All posts by David Dayen

CA-10: DeSaulnier’s Endorsement Trouble

Sen. Mark DeSaulnier has based a lot of his campaign strategy in the quick-sprint Congressional race for CA-10 on endorsements.  Not a day goes by when he doesn’t release some endorsement by one character or another into my inbox.  The other day he touted that he received a “majority of endorsement votes” from California Democratic Party delegates at their endorsement meeting over the weekend, without mentioning that he did not reach the 60% threshold that would be required for an official CDP endorsement.

However, one endorsement has caused DeSaulnier a bit of a headache – the support of the former holder of this seat, Ellen Tauscher.  DeSaulnier has made no secret of that endorsement, including it in mailers and on his TV advertisement.  One problem with all this: with Tauscher now at the State Department, some have raised concerns that her endorsement while working at a federal agency violates the Hatch Act, which prohibits executive branch employees from participating in partisan politics.  DeSaulnier’s camp has countered that the endorsement, which was made before Tauscher was confirmed for the post at State, always says “Congresswoman Ellen Tauscher” and thus indicates that it was made prior to that appointment.  But the State Department has weighed in, asking DeSaulnier’s campaign to remove the endorsement.

The U.S. State Department has asked 10th District Congressional candidate and state Sen. Mark DeSaulnier to remove all references in his campaign materials to his endorsement from former congresswoman Ellen Tauscher, who is now undersecretary for Arms Control and International Security at the U.S. State Department.

While a legal adviser to the U.S. State Department concludes that the endorsement broke no laws or policies, “Under Secretary Tauscher is committed to the highest standards of ethical conduct. To avoid even the appearance of impropriety, on behalf of Undersecretary Tauscher, I have asked Senator DeSaulnier to remove all references in his campaign material of any endorsement she may have made,” wrote James Thessin, deputy legal adviser and designed agency ethics official.

The DeSaulnier campaign is fingering John Garamendi for complaining to the State Department about the use of Tauscher’s name.  Actually, the complaint was made by Jason Bezis, an individual who claims not to be affiliated with any campaign, but who apparently enjoys filing complaints with the State Department and the FEC (he filed one there against DeSaulnier’s campaign over a health care mailer).  It looks like the DeSaulnier campaign won’t change current materials already printed, but will consult the State Department “about what qualifies and what doesn’t under their request.”

I actually question whether this means as much as the DeSaulnier team seems to think, but their strategy all along has been to gather up local endorsements.

The Lack Of Investment, Protecting The Rich And Connected

It’s hard to choose the most cruel or the most thoughtless among Arnold Schwarzenegger’s line-item cuts added to the budget revision.  But you could make a case for the slashing of all state funding for domestic violence centers, for a savings of about $16 million dollars.  LAist profiles one center, in the Santa Clarita Valley, that will probably now have to close:

The Domestic Violence Center in the Santa Clarita Valley is the only agency that provides domestic violence services in the 200-square mile valley. As a result of Schwarzenegger’s cut, which is immediate, they’ve lost 45%, or $207,222.00, of their annual funding, which they say will force them to close their doors later this year unless the community supports them with donations. In 2008, they served over 1,000 victims of domestic violence.

“As the Center’s Executive Director, I think about every client who has come through our doors and their horrific stories of abuse – I cannot help but cry when I think about what the loss of our services will mean to victims,” said Executive Director Nicole Shellcroft in a statement. “Those who walk through our doors have suffered through broken bones, beatings, strangulation, food deprivation, arson, torture, genital mutilation and unspeakable sexual violence. They have been thrown down flights of stairs, have been victim to violent physical attacks during pregnancy and have even faced the prospect of murder. Victims seek our services to escape incredible violence aimed at them and their children.”

Here’s another profile, from Oroville in Butte County.

