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Wannabe Guv Chiang: “Stronger Financial Future”

Apr13

Chiang-72xToday Calbuzz presents the fourth in our occasional series of interviews with contenders for governor in 2018. We’re starting with this stuff early, given both the clear and present danger President Hair Boy poses to the state and the huge political vacuum to be left by the departure of Gov. Gandalf, the most successful state chief executive since his father a half century ago. Our previous interviews with Antonio Villaraigosa, Delaine Eastin and Tom Steyer may be found in our priceless archive here, here and here.

In running for governor, California Treasurer John Chiang understandably promotes his deep experience with state finances and mastery of policy detail – but seriously struggles when asked for a clear and simple rationale for his candidacy.

When we interviewed Chiang, speaking on his cell while being driven from Fresno to Bakersfield, Calbuzz asked a question we pose to everyone running – tell us what the bumper sticker slogan is for your campaign.

bumperstickerWhat’s the message?

Calbuzz: If you had to sum up, what your campaign is about, you know, in a headline, three to five words, what would it say?

Chiang: I’m sorry, could you repeat that please?

CB: Yeah, I said if you summed up, what your campaign is about, you know, as a headline, in three to five words or so what would it be?

Chiang: That building a stronger…building a stronger financial foundation to create a better future for all Californians. Sorry that’s way over five!

CB: But we’ll send it over to the copy desk and see what they can do.

In the interview, the 54-year old Chiang spoke knowledgeably and in great detail about specific programs and policies, from housing and health care to pensions and taxes – “it gets technical,” he even reminded us at one point. By the time the interview ended, however – after exegesis about the Affordable Housing Tax Credit Authority, the Department of Labor rule on secured choice, and the work of the National Association of State Treasurers – we still were unclear on how Chiang foresees transforming his strengths as a behind-the-scenes technocratic policy nerd into a dynamic campaign personality.

The full transcript, edited for punctuation and clarity, is below; Here are a couple of key points:

Donald-Trump-as-Julius-CaesarTrump. Chiang was very cautious in criticizing the 46 percent 45th President of the United States. In sharp contrast to the leaders of the Legislature or even Brown, who has maintained a more balanced, paddle-to-the-right, paddle-to-the-left approach with his rhetoric, Chiang chose instead to reference “unintended consequences” of some of Trump’s most radical policies, like tax reform and repealing Obamacare. When we asked what he would do as governor if Trump sought to nationalize the California National Guard to militarize his immigration deportation policies, Chiang said he “would be engaged in very active conversations with President Trump and let him know, you know, I’m not supportive.” That’ll show him.

Health care. Chiang said that he is supportive of “universal coverage…as a concept” for Californians. More immediately, he said he would use “multiple approaches” to continue to cover state residents, in the event Trump and congressional Republicans cut Medicaid and Obamacare subsidies, perhaps including using some of the rainy day reserve and “thoroughly reviewing various funding sources” such as special funds in the state budget.

Immigration. Chiang said he “support(s) a sanctuary state” and would implement policies and procedures to ensure that state and local law enforcement “aren’t doing the feds’ job” in terms of investigating or identifying the immigration status of those who are arrested. With unspecified exceptions for “murder or some kind of violent activity like that” his intention as governor would be to “stop federal activity in California,” he said.

Climate change. Chiang suggested that California could sidestep efforts by Trump to reverse efforts to reduce greenhouse gases, in part, by creating a “green bond market” in which the state would back bond sales aimed at providing substantial funding “to finance clean infrastructure and green infrastructure” projects.

jerrygandalfThe incumbent. When we asked Chiang what he would do differently than Jerry Brown, he mildly credited the governor with doing “great work” in some areas, but said he would “elevate a lot of that work” and “keep pushing it” by focusing on a greater “level of detail.” When we asked for an example, he spoke of using technology to ensure low-income Californians know they are eligible for a special tax credit so they can “get their five thousand dollars back into their pocket.”

“I am effective, I get the job done,” Chiang said. “And I do care, I care a damn lot.”

Here’s the play-by-play for junkies:

whyCalbuzz: So we just like to always start by asking a pretty simple question, which is: why do you want to be Governor?

