Capitol Punishment

The awful truth about the California Budget Debacle is that the politicos fixing it also caused it, and they could now inspire our most precious commodity-educated working people-to hit the U-Haul trail whose deepening one-way ruts head out of California.

Leading the ship of fools is, of course, Governor Perfect Hair, the man who declared that no Californian would pay higher electricity rates on his watch, and dithered in fantasyland while events and rates blew past him like a tsunami.

Davis was striving to protect his political ass at the time, and now, in an eerie similarity to those days, he is boasting about how he is going to save us from the $34.8 billion Grayhole. (Republicans say Davis is exagerrating the size of the deficit by billions to help his tax plans sail through).

Davis absurdly claims the budget crisis will be over “within a year.” Worse, he's grandly been telling a nasty whopper to shirk blame. At his December press conference, he insisted that he approved the remarkable overspending by the Legislature because he trusted Wall Street firms who said the stock market would snap back and help pour tax money into California's coffers.

This is not true. As outgoing state Controller Kathleen Connell notes, “Gray was well aware the stock market was dead, but he spent and spent anyway, to assure his re-election.” When the budget was belatedly approved last fall, all the rosy analysts had long been proven wrong. Even Democratic-leaning economist Steven Levy, of the Center for Continuing Study of the California Economy in Palo Alto, tells me, “Nobody was surprised by what happened in the stock market.”

I'm not too thrilled with a governor who comes with a $35 billion pricetag. Pat Caddell, former speechwriter for Jimmy Carter and now a commentator on MSNBC, fears that with Davis living in la-la land, California may be headed for receivership.

“We haven't seen the bottom yet, and after all Davis' budget plans sink in, I don't think you'll have to fund a Davis recall effort-it could happen by itself,” says Caddell. “He lied about getting stuck with a massive deficit-it was clearly planned so Davis could hand billions in pensions to public employees, who then delivered thousands of votes to Davis and gave him the edge over Bill Simon. It's incredible, incredible, outrageous corruption.”

Many in the media do not fully grasp the import of all this.

On Jan. 3, the Los Angeles Times editorial page urged President Bush to release to California and other states $75 billion in economic help “with no restrictions on how the funding might be used.”

Are the editorial writers at the Times all high on crack?

Davis and many legislators are untrustworthy souls who knowingly do very naughty things, then lie to avoid getting the paddle. They cannot be trusted with money and must be closely monitored, like felons. Wisely, Bush said on Jan. 2 he will give many billions of dollars in federal aid to California-if Davis and the legislature adopt a budget package in the coming weeks that is shown to create real, economy-building jobs.

You cannot imagine the Shakespearean drama that is about to unfold. We citizens are represented by the most anti-job-creating, inept, unschooled, hard-left/hard-right, ideological Legislature ever to sit in the Capitol.

I watched in horrified fascination in December as the Assembly Budget Committee was told during special budget hearings that there's little money to be squeezed from Californians, the third-highest taxed in the U.S., who are suffering a recession in Silicon Valley unlike anything in the country.

Elizabeth Hill, the state Legislative Analyst, who strives not to take side with Democrats or Republicans, pointedly explained that corporations comprise only a tiny part of the roughly $70 billion tax revenue-about $6 billion.

That was a shock to some Assembly members. Hill noted, again rather pointedly: "The top 5 percent of Californians pay 42 percent of the income taxes" and just 10 percent pay 80 percent of taxes. Further, large numbers of millionaires and those making $100,000 have vanished. Some went broke, but others left for states that don't make them carry so much load, like tax-free (and booming) Nevada.

The packed audience at the special hearing appeared stunned. The message was clear: there aren't enough corporations and rich around to pour huge new taxes into state coffers and save us.

So what's the first act announced by the obviously bewildered Jenny Oropeza, a Long Beach Democrat who is clearly in over her head as chairwoman of the Assembly Budget Committee?

