For months now Meg Whitman has hid from the news media as well as the general public here in California, preferring to spend millions of dollars on a TV ad blitz designed to make Californians comfortable with the idea of letting someone buy the governor’s office. Whitman can control the message in a radio or TV ad; whereas she might actually have to engage with the public or the press on someone else’s terms, so she has avoided doing so.

Until yesterday in Lafayette, when she ventured forth from her lair to speak at a Commonwealth Club event. It immediately became clear that she has very little grasp on the problems facing California, and even less ability to honestly confront them. Take, for example, her proposed budget solutions:

Whitman has not released a detailed budget proposal of her own, but on Tuesday said she would favor privatizing some state services such as the work done by janitors and the state printing plant.

She said private companies may be able to do the work more efficiently. Contracting also would relieve pressure on the state’s pension obligations, she said.

“I wouldn’t privatize agencies, but I’d like to look at – are there certain services we can provide more cost-effectively?” she said. “For example, we have a printing plant owned by the government. I don’t know that that makes sense.”

It actually makes perfect sense to print in-house, since there is usually a significant cost savings to doing so. Privatized services are either of much lower quality, or of a higher cost to the public – or in many cases, both, as the contractor seeks to maximize profit by charging higher rates but spending less on the work and the workers.

In any case, privatizing a few services here and there is highly unlikely to accomplish anything useful in terms of the budget deficit. So either she is clueless, or is sowing the ground for a broader privatization push if she wins.

Whitman went on:

“We are going to find $100 million here, $50 million there, $300 million there – and that’s how we’re going to close this budget deficit,” she said. “I can tell you from having managed costs in business for 30 years, there’s never a silver bullet. There’s not a $15 billion cost reduction item in this budget. It’s about being smart about every penny you spend.”

Whitman said the cuts should not come from the University of California system…

“Let’s not destroy this. Let’s fully fund the UC system, let’s fully fund it,” she said.

There’s a lot of nonsense here, including the notion that she can “fully fund” the University of California (but apparently not CSU or community colleges or K-12?) without raising taxes. But more fundamentally flawed is her notion that we can close a $20 billion deficit with small cuts here and there. If that were possible it would have already been done. There simply isn’t $20 billion in small-bore cuts to be found. If she won’t raise taxes, something will have to give. It’ll probably be something like Healthy Families, Cal-WORKS, or K-12 education.

Of course, one might also wonder whether “running the state like a business” – a goal she laid out that she later walked back – is something we should see as positive in an era where many large corporations either failed spectacularly or have grown so bloated and inefficient that the only way they generate “profits” is to use their wealth to manipulate Congress into crush their competition at the expense of prosperity and recovery.

Overall it was a pretty weak performance that indicates Whitman plays a good governor on TV but isn’t actually up to the job and makes up for it by falling back on right-wing ideology. That happens to be the very same set of traits that define our current failure of a governor, Arnold Schwarzenegger.

Yet Whitman is pulling even in the polls with Jerry Brown as she is essentially the only person running for governor, with Brown inexplicably ceding the ground to her as she wipes out Brown’s lead.

Jerry Brown’s campaign remains AWOL, so an opportunity to exploit Whitman’s complete lack of understanding of how to fix California has so far been missed. With plenty of snow in the Sierra, California waits and wonders when he will join the battle.

Carly Failorina joined South Carolina Senator Lindsey Graham at SFO today to talk about their plans to protect Californians from demon sheep the Constitution. They want to have terrorists tried by military commissions and cut off funding for trying them in civilian court.

As you can see by the picture at right, tweeted by the Failorina campaign, most SFO travelers weren’t exactly captivated by the message. Nor should they have been, because it is based on distrust in our legal system and disregard for our Constitution.

If you stop and think about it, Fiorina and Graham are making a truly ridiculous proposal. Here’s why.

1. Does anyone really believe that a civilian jury would find someone like Khalid Sheikh Mohammad innocent? Other terrorists like Timothy McVeigh, Scott Roeder, Ahmed Ressam, and Ramzi Yousef were convicted and sentenced in civilian courts, as were several presidential assassins. It’s clear that the system works very well in bringing criminals and mass murderers to justice, and there doesn’t seem to be any real risk that someone like KSM would walk free. More significantly, if the government is convinced he is a terrorist, they should have no problem convincing 12 people of that fact.