John Chiang: Oh, I just feel incredibly blessed, you know, America gave my parents the best opportunities possible, they immigrated from Taiwan and I want to make sure that my six god-children live in the state that provides them with the best opportunity to fulfill their dreams.

CB: And what would that mean, as a practical matter?

JC: A great education, access to housing, the best opportunities, sort of that old Harvard study, you take a low income child, put them in a community that has higher opportunities, they will perform nearly as well as the wealthy kid. So, you know, how do we, you know, you are this child of immigrant parents from Taiwan, and you know, your parents worked hard, and they get you into this middle-class neighborhood, you meet (Insurance Commissioner) Dave Jones in high school, and thus end up doing pretty well.

CB: What are you going to do different than Jerry Brown?

JC: We will continue to focus on accountability and transparency, getting people involved in the school districts, a lot of the work I did, I just get deeply involved in communities when I was at the Board of Equalization.

I think I was one of the first people to do free income taxes for middle income and low income individuals, you know, how to help them make their daily finances work. You know I was the first elected official to do nonprofit seminars, if you want to address the people who are changing and transforming communities and the people they serve. So a lot of those types of connections, you know.

Be audited…not because, you know, we’re trying to, you know, take people out but you want to make sure that you have sound finances. If you have sound finances in local communities like where I grew up, you can have good public safety, could have access to the park, you could have access to libraries, but how do we make sure that the governance is this strong in California from state to local level.

CB: You think Brown hasn’t done that?

JC: Oh no, he has done that but the level of detail we’re going to, we’re going to keep, we’re going to keep pushing it. But (tax filing assistance) hasn’t been done, that traditionally hasn’t been done out of the governor’s office.

But I’ve done that on other agencies, having that background in building those partnerships, we’re going to make sure that. We try to elevate a lot of that work. The governor did great work, for instance, when I see the income taxes credits… but I want to look at what will work, and we’ll start technology to make sure that those California families that qualify for that income tax credit, that can get them, up to their five thousand plus dollars back into their pocket.

CB: If you had to sum up what, you know, what your campaign is about, would be about it, in a headline of three to five words what would it say?

JC: I’m sorry, could you repeat that please?

CB: Yeah, I said if you summed up, what your campaign is about, you know, as a headline, in three to five words or so, what would it be?

JC: That building a stronger, building a stronger financial foundation to create a better future for all Californians. Sorry that’s way over five!

CB: That’s more than five words.

CB: But we will send it over to the copy desk and see what they can do. We’ll figure it all out for you. Don’t worry about that.

What would be your approach to the Trump administration, particularly today, given that there was a (White House) budget being proposed, and the threat that they represent on immigration and health care and climate change and other issues? Do you think the legislature is taking the right approach by being very aggressive, and using a lot of strong rhetoric?

JC: I would think a comprehensive approach might be, you don’t have one solution. Because of all of our challenges, I’ll give you multiple examples. Number one. to the number you know Donald Trump (put out on tax cuts) early on, I don’t think he understood the consequences when he put out the…you know, the comments about reducing the tax brackets and reducing the highest marginal rate to the affordable housing financing market upside down in California.

So I tried to help the repair the financing market. I chair the Affordable Housing Tax Credit authorities in the state of California. One of the authorities yesterday took action to give both – the for-profit and nonprofit affordable housing developers more time to try to finance their projects.

It gets technical but it’s important because we care about affordable housing, we’re one and a half million units short in California. But, by reducing, I talked about reducing the highest marginal tax bracket, it reduces the pricing of tax credits. So, affordable housing development that used to pay a dollar, dollar fifteen for credit, we’re getting ninety to ninety-five cents for credit which created a gap in their ability to start to finance, or start building affordable housing because they didn’t have sufficient funds. If they didn’t start building on time, they could have been assessed negative points and get kicked out of the affordable housing program because we don’t want developers getting the tax support and not building your houses.

But we understood that this was an unintended consequence of President Trump’s potential policies and we took action to make sure that we protected affordable housing.

