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The Empire Strikes Back: Billionaire Meg Whitman Battles Back in the California Governor's Race

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After finally losing nearly all her lead last week in the Republican primary to succeed Arnold Schwarzenegger as governor of California, billionaire Meg Whitman is battling back against super-rich state Insurance Commissioner Steve Poizner, whom she led a few months ago by a whopping 50 points. She has a lead again, but it's only about a fifth what it was, and less than her campaign claims. With little more than two weeks to go till the primary, with over a third of the voters still undecided, she's in a precarious position.

Before delving again into the particulars of this race, let's pause a moment in wonderment at this spectacle before us. (And yes, this weekend is the 30th anniversary of the launch of a little movie called The Empire Strikes Back.)

Coincident with the 30th anniversary of the launch of The Empire Strikes Back, billionaire Meg Whitman's campaign has battled back against Steve Poizner's surge in the Republican gubernatorial primary.

Whitman is really showing us the possible future of oligarchic politics if she survives this far more difficult than expected primary and then manages to pull out a victory against Jerry Brown, who's barely spent a dime so far, in the fall. It's a possible future of unlimited spending and unlimited spin. Which is also, paradoxically, the problem with her candidacy.

Whitman has broken all spending records for a statewide race in America. (Only New York Mayor Michael Bloomberg, who began as a Republican in that most Democratic of cities, has spent more on a local or state race.) And she's still trying to get out of the primary. And Poizner, the guy who put the GPS chip into mobile phones, while being heavily outspent here, has spent more than any other Republican primary candidate in California. Yet, despite all this massive spending, over a third of GOP voters are still undecided. It's not that the Republicans' conservative base doesn't like the views coming from both candidates; each is hugging the rightward rail of conservative orthodoxy. Perhaps they're turned off by all the negativity. It will be interesting to see how many actually vote.

Since first revealing on April 16th on my New West Notes blog that the Republican primary race for governor of California was closing dramatically, I've kept on top of the numbers.

On Monday, I reported that billionaire Meg Whitman was fighting back against the surge of super-rich state Insurance Commissioner Steve Poizner, fueled by attacks against her stance on illegal immigration and her deep ties to Goldman Sachs, the board of which she left in the midst of controversy over her inside trades. And that her lead, which had diminished so sharply as to be nearly non-existent -- and in one sounding was briefly a narrow deficit) -- was in the high single digits, and possibly a bit higher, thanks to a boost over the weekend.

Whitman hits back against the conservative Poizner as "Just another liberal Sacramento politician" for supporting abortion rights and questioning the Bush tax cuts.

Poizner fell back some in private polling last weekend. Though nowhere near to the extent of a poll touted by Whitman chief strategist Mike Murphy, whose similar pronouncements during the 2005 California special election on behalf of Schwarzenegger's disastrous quartet of initiatives were routinely wrong. This poll, commissioned by Whitman ally Joel Fox, a pro-business/anti-tax lobbyist who once headed the Howard Jarvis Taxpayers Association, was conducted by some little-known PR firm and purports to have Whitman 18 points in the lead. Fat chance.

Why might Poizner have fallen back over the weekend, from running essentially even to the high single digits or perhaps a bit more?

Two reasons. First, he is being attacked, and is still not that well known. A Whitman ad slamming him as a "liberal," which scored him for past support of partial birth abortion and, supposedly, tax increases and Al Gore, while visually uninteresting, raised doubts about the suddenly ascendant candidate. Second, Poizner's very effective TV ad featuring conservative icon Congressman Tom McClintock, which was both a positive and a negative ad in that an image of Schwarzenegger morphed into Whitman, cycled off the air.

Which suggests a few things. Namely, that people need to know more about the relatively little-known Poizner -- Whitman ran negative TV ads against him before he ever went on the air, disrupting the normal biographical roll-out -- and that the one-time moderate Republican needs a validator for his conservative bona fides. (Both candidates have legitimacy problems.)

But for Poizner, help was already on the way. In the form of Whitman's odd new 60-second spot. As I predicted at the end of last week, it did not clear much onto the airwaves during watchable time over the weekend. Once it came on the air, it took up air time from other, more effective, ads, and limited her impressions, as TV time is sold in 30-second increments.

