Calif. Gov Race: Past vs. Future

The June 8 primary elections have been deemed The Year of the Republican Woman. But don’t look for any media hype like the original 1992 Year of the Woman when it was Democrat ladies who surged to the forefront of the nation’s political consciousness.


In the most watched races in California, Nevada and South Carolina, four GOP women made important gains, three of them advancing with the endorsement of Sarah Palin who is a major political force who was unknown just two years ago. 


In perhaps the most significant contest of all, billionaire Meg Whitman expectedly won her primary race by spending $71 million of her own money to become the Republican candidate for California governor in November. Whitman should be watched closely. If she is elected and reforms the economic basket-case of California, she will be in a good position for a future presidential run. 


She will face Democrat Jerry Brown in the general election. Brown is such a hackneyed political figure that it is amazing that he is even on the ballot. For those too young to know, Brown was California governor from 1975 to 1983 and was referred to as Governor Moonbeam for his ‘progressive’ ideas like a special satellite for state communications. He even gave up the governor’s mansion to live in an apartment, appointed a loopy enviro-kook Stewart Brand (author of the nonsensical Whole Earth Catalog) as a special advisor, and dated pop singer Linda Ronstadt.


Brown ran for president in 1976, 1980 and 1992, but never was considered a serious candidate. Brown lost a 1982 race for US Senate. He since has served as California attorney general and mayor of the impoverished city of Oakland, near San Francisco.


For Brown to reappear again is in the essential nature of socialism – to repeatedly return to formulaic, tired and dogmatic candidates and ideas from the past. If ultra-liberal California can produce no Democrat better than Brown, it is a good sign for Whitman, who is likely to win the election.


Meg Whitman represents the future if California is to survive as a state. Once the economic heartbeat of America, California’s economy is withering under rampant state spending resulting largely from a bloated pension system for state employees (CalPERS), along with heavy taxes and serious over-regulation of business, particularly enviro regs. Productive, educated and wealthy people are leaving the state, while the poor are left behind and the illegal immigrant population grows and grows.


Whitman graduated from Princeton University and got an MBA from Harvard in 1979. She is well known for her business career, mostly for her service at eBay, the internet sales site, which she joined in March 1998 when it had 30 employees and revenues of $4 million. As CEO Whitman grew the company to 15,000 employees and $8 billion in annual revenue.


Whitman left eBay in 2007 and is said to have a net worth of $1.4 billion. She supported Mitt Romney in the 2008 presidential election. She was mentioned by John McCain as a possible Treasury secretary during the second presidential debate of 2008 after she had joined McCain’s campaign.


Following the disastrous celebrity governorship of so-called “Republican” Arnold Schwarzenegger, Whitman appears to be serious about reforming the bankrupt California state government. She has pledged not to raise taxes, and is emphasizing job creation, reduced state spending, and reform of the state’s K-12 educational system, saying that she wants to do a few things well, rather than trying to do too many things.  


She also is proposing to lower business taxes  and to abolish the state capital gains tax in order to make California more business-friendly, noting that California is losing jobs not to foreign competitors but to neighboring states with lower tax rates like Nevada and Oregon.


Most significantly, however, Whitman appeals to to even liberal Californians who have decided that the state must get serious about addressing the massive unfunded liability of California’s unionized state employee pension system, the richest in the nation.


Brown is being seen as just another pro-union Democrat who will do nothing about the looming pension problem which is outlined on websites like pensiontsunami.com. But the defeat in the Arkansas primary of union-backed Democrat lieutenant governor Bill Halter in his race against incumbent US senator Blanche Lincoln is perhaps a sign that the public is turning on the pampered unions. Unions spent $10 million on the Halter campaign.


Whitman is being seen as the figure who will take on the California unions the way that Republican governor Chris Christie is confronting the New Jersey public-employee unions – head on.


To give some insight into the California crisis, here are excerpts from a column from Thomas Elias writing on December 29, 2009 on vcstar.com, the website of the Ventura County Star newspaper about the inner workings of the pension crisis:


Here, for example, is what the California Public Employees’ Retirement System, better known as CalPERS, told its retired members early in the fall of 2008, when it had lost more than $70 billion on its investments so far that year, more than one-fourth of the previous $260 billion value of all its investments:


“It is important for you to know that the current credit crisis does not directly affect your retirement benefits, which are securely protected by law, or our ability to pay benefits.”