But building partnerships that we know that, the Congress is taking action to repeal the Department of Labor rule on secured choice but we want that, we’re going to push on Congress. So pushing back on what they’re trying to do but also building partnerships. So when I was (attending) a few weeks ago the National Association of State Treasurers, we got some of the Democratic and Republican treasurers saying, you know, that we have this retirement security crisis.

Here in California we have seven and a half million residents who work, but their employers don’t provide any type of retirement plan for them and if you have a near-automatic enrolment plan, the likelihood of participating in a retirement plan is fifteen times more likely. So we want to protect women, we want to protect people of color, to make sure that they start saving, and have golden years, you know, when they have sufficient funds.

So that interest in building partnerships, bipartisan partnerships to try to work with Congress and the Administration so they don’t take action that is detrimental to innovative new programs. For instance, and with the Affordable Health Care Act, sort of, like what I did in the Controller’s office where we had financial challenges, I am, I have my staff thoroughly reviewing various funding sources to try to find possible money to create a lifeline, in the event that the various health care facilities no longer have the funding to provide the essential services to people with the greatest need.

So, multiple approaches.

CB: So are you suggesting that the state would pick up the tab if Trumpcare or Ryancare goes through and people lose their medical insurance in California? The state is going to pick up the tab?

JC: Well, not the entire tab, well, not immediately. You’re talking about a loss of, you know, estimates of around eight billion dollars. You know we don’t, we don’t have eight billion dollars sitting on the sidelines or in a rainy-day fund.  But if you look at the governor’s 2017-18 budget, at the end of the year, we are supposed to have a 7.9 billion dollar rainy day fund. There are restrictions on how you can use that money. So we don’t have that money immediately available, but what I am trying to do is, I am trying to search through the past to see at what point in future, you make sure that for some of these programs for those in greatest need to try to find additional funding.

CB:  Where?

JC: I will tell you once we know if we need legislative changes. But to give you an example of what we did in the Controller’s office. So in California that was cash starved, during the 2009 financial crisis that if you remember, in February of 2009, I had to hold back tax refunds for twenty-three days, because we didn’t have enough to pay, money in our state treasury to fully pay off all the tax refunds or later that year when I had to issue four hundred and fifty thousand IOUs to the tune of 2.6 billion dollars to keep California from defaulting on debt.

To make, to make our cash payment I had my staff go through all the special funds to see what we might be able to free up, so that we could meet as many cash obligations back then. And so, we were able to find like another thirty, forty funds…so that we could use those monies for cash purposes. The legislature later used that for budgetary purposes.

CB: As governor, let’s say in the next year, Trump is able to put through his health care program, you come in as governor, a year and a half, two years later. You’ve got millions of people in California who’ve lost their health care. What are you going to do about that? You just can’t go, you’re not going to be able to go find money in special funds to cover that.

JC: Yes, so I was talking about the money and calling on debt as a lifeline for certain programs, and then hopefully, we will have something out in it in the next few weeks, once we can identify what we can do.

And then obviously, for those that are going to be impacted we’re going to have to find other sources of funding or create the funding, based on priority. So we’ll have those very difficult and tough decisions to make, in regards to how do we replace those lost Medicare dollars. Do we continue to provide coverage?

And I would like to see universal coverage to a certain, you know, as a concept for California. Now that we added, you know, four plus million people with Medicare and other million plus through Covered California. You know, what if, can we cover all those individuals, do we cover all those people?  We understand that (perhaps) you cannot offer the same portfolio of coverage, in regards to depth of coverage or do we, are we more focused on taking the people who are most deeply impacted, and affected by healthcare issues?

So those are going to be tough decisions, and as Governor I would examine those propositions and try to figure out what we do. Essentially, we are going to have a re-look at the healthcare system that we have in California.

You know when you think about Japan paying far less per person for their health care, and having a different philosophy of preventative care, the wellness programs, I would like to start that conversation in California.

CB: Let me throw another scenario at you. For example, let’s say Trump, President Trump decides that, he thinks it’s time to nationalize the California, to federalize the California National Guard, to use those troops for border security, what would you do?

JC: Yeah, I would be engaged in very active conversations with President Trump, and let him know, you know, I’m not supportive.

CB: And then what?

