California Governor Race Pares Down

Former U.S. Representative Tom Campbell’s departure from California’s gubernatorial race last week has shaken things up in the Golden State… kind of. While he’d been arguably the best qualified of the GOP candidates – with a Harvard law degree, a Ph.D. in economics, a long history of public service – his financially magnificent adversaries Meg Whitman (former eBay chief) and Steve Poizner (state insurance commissioner) have already brought to bear a collective $50 million in campaign funds, an amount that the former dean of UC Berkeley’s business school was simply unable to match.



For a taste of Campbell's approach to public finances, watch the video above, in which Campbell gives The Commonwealth Club's 2008 economic forecast. Whitman will discuss her plans for the governor's office in a February 16 speech to The Commonwealth Club in Lafayette.

As Campbell moves on to less-competitive pastures (on the other hand, now he’s contending for a Senate seat with former Hewlett-Packard CEO Carly Fiorina? hmm), Whitman and Poizner are preparing to square off in earnest.

Whitman, who has delivered a strong message to Californians with months of radio spots and campaign advertisements, has a lead of 45 percent to 17 percent over Commissioner Poizner in a recent Field Poll. The same poll indicates that Whitman’s campaign clearly benefited the most from Campbell’s exit, picking up moderate, financially conservative voters and putting her even further ahead of her remaining, quiet challenger.

The balance will doubtlessly change as Poizner finally loosens his purse strings – but after Whitman’s shock-and-awe strategy, will it be too late? Thirty-eight percent of Republican voters remain undecided, yes; but 20 percent say they view Poizner unfavorably. That’s 17-percent positive versus 20 percent negative. It’s a simple metric, sure, but it looks like the California GOP may actually prefer Poizner to run for the other team.

Would it be too impish to suggest that the Democrats are also working toward a GOP win? All of its candidates have successively dropped out of the race against a man who hasn’t even announced a formal candidacy, yet: former California Governor (1974-1983) and current California Attorney General Jerry Brown. The mayor of L.A., the mayor of San Francisco and the lieutenant governor were all able to assess their collective chances as less than excellent against the man who fought Clinton all the way to the Democratic National Convention in ’92.

But then, Brown did it almost on a dare, using only a $100-per-person contribution limit and an 800 number. Maybe he is the one to challenge Whitman — the most likely GOP candidate, at this time.
Perhaps predictably, both sides of the party line are acknowledging the economy as a primary issue in the gubernatorial election. The impact of Republican Scott Brown’s recent Senate win in Massachusetts, too, reveals an important shift as voters begin leaning away from Washington and toward small-government, fiscally conservative candidates – campaign finances aside, of course.

--By Andrew Harrison

Columnist Writes of the 'Real' Pelosi while real thing comes to Commonwealth Club

E.J. Dionne's column in today's Washington Post sheds a quite divergent view of Speaker of the House Nancy Pelosi. It should be noted that Dionne is somewhat liberal and the idea of Pelosi as someone moving the country toward so-called "San Francisco liberalism" is a right-wing talking point. Nonetheless, the profile illuminates a possible congressional road map for the rest of the year.

Pelosi, in the article, lauded Republicans for voting with their convictions. The speaker is in a seemingly conciliatory mood as Congress heads into recess. It also helps that she will spend Easter at her Bay Area home before visiting the Commonwealth Club next Wednesday.

Pelosi told Dionne, "'The priority, of course, is to pass health care,' Pelosi said without blinking." The American Prospect's Ezra Klein notes in his blog that this is the first indication Pelosi sees health-care reform as a top priority over cap-and-trade.

To my knowledge, Pelosi hasn't said that before. More to the point, she's not signaled it. At a recent Maria Leavey breakfast, she implied just the opposite, and many folks I've spoken to on the Hill have suggested that her priority was energy rather than health care.

To reverse that specific perception, Pelosi seemed to be giving Dionne a lesson on congressional parliamentary procedure by saying she could muster 51 percent of the votes on health care under the rules of "reconciliation" where committees receive technical instructions on where and how funding will be budgeted. In effect, it's a promise that health care will be legislated but without specifics. Under the procedure, a bill only needs a simple majority, whereas a bill without reconciliation needs a more problematic 60 votes in the Senate. Pelosi also referred to the diversity of the party that also has the support of some coal-producing states. She showed Dionne a statue of a coal miner in her office given to her by a West Virginia congressman.

