Brown meanders, but sticks to taxes

JUNE 2, 2011

By STEVEN GREENHUT

Gov. Jerry Brown’s talk to the California State Association of Counties was more meandering and disjointed than usual, but the governor stuck to his talking points: Unless California voters approve of tax extensions, they must get used to greatly diminished public services. As is typical, Brown was funny and weaved interesting stories and references into his remarks, and even gave a nod to the need for pension reform. But Brown made it clear that he thinks Californians need to pay more taxes to fund a public sector he believes to be woefully underfunded.

“Half of the babies born in our state are born through the MediCal system,” Brown said. He said that his fellow Democrats see the level of poverty increasing and a lack of adequate health care. They believe that “we as a people have a real obligation, a link to all the people of California.”

“Should we do less?” he asked, with “we” meaning the government and doing less means failing to increase the size of state bureaucracies to handle all these endless needs. Brown acknowledged that Republicans are right about the level of waste and the need for pension reform: “God knows there is waste.” But instead of proposing ways to stretch public dollars or plans to root out waste and fraud in the state government, Brown rambled on about problems in the private sector: “Look at the private sector, where the average CEO makes $20 million and compare that to elected officials.”

What? Is he saying that California’s elected officials are underpaid? Public employee union officials and Democratic leaders often point to high salaries at the CEO level in the private sector, but it’s unclear what this has to do with waste and inefficiency in the public sector. CEOs are not paid by tax dollars, even if many of them seem overpaid and incompetent. Except with those businesses who seek government handouts and bailouts, private sector compensation is not a policy problem. No one can force us to patronize particular businesses, and if boards want to squander dollars on overpaid executives, that’s their problem.

Brown makes a nod to pension reform and indeed has proposed some reasonable albeit modest pension reforms, but he shows no zeal to fix the problem — despite unfunded pension liabilities estimated as high as a half-trillion dollars. Those are publicly backed pensions and the state should be increasing its annual pension contributions from the general fund, so this has a direct bearing on the budgetary problems Brown is trying to fix.

“We must summon the courage to make the tough choices,” Brown said. But where is his courage? Instead of taking on the powerful California Correctional Peace Officers Association, he gave away the store, allowing them raises and the ability to bank an unlimited amount of vacation time — something that could cost California hundreds of millions of dollars. Instead of pushing for real pension reform, the governor is pushing for tax extensions, at least for now. His talk certainly gave me the sense that other tax proposals will be coming down the pike.

Without at least the tax extensions, “we will get a radical restructuring of what we are.” This illustrates his thinking. Reducing the size of growth in government will change the very nature of what we are as Californians. In the Brown worldview, we are interconnected and that doesn’t mean that as individuals we have deep connections to other Californians, but as taxpayers we owe the government agencies, unions and program recipients more of our money. That’s what he means by making tough choices. We, the taxpayer, must tighten our belts. His union allies don’t need to do so.

Brown did offer some good news. He said the economy is coming back, however slowly. He said “we’re at a very good spot,” pointing to the current estimated $9 billion deficit as “a peanut compared to our overall wealth.” He said California’s deficit is nothing compared to the deficit at the federal level. Does that make you feel better?

But he added a warning: “If you don’t extend taxes, there is a real net loss in education and safety of our communities.” He compared the $6,000 a year received by the state’s public schools to private schools that charge as much as $30,000 a year in tuition. Of course, he understates the total school funding by about 45 percent. It’s also unclear how private schools are harming the public schools. All of us must pay to support the public schools through taxation. The existence of costly private alternatives — increasingly necessary given the incompetence of the public schools — offers no loss to the public sector. Again, we see that Brown ultimately reviles the private sector. He is the representative of the government class.

Brown talked about the debt crisis in Greece and Ireland, but again he placed the blame on the private sector. Banks gave out too much money and there were insufficient regulations, he said. Yet if government always is the answer to every problem, why is California, which has no lack of government regulation, turning into a basket case? Why is it awash in government-created unfunded liabilities, which is a banal term for debt?

To these points, Brown offers no answers.

I expected the governor to bring up his proposal to end redevelopment in California, which is something that should appeal to county officials given that cities use redevelopment to divert funds from county services. But he didn’t mention it. He did talk about the differences in worldview between Californians in places such as Modoc County and those in places such as California. He did talk about the need for us to try and see the world through the others’ perspective. Fair enough. But when will Gov. Brown see the world through the perspective of middle class working people who pay the bills and who are becoming increasingly afraid that there is no future in a state dominated by the public sector?

When will he at least address our perspective that finds his choices to be false. Do we really only face a choice between a diminished social contract and higher taxes? Why can’t he see that the government he so dearly loves does not produce very good services, that there are many ways to reform it through competition and other measures. Government has the wrong incentives. It has no consumers, only subjects. Year after year, legislators propose reforms and yet public sector services erode even as their budgets expand and the pay and benefit packages expand wildly for government employees. This is the nature of bureaucracy.

Near his home of Oakland, Alameda city police and firefighters watched and did nothing as a suicidal man drowned. They were hampered by rules and reduced budgets, the fire chief says. The police spokesman said the police couldn’t do anything because cops were afraid for their safety — they didn’t know whether a man up to his neck in water was on drugs or could be violent. And they blamed the man for his own predicament, which is true but besides the point. This is government in its full glory. It is heartless, yet well funded. There always are excuses for why those who work in these agencies didn’t do the right thing and why such behavior will rarely if ever be punished or corrected.

Things go wrong in the private sector also. Workers misbehave. But there’s usually some level of accountability and consumers always have  a choice. In the public sector, parents are stuck waiting years for reforms to take place in public school systems. It never happens despite all the commissions and proposals and oversight panels.

Yet Brown believes that we need more of the government sector and less of the private sector. He calls for realignment to bring the government closer to the people, but what California really needs is realignment so that the public sector gets reined in and plays a less dominant role in our society. Until that happens, we will always face desperate calls for tax increases and extensions.