2. Do Fiorina and Graham really believe that attacking the Constitution and the legal system is a winning move? The US Constitution is quite clear that people in our custody, such as KSM, have the right to a trial. That doesn’t mean we approve of what they did, it instead means we actually prefer to uphold our core values instead of freaking out and abandoning them the second we encounter a terrorist.

Fiorina’s basic argument appears to be that the legal system sucks, doesn’t work, can’t convict the guilty, and is basically not a reliable guarantor of our safety.

It makes you wonder why she even wants to be a part of that system. Oh, wait, now I remember: the 21st century Republican Party no longer believes in the American constitutional system that we’ve had for the last 223 years.

Rasmussen is out with its latest poll numbers on the US Senate race, and unsurprisingly finds it will be a close race:

Boxer (D) 46%

Fiorina (R) 42%

Boxer (D) 47%

DeVore (R) 42%

Boxer (D) 45%

Campbell (R) 41%

As BruinKid noted in the comments to yesterday’s open thread, Rasmussen is showing better results for both DeVore and Fiorina than either PPIC or Field, neither of which had those candidates above 40%. So this poll might represent the best possible current performance of the GOP candidates, but is still within the margin of error.

It’s also worth noting that these numbers come before any real campaigning has begun. Right now it looks like the Fiorina/DeVore/Campbell numbers are what a “generic Republican” would get against Boxer. Californians don’t really know much about those three GOP candidates, whereas they know Boxer, and Boxer has to deal with the failure of the US Senate as an institution, which is depressing the poll numbers of most incumbent Democrats.

Still, unlike Harry Reid (for example) Boxer is maintaining a lead over her opponents. Once the campaign begins she will be able to better define those opponents, all of whom are variations on the right-wing theme that Californians have repeatedly rejected. And each has their own personal weaknesses, particularly Fiorina (incompetent) and DeVore (far-right wacko) but also Campbell (close to Arnold).

Boxer has known she’ll need to run a strong campaign to win re-election, and these poll numbers merely reinforce the expectation that this election will be close. Progressives and Democrats will have to work hard for Boxer, who deserves our support for another 6 years in the Senate. God knows we desperately need good people in that place.

Over the last year or so I’ve been making a rather consistent argument that Attorney General Jerry Brown needs to take some clear stands on behalf of the progressive values Californians share. This week he did exactly that, and deserves a ton of credit for it.

Brown stood up to the teabaggers, led by Assemblymember Dan Logue and Ted Costa, by refusing to give in to their desire to mislead the public in the labeling of their initiative to suspend AB 32. Logue and Costa call their plan the “California Jobs Initiative.” But here’s the title Brown gave them:

Suspends air pollution control laws requiring major polluters to report and reduce greenhouse gas emissions that cause global warming until unemployment drops below specified level for full year.

Which is totally accurate. That is what the Logue/Costa initiative does. AB 32 is an air pollution control law. It regulates pollutants that cause global warming. And the initiative would suspend those rules until unemployment has dropped below 5.5% for an entire year.

When might that happen? Not anytime soon. The Obama Administration’s projections indicate we’ll be above 6% until 2015, and many economists project high unemployment will be with us for perhaps the whole decade. So this “suspension” will in fact be ongoing.

In the meantime California will lose thousands of jobs created by AB 32 in the up-and-coming green jobs sector. And of course, we’ll be sitting on our hands as global warming’s effects take hold.

What do Logue and Costa think of global warming? Here’s what Logue had to say on the initiative website:

AB32 is based heavily on the theory that global warming is a “man-made” condition. In recent weeks the “Climategate” scandal has revealed some very disturbing E-mails and information from the environmental science community. These leaks have revealed that reputable scientists and universities doctored their statistics and withheld evidence contrary to their own theories. They silenced dissenting opinion for political gain. In short, the “science” that CARB has based its decisions on has been found to be fraudulent.

In other words, Logue is California’s James Inhofe. Or, in Jerry Brown’s words as reported by Calbuzz:

As a political matter, Brown has hardly been neutral about AB32. In fact, when he was on KGO Radio last week he referred to people opposing the measure as “Neanderthals . . . who want to turn the clock backwards.”

And now the Neanderthals are angry. Led by John and Ken, the right-wing talk radio hosts from LA, they are reacting by spamming Jerry Brown’s Facebook page with their usual crap. It’s typical teabaggery – when you don’t get your way, throw a huge temper tantrum and show the world how ugly you really are.

