Is Tom Campbell a "fiscal conservative"?

Whatever else it’s done, Carly Fiorina’s “Demon Sheep” ad against rival Tom Campbell has sparked the first widespread interest in the campaign for Republican nominee to replace Barbara Boxer in the U.S. Senate.

The ad, which has generated a lot of ridicule against Fiorina, dramatizes what Carly writes on her Web site about Campbell backing state increases in taxes, and support for too much state spending, both when he was a finance director under Gov. Schwarzenegger and during last year’s budget struggle, when he was a civilian. The ad brands Tom a FCINO — fiscal conservative in name only — and advertises a Web site: FCINO.com. The site, at least as of today, features a scary/funny picture of the Demon Sheep.

Assemblyman Chuck DeVore, also running for the nomination, has made similar charges against Campbell.

Frugal man of the House

So, what is Campbell: spendthrift tax-increaser or fiscal conservative?

In the U.S. House of Representatives, he certainly was the latter. He also led opposition to Bill Clinton’s 1999 Kosovo War, which vastly expanded the U.S. military presence in that region that now has lasted more than a decade and cost billions of dollars.

Yet we shouldn’t overlook that he definitely was not a fiscal conservative when he was state finance director, nor in his comments since then about the state budget. In his biography on his campaign Web site, he boasts, “During Tom’s tenure as State Finance Director, California’s budget was balanced with no tax increases, no new borrowing, and no accounting gimmicks.” True enough. But that was at the height of the housing boom mania, when the state’s coffers were overflowing with tax money.

But just like when Gov. Gray Davis enjoyed a similar excess tax take during the dot-com boom half a decade earlier, the money was not saved, but was used for new spending. Tax revenues soared from $82.2 billion in fiscal 2004-05 to $93.5 billion in fiscal 2005-06, the only year in which Campbell had full involvement in the budget process (before he left the post).  That’s an increase of $11.3 billion in just one year. Who couldn’t balance a budget with that kind of revenue?

Spending problem

The problem was on the spending side, which he let get out of control. It went from $79.8 billion in fiscal 2004-05 to $91.6 billion in 2005-06, a whopping $11.8 billion increase. The spending increase even outstripped the taxing increase by $0.5 billion.

At the time the budget was being enacted, back on June 16, 2005, Campbell explained in a statement still up on the governor’s Web site:

Since this time last year, because of our recovering economy, our state has generated more than $12 billion new dollars in revenue, in the current year and estimated for the budget year. That’s a 16-percent increase in revenue over the two years. Those who wanted to increase taxes even more were saying, ‘we just can’t make ends meet with $12 billion new dollars. We have to have $15 billion.’ Or, ‘we just can’t make do with a 16-percent increase in revenue; we need 20 percent.’

The message that kind of action would send is clear: we’re addicted to spending, and we can’t stop. And employers, with jobs to offer, will steer away from a state that announces that it has such a huge spending problem. Why sink foundations and pour concrete in a state that can’t learn to live within its means?

So, within two very important principles, the Governor and the Legislature can work toward a budget for our state. Those principles remain: don’t use one-time money on permanent spending, and don’t try to tax your way out of a spending problem.

Yet, Campbell and Schwarzenegger still went on to craft a budget with all that excess spending. So, as his last sentence indicated, Campbell knew what was going on, yet went along with it anyway, instead of resigning his office in protest against the wild spending.

He left, and soon the roof caved in on housing boom, the economy and the state budget.

Opponents’ own fiscal problems

Of course, it’s easy for Carly to criticize Tom because she’s never held an elective office. Yet she was a senior economic adviser to John McCain in 2008, even though he supported Bush’s $700 billion bailout spending bill. She backed the bailout bill herself. (Although she now denies it, the evidence for her support of the bailout is here.) The federal bailout dwarfed whatever waste Tom Campbell presided over in California.

Yet if McCain had led the fight against the bailout of Wall Street paid for by Main Street, he might have beaten Obama.

Chuck DeVore definitely is a fiscal conservative in the the state Assembly, and certainly would be so in the U.S. Senate — except on the biggest spending item of all, war. He’s a big supporter of the Iraq War, which Nobel economist George Stigler estimates already will cost us — when you include all the hidden costs — from $3 billion to $5 billion.  President Obama just called for increasing overall military spending even more.

The federal budget — and the whole U.S. economy — are buckling under the wasteful weight of what Eisenhower called the military-industrial complex. Something has to give. Campbell, whatever his other sins, most likely would vote for cutting military spending.

Where that leaves us, I don’t know. But here’s Ike — five-star general, defeater of Hitler, president — warning us almost 50 years ago about what we’re suffering now, what he called “the disastrous rise of misplaced power”:

-John Seiler