I thought perhaps Oropeza should announce creation of a Job Stimulus Subcommittee or a Budget Cutbacks Task Force. Instead, she formed the “Revenue Working Group”-a crew of Democrats now meeting in secret to figure ways to tax corporations, the rich, the middle-class, Internet sales, retail sales, wine sales, small service businesses and anything else they can think of.

I'm a Democrat who's had a snootful of stupidity from Democrats in recent years. Thinking maybe I was being too judgmental, I called some leading Democratic thinkers to get their read on the message coming out of the legislature.

Al Checchi, who ran against Gray Davis five years ago and has been watching the debacle, told me: “They have thrown the money away, completely distorted the expenditures on public sector things like huge employee pensions they cannot afford, and they will run deficits of $10 billion or more next year as well. They should stop worrying about finding new taxes that are barely going to address this and deal with the true cause: their incredible overspending.”

Not likely, since a key member of the Revenue Working Group is one of the most middle-class-hating, capitalist-loathing big spenders in higher public office in California, Jackie Goldberg of Los Angeles, who one legislative aide tells me “has already taken control of the Working Group.”

Goldberg is, officially, the Stupidest Well-Spoken Person I Know. She hatched policies that left a wake of misery in her Hollywood city council district. My nickname for her-the Dominatrix of the Los Angeles City Council-should travel well now that she is pushing people around in Sacramento. This feminist lesbian used to corner the men in L.A. City Hall and cry like a baby to get her way.

That's right, she blubbers to win. And now she's scheming to tax us. It's enough to make you toss and turn at night.

David Friedman, who holds a fellowship at the New America Foundation think tank in Washington and has written about the state budget debacle, says many such Democrats hopelessly pray that the dot-com, New Economy is going to come back, while other Sacramento Democrats deeply believe “the public sector is nobler than what private economies do, so cutting back on their huge expansion of state workers is like giving in to Satan.”

Says Friedman, “If you tell a Jackie Goldberg that by taxing the rich any further, the rich will reallocate their wealth and leave the state with it, she'd probably say, ‘Great!'”

Given the Assembly circus, things don't seem so bad in the Senate. But I don't hold out much hope that Senate Majority Leader John Burton of San Francisco is thinking hard about creating meaty jobs in California as a way out of this crisis.

Unlike Oropeza, the powerful Burton at least has a crisp intellect. But he uses it for an odd brand of latte class warfare that I doubt will create economic growth.

Why didn't Burton use his power to take the huge $12 billion surplus four years ago, and fat revenues after that from the stock market boom, and direct much of it to build huge infrastructure and transportation projects California must have to attract high-tech, new-age manufacturing and affluent taxpayers?

Economists on both sides of the aisle say one-time public works projects like that would have created tens of thousands of construction, engineering and labor jobs, and the resulting efficient rail and public improvements would attract a big influx of good manufacturing and white collar jobs. Many of the projects would be nearing completion now.

Yet instead of giving people a way to catch their own fish, as the saying goes, Burton just handed out fish. Billions and billions went to assistance-instead of lifting people above the need for assistance.

“Now we're being redlined by corporations,” Checchi tells me, “because California is seen as the energy crisis and anti-business government, and now the only state with paid family leave. The other states advertise they have no such burden! Davis and the Legislature have no grounding in reality.”

Can Burton, Oropeza and Davis correct the $34.8 billion Grayhole without plunging weaker regions into crisis and driving more people out of California?

Clearly, no. But there's hope in the unlikely person of former legislator Steve Peace of San Diego, author of energy deregulation. Peace opposed deregulation, but finally relented and wrote the bill, adding consumer protections-all for naught.

Nevertheless, he's gifted and understands the economy. As Davis' new budget czar, he wants to reform taxes, cut the budget and create jobs. But Peace faces war with his own party. The Dems insist they will not agree to any budget cuts until Republicans agree to new taxes.

It's embarrassing for me to watch the Democrats. They are the leaders in Sacramento. It is up to them to set the tone in crushing a deficit that dwarfs deficits in many countries. They have to bite the bullet, show the guts and make the cuts. Sadly, so far all they've done is lie, whine and pass the buck.