A late State of the State

Today is the day that Governor Schwarzenegger was scheduled to deliver his annual State of the State Address to a joint session of the Legislature, and by extension the people of California. Since he has postponed his speech until January 15th, allow me to fill the void for all you who have been waiting to hear what he has to say,

I don’t know about you, but when he does speak to the people, I do not want to hear any high falutin’ rhetoric about California being the seventh largest economy in the world or what wonderful global warming laws (I’m sorry, climate change laws) we have passed that nobody yet knows the cost of.

No, what I want to hear is some honest, brutal talk about how bad things really are without false hope, phony budget numbers or unattainable political promises. No talk of anything other than the fiscal mess we are in and how we can get out of it, and how we are going to pay for the many problems we have neglected for so long.

So for all you political junkies who can’t wait until January 15th, here is my suggestion to Governor Schwarzenegger for his upcoming State of the State speech.

While we should expect that public sector labor would defend every privilege they have gained for their members, it is still astonishing that state unions and their patrons would consider their positions immune from the ravages of the state’s budget debacle.

With every other politician claiming we are in the worst economic downturn since the Great Depression, state unemployment rising to 8.3%, and consumer confidence falling to an all-time low, since when are reductions in state government personnel costs off limits? Indeed, Gov. Schwarzenegger has proposed what are probably the least harmful approaches to the current state workforce to minimize layoffs by a combination of furloughs, salary reductions, and reducing some state holidays, like Columbus Day.

In a recent column, the Sacramento Bee’s Dan Walters bitterly accused Gov. Schwarzenegger of being an “amateur governor.” That shot at our movie star governor was fresh on my mind as I read Ira Stoll’s new biography, Samuel Adams: A Life.

Full disclosure: Stoll, a journalist and newspaper editor, is a friend. So I won’t go on and on about how great the book is. But I did want to relay one historical gem that Stoll unearthed in the journals of the Second Continental Congress. It’s a detail I had never encountered before, even through many years as a newspaper reporter who had to write often about the intersection of entertainment and politics.

Sam Adams -- the Boston patriot, legislator and Founding Father -- saw religion and morals as the foundations of liberty and happiness. Adams was delighted that the Congress, in 1778, had passed a resolution making that plain. But some in that Congress, Stoll reports, wanted to go further and ban people involved with the theater from federal office.

I hear a lot of political professionals buzzing these days about the Obama online campaign. That’s a good thing. It seems that Obama’s victory (enabled, in part, by an aggressive online campaign) was the watershed event that the political world needed to finally recognize the internet as powerful political medium.

The last major watershed event of this kind was nearly 50 years ago for television with the televised Kennedy/Nixon debates. Television quickly became the dominant medium for political communications and has continued its reign through the present day. So, it’s natural that many campaign professionals have come to see the world through the one-way, broadcast framework that television requires.

From data we compiled from the 2004 elections, it was clear that there was an asymmetrical difference between dollars spent by campaigns on the internet as a percent of total media spending (1%) and the amount of time that Americans were spending on the internet vs. those other mediums (17%). This 17:1 imbalance represented a real opportunity for a campaign to embrace the internet vis-à-vis a competitor running a more “traditional media” campaign. Over the last four years, this analysis proved to be a powerful marketing tool for my business (a political internet agency), but it took the Obama watershed to bring about industry-wide recognition. Again, a very good thing.

If you thought 2008 was an interesting year in California politics consider what 2009 may offer.

Something is bound to break in the battle over the budget. And one action will undoubtedly lead to a reaction raising the stakes. In fact, it will be like those long paragraphs in the bible when the term “begat” is used over and over.

Will the governor and the Democratic majority agree to a budget solution that will use creative definitions on taxes and fees to raise revenue with a simple majority vote? The guess here is they will.

Signing the revenue legislation will begat both a referendum on the fee increase portion of the package, as well as a lawsuit challenging the constitutionality of the revenue bill.

If courts find the revenue raising mechanism legal, that will probably begat an initiative requiring future fee increases to pass with a two-thirds vote.

There are two things you already know for certain about California in 2009: the state will have terrible budget problems. And the state’s requirements of a two-thirds vote to raise taxes or pass a budget will face a serious challenge.