This is what we are talking about when we say that people will die from the decisions made by Arnold Schwarzenegger and the Legislature.  The $16 million in cuts represent a pittance of the budget and far less than the $2 billion dollar annual tax cut for the largest corporations in America instituted back in February.  But, we are told, those businesses would flee the state if they were forced to contribute a fair share of taxes for the commons that they use, so instead, women and their children will have practically nowhere to turn to save themselves from spousal abuse.

It turns out that some businesses are dismayed enough to consider leaving California – not because of the lack of tax breaks, because of all of the budget cuts and the impact on the workforce.

Wilbur D.Curtis invented the globular glass coffeepot, that staple of coffee counters everywhere, in 1940. Since then his son and grandsons have turned Wilbur Curtis Co. into a manufacturing concern that earns revenue approaching $100 million by turning out commercial coffee brewing equipment from a sprawling factory in Montebello.

But their long history in California doesn’t exempt the Curtis family from the costs and hassles that give this state its reputation as one of the hardest places in the country to do business […]

Yet it’s plain that the state government has failed in precisely those areas where it can make a difference. Laws’ main concern isn’t strictly how much money the state spends — it’s that the bucks don’t go where they count.

His two biggest issues are education and infrastructure. “We pay a fortune here to educate people on basic things like writing and math skills that they should have learned in high school,” he says. The company, whose workforce is mostly Latino, also provides training in English as a second language — including for some employees who came through the public schools […]

Then there’s that lifeblood of any firm whose products can’t be shipped through cyberspace — transport.

Traffic congestion in the L.A. basin has become a round-the-clock hassle. Laws says one of his biggest customers, a coffee company with a national reach, opened a local facility here to be near its own big customers, only to find that navigating the overstressed road system drove its costs to twice its expectations.

And these complaints about infrastructure and education exist before budget revisions that would decimate the future of higher education for a generation of students, and only harm the ability to create the infrastructure necessary for densely populated areas in the 21st century.

We’re picking away at safety net programs and increasing the danger and suffering for a whole class of citizens, while protecting the largest corporations and the wealthiest campaign contributors.  And the actual lifeblood of job creation, the small business community, would rather see investment than the current hijacking of state government by those who want to dismantle it.

Related: Marc Cooper’s cover story on California at The Nation.

The August District-Level Battle For Health Care Reform

Tomorrow is August 1, and the ball basically gets tipped for what could be a wild month of local events throughout the nation, as both sides of the political divide do battle over the health care bill.  One side is funded by lobbyists and special interests, and will be out in force in August, creating mini-Brooks Brothers riots all over the country, harassing members of Congress, doing whatever they can to be the squeakiest wheel in the hopes of drowning out support for health care reform.  So how will Democrats respond?

With polls suggesting that public support is sagging for President Obama’s push to overhaul health care, House Majority Leader Steny Hoyer said the party will use the August break to make a strong sales pitch to middle-class voters.

“We’re going to be on the air. We’re going to be in the neighborhoods,” said Hoyer, D-Md. “Our members are going to now have the opportunity to go home … and say to their constituents, ‘Look, this is what we’re doing. This is why it’s good for you and your family.’ ” […]

A House Democratic memo obtained by USA TODAY shows the steps the party is taking to coordinate its message over the break. Lawmakers are encouraged to hold town-hall-style meetings, post videos on the Internet and find small-business owners “whose testimony can provide a powerful narrative,” the memo states.

There’s an opportunity here for California activists in both swing and heavily Democratic districts to impact the debate.  House progressives actually moved the ball to the left, after Henry Waxman sealed a deal with Blue Dogs on the Energy and Commerce Committee, forcing leadership back to the table after 57 members signed a letter saying they would never vote for such a compromise.  14 of those members come from California, and so a key activist mission over the recess would be to get more House Democrats to sign on to these principles, to pass a health care bill that provides affordable options for everyone and as robust a public insurance option as possible, open to as many people as possible, to compete with the private market.  The Center For American Progress has created state-by-state fact sheets about how the current system harms regular people, and Waxman’s Energy and Commerce Committee has put out detailed district-level fact sheets for how HR 3200, the current bill in the House, would impact people.