Dionne also mentions the recent relaxing of Republican attacks against Pelosi. With President Obama's post-election popularity too strong to spar with, Republicans targeted Pelosi without abandon. An article on Politico from last November claimed that the tactic has failed every time it has been utilized: "It didn’t work in 2006, and it’s not working this year, yet many Republicans continue to use Pelosi power as the ultimate threat to American governance."

Presumably, with a bit less than 100 days of the Obama presidency to work with, Republicans are turning their criticism toward the White House. Karl Rove ironically believes Obama is more divisive than President Bush (according to today's Wall Street Journal).

Despite the constant attacks on her leadership, Pelosi has proven to be a speaker unfazed thus far. Whether Pelosi can help th president push through Democratic-themed legislation like health-care reform is unclear, but it shows that it takes more pieces of the puzzle to assemble than one might think.

You can hear Pelosi in person at The Commonwealth Club on April 15 in San Francisco.

Economy Already a Hot Topic for 2010

The politics over the stimulus plan and its near-unanimous rejection by congressional Republicans is already taking center stage for the drama that will be the 2010 mid-term elections. Robert Reich wrote an interesting blog posting this week exploring the reasons why Republicans will not have a thing to do with the proposal.

Republicans don't want their fingerprints on the stimulus bill or the next bank bailout because they plan to make the midterm election of 2010 a national referendum on Barack Obama's handling of the economy. They know that by then the economy will still appear sufficiently weak that they can dub the entire Obama effort a failure -- even if the economy would have been far worse without it, even if the economy is beginning to turn around.

During two votes in the U.S. House of Representatives, no Republican backed either version of the stimulus. It took a few centrist-leaning Northeastern Republicans to win passage by a single vote in the Senate. A Reuters story yesterday implied that President Obama's rival Sen. John McCain was portraying the nascent administration as adverse to bipartisanship and characterized the plan by saying, "I think that the majority of people understand that this was generational theft." Democrats, conversely, begin to complain that the bill was too bipartisan -- even without GOP cooperation. In an interview with conservative newsweekly NewsMax, the leader of 1994's "Contract with America" Newt Gingrich said he "absolutely" sees a connection between when Republicans took over the House and 2010.

Irwin M. Stelzer imparts these talking points while writing in The Weekly Standard and illustrates this point by saying that Obama "now owns the recession." By pegging the troubled economy solely on Obama, these critics may believe that the president cannot possibly make in-roads in quite enough time for congressional elections next year.

He has asked to be judged by whether this bill and other measures he will propose create or "save" 3.5-to-4 million jobs, the number lost so far since unemployment turned up. Forget "save" -- if unemployment keeps rising, voters are not likely to rally around the slogan "It would be still worse if I hadn't spent your trillions." What the President has done is to promise what he certainly can't deliver in time for the congressional elections next year -- a reversal of job destruction, and millions of new jobs, said Stelzer.

When it's all said and done, it's still all about the economy, stupid, as Bill Clinton's campaign declared in 1992. How President Obama, congressional Democrats and the Republican opposition react to that in 2009 will be a tale we're likely to hear a lot about in 2010.

--Steven Tavares

Some Economists Fears that Stimulus Bill Is too Small

President Obama will likely sign a stimulus bill this week roughly the same size he initially offered, but wholly different in composition. Some like Robert Reich and New York Times columnist Paul Krugman never thought it was large enough in the first place, and the watered down bill is furthering their anxiety. Krugman wrote last week:

And I don’t know about you, but I’ve got a sick feeling in the pit of my stomach — a feeling that America just isn’t rising to the greatest economic challenge in 70 years. The best may not lack all conviction, but they seem alarmingly willing to settle for half-measures. And the worst are, as ever, full of passionate intensity, oblivious to the grotesque failure of their doctrine in practice.

