Now there’s fresh evidence of this from a U.S. neighbor that doesn’t exactly have a history of smart governance. Walter Russell Mead has the details:

“Mexico’s Senate voted [Tuesday] 95 to 28 in favor of an historic energy reform bill last night, setting the stage for a massive turnaround of the country’s oil and gas production. The bill is now headed to the lower house, which is expected to pass it later this week.  The reform, if passed, will be a defining victory for President Enrique Peña Nieto, who has already made a name for himself as a reformer in his first year in office.

“But this is much more than a boost to his legacy; it’s a chance for Mexico to really take advantage of its resource bounty. Mexico has large reserves of conventional onshore and offshore oil and gas, and the world’s sixth and eighth largest shale gas and shale oil reserves, respectively. …

“The reforms will be especially beneficial for Mexican shale exploration. Fracking was so successful in the US because of our relatively simple geology—geology Mexico shares—and our deep pool of firms willing to compete with one another to develop the technology and take the risks on unproven techniques and reserves—something Mexico lacks. But that could change if this bill goes through. These changes could help the country realize the Pemex CEO’s dream of becoming the world’s ‘new Middle East.'”

Will CA join the ‘phenomenon’ or not?

Mead concludes that …

“Mexico is poised to join the US and Canada as new major players in the global oil and gas market, and if these reforms are successful, it will make the shale boom a truly North American phenomenon.”

But will California join in this “North American phenomenon” or not? Maybe not, given the dishonest media coverage of fracking.

From last month, here’s the latest L.A. Times editorial on fracking to not even mention that the Obama administration has repeatedly signed off on fracking’s safety, seeing it as just another heavy industry that can be made safe with proper regulation.

The latest Sac Bee editorial on fracking, which came in September, is not available for free online, but it too never even mentions that the Obama administration has repeatedly signed off on fracking’s safety.

The latest San Francisco Chronicle editorial on fracking also never even mentions that the Obama administration has repeatedly signed off on fracking’s safety. It’s from last month.

Only one editorial from a prominent liberal paper even hinted at the Obama administration’s views of fracking. It was the San Jose Mercury-News piece posted Sept. 15.

“Some environmentalists won’t be happy unless there is a complete ban on fracking or a moratorium until the environmental impact review is complete. But studies by the Environmental Protection Agency have not linked fracking by oil companies to groundwater contamination.”

Both edit page, reporters in on LAT’s anti-fracking agenda

Boy, such context would sure by valuable in all coverage of California and fracking, dontcha think? But so would the comments of U.S. Interior Secretary Sally Jewell at a May press conference, as reported by The New York Times.

“Anticipating criticism from environmental advocates, she said: ‘I know there are those who say fracking is dangerous and should be curtailed, full stop. That ignores the reality that it has been done for decades and has the potential for developing significant domestic resources and strengthening our economy and will be done for decades to come.’”

The Los Angeles Times also covered Jewell’s press conference. It didn’t mention Jewell’s strong support for fracking. Instead, it went to an oil-industry spokesman to make the claim that fracking is safe — not President Obama’s secretary of the interior.

So it’s not just the LAT editorial page with an agenda on fracking. It’s the newsroom, too.

Great, just great.

But this week, when one more federally subsidized green firm went belly-up, it doesn’t even seem to be considered news in California or elsewhere.  The screen grab at right shows zero hits on a Google News search for “Ecototality.”

I only heard about it via New York state professor/blogger Walter Russell Mead, who cited this Sept. 17 Reuters report:

“(Reuters) – Ecotality Inc, a maker of charging stations for electric cars that won a $99.8 million grant from the U.S. Department of Energy four years ago, has filed for bankruptcy protection and said it plans to auction its assets next month.

“The San Francisco-based company is among a growing number of U.S. alternative-energy companies that have struggled or succumbed amid consumer resistance to the high cost and restricted driving range associated with electric vehicles. …

“Citing ‘significant liquidity constraints and the difficulty of obtaining long-term financing,’ Ecotality said an auction is necessary to maximize value for creditors and avoid a ‘fire-sale liquidation.’ …

“Among other U.S. alternative energy companies, green car startup Coda Holdings Inc filed for bankruptcy protection in May after selling just 100 all-electric sedans.

“Meanwhile, the Energy Department on Tuesday said it will in October sell a non-performing loan made to another green car startup, Fisker Automotive.