In addition, this activist movement to find enough progressives willing to block negative compromises can provide a teachable moment for how to do this at the state level.  On certain votes, we can change incentives and move them in the right direction, even in our political system, which is currently wired for conservatives.

If events are happening in your district, let us know.  If your representative corresponded with you about health care, let us know that too.  This is really a pretty consequential month for health care reform in America.

SacBee Agrees On Ending Tough On Crime And Passing Sane Prison Policy

The Sacramento Bee comes out for sensible, workable prison policy solutions, including an independent sentencing commission, that would reduce our prison budget and actually make the state safer.

That leaves the biggest issue that legislators need to tackle: California’s jumble of complicated, inconsistent and confusing sentencing laws. Other states have resolved the mess by creating an independent, professional, nonpartisan sentencing commission. The time is ripe for California to do the same.

In other states, successful sentencing commissions collect past and current sentencing information and analyze the impact of sentencing changes on prison populations, budgets and crime rates. They recommend an organizing framework for sentencing. Details on who makes appointments and who serves (judges, district attorneys, law enforcement, etc.) get worked out on a bipartisan basis.

Assembly Speaker Karen Bass and Senate President Pro Tem Darrell Steinberg have shown interest in getting a bill passed. Assembly Bill 1376, which passed the Assembly and is now in the Senate, is the vehicle.

These prison solutions have been discussed for three decades; it’s time to act.

It’s about time this was recognized.  As General Barry McCaffrey has written, we have an addiction to prison in this country, and in particular in this state.  An all-too-prevalent “out of sight, out of mind” attitude has blinded the political leadership to the consequences of warehousing prisoners without giving them the tools to pay their debt to society and move on in a positive, successful fashion.  The sentencing commission bill has languished for years; it’s time to ignore fear and get this done.

Go Into Debt And Spend Conservatives

Before you sign on to the theory that California just spends too much and cannot afford the generous services it used to provide, take a look at this excellent work from OC Progressive.  These kinds of fiscally maddening deals are a dime a dozen in the failed Schwarzenegger era, because he refused to talk straight with Californians and make them understand that ponying up at the beginning would save tens of billions in the long run.

When the state decided to borrow 1.935 billion from local governments, the local governments were pretty damn skeptical that the state would have the money to pay them back in four years. So the legislature passed a bill, ABX4 15, that authorized bonds with the state’s highest rating, and agreed to pay the fees and interest to issue the bonds so the cities and counties wouldn’t have to try to borrow the money individually.

I was sure I misheard the terms when Noreen Evans was introducing the bill to securitize the borrowing from local government. It just couldn’t be possible that the state was authorizing 340 million in issuance fees on 1.935 billion in four year bonds and authorizing up to 8% in interest.

That would be almost a billion dollars in interest to borrow 1.9 billion for four years. That’s just batshit crazy.

Holy Shit. I heard right, and I calculated it right.

Those are rates that would make a loan shark blush.  And it’s not the first time.  You can go back further, but reducing the vehicle license fee in 2003 (remember Arnold’s campaign events where he would smash up a car) led to an orgy of borrowing, with interest payments piling up on the back end.  Over time, as credit becomes harder and harder to access and people become less and less trusting of the state’s fiscal structure, they have to design elaborate deals like this that just give away billions at a time for no reason.  Servicing debt is the fastest-growing segment of the budget, along with prisons.

And these stupid schemes get forced on the public by a process where radical “go into debt and spend” conservatives hold a minority veto over sensible revenue solutions.  We handed out two billion a year in corporate tax breaks in February, the repeal of which would have negated the need for this local government borrowing which costs an extra billion dollars on top.  The Yacht Party and the Governor refuse to be honest with the public, and tell them “we’re saving your money” while wasting a billion dollars in interest without blinking.  This is why we desperately need reform and the restoration of representative democracy where the legislature can reflect the will of the people.