You’ve undoubtedly heard about the legislative side: a Democratic plan, with backing from Schwarzenegger, to raise taxes to reduce the budget deficit in a complicated way that, Democratic lawyers believe, does not require a two-thirds vote of the legislature.

Now comes the initiative side of the attack on two-thirds. A Democratic law firm filed two versions of an initiative shortly before Christmas with the California attorney general’s office. As Democratic leaders have promised, the initiative effectively would eliminate California's requirement of a two-thirds vote to pass a budget. For political purposes, however, the two-thirds requirement would remain in the constitution--new language would merely exempt all appropriations from the two-thirds requirement for approving appropriations. Look for advocates of the initiative to say, over and over, that it doesn't remove the two-thirds requirement from the constitution. Because technically, it doesn't.

(Dateline Dec. 27, 2008, aboard the Carnival Pride, somewhere off Baja, 100 nautical miles north of Cabo) My wife and I booked this cruise for us and our grown son and daughter as a family, over-the-year-end-holidays vacation to the Mexican Riviera, last August, before all the dramatic economic events unfolded this past Fall.

As the date approached and the economic news grew dimmer and more like a B-movie film script, I truly had mixed feelings about the Marie Antionette-ish aspects of going on a family cruise while what may yet prove to be the next Great Depression was ravaging the world’s economies. But, the date came, I badly needed a break from the current gloom and doom of the commercial real estate world, so, a’cruisin’ we went anyway.

We are on our last day at sea. Overnight, we went from the calm, balmy, humid tropical mid-80’s, to the 40’s and 50’s with a 20 mph headwind, moving at a very fast 22 knots, bouncing wildly, and even skipping at times, across the dark, white-capped waves, all 88,500 tons, 2200 passengers and 950 crew of us, with many bundled up now with peeling tans, some huddled in their rooms with a bucket close by. For those who need it, this is an All-The-Bonine-You-Can-Gulp day at sea – too windy for the upper sundecks where even SnowBird passengers from the MidWest, Canada and other snowy places now fear to tread.

I was intending to write something lighthearted as my last entry for Fox and Hounds in 2008. (F&H will not publish again until January 5, 2009.) But then I read that the California Teachers Association has filed an initiative to raise the sales tax. And another initiative has been filed, I assume by the same group, to lower the vote requirement to raise many other taxes. (You can find the initiatives on the Attorney General’s site numbered 08-0021 thru 08-0023.)

Of course, we have the call for permanent tax increases to solve the growing budget deficit. And, then there is the report by the Department of Finance, as reported in the Los Angeles Times, that for the fourth year in a row more people are moving out of California than are moving in. Read that as taxpayers are leaving.

If all these tax measures are successful, expect the exodus to continue.

I gave a homeless man $10 at a freeway exit yesterday – he looked like he needed it more than me. The greatest panhandlers of our time are not homeless. I seriously question the wisdom of Congress giving yet another $350 Billion away in what has so far been the game of: “So You Wanna Be a Billionaire?” – without much to show for it.

The recipients of the first $350 Billion of the BailOut will not account for what they did with the money; why then is the drumbeat getting louder to give them another $350 Billion? They first need to tell us how they spent, or did not spend but instead hoarded, the first $350 Billion? Bernanke, Paulsen & Co. told us back just a few months ago that the skies would fall, the world, as we know it would end, and that the credit markets had seized up.

Never mind that this same group made Lehman Bros walk the plank and it will take years to unwind the Lehman Bankruptcy and its nearly ¾ of a Trillion dollar debt – that alone just might have caused credit markets to seize up and have a financial stroke. The mass giveaway, without strings or accountability, of some $350 Billion has not thawed the credit markets at all now at year-end.

Recently local media has been reporting frightening, one-sided stories about San Diego County's $78 million county budget shortfall, and the dire consequences we face.

For instance, a SAN DIEGO UNION-TRIBUNE article warned that this deficit "could force dramatic cuts in programs aimed at children and low-income families." The next day, the U-T reported that this reduction "could force cuts in public safety . . . ."

The NORTH COUNTY TIMES reports that "The shortfall could lead to cuts in jobs and programs that serve the poor, children and senior citizens, officials said." TV stories parroted the same lines, fed to them by county officials.

$78 million is indeed a lot of money. But compared to what? The total county budget is $5.2 billion. Do the math (no media story did). That's a 1.5% drop in funding.