“Ecotality’s $99.8 million grant was awarded in August 2009 to help develop the EV Project, a network of charging stations for vehicles such as the Chevrolet Volt and Nissan Leaf in major U.S. metropolitan areas.”

Apparently California journos simply don’t find it newsworthy that subsidized green ventures keep failing. It’s the norm, so why bother informing the public about it?

Sheesh.

By Wayne Lusvardi

Paul Krugman wrote in the New York Times an article, “Lessons from a Comeback.” However, a comeback for state government should not be confused with an economic or jobs recovery.

A number of liberal, conservative and moderate writers responded to Krugman that there has been no California comeback. Victor Davis Hanson wrote, “Krugman’s California Dreamin’.”

Walter Russell Mead wrote, “California’s Hollow Comeback.” Matt Miller, “Jerry Brown Still Has Much to Do.”

But as someone who closely follows California public policy and budgeting, I found myself thinking that Krugman’s critics are probably unaware that Krugman may be closer to the truth, although for all the wrong reasons.  California came back a long time ago. But like a giant redwood tree falling in Sequoia National Park, no one wanted to notice.

All the rebuttals to Krugman sound to me like a quotation from American jazz singer Billie Holiday: “I’m always making a comeback but nobody ever tells me where I’ve been.” 

The reasons cited for a comeback are income and sales tax increases from Proposition 30; a bullet train that isn’t even funded or environmentally certified; and a Sacramento Delta water fix that mostly backfills Colorado River water lost to Arizona.  

More taxes or public works projects won’t save California because it had the financial resources all along to meet its public pension crisis even after budget cutbacks resulting from the Mortgage Meltdown and Bank Panic of 2008.  That was because California government bureaucracies were bloated during the bubble, from 2003 to 2008.  Of course, once the budget bar has been raised, budget deficits inevitably arise.

The question that the media then ignores is: Whether the state budget should be balanced high or low?  It can be balanced either way.

How bloated is California government? 

Californians got a rare look into how much California government was bloated in 2009 when the state Legislature deregulated the “categorical” programs in the education budget under Assembly Bill ABX-4-2.  Categorical programs are politically earmarked non-essential jobs programs.  ABX-4-2 forced categorical educational programs to be prioritized into “tiers.” Tier I reflected the highest priority for continued funding and Tier III the lowest.

The California Legislative Analyst’s Office (LAO) identified that there was $7.5 billion allocated to Tier I and Tier II programs and $4.5 billion to Tier III. In other words, of the $35.65 billion of state general funding for K-12 public schools in 2009, $12 billion or 33.6 percent was allocated for earmark jobs programs.  These programs have been so entrenched for so long that they are considered essential.

Recently, the California Auditor’s Office also gave us a window for seeing into where a portion of California’s state budget has been spent over the past 10 years.  According to the auditor, California is in the red by $127.2 billion.

What is interesting, however, is the Auditor reported about $79.9 billion of this “wall of debt” was spent on bonds for the state to give to local governments and school districts for public works projects. This included about $15.46 billion for five voter-approved water and parks bonds with annual bond payments of about $1.02 billion per year.  The total annual bond payment for the entire $79.9 billion is estimated from $4 to $5.2 billion.

If you take the $12 billion per year in education earmark funding and add it to the $4 to $5.2 billion in annual public works bond payments, you get from $16 to $17.2 billion. If the unfunded state and local public pension liabilities are $328.6 billion, as reported by Reuters, the annual amount needed to plug the pension gap would be around $10.95 billion.

That could have easily been met if the Legislature had not appropriated up to $17.2 billion per year in K-12 education earmarks; and the voters had not approved $79.9 billion in bonds for luxury public goods.

Stated differently, California has had enough discretionary tax revenues over past 10 years to fully fund its public retirement funding gap. Instead, it has squandered those revenues on luxury items: education earmarks, water-less water bonds, and luxury public works projects.  This is to say nothing about when former Gov. Gray Davis blew a $12.3 billion budget surplus on increasing public education funding when he took office in 2000.

This runs counter to the story that liberals like Krugman portray that California is just now experiencing a “comeback.” Or the story by commentators across the political spectrum that California’s budget deficit problems are due to a shortfall of tax revenues.  California’s state budget does not necessarily reflect a comeback or a comedown as much as a come on: it portrays an image of budget deficits due to funding shortfalls when the funding was available all along.