The Fate Of Healthy Families

One of the better tangible policy changes during the first 6 months of the Obama Administration is the expansion of SCHIP, the State Children’s Health Insurance Program.  Starting from the premise that all children deserve access to health insurance, SCHIP is a state/federal partnership that seeks to cover children who fall between the gaps, whose families make too much money to qualify for Medicaid, but not enough money to afford health insurance.  The program has been wildly successful since its introduction under the Clinton Administration, and virtually every state has expanded their state-based SCHIP budgets to cover the maximum amounts of children.

Every state except California, that is.  As part of the budget revision, the Legislature cut Healthy Families, causing between a $128 and $144 million shortfall in the program’s current budget.  With his veto pen, the Governor (illegally?) slashed $50 million more.  The total, as much as a $194 million shortfall, is over 50% of its budget.  This has led to the only waitlisting in the country for an SCHIP program.

The program already froze enrollment earlier this month, quickly amassing a waiting list of some 22,000 kids in need of health care, and swapped its application payment assistance program for $4.6 million in savings. Now, to cope with the cuts, it’s expecting to disenroll hundreds of thousands of participants starting later this fall […]

No talk of preserving a safety net for the neediest here. Disenrollment will be based on when participants entered the program. Children who hit their one-year coverage anniversary will not be eligible to renew their enrollment, and will instead be moved to that growing waiting list.

“At this point, it is strictly based on eligibility renewal dates,” Puddefoot said. “Those children who were enrolled in July or August, and those children who were first enrolled in September will be the first to be disenrolled.

This could impact as many as 900,000 children.

Officials with the Managed Risk Medical Insurance Board met in Sacramento today to figure out the policy for waitlisting or disenrollment, and to explore additional avenues of support to fill the program gap.  Many have speculated that First Five, the successful voter-approved program to support young children, could provide some funding, but they cannot cover a $194 million dollar hole, and their mandate allows them only to support children between 0-5.  At the meeting, the board basically punted.

The task of shedding hundreds of thousands of children from the public Healthy Families health insurance program – or finding ways to keep some enrolled – was put off Thursday until Aug. 13 by the board managing the program.

The Managed Risk Medical Insurance Board must come up with a plan to respond to deep cuts in California’s budget, including Healthy Families […]

Disenrolling children from Healthy Families “is something we do not relish doing,” said Cliff Allenby, the board’s chairman, as members listened to a number of speakers anticipating harm that will come from cutting so many children from insurance. Allenby said the board “may have no choice,” but is looking at ways to restructure the program to reduce costs and raise money for premiums from other sources.

Among the options under consideration: eliminating vision benefits, increasing co-pays and changing reimbursement schedules.

First Five committed to help with some money, but failed to delineate the amount.

I know one way to instantly restore $50 million in funding for poor children – by overriding Arnold’s possibly illegal vetoes.

Holding Our Elected Officials Accountable

California’s system of government is designed to produce bad outcomes, no question about it.  But that does not let Democratic lawmakers off the hook for their actions.  The process denies the ability to budget in a sane manner, but nobody put a gun to their head and forced them to sign on to a budget that rips the social safety net to shreds.  If progressive Democrats in the legislature were willing to say no a little more, they might gain a measure of respectability and have at least some of their demands met.

The problem is that it’s very difficult to get a bead on who votes for and against a budget, given the state’s process.  There were 26 different budget trailer bills, and lawmakers had the opportunity to pick and choose where to take stands.  Progressive activists need that information of who voted on what in order to make choices about their representatives.  It’s not the sum total of the equation – leadership can cut deals with individual lawmakers to vote no on trailer bills where their vote is not needed for passage and yes on others, and there’s all manner of horse-trading that goes on.  But in the end, all we have are the votes.  And so we can judge our elected officials based on what votes they made.