Screw em. Jerry Brown, you got this one right. Well done. I hope you’ll continue to fight these Neanderthals all year, and show Californians that we would be lunatics to abandon AB 32 now.

Things are getting crazy in Sacramento with the Maldonado confirmation, with John Myers reporting that the Governor plans to swear in Abel Maldonado as Lt. Governor, despite claims from the Assembly that his nomination is dead.

The governor’s view is that Maldonado had to get 41 votes against confirmation for the nomination to be refused. Since only 35 voted against, Schwarzenegger claims Maldonado is confirmed. But only 37 voted for confirmation, instead of the usual 41.

The LA Times has more:

Two professors at the Pacific McGeorge School of Law, Leslie Gielow Jacobs and Brian Landsberg, said the governor’s interpretation is reasonable. So did Tom Hiltachk, a Sacramento elections lawyer who used to work for Schwarzenegger but does not currently. All three said that the Assembly is not “refusing” to confirm Maldonado unless it has actively voted to reject him.

“The failure to say no is not a rejection,” Landsberg said. “I think no means no, and yes means yes, and if we don’t have a yes or a no, then it would be reasonable to say they haven’t taken a position.”

And if the Assembly has not taken a position, Maldonado would be confirmed.

However, the 1988 opinion from then-Legislative Counsel Bion M. Gregory (it pertains to the office of treasurer, which has the same confirmation rules as lieutenant governor) argues that if the Assembly votes but does not confirm the appointee, he or she has been refused confirmation. The opinion said that “the defeat of a positive vote to confirm must be deemed a refusal to confirm ….” the nominee.

I guess we’ll see everyone in court?

One has to wonder at the behind-the-scenes machinations here, and why confirmation in the Senate was a breeze but not in the Assembly. Pedro Nava, one of the leading opponents of confirmation, is also a leading opponent of the Tranquillon Ridge oil drilling project that the State Lands Commission can either approve or reject. Maldonado would be the swing vote. There may well be other factors.

Still, what could have been a clean yes-or-no is going to become another dragged-out power struggle between the Legislature and the governor. Perhaps there’s no avoiding it. But the prolonged battle isn’t going to make any of the participants look good. At this point the right thing would be for Arnold to either resubmit the Maldonado nomination or try someone else.

UPDATE: Democratic Assemblymembers Jared Huffman and Anna Caballero put out the following statement defending their vote to confirm Maldonado. Worth noting that Caballero is running to replace Republican Jeff Denham in SD-12 this fall, which would be the 26th vote for the Dems in the Senate. If John Laird won in SD-15 (next door to Caballero’s Salinas Valley district) then Dems would have a 2/3rds majority.

Today I broke ranks with many Assembly Democrats and joined almost all Senate Democrats in voting to confirm Senator Abel Maldonado for Lieutenant Governor. For me, this was not about whether I agree with Senator Maldonado’s politics, voting record, or ideology – we have huge political differences. But the time for voting based on partisan and political differences is in a campaign, not in discharging the confirmation authority entrusted to me by the California Constitution. My decision process started and ended with a simple question: is he qualified? That’s the standard I believe is required by the Constitution, the Legislature’s own past practice, and the reasonable expectations of most Californians. That’s the standard applied by Democrats and Republicans alike in the Senate this morning. And it’s the standard both houses and both parties have traditionally applied to confirmation votes, including a Board of Equalization confirmation just a few months ago. Unfortunately, the prevailing view in the Assembly today was to apply a new and different standard. On principle, I think it was the wrong thing to do. Politically, I think it is likely to backfire and hurt the Democratic Party. Make no mistake; I will support the Democratic nominee for Lieutenant Governor this fall. But today, I was presented with a nominee who met the qualifications for confirmation, and the Constitution, as well as my conscience, dictated that I vote to confirm him.

The State Senate voted 26-7 to confirm Abel Maldonado as Lt. Governor earlier this morning. The no votes:

Aanestad (R), Denham (R), Ducheny (D), Florez (D), Runner (R), Wyland (R), Yee (D).

Now the confirmation is being taken up by the Assembly as I write this. Reports are flying that the Assembly will reject him. We’ll find out in a few minutes what will really happen.

…Assembly GOP leader Martin Garrick stands up to call for Maldonado to be confirmed.

