There’s no need to rush the confirmation of Abel Maldonado as Lieutenant Governor. But Arnold Schwarzenegger, impatient man that he is, wants exactly that:

I have no idea what Speaker Pérez is doing with confirmation hearings. I think we all are somewhat frustrated because he has been, now, promising me five times — at least — that he is putting him up for confirmation. It really started way before Easter vacation, when he said, ‘OK, this Monday I will put him up.’ Then it was, ‘Yeah, I can’t do it on Monday, I will do it on Thursday.’ And then it was, ‘I will do it on Monday but as soon as we come back from Easter vacation.’ Then it was the Thursday after that. Now it’s the Monday.

So, I mean, I have no idea. I don’t know why he’s not getting it done. I don’t know why he’s confused about it or what is going on and with his leadership. I cannot answer that because I do not work upstairs. I just hope that he gets it done as quickly as possible. (LA Times, 4/13/10)

Speaker Pérez is right to wait. If Maldonado is confirmed after April 22, then the special election here in the 15th State Senate District will happen in two rounds: first round in late August, and second round – the runoff – would be consolidated with the November general election.

That’s the right move for California taxpayers, since it’s far cheaper to combine a State Senate election with a statewide general election. All that would happen in the five counties that comprise SD-15 is another race gets added to the ballot. Simple, easy, affordable, efficient.

Conventional wisdom is that it also benefits Democrats here in SD-15, since it’s easier to turn out voters to elect John Laird to replace Abel Maldonado if the election is combined with the statewide balloting. Which, you know, might also be motivating Speaker Pérez’s decision about when to confirm Maldonado.

As you can imagine, I’m all in favor of that timeline. Democrats are going to take back SD-15, and along with electing Anna Caballero in neighboring SD-12, we’re going to get to 2/3rds in the State Senate – and Monterey County will be ground zero for that fight.

Carla Marinucci and Lance Williams have a long and in-depth article today on Meg Whitman’s connections to reviled investment banking house Goldman Sachs, which has played a leading role in the European debt crisis and is accused of being at the center of asset bubbles and their subsequent crashes.

The article goes into depth on both Whitman’s time on the Goldman Sachs board in 2001-02, relations between eBay and Goldman Sachs, and Goldman Sachs’ role in state bond issuances. An excerpt:

From 1998 to 2002, while she was CEO of eBay, Whitman helped steer millions of dollars of her company’s investment banking business to Goldman, court records show.

In 2001, Goldman put Whitman on its corporate board, paying her an estimated $475,000 for little more than a year of part-time service. The company also gave her insider access to the initial public offerings of hot stocks worth millions, according to the records.

Whitman left the board in 2002 after she was singled out in a congressional probe of bond underwriters and “spinning” – a financial maneuver, now banned, in which Goldman and other firms allegedly traded access to hot IPOs for bond business. Whitman later settled a shareholder lawsuit related to profits she and other execs made from buying the IPOs.

In recent years, Whitman has kept part of her fortune, estimated by Forbes magazine to be $1.2 billion, in investment funds managed by Goldman, her financial disclosure report indicates. For her campaign, she’s received $105,500 in donations from Goldman executives, state records show.

But it’s not just that Whitman has ties to GS, from serving on its board to raking in campaign contributions from them. Goldman Sachs has been implicated in urging bets against California bonds it helped to sell. The firm basically was advising clients to profit off of the state’s budget crisis, driving up the cost of borrowing and potentially contributing to the state’s cash flow problems in the spring of 2009.

State bonds are big business for Goldman Sachs, and can only be expected to grow if Whitman gets elected. Her campaign pledge to increase the budget deficit through higher taxes will lead to a greater reliance on bond debt to fund programs, unless Whitman plans to destroy those programs in their entirety and never spend another dime on infrastructure. Although the state treasurer has the key role in selling the bonds, the governor appoints members of key commissions overseeing these sales.

Meg Whitman represents the Goldman Sachs “vampire squid” approach to governance, extracting wealth for the elite by pillaging public services and picking the pockets of taxpayers. This has been going on under Arnold Schwarzenegger, but would likely rise to a new level under Whitman, who further plans to reward Goldman Sachs and their investors by eliminating the state’s capital gains tax, regardless of the cost.