Marty Omoto has helpfully strung together all the votes on the main budget bill and key trailer bills, and he will follow this up in subsequent posts.  Have a look.  Hone in on your representative.  Did they vote in your interests?  Did they take any notable stands?  Or did they go along with the leadership?  If so, is there any need for them to participate in the Legislature, or couldn’t a lever pulled by the leadership work just as well?

I’m going to look at my two lawmakers, on the flip.  By the way, I also have a list of all Assembly votes on almost all the budget trailer bills, ping me if you want a copy.

For the time being, I live in the 41st Assembly District and the 23rd Senate District.  My lawmakers are Julia Brownley and Fran Pavley.  How’d they vote?

Brownley voted yes on every single budget bill except for four based on my records: AB X4 7, AB X4 8, AB X4 19 and AB X4 23.  AB 7 (for short) privatized the social services enrollment process.  AB 8 instituted so-called “anti-fraud” provisions to CalWorks to reduce or limit eligibility, and eliminated cost of living adjustments to the welfare program. AB 19 dealt with in-home support services (IHSS) in a similar way as CalWorks, adding fingerprinting and background checks and other anti-fraud measures.  AB23 was the Tranquillon Ridge offshore drilling deal.

So basically, Brownley objected to the policy changes made to human services programs but voted with the leadership on pretty much all the program cuts.

As for Pavley, she voted against AB 7 (privatizing social services enrollment), AB 8 (anti-fraud changes to CalWorks), AB X4 9 (cuts on spending to developmental services like Early Start), AB 19 (the aforementioned IHSS bill) and AB23 (Tranquillon Ridge).  She also voted against AB27, the use of redevelopment funds by the state.  Everything else was a yes.

I think if you go through the votes, with rare exceptions you will see this as the norm for Democratic legislators – picking a few issues, usually on issues where their votes were not needed, to draw a line in the sand, but being generally not too troublesome and following leadership.

In general I think Julia and Fran are solid legislators, but I think it’s reasonable to ask whether that’s good enough.

Tostitos State Park

This is the legacy of historically unpopular Governor Arnold Schwarzenegger and his friends in the Yacht Party – corporate sponsorships for state parks.

State parks officials and nonprofit organizations scrambled Wednesday to find funding and possibly new corporate sponsors to keep as many as 100 parks and beaches open after Gov. Arnold Schwarzenegger slashed an additional $6.2 million out of the state parks system […]

State officials won’t finalize a list of park closures until Labor Day and said they hope to see the parks reopened in one to two years.

“We are actively seeking anyone who can help us with these places, all of them jewels, at a time when people need them most,” said state parks Director Ruth Coleman.

“There are many groups and corporations that will step up to the plate and try to help,” said Elizabeth Goldstein, executive director of the California State Parks Foundation, a nonprofit organization dedicated to protecting state parks. “But it would be a mistake to think that these efforts will be sufficient to replace the public funds being extracted.” […]

The crisis also triggered debate over the kinds of recognition corporate sponsors could expect in return for helping to subsidize a state park.

“We’re reaching out to all possible partners — cities, counties, nonprofits, banks, corporations, newspapers, individuals — who would be interested in helping us,” said Roy Stearns, spokesman for the state parks department. “Maybe we can find agreements that don’t alter, commercialize or degrade our state park system.

“For example, if Budweiser came forward with money for Malibu Beach State Park, we wouldn’t change the name to Budweiser Beach,” he said. “But why not put up a banner saying, ‘This park is kept open by Budweiser’ for as long as they continue helping us?

If this isn’t a hop, skip and a jump to unique licensing agreements to sell products on site, I don’t know what is.

The article makes pretty clear that, while state parks and beaches may not be financially self-sustaining, they generate major amounts of economic activity.  In fact, over the past year, the system “is currently packed with the highest visitation rates ever recorded,” according to the parks director.  This leads to residual spending in the areas around parks and beaches, increased tourism, etc.  The natural beauty of California is a major attraction throughout the world.