…Republican Jim Nielsen (AD-2) calls Maldonado “clearly qualified”, says “we disagree on a lot of issues” but that doesn’t mean we should reject him, let the voters decide.

…Sandré Swanson says Arnold should have appointed a caretaker, and that a “no” vote is justified because Maldonado is running for the post.

…Charles Calderon rises to oppose confirmation, says it was a “backroom deal,” “could not have been more partisan,” “there’s no reason to confirm Maldonado.” If progressives like Swanson and moderates like Calderon are opposed, Maldonado’s nomination may indeed get shot down.

…Anthony Adams reminds people about confirmation of Bruce McPherson, a Republican who was confirmed to replace Democrat Kevin Shelley. McPherson ran for the office in the next election, and was beaten by Debra Bowen. He reminds people of his “courage” in voting for the budget a year ago, he put the state above partisan needs. Closes by quoting Obama: “Si Se Puede!”

This all looks like it’s going to fall out along party lines. Unless we see some indications that a dozen or so Dems will vote for Maldonado, his nomination will die.

…Mariko Yamada rises to oppose nomination. Says she makes her decision not on partisanship, but the evidence available, says Maldonado’s voting record is out of step with the state, can’t have him being a “heartbeat away” from the governor’s office, can’t reward “temporary courageous acts.”

…former Democrat, now Independent Juan Arambula supports confirmation, says “we need people in the middle.”

John Myers tweets:

Maldonado looks nervous as he stands in back of Asm chamber..walks up to 1 Dem assemblymember who shakes his head..no.

…Torrico closes debate, saying “we’ve all been moved by Maldonado’s personal story,” but that nomination shows what’s wrong with the political system, “Sacramento is broken,” system gives too much power to a few people to dictate terms of the budget because of 2/3rds rule. That rule allowed Maldonado to “leverage system for personal gain.” “We cannot reward this system, this nomination.”

Vote begins. 36-34 so far with some Dems voting yes, still others not voting. Vote still open.

As we wait for the vote to be finalized, some of the Dems who voted for the confirmation include Cathleen Galgiani (AD-17) and Anna Caballero (AD-28), along with Ted Lieu, Anthony Portantino, Jared Huffman, Alyson Huber. Shane Goldmacher tweets that neither Karen Bass nor John Pérez have voted yet. This thing could still go either way, as the vote is “on call.”

…my Asssemblymember, Bill Monning, also voted yes. 36-36 now. Vote placed back on call. Now down to 36-34. Motion fails. Torrico moves for immediate reconsideration. Crazy stuff. Reconsideration approved, Republicans go into caucus.

In short: Maldonado only got 36 votes, so he technically went down in the Assembly. But immediate reconsideration is happening, Republicans will caucus and try to round up enough votes.

UPDATE: This thing has gotten real crazy real fast. Arnold Schwarzenegger’s office says that unless there are 41 votes against the nomination, Maldonado is confirmed. The Assembly clerk says it’s the other way around – unless there are 41 votes for the nomination, it is dead. Arnold says he’ll go to court on this if needed. They’ve also said they’ll resubmit the nomination if necessary.

Republicans have put off the reconsideration vote while Danny Gilmore, who is sick with pneumonia, is driven up to Sacramento from Hanford.

My guess is somehow 5 arms in the Assembly will be twisted to get Maldonado confirmed. But we shall see what happens.

…Cap Weekly tweets that the Dems might prefer Maldonado be confirmed later in the spring so that the SD-15 special election happens the same day as the November statewide election:

If Dems drag out this reconfirmation past April 21, it would allow Gov to consolidate election for Maldo’s Senate seat with the Nov election

Let’s be clear: Democrats can win SD-15 whether the vote is in June or November. Doesn’t matter. We’re taking SD-15 back.

UPDATE by Brian: I’m trying to figure out just who exactly hasn’t voted yet. With 72 votes on record right now, that means 8 votes are outstanding. I know that Democratic Asms. Davis, De Leon, Hernandez, Speaker-elect Perez, and Speaker bass have not yet voted, and Asm. Carter was absent.  On the Republican side, Chuck DeVore did not vote.  Profile of courage right there. Do you think his plan in the Senate is to skip out of votes too?

Here’s the roll of the vote from a photo taken by the Bee staff.