JC: Then we will push back aggressively, we’ll see where we go from there. Be engaged in litigation or other things. We’re going to explore every opportunity possible.

CB: Would you allow him to federalize the National Guard?

JC: For immigration purposes?

CB: Yes.

JC: That wouldn’t be something that I would push for.

CB: I know you wouldn’t push for it. How would you stop it?

JC: I would object to it. Well, I would have to check my legal authority but I wouldn’t, that’s not something, I wouldn’t support what he was trying to do.

CB: Do you support Kevin De Leon’s call for California to be a sanctuary state? Do you think that is a good idea on immigration reform? Law enforcement should not co-operate with ICE at all?

JC: I support a sanctuary state. I don’t know all the details of  Kevin’s proposal but he shared a lot of that with me.

We want to stop federal activity in the state of California. We understand the federal government has responsibility in regards to immigration rights , the state doesn’t have those responsibilities. I don’t want to end local government partnership with the feds, but I want to make sure that our local entities aren’t doing the fed’s job.

It is not, it is not the local government’s responsibility to enforce immigration laws. But if the feds identify that somebody has committed murder, and they are asking us, for you know, to take up action, when it’s appropriate, might be, I don’t want  to deny that from happening.

CB: So how much do you think local law enforcement should cooperate with the federal immigration authorities?

JC: You know, you have to have set procedures and guidelines in place. So if you have somebody committing, you know, murder or some other type of violent activity like that, I am okay with procedures in place so that local government can make sure that that person is, you know, subject to whatever the proper procedures are, identified.

CB: I read a quote from you, John that said, quote, “We can’t have a brilliant future with an empty wallet.” What does that mean?

JC: Well, we’re going to have to invest. We’re going to have to invest in things that are the highest priority for the state, so you know, whether it’s education, whether it’s healthcare, whether it’s building our roads or schools, our bridges, investing in work force development, things that grow the economy.

CB: Well, those are all spending items, so they tend to empty the wallet. So what does it mean, ‘we can’t have a brilliant future without an empty wallet,’ when your solution is to go spend money on education, health care, rebuilding roads and schools, investing in other programs?

JC: Oh yeah, but it’s also about spending, it is about spending money wisely and saving, you know, saving money for the future, such as the rainy-day fund.  Making sure that you are intelligent and you identify the best value for how you use every taxpayer dollar.

CB: Well, but you know what happens is, as soon as a state starts having extra money around, the legislature wants to spend it on ongoing programs. That’s just the way it is. That’s what happened to (Gray) Davis, as you know, with John Burton running the legislature. What would you do as governor? Would you build up the rainy day fund or would you just spend that money on programs and on the quote “investments” that you’re talking about?

JC: Well, you always have to have the rainy-day fund. So I would have a rainy-day fund. We know that humans have not eliminated the business cycle. So we’re going to have good days, we are going to have bad days.

Those monies are going to be spent on a lot of your services and programs, you know, may not be today, but you know that those priorities are very important and in due time, they are going to be spent because we’re not going to have as much money available in the future.

But obviously we’re under-invested in a lot of areas. We are under-invested in infrastructure, our roads and bridges, you know, many of them are in the condition that call out for, great attention and repair, so you want to invest in those types of projects.

CB: What about climate change? I mean aside from, you know. the fact that the head of the EPA doesn’t believe that carbon contributes to climate change. There are also a lot of financial incentives for green industries, green building that involve federal monies. How would you counter that?

JC: Yeah. Well, we know we’re not going to be able to replace everything, but I’m advocating for one, I’ve been trying to establish and develop a green bond market here in the United States of America.

We are ready to sell green bonds, but the advancement hasn’t been as positive as we have witnessed in other places, like Europe has a very well developed market, China aggressively, but less so in the United States, where you don’t have the same type of consistency; issues in regards to transparency, there’s issues in regard to the secondary market, so I would put out a green bond.

I did a (undecipherable) last year, with a socially responsible investor underwriter, broker-dealers, representatives of the investor community to see what we need to do to make sure that we get a good shot of being a bond market. And then I am putting together a couple of international conferences so that we can try to take that step to better enhance any shortcomings identified of being in the bond market, so that people can use that as a tool to finance clean infrastructure and green infrastructure.

