The hotly contested race for the Republican nomination in both the U.S. Senate and Attorney General races are tightening up with the primary only three weeks away, the Small Business Action Committee/M4 Strategies Poll found.

In the U.S. Senate contest, Tom Campbell leads with field with 32.6%, with Carly Fiorina close behind at 28.2%, and Chuck DeVore tallying 15.3%. Fiorina has made the biggest movement since the SBAC/M4 Strategies poll in February. At that time, Campbell had a similar 32%, Fiorina was at 18% and DeVore stood at 11%.

The poll conducted on May 12, 13, and 16 of 600 high propensity Republican voters has a margin of error of 4%.

For those of us who live in California or as we like to call it "Athens-on-the-Pacific", things have never looked bleaker.

Last week, Governor Schwarzenegger released what will be his last budget to the
Legislature and the people. It projects a deficit of $19.1 billion and
will make drastic cuts in social spending.

Right
on cue the Democrats who have had a death grip on the Legislature for
decades began their whining and caterwauling about the destruction of
the safety net and that the "rich" weren’t paying enough and business
needs to pay more.

When I started posting, I told our publisher, Joel Fox, that I’d only write  on the dynamics of jobs in California. But I think he’ll indulge me on the post below about a segment of California past-and hopefully future.

Donna and I were at UC Irvine recently, and took the opportunity with our oldest daughter Sonia to drive to Balboa Island.

From the university to the Island is a short drive straight down Jamboree. The hilltops above Jamboree are filled with oversized condos and apartment complexes. But as you cross the Pacific Coast Highway, the road narrows to a two lane bridge, the condos and apartments disappear, and you find yourself on Marine street, the main street for Balboa Island.

State and
federal lawmakers and bureaucrats are holding our children hostage.
They are well-intentioned, no doubt, but the road to hell is paved with
their good intentions. And the travel is getting hotter every day.

Sacramento is broke, programs are being cut, legislators’ management
skills are questionable and California’s economic recovery is not
evident. Local educators are doing their best with constrained, delayed
school funding, making the tough decisions every other private sector
company is making to get by.

But complicating this mess further, Orange
County educators have zero flexibility on 73% of the public funding
they do get! They are dictated by Sacramento and, frankly, Washington
as well, on how to spend, when to spend, who to spend on, leaving no
flexibility to meet local community needs for our children in tough
times.

Meg Whitman holds a 17.5% point lead over Steve Poizner in the newest Small Business Action Committee poll conducted by M4 Strategies of Costa Mesa.

The poll was conducted May 12, 13, and 16, targeting 600 high propensity Republican voters. The poll’s margin of error is 4%.

Whitman leads Poizner 49% to 31.5% with nearly 20% undecided or refusing to respond.

Pollsters asked respondents if they viewed the candidates as favorable or unfavorable. Whitman registered 54.5% Favorable, 26.8% Unfavorable. Poizner stood at 38.5% Favorable, 33.8% Unfavorable.

44.3% of the respondents labeled themselves “very conservative.”

It’s much
too early to start picking winners and losers for next November.  In many of the potential targeted races
for congress and the state legislature, we won’t know until after the June 8
Primary who the Party nominees will be.

So, let’s
first talk about what we do know.

In November
2008, Barack Obama outpolled John McCain in 8 of 19 congressional districts, 5
of 15 state senate seats, and 12 of 29 assembly seats that are currently held
by a Republican.

There is not
a single Democratic-held congressional or state legislative district up for
election this year that John McCain carried in 2008.

For
Republicans to pick up any seats in November, they must defeat a Democrat
running in a seat won by Obama.

If the
latest Rasmussen poll taken in mid-May is to be believed, Obama’s current
approval rating in California stands at 61% – the same percentage Obama carried
this state in 2008.

No new taxes – at least none proposed by the Governor last Friday. Kudos to him and his team for recognizing the damaging effect that more taxes would have on the hoped-for economic recovery. Businesses and individuals are paying tens of billions in higher and more aggressively collected taxes enacted during the past two years.

But additional taxes remain on the table as the politicos and interest groups clear their throats. Legislative Democrats have lined up a parade of tax increases to keep pressure on budget negotiators. And even the Governor is counting indirectly on a tax increase for nearly nine hundred million dollars of his budget solution. The state receives a small portion of the federal inheritance tax, and unless Congress takes action to reduce or repeal it, the federal “death tax” will be reinstated come 2011.

Governor Schwarzenegger released his revised May budget proposal for the 2010-11 budget year on Friday.  It puts forward some very difficult cuts that are sadly necessary to bring spending in line with revenue and balance the budget.

I believe the May Revise should be seen as the starting point for serious budget discussions in the coming weeks.  With a $20 billion budget deficit, it’s clear that we must achieve the same level of budget savings that the Governor has proposed, even if we have different ideas.  It is my hope that Democrats will start working with Republicans today to craft the bipartisan balanced budget Californians are seeking by June 15th.

Speaker Pérez is right to call for more openness and transparency in the annual budget process.  We should not be relying on the “Big 5” to negotiate state budgets in the middle of the night. 

By the same token, it’s time to get serious about what we’re actually doing in legislative budget committee hearings.  In order to pass an on-time, responsible budget, it is essential that the majority party commits themselves to honest and open budget discussions with Republicans.

Cross-posted at NewGeography.com.

The debate over the repeal of California’s global-warming regulation, AB32, has degenerated into a shouting match, each side claiming economic ruin if the other side wins. A couple of long-dead French economists can help us think about the debate.

The great French economist Leon Walras (1834-1910) showed that perfect markets result in an allocation of goods and services that can’t be improved on, in the sense that no one could be made better off without someone else being made worse off.

Of course, we don’t have completely unfettered markets. In fact, they have never existed. They will never exist. In particular, we economists like to talk about what we call negative externalities. These occur when I do something, but an unintended consequence is that it hurts you, and you have no recourse.