UPDATE by Robert: Assembly to reconvene at 3pm, with Danny Gilmore included….and by “3pm” we mean “sometime this afternoon.”

Under way. Gilmore is clearly ill, but speaks in favor of the Maldonado nomination. Torrico speaking now against it.

Revote underway. 37-35 in favor. No meaningful change. Vote held open “on call.”

…So the vote is over and the floor session is adjourned. Maldonado got 37 votes for confirmation and 35 against. Bass and Pérez both voted no.

But what this means is totally unclear. Did Maldonado need to get 41 yes votes? Or did he merely need to avoid getting 41 no votes? Right now it’s unclear, and it may very well wind up in court. The Maldonado nomination saga is by no means over.

All day I’ve been hearing reports that the effort to put two initiatives on the November ballot allowing voters to call a Constitutional Convention is either dying or dead. According to an email John Grubb of Repair California sent out to his list just a few minutes ago, the effort is indeed in trouble, needing an infusion of cash to stay alive:

Success is tantalizingly close. This week about 100 people were working full-time collecting signatures from our fellow Californians to put the question of the Convention on the ballot. With funding we can ramp up to 400 people. We are running a lean campaign with many volunteers and others working almost for free because they believe in the mission of the campaign and refuse to let California fail. Given our trends, this week alone, approximately 100,000 voters will put their name on a petition to enable the Convention to be called. Fairly incredible.

That said, we still have to pay rent on our offices across the state, meet payroll and print petitions for registered voters to sign. Our overall budget is $3.6 million to qualify the Convention for the ballot, a small amount considering the normal $60 million cost of a full ballot measure campaign. Donation by donation we are getting there, but not fast enough.

We are about to start spending more than we are taking in and our costs are going to grow. Without more funding, the campaign will need to end and with it, the possibility of a Convention.

Grubb goes on to tell the story of Robert Morris, a financier in colonial America who stepped in to fund and equip the Continental Army in the winter of 1776 at a moment of desperation. Grubb would like a similar wealthy white knight to appear to help fund the Con-Con campaign, but that appears unlikely.

Both Joe Mathews and John Myers are reporting that Repair California has indeed “paused” its campaign efforts as they await more funds. So far they have taken in $500,000 but have budgeted $3.6 million for the signature-gathering effort.

This news comes in the wake of reports that the signature gathering cartel has blacklisted the Con-Con petitions, making it more difficult to get the 1.2 million signatures each initiative needed to qualify for the ballot. The cartel wanted to drive up the price per signature, and Repair California didn’t want to pay it.

I’ve been pretty critical of the Con-Con proposal as it finally emerged, but have always argued that the biggest obstacle was the broken political system itself. If the Con-Con does indeed fail to make the ballot, it would be further proof that California’s political system is too badly broken to repair itself. What that portends for the future is, of course, both unclear and very deeply troubling.

UPDATE: Grubb tells KQED that the campaign can survive another 30 days, so “dead” seems to be vastly overstating matters:

The following are quote is from Grubb to my KQED colleague, Cy Musiker: “We put a pause on our signature gathering. We still have plenty of time to do it. But we’re trying to wait for our funding to catch up.” Grubb said that so far, they’ve only gathered about 100,000 signatures… a small fraction of what’s needed to qualify the two initiatives (one would allow voters to call a convention, the second would actually call the convention). He also said that they can continue with “reduced” staff for another 30 days before officially calling it quits.

There have been few more vocal and persistent critics of Senator Abel Maldonado than this site, myself in particular. As one of his constituents I have always regretted the fact that he (theoretically) represents me in the State Senate, and have eagerly awaited the day when the Central Coast could replace him with someone who better reflects our values, like John Laird.

In fact, it’s my strong dislike of Maldonado and his conservative politics that partly explains my support for his nomination to fill the vacant post of Lt. Governor. As we all learned a year ago, Maldonado has done massive damage to the state from his post in the Senate. His blackmail led to the removal of some needed tax solutions from the budget, and wound up placing the top-two primary on the June ballot, Prop 14, which if approved will increase the power of corporate money in Democratic primary elections.

My opposition to Maldonado and his politics leads me to conclude that the deal being placed on the table for Democrats – that we should confirm him to a short stint as Lt. Governor in exchange for the opportunity to win back a blue district represented by a right-wing Senator and help achieve a 2/3rds majority – is a deal we absolutely ought to take. Calitics said as much in our open letter to the Senate Democrats in November when the nomination was announced. And we stand by it.