Jerry Brown has his own familial connections to Goldman Sachs – his sister Kathleen Brown, former state treasurer and candidate for governor in 1994, serves as a vice president for Goldman Sachs in LA. But Brown himself has no ties to Goldman Sachs and owns no Goldman stock, according to the Marinucci and Williams article.

Jerry Brown has already been staking out a position as a populist critic of Wall Street, as seen on a memorable CNBC appearance last October. Whitman’s Goldman Sachs ties do indeed make for an important campaign issue, one that Brown would do well to exploit.

After all, one of the key political and economic needs this country faces is to get the vampire squid of Goldman Sachs off our backs. If Brown is willing to lead the charge, he would find many Californians willing to back him in doing so.

When the US Department of Education announced that only two states – Tennessee and Delaware – had won funds in the “Race to the Top” championed by right-wing Education Secretary Arne Duncan, the reaction from a growing number of states was a sense that something wasn’t right with the program. As the New York Times explained last week, state skepticism about the program is growing:

“It was like the Olympic Games, and we were an American skater with a Soviet judge from the 1980s,” [Colorado Governor Bill] Ritter said….

“There’s a serious conversation going on here about whether it makes sense to put all that time and effort in again to reapply,” said Rick Miller, who as deputy schools superintendent led California’s first-round Race to the Top effort. He has since left state government….

In California, Gov. Arnold Schwarzenegger fought hard to help win passage of several new education laws favored by Mr. Duncan, but the state received little or no credit for those victories in the scoring, said Kathy Gaither, the state’s undersecretary of education.

The reason states like California didn’t win is because they were never intended to win. The purpose of Race to the Top wasn’t to award money, but to force policy changes. Now that the policy changes have been approved, there’s no reason for Arne Duncan to want to get money to those states. He got what he wanted.

Adding insult to injury, the US Dept of Ed has capped future award amounts, so states are eligible for much less money than was originally promised. California was eligible for $1 billion in the first round, can now receive a maximum of $700 million.

What this all shows is that, as we’ve been saying here at Calitics, Race to the Top is nothing more than Arne Duncan’s apparently successful attempt to push states to adopt right-wing reforms that are unproven and still subject to intense debate among educators by pulling a dollar on a string in front of states facing big budget deficits and education cuts.

Instead of rushing federal aid as quickly as possible to the public schools in this state and country that are facing a serious crisis, laying off teachers and packing classrooms as an entire generation faces the irreparable loss of their education, Arne Duncan is using $4 billion of the funds as bait to push states to start gutting their public schools for good, adopting policies that will outlast the budget crisis.

The right response for California would be to repeal the policy changes made in January to enable the state to compete for Race to the Top money, and show Arne Duncan that we know better than to play cards with a stacked deck.

Mickey Kaus, a right-wing blogger and self-described “not going to win” candidate for the Democratic nomination to the US Senate, is throwing a temper tantrum because he’s not going to be offered a chance to speak at next weekend’s California Democratic Party convention in Los Angeles. The best coverage is from TBogg:

If Carly Carlyfiorinafornia’s Senate campaign is a twenty-car pile-up involving a tractor-trailer loaded with demon sheep, then the equally quixotic Senatorial campaign of Mickey Kaus is a fender-bender between two Ford Escorts in a Big Lots parking lot. It fails the Rubberneck test.

TBogg helpfully examines the correspondence between Kaus and CDP Executive Director Shawnda Westly about whether Kaus would be given a place in the program to speak to the delegates from the stage. Westly explained that “all four state officers” of the CDP – including Chair John Burton – agreed that Kaus’s candidacy did not meet the “viability” rules for allowing a Democratic candidate to speak.

On what basis did they reach that conclusion? Why, all they had to do was look at Kaus’s own words, as Shawnda explained to Kaus:

All four statewide officers agreed on the question of your campaign’s viability – based in part on statements that you had made to the press on that very topic – and forwarded their recommendations to the Chairman. One of the quotes was from an article you sent to us as part of your endorsement request on March 23rd.