During a speech last month at The Commonwealth Club of California, former Labor Secretary Robert Reich reiterated his belief that the stimulus bill should be over $900 billion or more over the next two years. On his blog he wrote this week:

But what if the stimulus isn't big enough? (I fear it won't be, given the large and growing gap between what the economy can produce at near full-employment and the meager demand coming from consumers and businesses.) And what if the bailout doesn't quite work? (It may not, given that the banking system is collapsing and many banks are actually insolvent.) The economy in November of 2010 may be worse than it is now, with no turnaround in sight.

Reich also predicted during his Commonwealth Club address that President Obama might bargain with Republicans to win votes in a bipartisan fashion. This indeed occurred, and the nearly across-the-board rejection by Republicans of the plan has rankled many Democrats. Joan Walsh at Salon wrote today about President Obama, "He better have learned that Washington bipartisanship is dead." Even the president's chief of staff, Rahm Emmanuel, admitted that working with congressional Republicans who were dead set against the bill was a mistake. Not surprisingly, the editors at the conservative National Review declared President Obama's economic plan already has a ring of "no-confidence" surrounding it.

--Steven Tavares

Is the National Review correct in its description of the state of Obama's economic plan? What do you think about economists' Reich and Krugman arguing that the stimulus is actually too small? Leave a comment and join the discussion.

Using the Union to Break the Fall of Detroit

REPUBLICANS BLAME U.A.W. FOR NO BAILOUT DEAL

If the Chrysler bailout of 1979 is our guide for the tumultuous times in Detroit today, then Federal assistance for the Big Three is not much more than a short-term solution.

Popular culture fawned over Chrysler Chairman Lee Iacocca after "saving" the company. He had a best-selling book, graced magazine covers and hawked cars on television commercials. Iacocca was the man, except, in hindsight, he barely stopped the bleeding of the company and the slow slide of the American automobile industry.

A Hertitage Foundation essay from 1983 did well to take some of the shine off Chrysler's resurgence, calling the bailout "quasi-bankruptcy" in which the company failed to recapitalize or make significant changes to its leadership. The report points out that Chrysler missed out on becoming a leaner and more innovative company and its laggard ways also spread to General Motors and Ford.

Barry Ritholtz at The Big Picture blog details this point in a posting last month:

The Chrysler bailout of 1980 was not quite a pre-packaged bankruptcy reorganization. It left the company with the same management team, the same union contracts, the same pension obligations, and the same health-care coverage; all the bailout did was buy the company a few more years. Indeed, the pre-bailout industry looked almost identical to the post-bailout industry. None of the Detroit automakers, Chrysler included, received any long-term benefits from the bailout.

The major difference between 1979 and today is the hovering dark shadow of economic collapse, and many people believe that whether The Big Three fail is almost irrelevent just as long as it does not happen now, when just a smidge of panic on Wall Street will trigger further bloodletting.

What is interesting about our current financial atmosphere is a willingness by Republicans in Congress to stick to their ideological guns during this period by laying blame on the United Auto Workers. Embattled Louisiana Senator David Vitter simply says, “It sounds like the U.A.W. blew it up,”

Possibly the leading opponent to the bailout Sen. Richard Shelby of Alabama, who has four foreign automakers in his state, told the Wall Street Journal that he has always been against government assistance of private industry, noting that he voted against the 1979 Chrysler bailout and the recent $700 billion financial bailout. The story also describes the South's hospitality toward non-union workers and low wages.

Blaming the union for scuttling the proposed $15 billion bailout is not fair, according to The Nation's John Nichols, who notes that the UAW has already made huge concessions to The Big Three, while attempting to further weaken them will hamper the labor movement in the U.S.

Anyone who thinks that breaking the UAW will only weaken the circumstances of autoworkers is missing the point of the royalist enterprise, which is to weaken the ability of all American workers to demand fair pay and benefits.

Failure to aid Detroit could lead to unimaginable economic decline (just in time for Barack Obama's inauguration!). If politics is the ulterior motive of House Republicans – where one of labor's strongest unions is obliterated and the president-elect is saddled with an agenda solely of economic matters – then some people will wonder who's interests are being served.

Look for more thoughts on the auto bailout at The Commonwealth Club's Bank of America-Walter E. Hoadley Annual Economic Forecast, coming January 14. Former U.S. Labor Secretary Robert Reich will share his reactions.