Meg Whitman's economic plan for California will dig our state into an an even deeper hole, not help us get out. It's long on political rhetoric, short on sound economics and today, August 10, the Center of American Progress will host a press call in which UC Berkeley Professors Michael Reich and Robert Reich along with USC Professor Manuel Pastor will tell you why. Michael Reich, economist at Berkeley, recently wrote an analysis of Whitman's economic blueprint entitled Can Californians Trust What Whitman is Selling? that was released today by the Center for American Progress Action Fund. In addition to Reich's report, a letter to California voters from over a dozen prominent economists from universities around the state was also released endorsing the analysis. The voters deserve the facts.
Professor Reich criticizes Whitman's economic plan for presenting an inaccurate diagnosis of California's economic difficulties and inappropriate policies to address them. Reich argues that Whitman's proposals could actually lead to further job losses, slow economic growth and worsen the budget crisis.
Whitman asserts that California no longer has a competitive economy because of a bloated public sector, too much spending, and excessive regulation. As a solution to these ills she promises to restore economic growth and create 2 million private sector jobs by cutting $15 billion in state spending, eliminating 40,000 state employees, revamping public pensions, cutting taxes for the rich, and reducing environmental and worker protections. Reich takes issue with these economic policy proposals for various reasons.
First, his report makes clear that Whitman's proposed tax cuts for businesses and the wealthy would generate little economic benefit while making the state's budget problem worse at a time when it is already strained. He states that Whitman's proposal to cut spending and taxes is misinformed because government spending has a greater "multiplier" for creating jobs than do tax cuts in a severe recession. Additionally, he notes that taxes play a secondary role in the location of business and attraction of skilled workers when compared to other factors such as investment in public services and education.
Second, Reich points out that Whitman's plan doesn't specify from where the $15 billion will be cut nor how these savings will be achieved. Although Whitman asserts that the state government can provide the same level of services while reducing costs by 20 percent there is no evidence supporting this claim. Further cuts to the budget could lead to job losses and would more than likely affect education, health and human services.
Finally, Meg 2010 is assuming that deregulating business will automatically create economic benefits, but this is shallow thinking and hasn't always proven the case. For example, Reich demonstrates that lenient regulation of the California mortgage market led to the foreclosure of a quarter of a million homes. Whitman fails to address the California mortgage crisis and the need for reform.
Similarly, regulatory incentives imposed in California under the Global Warming Solutions Act of 2006 (AB 32) have allowed for the creation of new jobs, highly innovative industries and the increase in venture capitalist investment. Yet Whitman wants to eliminate AB 32, the bipartisan Act that established the first-ever mandatory reporting guidelines for global warming pollution, and set a statewide limit for carbon. Repealing the law through Proposition 23, as Whitman hopes to do, would dampen California's clean energy economy and its competitive edge.
Whitman's approach to California's economy is one of politics and rhetoric rather than sound fact-based solutions. Whitman's proposed elimination of climate change regulation would set California back by many years and her spending cuts would likely outweigh any positive stimulus from her tax cuts. It is quite clear that Meg 2010 is based on unreliable economic theories and studies as noted by the California Legislative Analysts Office. California cannot afford to be at the whim of Whitman's politics, especially not now.
Rebecca Friendly, CAP California Intern, contributed to this blog post.
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The rights "unions or special interest" are comprised of the few and privileged, the limousine using, private jet owning, CEO's and Chairmen of industry, these are the "elites". The greedy bastards, the ones that only believe in an Oligarchy (noticed it is spelled and used correctly, unlike Glenn Beck) for them.
Defintion of insanity: doing the same thing over and over and expecting different results
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Yes I agree with you that would be insane.
Both candidates agree that public pensions in CA are out of control. Brown wants to reduce them for new hires and Whitman wants to treat public employees like private citizens.
Reich believes in a public multiplier greater than 1 but there is world wide data that it probably isn't in most cases. CA government spending has outstripped population growth and inflation for some time. It isn't completely clear that we have been getting a lot more for the increased spending. And the boom and bust funding mechanism of having the state dependent on a few IPO's is problematic.
The mortgage crisis is national, but if either candidate wants to increase mortgage requirements in CA beyond the 5% down the feds are proposing...that may be a good thing.
AB32 is complicated. It will definitely help some CA businesses, but will also raise the price of energy in the state. Most high energy users have left the state already so it may not cause as much harm as some think.
As an independent I hope there is enough detail to each candidate's plan to evaluate.
Yo, the taxpayer is an endangered species unless we can get a Gov that can stop the insanity.
We all pay, rich or poor. Please, stay to the truth.
I keep hearing from conservatives that "businesses" are leaving in "droves" because of the tax rates, and yet, not one can point to a single business name that has left. Now, granted there may be many small businesses that leave, however, they are not large employers, and most likely not incorporated. If any business leaves strictly based on the tax rate, and taxes paid they have terrible accountants.
As for stopping the insanity, get rid of the republican governors! eMeg is currently advocating the same the same platform as Arnold did when he ran in 2002, and 2006. How has that turned out? Arnold brought "business" acumen and "arm twisting" to Sacramento, now we are $20 Billion in the hole. What eMeg proposes won't help the state one bit. Running a business where employees put up with any and everything to keep their jobs, and jump when the boss wants something done, is not the same as Government, where you have to actually "sell" your point of view with "facts" to the people who may or may not help you.
Millions of us non-union folk also support Brown and his plan for fiscal sanity. I wish I had a union to express and protect my interests, BTW.
She is not the least bit interested in serving the people of California.
Basing her campaign upon lies and mud slinging, this above all reveals her lack of credibility.
What is it with all these ‘rich’ incompetent Republicans who think they can just buy votes, no matter how inept they reveal themselves to be with their “help the rich get richer” politics and policies?
Meg, Californians are on to you, you’re not even good for the Middle-Class Americans who vote as Republican, who are among the thousands that have lost their jobs, homes, retirement and everything else, do to the greed and lack of common sense of Republican Party policy.
The exact policy, I might add, that you are campaigning on!
California does not need you or want you!
Remove that drag and we can see private sector job creation.
If CA stays the same I would advise high school students not to go to college. Instead take a civil servant exam and be a part of the new "haves".
Yes, take the civil servant exam and marvel as you make barely enough to afford your rent.
We have tens of thousands of civil servants in CA that make more money than VP's of small to mid size private companies plus generous pensions.
Just think if all the baggers stopped using "public services" the freeways would move along at a normal pace, you could get a cop if you needed one. Probably the only place with no impact is the library because they don't read.
to me that Meg Whitman knows how to create jobs here in California and America for
the future . The ways of Brown and his union supporters are just more of his failed past .
Meg Whitman supports Traditional Marriage and gay rights such as civil unions .
give me hope for California.
Let the union bosses spend millions of the worker's
hard earned money trying to help Jerry Brown the
has been flunky Moonbeam .