Not all Democrats agree. Several Democratic Assemblymembers are pledging to block Maldonado’s nomination, with Pedro Nava being perhaps the most outspoken. Late last night, Nava sent an email to his list pointing out Maldonado’s flawed and out-of-touch politics and asking people to contact their legislators to block Maldonado’s confirmation:

Right now, I want to share with you an urgent matter facing California. Recently, Governor Arnold Schwarzenegger nominated Senator Abel Maldonado to fill the vacancy of Lieutenant Governor, a mere heartbeat away from the Governor’s office. It is vital to the future of California that we do not confirm a candidate whose record does not reflect our state’s values.

The state legislature must now determine whether or not to confirm Senator Maldonado. This means that your local Assemblymembers and Senators will be voting on his appointment this week. I urge you to take action now to oppose Senator Maldonado’s confirmation by contacting your legislators.

Senator Maldonado voted against legislation to protect consumers, healthcare coverage, the environment and the rights of women, seniors and workers. These issues are of great significance to Californians and Senator Maldonado’s views simply do not represent everyday working families.

The email also included a link to an an exhaustive list of Maldonado’s votes on key issues, illustrating his right-wing record.

Nava is absolutely right that Maldonado’s “record does not reflect our state’s values.” Which would seem a pretty damn compelling reason to get him out of the Legislature and into an office with very little power, where he can do very little damage, and where he’ll be subject to not one but two statewide votes this year (the Republican primary in June and the general election in November) where Californians can show they reject Maldonado’s values by rejecting Maldonado himself.

Democrats should not be afraid of Maldonado. Dean Florez, Janice Hahn, and even Gavin Newsom were he to jump into the LG race could beat Maldonado. In exchange, Democrats can make Monterey County ground zero in the fight for 2/3rds in the State Senate. California Democrats should be in the business of expanding the field of opportunities to win more seats and enact our agenda, not hiding in fear of a Latino Republican deeply unpopular with his own party base.

Further, Democratic Assemblymembers have every reason to want to see Maldonado out of the Senate. In the last year or so, the Assembly has generally produced better policies and votes on issues such as offshore drilling and the state budget. The Assembly has had to fight rear-guard actions against things the Senate has foisted upon them – but that could come to an end if Dems win a 2/3rds majority in the Senate.

So I don’t really understand why Nava is so fired up about blocking Maldonado’s nomination. I share Nava’s outrage at Abel’s politics, but confirming him still seems like the most obvious thing in the world to do right now.

There may be no better illustration of how corrupt our politics have become than the efforts of the Mercury Insurance Group to change a landmark consumer protection law that they are apparently violating on a regular basis. In 1988, California voters passed Proposition 103, a sweeping reform of the state’s auto insurance industry. 22 years later, as insurance companies have become one of the nation’s most reviled villains thanks to the murderous practices of health insurers, Mercury has put Proposition 17 on the ballot, which would raise auto insurance rates for many Californians.

Several years ago Mercury Insurance wanted to raise rates on customers who had a lapse in their insurance coverage. In 2005 California courts prevented this from happening. In Nevada, rates increased by 73% on customers with even a day’s lapse in coverage. Mercury wants to do this here in California, and authored Prop 17 to change Prop 103 to allow it.

But as the San Francisco Chronicle reports, Mercury may have been violating other parts of Prop 103 all along:

A high-profile California insurance company that is backing a controversial insurance measure on the June ballot has engaged in practices that may be illegal, including deceptive pricing and discrimination against consumers such as active members of the military and drivers of emergency vehicles, according to a state report obtained by The Chronicle.

The report, obtained through the state Public Records Act, alleges that Mercury Insurance Group may have violated Proposition 103, the landmark consumer protection law approved by voters in 1988. The measure limited the cost of policies and made civil rights and antitrust laws apply to the insurance industry.

The report referenced in the article shows that Mercury is the embodiment of the “evil insurance company” trope that has been so widely discussed in recent years. They’re charging higher rates in violation of the law until they get caught and slapped on the wrist by Steve Poizner, the state’s Insurance Commissioner and wannabe governor.

And what does Mercury do with those ill-gotten gains? Turn around and spend it on getting Prop 17 on the ballot and approved in order to legalize some of their most odious and destructive practices.

