With the tumultuous California election just a few days away, several unassailable facts have emerged about this race that should help guide the decision-making of Golden State conservatives.
First, it should be self-evident to Californians of all political persuasions that for the good of the state, it is time for Gray Davis to go. The state simply cannot afford three more years of his high-tax, high-spend (the budget went up 38 percent in his first term), anti-business policies. The budget deficit he has created is now larger than that of the other 49 states combined.
The state is plunging $25 million further into debt each and every day Davis remains governor. His recent signature on legislation forcing businesses with 50 or more employers to purchase health insurance for their workers is further evidence that Davis is completely divorced from the reality of this economic crisis. For five years running, the Davis administration in Sacramento has treated businesses as unlimited ATM machines to pay for social-policy legislation.
As a consequence, businesses are leaving the state in droves–taking their tax payments with them. According to an analysis reported in USA Today, a medium-sized manufacturing business can now save more than $1 million a year in costs by moving from California to Nevada. Since 2000, more than 150,000 Californians have left the state and since 1996, 250,000 manufacturing jobs have disappeared from the Golden State.
If California were a business, and Gray Davis were the CEO, the board would surely have a fiduciary duty to evict him from office. Hopefully, voters will come to the same unavoidable conclusion.
Second, I have met at length with both Republican candidates and there is no doubt that the man with the best set of policy ideas is Tom McClintock. McClintock knows precisely what to do to turn California’s $1.4 trillion economy around; and he has the steely convictions to implement them. Top among these reforms is a substantial revamping of the California tax system to reward wealth and job creation and to coax businesses back into the state. California now has the third-highest income-tax rates (on corporations and small-business owners) of all 50 states and it has the second-most tax-unfriendly environment for businesses. Steeply progressive tax rates, in which the highest personal-income-tax rate of 9.3 percent hits families with incomes as low as $50,000, has driven away the state’s most precious resource: Its most productive people. McClintock would work to enact a flat tax for California, which would go a long way toward restoring growth and budget surpluses to the state.
McClintock is the only candidate to take a pledge not to raise taxes–which is to me, an extremely important detail. McClintock has outlined a comprehensive worker’s-compensation-reform package (in a state where commonsense improvements in the system have been single-handedly stymied by trial lawyers). He will fight to renegotiate Gray Davis’s long-term electricity contracts that will cost the state government in Sacramento and homeowners $24 billion in excessive rates. McClintock will abolish the car tax. And last, but crucially important, he will work to enact a state-spending cap that prevents this kind of ruinous debt spending buildup from ever occurring again. If the budget under the Gray Davis years had been constrained to population and inflation growth, there would be no budget deficit in Sacramento today. McClintock would quickly restore budget balance by making the cuts that Davis is incapable of.
But, alas, Tom’s chances of winning the race, notwithstanding his winning message, are slim. McClintock will not be advancing the cause for fiscal- and economic-policy sanity in California, if he peels enough votes away from Arnold Schwarzenegger, to deliver a victory for Cruz Bustamante.
Third, the worst-possible outcome would be for the state to place Bustamante in the governor’s office. Bustamante’s economic ideas are even more dangerous than Davis’s are–if that’s possible. He has only one overarching economic idea, and it is a catastrophically bad one. His plan for the budget crisis is to “raise taxes on the rich and businesses.” If he were to have his way, pretty soon there won’t be anymore rich people or companies left in California to pay the taxes that he wants to impose. Bustamante does not get the most-important reality of the crisis in California: that taxes are way too high on businesses and wealth producers–not too low. A Bustamante regime would give California more of the same class-envy politics that has eroded growth so severely in recent years.
Which brings us fourth and finally, to Arnold Schwarzenegger. What are California conservatives to do about Arnold? Can free-market conservatives trust the Terminator to do the right things to fix the California economy?
Even though there are certainly reasons to be skeptical, I believe they can. I write this with some trepidation, because Arnold has refused to take a pledge not to raise taxes, and in my experience when candidates don’t take the no-tax pledge, they are leaving the tax-hike option open. He has advisers like Warren Buffet, whose infuriating views on economic-policy issues are as wrongheaded as his investment advice is sound.
But notwithstanding all of these reservations, I’m optimistic about the policy changes that would be enacted under a Governor Schwarzenegger. His economic heroes are Milton Friedman and Adam Smith. I’ve been impressed with his intellect on economics and his instinctive understanding of the steps that need to be taken to rescue this state from debt and despair.
Schwarzenegger has said repeatedly that he “means to cut taxes in California, not raise them.” I believe that he is sincere in this regard, though it wouldn’t be the first time a politician has disappointed me. There is a decent chance that he will actually revamp the California tax system in a productive flat-tax direction. He, too, has pledged to take on the trial lawyers on business issues like worker’s compensation.
Schwarzenegger thinks like a supply-sider: He understands that growth really is the key to restoring a balanced budget and bringing back the glory days of the California economy of the 1980s and ’90s. Since California’s economy is the sixth largest in the world, getting California back on track is of more than just a little importance to improving the prospects for growth of the national economy.
Finally, one of the benefits of a Schwarzenegger governorship is that McClintock may very well be directly or indirectly running the economic-policymaking shop. McClintock has better ideas on the budget and the economy than Arnold does, but Arnold understands that. With Arnold in the governor’s office, we could get two for one.
In sum, California can’t afford another 20 minutes, let alone three more years, of the bankrupting policies of the Davis-Bustamante tenure. They must be terminated.
As such, I’m convinced that trading a Davis-Bustamante for Schwarzenegger and McClintock is a giant trade-up.
Hey Californians: The ship of state is out of control. For goodness sakes, let Arnold drive.