* “I do not expect to win, and that is the difference between Franken and me.” (New York Times Magazine, March 14, 2010)

* “‘I’m not going to win, don’t worry about it,’ he told one guest, who was reluctant to sign. Others were assured that they could still vote for Boxer in the fall.” (LA Weekly, March 11, 2010)

In other words, the CDP leadership – rightly – decided that there was no reason to let someone running a vanity campaign use the party’s stage to promote himself. As an elected CDP delegate and member of the state Executive Board, I wholly endorse and support the decision of the leadership on this matter.

Especially since Kaus’s dedication to Democratic values is, well, nonexistent. He claims to be a “lifelong Democrat” but has spent his career attacking core Democratic constituencies such as labor unions and immigrants. What Kaus apparently willfully forgets is that unions and immigrants have been a core part of the party since the 1830s.

One would think that Kaus should just do the obvious thing and join the Republicans, but then that would mean he has to drop his ridiculous “I’m a Democrat embarrassed by my own party because they’re not a bunch of wingnuts like me” shtick. I for one am glad he won’t be spewing that nonsense from the stage of the CDP convention. Let’s reserve that for actual Democrats, please.

The headlines were breathless: California pensions short by $500 billion! An independent analysis by Stanford graduate students was commissioned by Arnold Schwarzenegger, and is being used by California’s own deficit scolds to argue for cutting pension benefits. For that reason, it’s important we get this issue right.

So, let me give an independent analysis from this University of Washington graduate student: the $500 billion figure is overblown and assumes a much lower rate of return than has historically been the case.

According to the study’s authors, as reported in the New York Times:

Currently, governments discount pension values by using the return they expect their pension investments to earn over the long term. For most public pension funds, that means about 8 percent. In California, the teachers’ fund uses 8 percent, Calpers uses 7.75 percent, and the University fund uses 7.5 percent.

The Stanford team found fault with that approach. The researchers wrote that in today’s economic climate, such rates are associated with more speculative securities that carry some degree of risk, like those of emerging markets. Pensions, by contrast, are constitutionally protected and therefore the payments to public employees and retirees should carry almost no risk.

After the researchers applied a risk-free rate of 4.14 percent, equivalent to the yield on a 10-year Treasury note, the present value of the promised benefits ballooned. The researchers came up with a $425 billion shortfall for the three funds.

But is that rate of return sensible? Over the “very long-term” the rate of return on the S&P 500 has been between 6% and 7% when adjusted for inflation.

I’m not the only one questioning the Stanford grad students’ methodology. Economist Dean Baker slammed the rate of return assumptions:

There have been few people who have been more critical of assuming exaggerated market returns than me, but 4.14 percent nominal? Anyone want to take a bet that California’s pension funds will do better than this?…

Stocks have historically provided a real return of 7 percentage points above the inflation rate, so assuming a nominal return of 7.0 percent for the mixed portfolio is hardly unreasonable.

In short, the story of outsized pension liabilities in this article is driven largely by a ridiculous assumptions about pension returns. There is no reason whatsoever that the state of California should use this 4.14 percent discount rate in assessing its pension liabilities. This calculation would lead it to exaggerate its pension liabilities and therefore raise taxes or cut pensions and/or other spending unnecessarily.

CalPERS has come under criticism for too-risky investment practices in the ’00s bubble, and Baker shares those criticisms – but 7.0% rate of return above inflation does indeed seem reasonable. In that situation, the long-term gap in pensions is much smaller and more manageable. Of course, it’s possible that we’re entering a prolonged period of low economic growth, but in that case the state has much bigger problems than the pensions gap – which, it must be remembered, doesn’t have to be paid out all at once.

The fiscal scolds that are pushing these numbers, like those at the national level, believe that our future prosperity can only be achieved by gutting the prospect of a secure retirement/old age. In the California of Pete Peterson’s and Arnold Schwarzenegger’s future, people work until they die, and instead of properly funding pensions, we slash benefits and taxes in order to let the already-wealthy collect even more riches. The reality is that such a move isn’t necessary, and is instead being promoted by those seeking those riches.

That’s not to say there aren’t any problems surrounding pensions in California. The cost to local governments of these pensions isn’t cheap, and it is fueling right-wing movements in cities across the state to slash benefits for incoming workers, or to leave CalPERS entirely, as Pacific Grove voters mandated in 2008 (despite this being a far more costly move than just staying in CalPERS).