Thanks to Governor Hoover we must lock them up or turn to the private sector to sustain them.

All part of his plan.

…I want to also address George Skelton’s complaint that progressives somehow made their bed by voting down the May 19 ballot measures and now they must lie in it.  I’ll ignore for the moment this major error in the piece, the assertion that “state revenue has been plummeting, down 13% in the last two years even with February’s tax increases.” (um, they didn’t take effect until April, not over the “last two years”) And I won’t comment on his barely suppressed glee over eliminating cost-of-living adjustments for poor people on welfare.

Schwarzenegger and the Legislature were widely accused of scare tactics — crying wolf — when they warned about the consequences of voters rejecting the May ballot measures. The wolf just broke down the door.

So let’s do Skelton’s counterfactual.  Let’s envision a world where the ballot measures that impacted the bottom line passed.

Those were worth a little less than $6 billion.

The deficit was $26 billion.

$1 billion of those $6 billion were cuts to different programs.  If a world where cuts to certain programs means we wouldn’t feel cuts to other programs is a world you populate and exalt, I think you’re alone.

The other $5 billion was dubious borrowing.  The most contentious item in the budget, and the most likely to have been dropped in your counterfactual… was $5 billion in dubious borrowing, only to local governments.

So the consequences of voting down very unwise ballot measures was… what, exactly?  Different cuts to vital services and different dubious borrowing?

(And of course, we’d have a permanent spending cap, rather than the political spending cap we have now thanks to the conservative veto.)

CA-10: An Interview With Sen. Mark DeSaulnier

Mark DeSaulnier has had a rapid ascent through the state legislature and now, potentially, into Congress.  Within three years, this former restaurant owner won elections to the State Assembly (in 2006) and the State Senate (in 2008), with a Congressional primary scheduled for September 1.  Prior to that, he was a 3-time member of the Contra Costa County Board of Supervisors and the California Air Resources Board.  A former liberal Republican in the mold of Edward Brooke, DeSaulnier switched parties several years ago and compiled a liberal voting record in the State Legislature.  His first ad of the campaign covered the topic of health care, and I asked him about this and several other issues in an interview conducted last week.  Having taken place before the crucial budget vote, I spent a good deal of time asking DeSaulnier about that, and you can see his responses here.  Depending on your perspective, he either did or did not fulfill the promise to vote against “most” of the budget, by the way, voting no on 11 of 26 bills, including all of the more controversial ones.

I’ll pick up with a paraphrased transcript of the rest of the interview below:

DD: So, other than the budget, how’s it going with your campaign?

Mark DeSaulnier: Well, this is a tough campaign, with a big field and a lot of good candidates.  The polls we’ve done show us winning.  We’ve got 70% of the money that we need to compete, and a lot of great endorsements.  I would say we have the most local endorsements inside the district.  And we’re going to be able to put together a great ground campaign, with people I’ve worked with for 20 years in the district.  I think we’re going to be concentrated in Contra Costa County, where we can post a big number.  I think we’re putting ourselves out there as the local candidate, who has represented the district for a long time.  And we have people out there walking and phoning, putting forward that message.

DD: As long as we’re on California, obviously you’ve seen the dysfunction at the local level.  What do you think you can do at the federal level to remedy this situation?

MD: You know, I read a lot of Paul Krugman, and I agree with him that we’re going to need a second stimulus package.  And I think we need it sooner and not later.  I think we can take what’s been learned from the stimulus package that we’re doing now.  I think the problem is that the banks like Citi and Bank of America aren’t lending, and so we need to require the banks to lend, with relief for the credit worthy who are falling behind on their payments, and more money out to the credit unions who have done a better job handling this crisis.  Next, I think we have to do some sort of fiscal stabilization.  I see it in this state, people who need to access the safety net go up when the economy goes down.  And so we have to break that cycle, and I think we can by providing some relief.  Finally, we should say that we can do things more efficiently.  There shouldn’t be this silo mentality.  I’ll give you an example.  We put together these “one-stops,” places where you can go for unemployment and job training.  And people tell me that you have to get out of one line and pick up a phone in the office to get your unemployment benefits.  That just doesn’t seem like good government to me.  And I think we have an opportunity to make government work better.