Lessons from California’s budget “comeback” 

The lessons to be taken from a so-called “California Comeback”: Voters should be skeptical of:

1. Annual threats of core teacher layoffs when the real fight is over discretionary “categorical” funding for non-essential earmark jobs programs;

2. Voters shouldn’t fall for popular water and other bond issues that end up crowding out meeting unmet public pension fund liabilities and other needs. A Zen proverb aptly sums it up: “Let go over a cliff, die completely, and then come back to life — after that you cannot be deceived.”

By Chris Reed

The feudalization of California that Joel Kotkin has written about so smartly for years just keeps accelerating. Wealthy coastal professionals and public employees with deep job security and high pay simply don’t care that the high cost of housing and the lack of decent-paying private-sector jobs are driving away middle- and low-income individuals and families by the hundreds of thousands.

Allysia Finley recently wrote about this phenomenon for the Wall Street Journal in a piece headlined “The Reverse Joads of California”:

“During the Great Depression, some 1.3 million Americans — epitomized by the Joad family in John Steinbeck’s ‘The Grapes of Wrath’ — flocked to California from the heartland. To keep out the so-called Okies, the state enacted a law barring indigent migrants (the law was later declared unconstitutional). Los Angeles even set up a border patrol on the city limits. Soon the state may need to build a fence to keep latter-day Joads from leaving.”

Now historian Walter Russell Mead is detailing how this progressive contempt for the less affluent is combining with the brown energy boom in red states to change basic population patterns in the U.S.:

“The US Census Bureau reports that the Great Plains and Texas are experiencing the country’s most rapid population growth. Thanks to the energy boom, strong hiring growth, rising home prices, and other factors, the Northeast and Midwest are bleeding domestic migrants bound for cities like Austin, Orlando, Phoenix, Denver, and Raleigh.”

One in 25 Americans moved to a different county in 2011, the highest figure in several years. It likely would have been far higher had not so many families been rendered immobile by being underwater on their mortgages.

Social justice = protecting public employees, causes of rich liberals

We’re accustomed to California leading the nation and the world, but the growing feudalization in blue states is a perverse example. It underscores a point that can’t be made enough: The party that supposedly cares about social justice instead often uses minorities as props to protect and advance the interests of its affluent liberal professional elites and its secure, well-paid public employees.

That’s bad enough. What’s appalling is how — at least in California — many elected Latinos don’t mind being props for the most powerful Democratic special interests.

The epitome of this phenomenon: Assembly Speaker John Perez. The Los Angeles Democrat’s primary role? Being the enforcer of a diseased education status quo that values teachers infinitely more than students, especially struggling minorities.

By Chris Reed

With the op-ed in last week’s Wall Street Journal about California’s enormous potential for a fracking-driven energy boom, it’s beginning to look like how Gov. Jerry Brown deals with the issue will be a national story. It’s one that will test the narrative about Brown being the ultimate pragmatist, a liberal who raps regulation and a Democrat who sees tight-fistedness as akin to good government.

Bard College professor Walter Russell Mead is no conservative, but he’s a very thoughtful critic of modern liberalism and its essential unaffordability. He too thinks how the Golden State deals with its oil shale is a huge story. Still, he joins the long list of East Coast pundits who have no feel for California politics:

“California’s greens are sure to raise a fuss over any new drilling in America’s greenest state, but their fears are misplaced. Drilling for shale oil doesn’t risk water contamination in the way drilling for shale gas does, and much of the drilling will be done on existing oil fields. …

“Rather than pushing against any and all new drilling in California, smart greens should be looking for ways to move forward with drilling while ensuring that environmental concerns are taken care of.”

Such “smart greens” do not exist in California. Opposition to fracking has been reflexive and strident. The Golden State’s greens and their bureaucratic allies are so dogmatic that they have actually talked themselves into believing higher energy prices, specifically those created by AB 32, are good for the economy.

The advice from Pennsylvania’s governor

The question for Jerry Brown is whether he will heed the green hysterics — or Ed Rendell, the former Democratic governor of Pennsylvania, who saw fracking create jobs and economic growth in his state without the downside warned of by enviro groups.

New York Gov. Andrew Cuomo has a late-February deadline for deciding whether to extend his state’s ban on fracking. This New York Post story from Nov. 30 would leave one assuming that Rendell would offer Gov. Brown the same advice he offers Gov. Cuomo:

“‘New York would be crazy not to lift the moratorium’ imposed by former Gov. David Paterson in 2008, Rendell told The Post.

