Author: Joel Fox

The second Republican gubernatorial debate in San Jose yesterday featured relentless attacks from Steve Poizner, with Meg Whitman sticking to the script that has served her well so far. Whitman counterattacked, but Poizner had the sharper elbows.

Three times Poizner said the election was about character and asked Whitman, "Who are you, really?" in identifying Whitman as a supporter of Barbara Boxer and Van Jones. Whitman called Poizner a true engineer, as in engineering a new position for every office he runs for. Meanwhile, solutions to California’s many problems were few and far between.

This may be the worst of times for California, but Republican gubernatorial candidate Steve Poizner says this is the best of times to run for governor. Speaking yesterday at the luncheon meeting of the National Federation of Independent Business Capitol Day, Poizner said the best time to achieve change is when facing a crisis.

Poizner told the business crowd that California dropped from the sixth largest economy in the world to the eight largest in the last decade. He said the reason is that California’s tax and regulation policies are driving job creators out of the state. One example, Poizner noted, was the need to acquire 25 permits from a dozen local government agencies to open a pet food store in San Diego. He proposed a one-stop permit shop to make it easier to start a business.

Members of the audience nodded in agreement as Poizner ticked off troubles facing business in California. He said that 3000 people leave the state every week and that California has lost one-million residents over five years.

Gaining headlines with the release of the Pew Research Center’s survey last week was the fact that Americans don’t trust government. But buried in the survey numbers on the negative feeling Americans had about most institutions was a major exception – small business.

While the federal government garnered support from only 25% in the survey, large corporations achieved the same level of support, the media corralled 31% support, labor unions 32% and entertainment industry 33%, small business was sitting atop the survey at 71% support from the American public.

Support for small business crossed party lines. Over 70% of Democrats, Republicans and Independents look favorably on small business.

The labor unions continued the all out assault on Meg Whitman’s candidacy for governor with yesterday’s announcement that they are launching another campaign to attack Whitman’s record. This is on top of the already announced independent expenditure efforts backed by the public employee unions to attack Whitman and the childish histrionics of the Queen Meg campaign.

But the unions have an agenda of their own for California. That agenda’s bottom line is at least $40 billion in new taxes. The unions have been pushing a catalog of tax increases for some time now. The recent revelation of their "tax everything" plan was promoted at the end of a long march to the state capitol that ended last week.

Among the list of union tax demands are the following tax increase proposals listed in a Capitol Alert report:

The debate over public union pensions, benefits, and influence is gaining more and more attention with the mainstream media and the public at large. This couldn’t be more evident than the release of a new documentary skewering teachers unions and a skit making fun of the public unions on this past weekend’s Saturday Night Live.

In the SNL satirical skit, Kenan Thompson played the host of the "2010 Public Employee of the Year Awards." As he tells his audience at the mock award show, "people with government jobs are like workers everywhere except for lifetime job security, guaranteed annual raises, early retirement on generous pensions and full medical coverage with no deductibles and office visit fees or co-payments."

Have a laugh when you take a look at the skit for yourselves here.

A new documentary on teachers’ unions called "The Cartel" was produced and reported by former Bloomberg television reporter, Bob Bowden. He argues in his 90-minute documentary that the state of the public schools are the greatest threat to the nation and that powerful teachers unions are the cause of failed public education.

One major battle to reform the public pension system is being played out over an assembly bill that would restrict the power of local governments to declare bankruptcy. Assembly Bill 155 by Tony Mendoza, D-Artesia, came out of the Senate Local Government Committee this week after Senate Pro Tem Darrell Steinberg dumped an opponent of the bill from the committee allowing the union backed bill to move along its way.

The bill is a power play by the public employee unions to stymie the use of bankruptcy as a device to reconsider public employee contracts. The bill surfaced after the City of Vallejo declared bankruptcy and used the bankruptcy laws to reconfigure pension provisions for new city employees and demand higher contributions in the retirement fund from current employees.

In an environment in which city and state officials are looking for ways to maneuver past fiscal crises, public employee pensions and benefits have become a hot issue. Suggestions on revamping pensions and benefits have popped up from the governor’s office to non-profit foundations. Much attention has been focused on Steven Malanga’s essay in the City Journal laying California’s deficit problem at the feet of public employee unions.

President Barack Obama’s visit to Los Angeles yesterday in support of Senator Barbara Boxer’s re-election bid is another sign that Boxer is in trouble – or that Obama has learned a lesson not to take an election for granted. His last minute attempt to rescue Martha Coakley in the Massachusetts senate race to replace Ted Kennedy was too little, too late.

Will California be a replay of the Massachusetts election?

California politics has come to resemble Massachusetts politics over the years. The two states are not exactly mirror images of one another, granted; yet the similarities are noticeable. Both states have overwhelming Democratic legislatures and solid Democratic voter majorities. Both find themselves with growing independent voting blocks that often determine elections. California Republicans, as a whole, tend to be more conservative that Massachusetts Republicans.

However, let’s also note that the Proposition 13 tax revolt, which spread across the country, was almost immediately adopted in Massachusetts. The Bay State version, Proposition 2 ½, also limited property taxes. Like Proposition 13, despite constant attacks, the public in the blue state of Massachusetts holds the property tax limitation favorably even after three decades.

Jerry Brown’s weekend suggestion at the state Democratic convention that a pre-primary debate take place between him and his main Republican rivals is a way for Brown to insert himself into the Republican primary. He is following the example of his one time chief-of-staff and later governor, Gray Davis, who jumped into the 2002 Republican gubernatorial primary. Davis ran ads to undercut his most feared opponent, former Los Angeles Mayor Richard Riordan.

Davis was sitting on enough campaign cash in those pre-billionaire candidate days to afford to spend some campaign funds and weaken his rival. Brown needs to husband all the money he has for a November election battle so his plan is to disrupt leading Republican candidate, Meg Whitman, by drawing her into a three-way debate.

As Riordan rival Bill Simon welcomed Davis’s ads nearly a decade ago, Steve Poizner saw Brown’s move as an advantage to his tough uphill campaign and eagerly agreed to the debate.

The United States income tax structure is starting to look like the California income tax structure and that is not a good thing. California should be a lesson for federal tax planners. Relying more and more on the “rich” to carry the tax burden subjects the treasury to wild swings in revenue. That is something we experienced too often in the Golden State, as the economy goes through ups and downs.

There is also a question of fairness in who pays the bills for government services. Everyone should pay something to provide for government. People should not be dropped completely off the tax rolls, nor should there be loopholes for the wealthy taxpayers to escape all tax obligations.

On this tax day, state officials will be hoping for a rush of income tax returns to help pull California out of its deficit hole. But when approximately 144,000 income tax filers pay 50% of the state income tax, the tax structure is built on a rickety foundation.