DD: Let’s move on to health care.  Seems to be a big issue for you.  What are the principles you carry in this debate?

MD: To me, the gold standard is single payer.  We have the problem of getting health care to those who need it, and also how we get control of costs.  I think the public option is the first step, and if we do it right, it could be, and really I think it should be, single payer.  The question is what are the Democrats willing to give up to get moderates on board, and I think there have to be some lines we cannot cross there.  In the end, it has to be about flexibility and more choice.  That’s the way you’re going to sell this thing.  It’s telling that the moderates want firewalls in their plan, they don’t want the people to have more choice, they want to preserve something for the insurance companies.

DD: Will you commit to not vote for anything that doesn’t have a quality public plan available on day one, not a trigger, open to everyone, and with the kind of rates necessary to force the insurance companies to compete?

MD: Yes.  I think as liberals, as progressives, something we don’t do a lot but which we can learn from Republicans, sometimes we’ve just got to say no.

DD: Congress has started to debate the regulatory reform ideas put forward by the Obama Administration, and they’re getting a ton of pushback from the banking industry, particularly on the concept of the Consumer Financial Protection Agency.  It’s the same way on a lot of these issues, the banks just won’t relent.  How do we solve this problem?

MD: Honestly, the politics will never get totally fixed without a public finance system in this country.  And then people say, “why should we pay for elections?”  The truth is that the average American is paying disproportionately already, when the giveaways to businesses and corporations are factored in.  They buy elections fairly cheaply, and they get the rewards.  So that’s something we have to pursue.  As far as your question, yes, I think we need a Consumer Financial Protection Agency, in fact I think it should be cabinet-level.  A Secretary of Consumer Protection.  The point to all of this is that if middle income people don’t have wealth, democracy ends.  That’s just the bottom line.  And one way to ensure that is by protecting consumers, so you don’t see all their wealth go into someone else’s pockets.  Inequality is just killing us right now.  Kevin Phillips wrote about this years ago, in Bad Money, and he was very prophetic.  I also think that you can’t reform the financial system without holding people accountable.  And so I would involve the Department of Justice right at the beginning.  That’s the only way to really ensure it doesn’t happen again.

DD: You mention inequality, it’s something Democrats don’t talk about enough.  A recent Wall Street Journal story talked about the top 1% earning 35% of all the compensation in the country.

MD: It’s stunning.  And our tax structure, by the way, rewards the accumulation of wealth, not work.  This happens when you get a financial services economy, which is completely not sustainable.  We don’t have manufacturing, we just have this financial services giant, and it trades in bubbles.  So one way to reduce that inequality is to retool the financial services sector, make it smaller, make it more boring.

DD: OK, last question.  I wanted to ask you about SB375, the smart growth measure that you played a big part in passing last year.  This bill doesn’t get a lot of attention, but it really offers a blueprint to how to achieve smart growth policies with the statewide authority working in concert with local communities.  Do you plan to scale that up if you make it to Congress?

MD: Oh, absolutely, and this is where I think my background really suits me to replace Ellen Tauscher.  I chaired the Transportation Committee in the Assembly as a freshman, I think the first person to do that.  I spent ten years on the California Air Resources Board, and I co-authored SB375.  I’m pretty sure there’s a companion bill in Congress right now.  Doris Matsui (CA-05) is carrying it right now.  I have honed in throughout my career on the changing transportation and mobility side of the energy issue.  We accomplish this, in part by reducing miles, and also finding new energy sources for transportation.  We need more transit, and a move away from single-occupancy vehicles and long commutes.  It’s about bringing the work space closer to the living space, and creating livable communities.  So I think I’m naturally suited  for such a task.  I’d like to get on the Transportation Committee if I get to Congress.