For her part, Whitman tried to complement her advertising move with a new policy initiative. Never let it be said that political consultants don't try the same stunts more than once. They do, merely adding more spin to distract from their essential spuriousness.

In a move strangely reminiscent of Arnold Schwarzenegger's campaign in the 2003 California recall election, Whitman called for a Cabinet-level inspector general and a special state grand jury to root out "$10 to $15 billion in waste, fraud, and abuse" in the California state budget.

Meg Whitman likes this oddly defensive 60-second ad. But the more it runs, the more it helps Poizner.

In 2003, Schwarzenegger, though he did not cite such a dramatic figure, pledged to conduct a special state audit as governor to root out, yes, "waste, fraud, and abuse."

Schwarzenegger's private polling showed that most voters, who don't really have much idea about the state budget, felt that as much as a third of the budget was wasted.

So, advised by consultant Mike Murphy, who is now Whitman's chief strategist (and who was also Florida Governor Jeb Bush's consultant), Schwarzenegger imported the very conservative Florida budget director Donna Arduin to conduct the audit.

Arduin didn't find all that waste, fraud, and abuse. In fact, she didn't find much at all. But after her preliminary report, she was kept on as state budget director, where she had a controversial tenure.

Schwarzenegger instituted the California Performance Review to find long-term efficiencies in government. It didn't come up with dramatic easy savings, either, and fell afoul of opposition from liberal interest groups and, most tellingly, internal infighting within the administration.

Now, oddly, after massive budget cuts, Whitman is still parroting the notion that there are these massive savings to be found by getting rid of waste, fraud, and abuse.

Steve Poizner held a press conference on Thursday to discuss his rise in the polls and to criticize the joint appearance by President Barack Obama and Mexican President Felipe Calderon.

If they were there, Schwarzenegger would have gotten rid of them by now.

In fairness, Whitman may simply be unaware of the recent history here. By her own admission, she didn't bother to vote in the 2003 recall, merely one of the most famous and galvanizing elections in history, and a key moment of distress for the state about which she purports to care so deeply that she now wants to govern it.

For his part, the de facto Democratic nominee, former Governor-turned-Attorney General Jerry Brown, denounced Whitman's ideas as "nonsense" and added bureaucracy to boot campaigning at UC Santa Barbara and in Los Angeles.

Talking on the phone between campaign events, Brown made it clear that he doesn't take Whitman's recycled consultant-derived notions about state government seriously.

Frankly, it's not easy to take someone seriously who has been talking non-stop for over a year about cutting 40,000 state government jobs as some sort of fiscal panacea -- which the arithmetic shows it clearly is not -- but is still unable to say which jobs she would cut.

In a recent Sacramento TV news interview, Whitman struggled badly at first to go beyond her talking point. Finally, she said she would cut jobs in prisons.

Unfortunately for Whitman, she had already called for building more prisons. Oops.

The reality is that California has the nation's third-lowest ratio of full-time government employees to population, according to the nonpartisan Center for Continuing Study of the California Economy. And roughly two-thirds of the 100,000 state jobs over which the governor has direct authority are in the prison system. As Schwarzenegger spokesman Aaron McLear puts it: "I don't know how she does it without endangering public safety."

Whitman's next big move of the week was to put another $4 million from her personal fortune into her campaign. That's in addition to the $5 million she put in last week.

Whitman has now officially contributed $68 million to her primary campaign. But it's really more like $70 million, as she has not reported heavy early spending on consultants, travel, and research.

With money she's raised from her corporate contacts, and possibly more personal funds, she'll end up spending at least $85 million trying to win the Republican primary that almost all experts had ceded to her months ago.

Whitman has been talking for over a year about the supposed fiscal panacea of eliminating 40,000 state worker jobs, but still can't say what should be cut.

In the meantime, the Public Policy Institute of California (PPIC), one of the last remaining major public polls in California, has finally released its long awaited poll, which was published in newspapers Thursday, having come off embargo late the night before.

Whitman leads Poizner 38% to 29% In the PPIC poll, with the balance undecided. In March, Whitman led Poizner by 50 points, 61% to 11%. Jerry Brown leads both Republicans.

Whitman's support has dropped at least 17 points across all demographic groups, with the sharpest declines among those who are not college graduates (29 points) and those whose annual household incomes are at least $80,000 (28 points).

