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California Republic: Pass the Bananas

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Jerry Brown may have thought that the bad old days of campaign finance were gone. At least for a fleeting historical moment. The really bad old days, that is, of unreported spending and cash sloshing everywhere through the system. But now he's finding himself in the midst of some bad new days.

Brown played the lead role in getting rid of the problems mentioned above and a lot more besides when he co-authored and championed the Political Reform Act of 1974, a winning initiative campaign in June 1974 which helped set the stage for his first election as governor of California five months later.

But money in politics, like water, has a way of making its way to the sea. Even big mystery money, for the anything-goes-days of campaign finance are back with a vengeance. It's especially true this season of California politics, in which the grand old bear flag California Republic is increasingly redolent with the unmistakable scent of bananas.

Truly massive amounts of money from a relative handful of individuals, some of them totally hidden from view, have made their way into campaigns against Brown's Prop 30 revenue initiative (which would raise taxes temporarily on the rich, along with a quarter-cent sales tax hike) and for the Prop 32 initiative to neuter public employee union campaign funds. And billionaires are self-funding pet project initiatives to enact major changes in California law.

Brown has seen the ebbs and flows of political money in his long and varied career as California's only three-term Democratic governor, mayor of a big city, state attorney general, and two-time runner-up for the Democratic presidential nomination.

He had some very interesting observations in conversation about his initiative with regard to the rich who would bear 5/6th of its burden as part of his drive to balance the state budget and prevent major cuts to the schools and public universities.

"The top one 1 percent in California get 22 percent of the state's income," Brown notes. "In a $1.9 trillion economy that is roughly $400 billion." (Gross domestic product equates to gross state income.)

The temporary tax hikes "amount to $5 billion from the 1 percent (i.e., the richest 1 percent in society) and $1 billion from the rest" through the temporary quarter-cent sales tax hike.

With the proposed change in rates, Brown says, "That is 1.25 percent more from the 1 percent; with federal deductability it's less than 1 percent."

Apparently there are some folks who really don't want to pay even a little more.

But their identities are being shielded from TV viewers by political operators, and in some cases hidden entirely from everyone, even the news media.

There is still no information on the true source of a stunning $11 million funneled a few days ago through a shadowy Arizona super PAC ("Americans for Responsible Leadership") thence through the "Small Business" Action Committee (SBAC) political laundry into the No on 30 and Yes on 32 (anti-public employee union) campaigns.

The newly hired spokesperson for the "Small Business" committee, which is a useful laundry to avoid state law requiring that major funders be revealed on ads (and which has suddenly come up with nearly $35 million in the past couple months after raising only $60,000 in the first half of the year), says she knows very little about the money. Veteran Republican operative Beth Miller, a former Pete Wilson press secretary, says that neither she nor SBAC operator and career anti-tax/small government operative Joel Fox, former head of the Howard Jarvis Taxpayers Association, knows where the $11 million actually comes from.

Really now. No one serious in politics takes $11 million from an unknown out-of-state outfit without knowing the source of the funds.

Otherwise, for all you know, you may be accepting money from any godawful source, such as a drug cartel.

Clearly, the claim has no credibility.

Fox also runs a blog called Fox and Hounds, almost entirely written by conservative to very conservative activists and lobbyists, and gets involved, usually on the very conservative side side of things, in California campaigns.

In 2010, he used his Small Business Action Committee -- of which I see no real evidence of small business involvement, aside from the committee itself -- as a vehicle for nearly $2 million in attack ads against Brown. They were supposedly issue advocacy ads, so Fox refused to divulge the actual contributors.

But you can bet they weren't small businesses. No one other than Fox himself is cited as a current member of the Small Business Action Committee on the entity's website.

No board of directors is identified, no board of advisers -- well, you get the picture. I believe that James Lacy, a well-known hard right political lawyer, is the SBAC legal counsel. So that would make two members I know of.

Then there are the Mungers, the children of billionaire Charles Munger, business partner of Warren Buffett.

Before his sister Molly, the heiress self-funding her own tax hike for schools initiative, Prop 38, emerged from relative obscurity -- I'd never heard of her before she surfaced as someone supposedly knowing better than the state's elected leadership -- Charlie Munger, Jr., as he is known, was the younger Munger of note in California political circles.

He only began in politics eight years ago as a volunteer in future former state Insurance Commissioner Steve Poizner's 2004 Assembly race in the San Francisco Bay Area. This is before Poizner, who ran for the legislature in 2004 and was elected state insurance commissioner in 2006 as a moderate Republican, went hard right in his run for the 2010 gubernatorial nomination.

Munger then became a big backer of political reform, notably redistricting reform and open primary initiatives.

Which makes his biggest financial venture to date in politics all the more ironic, given how the state's campaign reform laws can shield his role as principal funder of ads behind the rubric of the faux "Small Business" committee.

Along with Molly Munger, whose Prop 38 initiative has always trailed in all public polls, and who launched $5 million in attack ads on Prop 30 in apparent determination to make sure that if she can't get her way no one else can (she backed off after nearly a week of attack ads), there are two other initiative promoters of billionaire vintage.

George Joseph, owner of Mercury Insurance, has spent over $16 million on his Prop 33, which opponents say will overturn state law disallowing previous lack of coverage or gaps in individual auto insurance coverage from being a factor in setting rates.

Then there is hedge-fund billionaire Tom Steyer's Prop 39, which will close a $1 billion-a-year corporate tax loophole, benefiting multi-state corporations based outside California, enacted as part of the convoluted 2009 budget deal to gain more revenue overall, devoting most of the money for the first five years into renewable energy and energy efficiency.

The tax revenues the budget deal generated were temporary and have long since expired, but the huge tax break lives on, confounding today's budget-makers.

While Steyer's measure would also contribute to the state's general fund, especially after the first five years, it's problematic in its own way.

Steyer is a good man. I've had lunch with him, and, much more to the point, he joined forces with then-Governor Arnold Schwarzenegger and others to crush a November 2010 initiative that would have effectively eliminated California's landmark climate change program.

I'm all for green energy, as readers are well aware, and have been since the '70s. But is this the absolute best use of these funds?

It's a good use, and I'm for the initiative. But we're presented with a huge fiscal choice containing no other options.

Of course, from Steyer's perspective, he probably figures that if he waits for the California state legislature to do anything else, he will wait for a very long time. Indeed, two previous efforts to reverse the big tax break and direct the funds to economic development and education uses -- one by Brown and one by Assembly Speaker John Perez -- have come up short.

So I'm not lumping his effort in with the rest of the banana republic crew, just noting that it's a hell of a way to run a railroad.

And to think that I used to love bananas.

You can check things during the day on my site, New West Notes ... www.newwestnotes.com.

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