Here again, we’re presented with a false choice. It’s not pensions that are causing problems to local government budgets, but the loss of revenue from Prop 13, repeated theft of local government funds by the state, and the 2/3rds rule that makes it nearly impossible for cities to right their fiscal ship. With those rules and restrictions in place, it becomes easier for cities to blame their problems on their workers and their middle-class benefits.

In fact, it would seem that here again is another example of Arnold’s shock doctrine in practice – create a crisis and use it to attack your enemies and push through right-wing policies that would otherwise not have been possible. Just as Arnold pushes privatization of public schools through budget cuts, he pushes attacks on public workers and their pensions through cuts to local government funds.

It’s time Californians stood up against the root cause of the problem, rather than turning on each other and denying workers a financially secure old age.

At a time when California faces an annual budget deficit of $20 billion for the next three years, it would seem particularly reckless and nonsensical to propose a huge tax cut for the rich. But that is precisely what Meg Whitman is doing. Revealing her intention to govern California for the benefit of corporations and the rich and without regard to how that impacts everyone else, Whitman wants to eliminate the state capital gains tax, even though it brings in about $10 billion per year.

George Skelton took a look at Whitman’s plan and slammed it as “risky”:

Who pays the tax?

* People with adjusted gross incomes exceeding $500,000 pay 82% of the total capital gains tax. For them, 38% of their earnings comes from investment profits.

* These $500,000-plus earners amount to only 1% of taxpayers — or about 150,000 returns — but provide 48% of the total personal income tax.

* People with more than $200,000 in adjusted gross incomes — 4.4% of filers — provide 93% of the capital gains tax.

This is very clearly a tax cut benefiting wealthy Californians, who have no need of such a cut – especially when working Californians are struggling to afford to get to work thanks to Arnold Schwarzenegger’s mass transit cuts, struggling to afford health care thanks to cuts, and struggling to ensure their kids get a quality education, thanks to Arnold’s classroom cuts.

Another $10 billion hit to the state budget would mean $10 billion more in cuts to schools, transit, and health care. That’s money going out of the pockets of the working-class and middle-class and into the already fat profits of the wealthy.

How does Whitman justify such a naked transfer of wealth? Skelton again:

Whitman says that eliminating the tax would “spur innovation, which we have to own in California.”

But, I note, many people realize investment profits merely by buying and selling stock. That hardly induces innovation.

“Right, I agree with that,” Whitman says. But she adds that it is important to stimulate the creation and selling of companies, “to make it more attractive to live here, to keep people here, to keep companies here and them expanding here.”

This is complete and utter nonsense. California is in serious financial and economic trouble because over the last 30 years we have gone from a state that makes things to a state that manages money and profits off of rents. The former model of economic activity enables broadly shared prosperity; the latter model merely enables concentration of wealth and instability for everyone else. Which is of course exactly what we’ve seen happen in California.

A capital gains tax cut does nothing – absolutely nothing – to spur long-term job growth in California. In a globalized economy, those investors would be benefiting from profits made elsewhere in the world. It would reinforce, not reverse, the incentive for California companies to follow Carly Fiorina’s lead and offshore (or as she called it, “rightshoring”) jobs in order to increase corporate profits and shareholder returns.

There is no reason whatsoever to believe that this capital gains tax cut would create a significant number of jobs in California, aside from maybe hiring a couple more salesmen and mechanics at the Jaguar dealership or a few more seasonal staff at the Pebble Beach golf resort. Stable, prosperous, widely-available middle-class jobs are simply not created through these policies, as the last 30 years have proved.

Unfortunately, Skelton falls for Whitman’s approach:

I’d suggest we start by cutting the capital gains rate by a third, or maybe half. Not completely erase it.

This is just sad. But at least Skelton has helpfully provided the numbers that we need to show Californians how damaging Whitman’s reverse Robin Hood tax policies truly are.

The red-faced California Chamber of Commerce and their right-wing head, Allan Zaremberg, are in full retreat this afternoon after an unprecedented – and richly deserved – backlash against their massively dishonest attack ad. Anthony York reports the Cal Chamber has agreed to pull the ads:

The California Chamber of Commerce has pulled an ad off the airwaves after objections from Jerry Brown and Brown’s allies in the business community.