Whitman chief strategist Murphy, who presided over the historic debacle known as Governor Arnold Schwarzenegger's "Year of Reform" special election package of four statewide initiatives back when he was still Schwarzenegger's chief strategist in 2005, did an enormous amount of pre-spin and post-spin around this poll, trying to stave off the devastating headlines that it nonetheless engendered. Murphy spun so hard that he has been pretzelized.

When Poizner had closed to within 20 points or so a few weeks ago, Murphy claimed that he was really 31 points behind, trotting out a memo from pollster John McLaughlin. Who had a bad experience with Murphy in 2005, with Murphy citing McLaughlin's polling as he continued to insist that the doomed Schwarzenegger initiatives were really in good shape.

When Poizner had closed to within single digits, Murphy claimed that Whitman had a lead in the high double digits. Then, with the PPIC poll about to come out, Murphy touted a poll commissioned by Whitman ally Joel Fox, a pro-business/anti-tax lobbyist, which purported to show that Whitman was 18 points ahead. The difference being that the Fox poll was more recent and hence more accurate than the PPIC effort.

Now that the PPIC poll is out, Murphy has been twittering and skittering furiously. He claims that Whitman is really 25 points ahead now, and told Democratic operative Steve Maviglio, who had twittered that the race was within the polling margin of error, that he was behind the curve. That that's what it had been a week earlier. Which, of course, was when Murphy was claiming that Whitman had a double digit lead. Oops. Pretzelized.

A more recent poll, as in completed two days ago, that I've seen has Whitman 10 points ahead of Poizner. She might be a little bit higher than that.

What else does the PPIC poll tell us, which in turn tells us a lot about California's political environment heading into the general election?

For starters, reflecting a reaction against hyperpartisan politics, Proposition 14, the open primary initiative which would create a run-off between the top two candidates regardless of party, is on cruise control headed to victory in the June primary, leading 60% to 27%. I've looked at the competitive situation, and there isn't much to change the course of this Schwarzenegger-backed measure. Its political support is far broader than that, incidentally, but this campaign may err, if at all, on the side of caution in terms of spelling it all out.

The PPIC poll also at the marijuana legalization measure targeted for the November ballot, and the findings are decidedly mixed. 49% yes, 48% no. That's really not where you want to start out with such a controversial measure.

And what do California voters think of the state's chronic budget mess? Somewhat surprisingly, given Schwarzenegger's low job approval rating, his draconian budget plan gets pretty good marks.

Californians are also divided over Schwarzenegger's May budget revision for the next fiscal year, which proposes big cuts in health and human services, as well as cutting spending for prisons and state employee compensation. The governor says his plan will maintain spending levels for K-12 education and increase funding for higher education. The plan includes no new taxes. After reading a brief description of the plan to 829 survey respondents, PPIC finds that 46 percent of Californians are satisfied with the plan and 43 percent are dissatisfied. Most Californians are concerned (40% very concerned, 40% somewhat concerned) about the impact of spending cuts in the governor's plan. Yet they are divided (46% yes, 49% no) about whether tax increases should be included.

Californians would consider some other ways to raise revenues: 67 percent favor raising the top rate of the state income tax paid by the wealthiest Californians and 58 percent would favor raising state taxes paid by California corporations. Residents are much less likely to support extending the state sales tax to services that are not currently taxed (35%) or increasing the vehicle license fee (28%).

All this points to a challenging environment for any candidate for the California governorship this fall, though more so for a conservative Republican, which is what both Poizner and Whitman are tagged as coming out of this primary battle.

Poizner's brand new TV ad shows Whitman and Mexican President Felipe Calderon saying the same thing about illegal immigration, opposing the Arizona law so popular with Republicans.

And what's the next twist in the GOP primary? Perhaps a return of illegal immigration to center stage. It seemed to fade a bit early in the week, with Whitman doing her best to muddy the waters with the backing of former Governor Pete Wilson, the champion of 1994's draconian Proposition 187.

Then Mexican President Felipe Calderon visited Washington, for a state dinner with President Barack Obama and an address to a joint session of Congress. Calderon denounced the hot button Arizona immigration law for two days running.

Naturally, Poizner is putting out a new TV ad this weekend showing Whitman and Calderon saying the same thing on the issue.

The fun never sets ...

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