Mercury and Prop 17 are just one way in which the June election will be a battle over corporate power. Prop 16 is another effort by a large corporation, PG&E, to change laws and undo democratic rights that have obstructed their pursuit of limitless profits. And Prop 15 offers a chance to fight back by creating a publicly funded election for the Secretary of State races in 2014 and 2018 as a proof of concept to show that clean money can work in California – and that it is desperately needed.

Learn more about Mercury Insurance and Prop 17 at Stop the Surcharge.

The financial news in recent weeks has been dominated by concerns about the possibility of “sovereign default” in several key Eurozone countries. Often known as the PIGS (Portugal, Ireland, Greece, and Spain, sometimes called PIIGS when you throw Italy into the mix), their high levels of unemployment and debt are claimed to be a ticking time bomb for the euro currency and the European Union as a whole.

In recent weeks Greece has been forced into promising “austerity” – meaning huge budget cuts – in an effort to bring its debt levels down. Portugal is exploring similar options after a debt sale didn’t go as well as expected, and now Spain is expected to follow suit with the Socialist government proposing its own spending freeze.

The parallels to California are obvious, but that doesn’t mean they’ll always be drawn properly. One observer that does so is Gregor Macdonald, who points out that California’s problem is owed largely to overdependence on cheap oil:

I’ve identified seven large US states by four criteria that are sure to cause trouble for Washington’s political class at least for the next 3 years, through the 2012 elections. These are states with big populations, very high rates of unemployment, and which have already had to borrow big to pay unemployment claims. In addition, as a kind of Gregor.us kicker, I’ve thrown in a fourth criteria to identify those states that are large net importers of energy. Because the step change to higher energy prices played, and continues to play, such a large role in the developed world’s financial crisis it’s instructive to identify those US states that will struggle for years against the rising tide of higher energy costs….

The seven states to make my list are California, Florida, Illinois, Ohio, Michigan, North Carolina, and New Jersey. Each has a population above 8 million people. Each has had to borrow more than a billion dollars, so far, to pay claims out of their now bankrupt unemployment insurance fund. Also, each state currently registers broad, underemployment above 15% as indicated by the U-6 measure for the States. And finally, each state is a large net importer of either oil, natural gas, electricity, or all three of these energy sources….

21st century energy prices overlaid on a 20th century economy? That’s no fun at all. The mainstream economics profession, perhaps unsurprisingly, still does not pay enough attention to the interweaving of long-term stagnant wage growth, higher energy inputs, and the resulting credit creation that OECD countries took as the solution to resolve that squeeze….

My seven states of energy debt represent a full 35% of the total US population. As with other US states, they face looming policy clashes between protected state and city workers on one hand, and the growing ranks of the private economy’s underemployed on the other. The recent circus at the LA City Council meeting was a nice foreshadowing that the days of unlimited borrowing by governments-against future growth based on cheap energy-is coming to an end. Washington can print up dollars and fund these states for years, if it so chooses. But just as with the 70 million people in Portugal, Italy, Greece and Spain, the 108 million people in these seven large states are probably facing even higher levels of unemployment as austerity measures finally slam into their cashless coffers, and reduce their ability to borrow.

Over the flip I explain what all this means, and why Europe’s response to the problems with the PIGS shows why California and the US should not repeat it.

Macdonald’s point is one I’ve often made here on this site. The current economic crisis facing California isn’t part of some normal cycle, nor is it something that will naturally pass over time.

California’s present economic and financial crisis is due in large part to an overreliance on cheap oil to meet the population’s needs. As wages stagnated after 1975, the US turned to debt to make up the difference and enable economic growth. Here in California that took the form of using debt to fuel three successive asset bubbles that appeared to provide prosperity, growth, and balanced budgets, but proved in fact to be not only illusory, but setting up a bigger fall each time out.

The real estate bubble in the 1980s and again in the 2000s, with the 1990s stock market bubble, were all used and encouraged by state policymakers as the solution to California’s economic and fiscal woes. Each time it worked, for a few years, but then crashed down to earth again.

The underlying problem was that this was all built on the assumption that cheap oil would last indefinitely. If energy costs rose, then working Californians wouldn’t be able to service the debt they’d taken on to fuel the housing bubbles or the stock bubble. They’d instead have to pull back on their spending, crashing the economy and the budget along with it. Cheap oil helped provide a modicum of stability to an otherwise unwieldy system.

