmacher, who runs the Bee’s terrific Capitol Alert online feature, seems like the hardest working man in show business. His best coup this week was scoring that color photo of GOP senator Tony Strickland suited up to join the L.A. Lightning of the International Basketball League for their season opener. At 6’5” Strickland was a serious baller at Whittier College, Big Dick Nixon’s alma mater where he played small forward (Strickland, not Nixon) and broke the school’s single game scoring record. But this posed photo looks like a ’50s dork in the high school yearbook, who’s in critical need of a sun lamp. As for those jiggly arms, where’s Michelle Obama when you need her? . . .

This just in: California’s best hope for economic recovery now appears to lie in the Democratic primary race for attorney general, where campaign consultants are lining up around the block to cash in on a field of no less than seven wannabes maneuvering to be the state’s top cop. With S.F. DA Kamala Harris, L.A. city attorney Rocky Delgadillo and most of the male population of the state Assembly already signed up to run, Santa Monica councilman Bobby Shriver, Maria’s brother and the owner of a full set of authentic Kennedy pearly whites, is the latest to sniff around the starting line. . . .

Elder statesman: Now that Ms. Shriver-Schwarzenegger has batted down the silly rumor that she might run for governor, those looking around for a long-odds, undeclared dark horse are keeping an eye on Treasurer Bill Lockyer, about the only Sacramento pol who’s acted like a grown-up in recent months, managing not to get too much budget muck splashed on him. . . .

Short-lived revolution: Largely overlooked in all the fuss about the governor’s free falling ballot measures was the news unearthed by PPIC poll-taker Mark Baldassare that support for repeal of the two-thirds vote budget vote requirement has also plummeted. Just two months ago, Baldassare reported that for the first time a majority of voters (53%) favored such a change, stirring hope among the liberal netroots and other progressive types that repeal might be possible. Now that erstwhile support has quickly crumbled, as only 43% favor tossing out the two-thirds rule, while 49% say it’s a damn fine idea whose time has not yet passed. . . .

Memo to Hank Morris: WTF were you thinkin’, man?

Fred Keeley: Calbuzzer holds his nose to vote for budget props

Thursday, March 26th, 2009

By Calbuzzer Fred Keeley

The May 19th ballot package is the best bad deal you will get.

Despite the claims to the contrary by the governor and leaders of the Legislature, the packet of ballot measures that implement the February Follies budget is, for the most part, lousy public policy.

The single exception is Proposition 1A, which would create an effective tool for reducing the tremendous volatility in the General Fund portion of the state budget. (Yes, it extends tax increases, but it’s still worth supporting.)

As to the other elements, they are further evidence of the need for profound reform of California’s budgeting system — a system that for decades has failed to produce a budget that reflects the needs and aspirations of most Californians.

When the deal was done, California slipped from 44th to last in the nation in per-pupil spending in K-12 public schools. A severely under-funded public mental health system will be even more threadbare and ineffective. The highly-regarded First Five program for young children will be stalled in its tracks. And the California Lottery, a mockery of a public enterprise if ever there was one, will be further disgraced by becoming, effectively, a credit card.

Why, then, should voters support these measures?

First, it’s the best bad deal that the current system can produce. Under the current budget-making architecture, irreconcilable belief systems are given equal value and left unsettled. For example, it has been reported here and elsewhere that many members of the Republican Caucus in the Assembly and state Senate were urging party members to withhold their votes for the budget in order to drive the state into bankruptcy.

Some people may think that’s utterly irresponsible. But for Republican legislators who believe that “government schools” cannot be made better by increasing funding, but, rather by injecting competition, or that the only way to break the stranglehold of the prison guards union is to contract management of the system to a private firm, to them, California’s fiscal crisis was not about coming up with an 18-month solution: it was about the chance for Republicans to see their belief system become reality.

Second, the few folks who will go to the polls in May will see two measures that contradict their previous messages to budget writers in Sacramento. The First Five and Mental Health “sweeps” will seem offensive in the extreme to those who fought to enact them in the first place. Convincing those folks that it will only get worse if they don’t approve all of the measures on the ballot, will be asking skeptical voters to suspend disbelief.

Third, the Legislative Analysts Office says that the budget deal has already fallen apart. A new projected $8 billion deficit is prepared to come into full bloom before the end of this fiscal year. Additionally, the Department of Finance, in moments of private pondering, sees that as a fairly “happy” deficit projection. Combine that reality with the failure of the May 19th ballot measures, and a new $12-15 billion deficit will present itself to the governor and legislature.

More importantly, the tools for fixing that problem in early June will consist of a bit of borrowing and a ton of budget cuts. The Republicans who saw their chance to prevail in the clash of beliefs in February may well be in the driver’s seat again.

So, if you are a voter who believes that we simply cannot expect high quality public education while we are looking up at Mississippi in terms of per-pupil spending, or if you are a voter who believes that decades of programmatic retrenchment in the areas of health, human services, environmental protection, infrastructure, affordable housing or any of the other policy areas where California has fallen from leadership and grace, then you’ll vote “yes” on each and every ballot measure May 19.

It’s the best bad deal you’re going to get.