DD: Thanks for your time today.

MD: No problem, thank you.

Breaking The Law To Balance The Budget – Again?

There’s been quite a bit of confusion about whether or not the Governor was able to make line-item cuts in this budget.  After all, it was a revision, not a budget agreement where spending appropriations are made.  In those cases the Governor can make cuts, but this was a revision consisting of a series of cuts and fund shifts, and it’s unclear whether the Governor can make additional cuts on top of cuts in a budget revision.

Craig Cornett, the Budget Director in the office of Darrell Steinberg, has sent out a letter to interested parties, which I’ve reproduced below.  Cornett reiterates the argument that the revision do not constitute appropriations, and should not be subject to the line-item veto.  This is particularly true with any appropriation reductions that passed with a simply majority vote, since a budget vote must have a 2/3 majority.  Cornett offers the remedy here, but he confines it to the courts.

Should the Controller implement these vetoes, we suspect that some party that will be injured by the vetoes will file a lawsuit.  Given the sweep of the reductions, this could come from any of a number of potential plaintiffs, such as children who will no longer have health insurance because of the reductions to Healthy Families Programs, battered women’s shelters that will be threatened with closure because of elimination of funding for the Domestic Violence Program, AIDS prevention and treatment programs that will no longer receive state support because of the elimination of Office of AIDS funding, or counties that will see cuts to their Child Welfare Services or Medi-Cal administration funding.

What Cornett leaves out of this analysis is the ability for the Legislature to override the Governor’s blue pencil edits.  Obviously that is off the menu, as far as we know.

I don’t think it would surprise anyone to see Schwarzenegger break the law to balance the budget – so many provisions in this budget violate the law that it can be seen as a stimulus package for the legal system.

When the Governor signed ABx4 1-the bill that revised the 2009-10 Budget Act-and accompanying trailer bills this morning, he line-item vetoed about $500 million in General Fund expenditures in order to ensure that the state has a reserve for 2009-10.

Budget staff from both the Senate and Assembly worked closely with Legislative Counsel in construction of ABx4 1 and, based on that work, and follow-up conversations, we think that these vetoes-especially those of health and human services programs-are outside the Governor’s Constitutional authority, for a couple of reasons.

First, reductions to amounts in the various budget schedules do not actually constitute appropriations and, thus, are not subject to line item veto.  This argument is bolstered by Counsel’s long-held view that, unlike new or increased items of appropriation, the Legislature may reduce General Fund items of appropriation with a simple majority vote, and any General Fund action that takes place with a simple majority vote is not, by definition, an appropriation, and therefore not subject to line-item veto.

Second, most of the budget revisions for the health and human services departments were not even included in the scheduled items, but instead were placed in Sections of 568 to 575 of ABx4 1.  These sections of the bill added new Control Sections 17.50 to 18.50 to the 2009-10 Budget Act that reduced the various appropriations for HHS departments in a descriptive manner, thus making it even clearer that they do not constitute appropriations.  These control sections include departments that were specifically included in the Governor’s line-item vetoes-Aging, Health Care Services, Public Health, MRMIB, Mental Health, Developmental Services, and Social Services.

Should the Controller implement these vetoes, we suspect that some party that will be injured by the vetoes will file a lawsuit.  Given the sweep of the reductions, this could come from any of a number of potential plaintiffs, such as children who will no longer have health insurance because of the reductions to Healthy Families Programs, battered women’s shelters that will be threatened with closure because of elimination of funding for the Domestic Violence Program, AIDS prevention and treatment programs that will no longer receive state support because of the elimination of Office of AIDS funding, or counties that will see cuts to their Child Welfare Services or Medi-Cal administration funding.