Translation: Not to worry; the taxpayers will have to bail us out.


In fact, retired public employees from the 2,000-odd cities and counties that contribute to the plan have not seen a nickel’s reduction in their stipends. CalPERS paid out $10.88 billion in retirement benefits in 2008, plus an estimated $5.7 billion in health benefits.


This meant, for instance, that in the small San Francisco suburb of San Bruno alone, 12 retirees received benefits totaling at least $100,000, with the top city retiree getting $187,358 for the year. Plenty of larger cities and counties had many more six-figure pensioners.


But until now, those cities and counties have not been forced to cut services and work forces or seek new taxes. That’s because the setting of CalPERS “dues” generally lags two years behind investment performance. Rates paid by member cities and counties have been flat during this fiscal year because fiscal 2007 was a very good year for CalPERS investments, the peak of the real-estate bubble producing gains of 19.1 percent on the huge fund’s often-risky investments.


That fat year is long past, and CalPERS will be challenged this year to attain the 7.75 percent annual gain on investments it has said it needs to meet its obligations. That’s where things get back to the reassuring statement the fund sent its pensioners 15 months ago.


For pensions are protected by law and contract, even when the pension fund can’t pay. Where does the money come from in such times? Cities and counties, of course. Us.


So CalPERS has warned state, city and county governments their annual pension contributions could increase by nearly one-third — the same percentage as the losses in the value of the fund’s investments during the disastrous 2008-09 nosedive of stocks, bonds and real estate. No one is quite sure what the fund will actually dun its contributors, though, as stock and bond markets might rebound before next summer even more than they already have. The CalPERS portfolio has reportedly recovered about $40 billion of its former value since bottoming out early last year along with the markets.


Contributions from cities, counties and special districts now come to about 13 percent of payroll, but that could rise anywhere from 2 percent to 5 percent of payroll despite efforts to spread the losses and increases in contributions over 30 years. “If investments perform well, then rates go down. If not, then rates have to go up,” Edward Fong, a CalPERS spokesman, told a reporter.


For a city like Fullerton, in Orange County, that could mean $5.5 million a year for four years in added payments that have to be made regardless of other obligations. Payments by larger cities might increase far more even as they’re seeing big drops in tax revenues from 2007 levels because of recession and the housing bust. For sure, labor unions won’t willingly give back any pension rights.


The result will be that hundreds of cities and counties will have to tap their rainy-day funds — if there’s anything still in them after two tough years. Some local governments will surely seek to cut employee pay, decreasing both direct expenses and pension contributions.


Because public employee pensions of all but a few cities, counties and other public entities are administered by CalPERS, the crunch will be felt in every part of the state — unless CalPERS’ investments suddenly pick up.


With that in mind, the fund has lately taken new risks, hoping to resolve its crisis internally rather than pass it along to participants. The beleaguered CalPERS board, under fire for making large payments to middlemen who steered it into bad investments in the past, has authorized a big increase in the percentage of plan holdings that can be invested in private equity funds — which took even bigger losses than publicly sold stocks during the crash. The hope is that these funds will also recover faster than stocks — but that’s only a hope.


In the end, taxpayers stand to pay plenty for all this, either through increased taxes or diminished public services — closed libraries and shelters for battered women, fewer trash pickups, shuttered courts, slower police and fire response times, more potholes, early county jail prisoner releases and much more — if local governments see layoffs and furloughs as their only way out. (end of excerpt)


Whitman also has said that she will suspend the Global Warming Solutions Act of 2006 to study its potential economic implications. She has described the legislation as  a “job-killer.”


She supported California’s Proposition 8, which favors traditional marriage, a good sign for social conservatives wary of business-type liberal Republicans. However, it will be troubling to conservatives that she favors civil unions for gays and believes that homosexual couples should be able to adopt children. 


She voted in favor of California’s Proposition 4  which requires that parents be notified if a minor requests an abortion, except in certain cases.


Whitman believes that Arizona’s SB 1070 immigration law is flawed. She is opposed to the legalization of marijuana.  Whitman did not even vote for over 20 years and  has described her voting record as “atrocious”.


Please visit my website at www.nikitas3.com for more. You can print out for free my book, Right Is Right, which explains why only conservatism can maintain our freedom and prosperity.