Fred Keeley is the elected Treasurer of the County of Santa Cruz, a former member of the California Assembly, a member of the Governor’s Commission on the Economy of the 21st Century, and a member of the Leadership Council of California Forward.

Arnold and Legislature Are Toxic Assets for May 19 Measures

Wednesday, March 25th, 2009

The screwball set of special election ballot measures cooked up by sleep-deprived politicians in Sacramento to implement their Rube Goldberg budget-balancing plan appear to be doomed.

That’s the bottom-line political prognosis to be drawn from a new Public Policy Institute of California statewide survey, which shows Propositions 1A and 1C, two linchpin initiatives needed to make last month’s budget deal work, badly lagging. Two other revenue measures, Propositions 1D and1E, lead by relatively small margins that may evaporate swiftly once opponents start hurling millions of dollars into TV campaigns to beat them. The full PPIC survey report is here:

As a political matter, the big problem for Governor Schwarzenegger and legislative Democrats, the major boosters of the Col. Mustard-With-The-Candlestick-In-The-Conservatory budget plan, is not the sheer complexity of the measures — though that alone could be enough to sink them, given the historic, reasonable man standard of Californians voting “no” on what they don’t understand.

Rather, the steepest political obstacle is that, less than eight weeks before the May 19 special, the governor and the Legislature have become political toxic assets.

Schwarzenegger’s approval rating has plunged to 33% percent — including 54% of Republicans who disapprove of his performance; only 29% of those surveyed approve of their own legislator, and the world’s least deliberative body as a whole, um, enjoys a staggering 11% approval rating.

“That’s a low I didn’t ever think could be reached,” PPIC poll-taker Mark Baldassare told us.

So: a batch of ballot measures, involving at least $6 billion of taxpayer money, that makes theoretical physics seem simple, being pitched by a sales team that voters don’t trust to mow the lawn. A recipe for electoral triumph? You be the judge.


As a financial matter, defeat of one or more of the key May 19 ballot initiatives will send Arnold and the Democratic leadership back to the drawing board for a new budget bail-out, barely three months after the shameful spectacle of legislative sleepovers yielded this alleged solution, passed by the barest of margins.

One Capitol financial maven, promised anonymity in exchange for candor, gave this reply when we asked what the effect on the budget would be if the mission-critical initiatives lose: “We’re fucked.”

The Legislative Analyst has reported that lower-than-expected state revenues have already pierced an $8 billion hole in the budget deal passed in February. With $5.8 billion more at stake in passage of the initiatives, state government may be looking at a new $15 billion deficit to fix come the May Revise, a week or so after the election.

For those who want to get into the weeds on fiscal stuff, this narrative about the budget deal http://www.dof.ca.gov/budget/historical/2009-10/documents/Budget_Agreement_Full-Package-w.pdf has data showing what the passage or defeat of initiatives would mean to state finances; details on revenue and borrowing issues are on page 8.


The six measures on the special election ballot are numbered Propositions 1A-1F. Looking at the PPIC poll results in reverse order:

Prop. 1F, the only initiative that’s winning big (81-13), is senator Abel Maldonado’s bid to block pay raises for state officials in years when the California is in deficit.

Prop. 1E would divert $460 million into the general fund over the next two years from a special, voter-approved fund earmarked for mental health services. Although it is now leading, its support falls short of a majority (47-37), historically not a strong indicator of future success.

Prop 1D would divert $1.4 billion into the general fund over the next four years from a special, voter-approved fund earmarked for early childhood education; although it is winning, its support also falls short of a majority (48-36) and will draw strong opposition from partisans of this worthy program .

Prop 1C would authorize $5 billion in borrowing from future lottery profits. It is getting creamed (37-50). Turn out the lights.

Prop 1B would require the state to repay public school and community colleges in the future for cuts made this year. It is in a statistical tie (44-41). But even it passes, 1B will not go into effect if Prop.1A loses.

Prop 1A is the foundation of the whole deal, and may now be at its high water mark, trailing by 39-to-46%.

The political problem with Prop 1A – which is being pitched as a conservative measure to increase the state’s “rainy day” reserve fund – is that it relies on extending for two years $16 billion in tax increases that were part of the February deal.

Or as the Legislative Analyst says: “Measure Results in Tax Increases.”

This rather salient point is not mentioned in the official ballot label, which was read to respondents in PPIC’s poll, because proper independent polling technique required their interviewers to read the ballot label verbatim to respondents, even if it is misleading, and um, incomplete. The ballot label – which conservatives tried unsuccessfully to alter in court – simply fails to tell voters that the tax increases would remain in effect.

It’s not likely that Republican candidates for governor Meg Whitman and Steve Poizner will follow suit. Look for one or both to pour a few of their multi-millions into TV ads telling voters that Schwarzenegger and the Democratic Legislature are trying to bamboozle them into voting for tax increases.

Baldassare agreed that the poll’s 39% approval rating for Prop. 1A could represent a peak. Not only does “no” beat “yes” when ballot measures are long and confusing, but, “It drives voters crazy if they get any sense that someone is trying to pull the wool over their eyes,” he said.