Brown was instrumental in pulling the ads by exerting pressure through board members on chamber President Allan Zaremberg. Brown and his wife, Anne Gust, who once served as chief operating officer of the Gap, made calls to chamber members Wednesday imploring them to put pressure on the group to take the ad off the air.

“We’re ready to move on to the next phase of our paid media campaign,” Zaremberg said. “We believe we’ve accomplished what we tried to accomplish with the first ad, which is bring attention to these important issues. We probably got a little more attention than we expected.”

When asked about Brown and Gust’s roles in getting the ads off the air, Brown spokesman Sterling Clifford said, “This campaign has worked very hard to mare sure the chamber’s misleading ads be taken off the air.”

Brown’s personal intervention may have helped tip the scales, but the Cal Chamber was already getting huge pushback from its members including UC President Mark Yudof, who was one of the first to denounce the ad and say he didn’t even know the Cal Chamber was producing it.

I’m sure that the Whitman campaign and the Cal Chamber will use this to justify a demand to pull whatever the next independent expenditure ad airs that targets Whitman, but that would be a classic case of false equivalency. It has to be kept in mind that it’s not that the ad attacked Jerry Brown, but that it did so by making a shockingly dishonest misinterpretation of the past, leaving out key details.

This is a big victory for Jerry Brown and a big defeat for the Cal Chamber. They’re not going to stop trying to destroy California for their own profit, but they’ve been dealt a blow in their efforts to smear the Democratic candidate.

Maybe there is some hope for California. Earlier this week the Cal Chamber of Commerce released what I called “as dishonest an attack ad as I’ve ever seen”, going after Jerry Brown with distortions and half-truths.

Apparently I wasn’t the only one outraged by the attack ads. Several Cal Chamber board members, including UC President Mark Yudof, denounced the ad, with Yudof saying “I want to make absolutely clear that I was not aware of this ad. I did not and do not approve of it.”

Jerry Brown and his campaign are now joining the battle. In the first aggressive move out of the Brown campaign, they called on the Cal Chamber to withdraw the “misleading” ad:

Jerry Brown Campaign Manager today called on the California Chamber of Commerce to withdraw its misleading ad attacking Jerry Brown. Within a day of the ad’s appearance, numerous Chamber Board members denied giving authorization to create it or Chamber dues to put it on the air….

Under the guise of an issue ad, the Chamber falsely ties Brown to job losses and budget shortfalls from the past two years, when California was led by a Republican governor. The ad hypocritically attacks Brown for his stance on Proposition 13, despite the Chamber endorsing Proposition 8, the alternative to 13, along with leaders like then-San Diego Mayor Pete Wilson, who now serves as Meg Whitman’s Campaign Chair.

“You would expect the Chamber to elevate the debate rather than perpetuate the mud slinging that has paralyzed Sacramento,” said Brown Campaign Manager Steven Glazer.

And on KGO radio this morning, Jerry Brown laid the blame for this attack at the feet of Cal Chamber board member, Meg Whitman advisor, and former California governor Pete Wilson, as Carla Marinucci reports:

Democratic gubernatorial candidate Jerry Brown slammed the CalChamber’s attack ads targeting him Thursday, saying they’re evidence that Chamber board member Pete Wilson — the former governor who chairs Meg Whitman’s campaign — “carries a real grudge, and he’s very much in this battle.”

“I don’t know what he did on the Chamber, but he certainly has a lot of friends there,” the State Attorney General said of Wilson and the CalChamber on KGO radio today. “And they cooked this thing up in a small little group — and the rest of the board members are pretty angry about it.”

This lame, misleading attack on Jerry Brown is not only backfiring badly on the right-wing Cal Chamber, but is giving Jerry Brown his first real campaign boost. After what can only best be described as a somnambulant campaign, the Cal Chamber attack ads appear to have finally woken up the Brown campaign and gotten them to show their teeth.

Let’s hope this is a sign of a newly active and assertive Brown campaign, and that the Cal Chamber will back off of its effort to distort and mislead Californians about Jerry Brown.