CB: You have been very generous with your time. One more thing: what’s the single most important thing you want voters to know about you, when they’re considering, who to vote for. for governor?

JC: That I am effective, that I get, I get the job done.

CB: OK.

JC: And I do care, I care a damn lot.

CB: So I’m going to give you one more shot at your bumper sticker, John. What if you could boil it down to a simple message, what is it you want to say?

JC: Well we’re going to take a different road and move California forward.

CB: A different road?

JC: Yes, different than what President Trump’s doing, different than watching all the yelling and screaming. Something that’s effective, that we make sure that we do the hard work that makes California great.

CB: Fair enough. Thank you. We appreciate your time.

JC: You bet. You are welcome.


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There are 5 comments for this post

  1. avatar smoker1 says:

    I think John Chiang is a very good guy and he knows how to get things done. But is this the kind of Governor we need right now? Our relationship with the federal government and other states is unsettled. Our attitude about immigration, healthcare, civil rights, criminal justice, climate change, etc. is at odds with those in control of Washington. Is this the time for a governor who can deftly operate the levers of government or is it time for someone who can forcefully articulate Californian values and envision our best path forward. I don’t know who that is, but right now we need a visionary.

  2. avatar sqrjn says:

    I can’t believe you guys asked him about Trump federalizing the national guard. That is hilarious. I’d check with legal counsel sounds like a pretty good answer to me.

    • avatar pjhackenflack says:

      You may not take this idea seriously, but the Brown administration sure does: http://www.calbuzz.com/2017/02/how-brown-would-reject-trump-natl-guard-plan/

    • avatar sqrjn says:

      Perpich v. Dep’t of Def., 496 U.S. 334

      Supreme Court of the United States
      June 11, 1990, Decided

      Since 1933, federal law has provided that persons enlisting in a state National Guard unit simultaneously enlist in the National Guard of the United States, a part of the Army. The authority to order the Guard to federal duty was limited to periods of national emergency until 1952, when Congress broadly authorized orders “to active duty or active duty for training” without any emergency requirement, but provided that such orders could not be issued without the consent of the governor of the State concerned. After two State Governors refused to consent to federal training missions abroad for their Guard units, the gubernatorial consent requirement was partially repealed in 1986 by the “Montgomery Amendment,” which provided that a governor cannot withhold consent with regard to active duty outside the United States because of any objection to the location, purpose, type, or schedule of such duty.

      Held: Article I’s plain language, read as a whole, establishes that Congress may authorize members of the National Guard of the United States to be ordered to active federal duty for purposes of training outside the United States without either the consent of a state governor or the declaration of a national emergency.

      Ok – hardly an exhaustive effort but interesting right?!

      I’m still thinking that Brown’s attorneys are way off Sections (2) and (3) of 10 US Sec. 12406 seem pretty clear. (Are you sure you guys didn’t get that off the record quote at a cocktail party? Heavy drinking explains a lot. As would some flack telling you what they half recalled and poorly understood from nuanced legal brief they read for 5 minutes between fundraisers.)

      What is the basis of their claim that a Governor’s consent is required in cases of national emergency? Perpich seems to say that there is no constitutional requirement, so it must be statutory.

      I assume they were talking about 10 U.S. § 12301 (b). But (b) applies to federalizing the Guard “at any time” (i.e. training) and gives the Governor a veto. It is Section 12301 (a) that covers federalizing the Guard in time of war or emergency, declared by congress, or otherwise authorized by law (i.e. 12406). Section 12406 says that “whenever” the President is unable to execute the laws of the United States with regular forces he can use the State National Guard. Nothing in their about a Governor getting to withhold consent.

  3. avatar toddflora says:

    One of the many things I love about John Chiang is his commitment to making sure we get things right “in the weeds.” Details affect people’s lives, and affect how much of that “wallet” we keep and use effectively vs. waste away. I mean — his knowledge of, and answers on, affordable housing and green bonds above are spot on and NOT takes you’re hearing from two other particular candidates, who both only think at the 50,000 foot level.

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