In 2006, that cheap oil began to vanish. Gas prices in California broke $3 per gallon for the first time that year, and stayed above $3 for much of the spring and summer. It was at that time that the housing market peaked in California. One estimate was that 60% of new jobs created in California in 2006 resulted from the real estate bubble.

But once gas prices hit $3, it became difficult for all those folks who took out huge mortgages to service that debt, especially in places where many buyers had long commutes. It’s no accident that Stockton-Modesto and the Inland Empire were hit hardest by the foreclosure bubble, since residents there tended to have the highest energy costs.

The Center for Neighborhood Technology and the Urban Land Institute put out a study last fall, Bay Area Burden, showing that high transportation costs meant that housing in exurban areas that seemed more affordable than in the urban cores actually weren’t affordable once transportation costs were included. CNT has also showed that foreclosures correlate closely to high transportation costs.

But none of this was expected by California politicians and planners, who assumed that oil would remain cheap for the foreseeable future. Debt levels were predicated on the 20th century model lasting forever – ongoing economic growth fueled, literally, by cheap oil.

Those days are now over. Even in a severe recession like this, gas prices continue to flirt with $3/gal. Most observers expect gas prices to rise once economic recovery sets in, whenever that is, potentially strangling that recovery – unless we take steps to get off of oil.

That isn’t looking very likely. Although high speed rail will be a major boost to efforts to wean ourselves off oil, budget cuts are at the same time slashing transportation spending and leaving the public with fewer options to travel affordably. Fiscal austerity is worsening our exposure to rising energy costs.

Of course, that’s not the only cause of the state’s fiscal crisis. The three asset bubbles over the last 30 years made it possible for both Democrats and Republicans to leave Prop 13 alone and refuse to confront its anti-tax legacy. State government began borrowing money to replace funds it used to get from tax revenues. This was dramatically accelerated when Arnold Schwarzenegger used bonds to close the budget gap when he took office.

California is a rich state, even today, and there is plenty of money out there to help ease our fiscal problems. But there is no political willingness to go out and get it, even though polls and election results make clear that voters would support this instead of imposing austerity on schools and health care.

Of course, the argument that California has to embrace austerity or else face default or some other significant debt-related problems has been used since 2008 to justify massive spending cuts. This is, to bring the post back full circle, exactly what is being adopted in the PIGS countries in Europe. As former IMF economist and leading commentator Simon Johnson argues, however, these European policies are a recipe for disaster, that Europe risks another global Depression:

What are the stronger European countries, specifically Germany and France, doing to contain the self-fulfilling fear that weaker eurozone countries may not be able to pay their debt – this panic that pushes up interest rates and makes it harder for beleaguered governments to actually pay?

The Europeans with deep-pockets are doing nothing – except insist that all countries under pressure cut their budgets quickly and in ways that are probably politically infeasible.  This kind of precipitate fiscal austerity contributed directly to the onset of the Great Depression in the 1930s.

Indeed, here in the US the reaction from many other states to California’s fiscal crisis is “fix your own mess,” as if they won’t be dragged down by California if we experience a prolonged downturn thanks to budget cuts. The White House has not taken the fiscal problems of the states seriously, since their own focus on economic recovery is instead on Wall Street. So California is destroying its educational system, jeopardizing our future ability to create jobs and grow wages, and is destroying its public transit system, destroying our ability to avoid the costs of rising oil prices.

It’s a destructive cycle that will merely ensure that California’s recession is not only prolonged, but that we face serious long-term risks. The massive levels of household debt, still-inflated real estate values, and ongoing wage inequality are not going to be resolved if we are vulnerable to the effects of peak oil over the course of the decade.

There is some hope. At last week’s confirmation hearing for Abel Maldonado’s appointment to Lt. Gov., Darrell Steinberg asked Maldonado if he thought budget cuts were prolonging and worsening unemployment, to which Maldonado answered yes.

Hopefully this portends an end to the “we must cut the budget or else the bond markets will be pissed!” nonsense that is actually worsening our problems. As Simon Johnson points out, the only outcome of austerity is Depression.

California can avoid this, if we tax corporations and high incomes in order to wean ourselves off of oil, reduce income inequality, and support the public services that are essential to future prosperity. And we need federal support and assistance to help prevent those cuts.

The 2010 elections will help determine whether that happens, or whether we slide deeper into recession.