Funny or Die has produced what has to be one of the best political videos we’ve seen in California for a very long time. Starring Megan Fox (of Transformers fame) and Brian Austin Green (of 90210 fame, of course!), it mocks Arnold Schwarzenegger while showing the impact of his war on public education. It’s a must-see:

The ad directs viewers to Say No To Cuts, a website put together by the California PTA and the Wonderland Ave PTA that is collecting signatures on a petition that will be delivered to the governor and to legislators later this month.

What the video shows, once again, is that Californians do not support Arnold Schwarzenegger or his budget cuts. They just don’t. The polls that have been done so far indicate that the public prefers higher taxes to cutting K-12 budgets, and while nobody seems to have asked “do you support the $17 billion in education cuts made since 2008?” such a poll would likely find widespread public opposition and outrage. There’s a reason Arnold’s disapproval rating is at a record level of over 70%.

It’s taken Megan Fox and Brian Austin Green to tell Californians what their media should have been telling them all along – Californians want to fund schools properly. We’ve been saying that here at Calitics for years, but maybe it takes a clever Hollywood video to get the state’s political and media elite to wake up to that reality.

What if the Mexicali earthquake had taken place 200 miles to the north? What if it had struck on the Newport-Inglewood Fault as in 1933, the second deadliest quake in state history? Or what if it had taken place on the Hayward Fault, right next to UC Berkeley? Would California have been prepared to handle the devastation?

For 40 years California has been running an intensive program of earthquake readiness. But the state budget crisis is cutting into the ability of local governments and rapid responders to be properly prepared for a quake. And as the New York Times examines, the private sector seems better prepared than the cash-starved public sector:

The budget challenges faced by firefighters and other first responders have probably affected preparedness, fire officials say…

“We know that there’s going to be an earthquake, and we know it’s going to be a major natural disaster,” said Lou Paulson, president of the California Professional Firefighters and a captain in the Contra Costa County fire protection district. “And I don’t want to be one of the people who stands in front of the state of California and says, ‘We told you so.'”…

Mr. Paulson said an equivalent quake in Los Angeles could have sparked about 1,500 fires, each of which requiring 20 or more fire personnel to control. And while fire teams in California are used to helping each other, particularly during fierce wildfire seasons like 2008, cutbacks and furloughs have some departments rethinking voluntary mutual aid agreements. “People are not going to saddle up as much as they used to,” he said.

If this sounds familiar to you, it should. Back in 2005, Orange County Republicans fought a proposal to direct more money to the Orange County Fire Authority, claiming that the money wasn’t needed and that it would have only benefited greedy public sector unions. Sure enough, when the Santiago Fire struck in the fall of 2007, the OCFA was shorthanded and unable to adequately respond, missing a key opportunity to stop the fire from spreading and nearly burning down my old neighborhood.

Of course, when I called them out on this, the Register responded by devoting their editorial page to attacking me for merely pointing out the truth. Ironically, the editorial also praised privatized fire services, making protection from firestorms conditional on one’s ability to pay.

What we are beginning to see is a similar situation with earthquake preparedness. Smug Southern Californians who mocked the largely black population of New Orleans for their suffering in the wake of Hurricane Katrina don’t realize that a major earthquake could very easily produce similar results for themselves. A major quake could knock out power, water, and gas services to the region (or to the Bay Area if a quake struck there) and although Caltrans embarked on a statewide program of seismic retrofits for freeways, paid for by a tax increase, many local governments still have roads and bridges that aren’t reinforced and could become impassable after a big quake, making relief supplies more difficult to deliver.

Even if most Californians had their recommended 3-day supply of food and water, it might well take longer than that for relief supplies to reach everyone, especially if there is widespread devastation. As in New Orleans, many Californians will expect their state and federal governments to help out – but will find instead that Republican budget cuts have left the emergency response system frayed and unable to provide immediate assistance.

Someday soon, within most of our lifetimes, the long-expected “Big One” finally will hit either the Bay Area or Southern California. Let’s hope that when it does happen, we’ve abandoned this misguided and in many ways unpopular anti-government, anti-tax budgeting that leaves so many vulnerable to disaster and catastrophe.