Fixing California

While much of the political attention today is on actions like health care reform Washington is taking and the huge debt it is accumulating, it is less than two months until the June California primary election and things are heating up here on the Left Coast.  But unless something dramatic changes we already know the likely nominees.

This week Meg Whitman, the former eBay CEO running for Governor in the Republican primary is spending $40 million to send a 46 page magazine like publication to likely voters outlining her program for Governor.  It is a thoughtful, focused and safe manifesto. Its primary focus is:

  • Create Jobs.
  • Cut Government Spending.
  • Fix Education

And to make sure all the bases were covered Whitman also gives her positions on:

  • Secure Our Borders
  • Protect the Environment
  • Fight Crime

Whitman isn’t the only Republican running.  Her opponent is State Insurance Commissioner Steve Poizner.  Both are wealthy and spending their own money on their campaigns, but Whitman can outspend Poizner by orders of magnitude—and is doing just that to win the nomination.

The sole Democrat candidate for Governor is former Governor and current Attorney General Jerry Brown.  Governor Moonbean has come a long way since he served as the youngest Governor in California’s history in the 1970’s dating movie stars and moving out of the Governor’s Residence in favor of a cheap apartment.  If elected this fall he will also have the distinction of being the eldest person ever elected Governor.  Brown has been quiet, happy to let Whitman and Poizner take shots at each other while the press focuses on the more exciting US Senate race pitting incumbent Barbara Boxer against former Congressman Tom Campbell and former HP CEO Carly Fiorina.  The latest Rasmussen poll has Brown and Whitman running even at about 40% each with the rest undecided, the Senate rate is also close and Barbara Boxer is running scared.

Jerry Brown has been a competent and noncontroversial state Attorney General but he was a standout as Mayor of Oakland willing to take risks and confront established players in an effort to change the dynamics in the Bay Area’s “other “big city.  From military academies to substantial new high density housing downtown, Jerry changes Oakland giving the flatland some buzz for something other than gang violence.  Oh there is still plenty of violence, but Jerry was good for Oakland and it owes him its second chance because of it.

So what?

So we wait for the primary silly season to anoint the nominees for Governor and US Senate.  Expect fireworks and surprises from June to November.  The most brutal campaign will almost certainly be the US Senate race against Barbara Boxer but the polls consistently show Senator Boxer in trouble with voters.  That food fight will be fun to watch, but the real campaign will be between Whitman, assuming she is the anointed nominee and Jerry Brown.

Ironically, the central issue to the campaign could turn on taxes and how to get California moving again.  Why ironic?  Because while Whitman’s platform calls for eliminating the small business start up tax of $800 for every new business; eliminating the factory tax on manufacturing equipment, increasing the R&D tax credit from 15% to 20%, tax credits for the agriculture industry for using water conservation technology, and eliminating the state capital gains tax these things just don’t excite people.  They are all probably good ideas but they are not sufficient to turn California around.

In 1992 when Jerry Brown ran for President he proposed a 13% flat tax as a substitute for the Federal Income tax and earned the endorsement of Art Laffer, famous for the Laffer Curve.  Jerry could steal the campaign show again with a version of that same proposal scaled back to remake California’s competitiveness.  Such a change in tax structures would turn California into a giant sucking machine for capital investment and make Meg look like a math teacher taking on Einstein.

Think about it, California has all the brainpower and fresh ideas we can tolerate, but we have a state government that sucks the life out of entrepreneurship, taxes the pants off Main Street, and is seeing its soul flee to Texas and other places more business friendly, family friendly, and retirement friendly.

If our candidates for Governor would focus on what it will REALLY take to turn the California competitive advantage opportunities into the California’s actual competitive advantage they will do the state a great service.