“‘I told Gov. Cuomo I would come to testify before any legislative committee,’ Rendell added. ‘I told [Cuomo] it’s a good thing to do.’

“Rendell’s strong pro-fracking comments are a coup for the drilling industry and for economically depressed upstate New York, which is clamoring for jobs.

“The no-nonsense Rendell, a former head of the Democratic National Committee, has a lot of credibility on the issue. … Rendell’s former environmental commissioner suggested it’s outrageous for New York to continue buying natural gas from other states without drilling for its own.

“’I do find it stunningly hypocritical to buy gas that comes from fracking wells somewhere [else] in the US and then say fracking is bad,’ said the former commissioner, John Hanger.

“He argued that natural gas is less polluting than coal or oil. …

“Rendell noted he barred the dumping of fracking water into wells and imposed fracking-well fees to hire 100 additional environmental inspectors.

“’The environmental harm can be significantly reduced or limited,’ by putting safety regulations in place ahead of time, he said.”

Rendell, like Jerry Brown, enjoys a rep as a blunt pragmatist. But Rendell also has a regular-guy populist vibe about him. That’s not our Jerry. Whatever his other qualities, I challenge anyone to point to any single event of his most recent four years as governor that suggests he has empathy for the long-term unemployed. Brown seems unlikely to use Rendell-style rhetoric in touting what fracking will do for hurting Californians.

As for Cuomo, he’s also not a populist. Instead, the New York governor is considered a clever straddler, someone who can win liberal votes by stressing cultural issues like gun control while governing as a pro-business centrist.

It’s hard to imagine how either Brown or Cuomo can finesse fracking, which threatens green dreams of a massive shift to renewable energy sources. Cuomo also wants to be president someday. So it is going to be intriguing — and, at least for political junkies, fun — to watch how fracking and the brown energy revolution play out this year in America’s two most influential states.

By John Seiler

One centrist Democrat I’ve read for years is Walter Russell Mead. He writes the Via Meadea blog for the American Interest. The name is a pun on several levels: his name, mead the beverage, media and via media, Latin for “middle of the road.” So he practically defines centrism in the Democratic Party.

He just commented on Gov. Jerry Brown’s May Revise budget proposal and call for $8.5 billion in tax increases. Mead:

“California’s budget woes combined with poor economic results have long made it a poster child for poor fiscal management. The state’s credit rating has been downgraded to an A- by S&P, the lowest rating for any U.S. state, and its budget and pension shortfalls are infamous. Even more so than in other states, the main political challenge for California’s politicians will be to put the state on firm fiscal footing. Given the state’s poor current condition [and] the rotten condition of its non-Hollywood, non-Silicon Valley economy, this process is bound to take years….

“California’s budget woes combined with poor economic results have long made it a poster child for poor fiscal management. The state’s credit rating has been downgraded to an A- by S&P, the lowest rating for any U.S. state, and its budget and pension shortfalls are infamous. Even more so than in other states, the main political challenge for California’s politicians will be to put the state on firm fiscal footing. Given the state’s poor current condition the rotten condition of its non-Hollywood, non-Silicon Valley economy, this process is bound to take years.”

Remember: Mead is a top Democrat.

“It is all getting worse in a dismal cycle. New business is stifled even as many employers and successful people flee the state or opt not to go there in the first place. The housing bubble covered over some of California’s starker problems, but it will be some time before the residential construction industry picks up again — especially if the rest of California’s economy continues to languish.

“Behind it all is the reality that California is too large and too diverse to be effectively run as a single state. The regional and economic differences among the voters produce political gridlock and the huge size of the state with its many expensive media market make the power of special interests even greater than in most of the rest of the country.”

Most California Democrats still are too dense to get what’s going on. Like Brown, they think the mess can be solved by hitting up rich folks for more tax dollars. After all, who would leave the most beautiful place in the world? Who would not want to “man up,” as Brown himself once urged, and love being gouged for higher taxes?

“Governor Brown is now asking Californians to pay more for less: to raise taxes even as services decrease. In effect, he is behaving like the Greek and Spanish governments — offering voters nothing good, reduced to arguing that all their choices are worse than the swill he is asking them to drink.”

The rest of the country — even other Democrats — is gagging on the smell of the big California goernment whale rotting on the beach.

Some day Californians will smell it, too.