10/08/2012 09:26 pm ET Updated Dec 08, 2012

Jerry Brown Gets an October Surprise

Gov. Jerry Brown is preparing his next moves in a campaign for the Proposition 30 revenue initiative, which just got much more been complicated at the end of last week by the intervention of a few billionaires operating behind the shield of an outfit called the Small Business Action Committee. Funneling the money through the group means that the true source of funding goes unrevealed on TV ads, which is required by state campaign reform law.

Brown's plans to match his big budget cuts with new revenues were already somewhat complicated by heiress Molly Munger's rival income-tax-hike-for-the-schools initiative. But a much bigger threat emerged in dramatic fashion late last week. Not that it doesn't center on the Munger family, however.

Molly Munger's Prop 38 was underwater from the start, and has stayed there, despite her spending nearly $30 million of her money, inherited from her father Charles Munger, the multi-billionaire partner of Warren Buffett.

Prop 30, in contrast, has been in the 50s all along, despite the presence of Munger's initiative and in defiance of the prevalent theory that the presence of it and another tax-related measure, that of equity fund billionaire and environmentalist Tom Steyer would also create too much confusion for voters, dooming all three.

Steyer's initiative would -- or I should say, will, because it is going to pass -- close a convoluted corporate tax loophole created as part of then Gov. Arnold Schwarzenegger's urgent deal to enact an overall tax increase in 2009. Steyer's measure will redirect the $1 billion a year reaped by out-of-state corporations to renewable energy development and to state budget balancing efforts.

While Molly Munger, an attorney in LA, said Sunday on an LA interview show that she is likely to start criticizing Brown's initiative in ads, it's Charlie Munger who is the bigger problem. Charlie Munger, Jr., that is, the Bay Area physicist who is another mega-rich child of Buffett's business partner.

I wrote about the prospect of this happening in "Jerry Brown: Gearing Up a Campaign at Last?" here a few weeks ago. Now it is quite real.

Munger, who has been known as a major political reform advocate for his role in helping pass redistricting reform in California, is avoiding the state's reform legislation requiring full disclosure of the major funders of campaigns by pushing massive amounts through the Small Business Action Committee.

By pushing the money through the SBAC, it is the SBAC -- which is a small business-representing committee in the way that I would be a middle class-representing committee if I set up a bank account and website called the Middle Class Action Committee -- that shows up on the TV ad identifiers and not the real source of the money. And, while Munger is still trying to help pass the Prop 32 initiative to eliminate payroll deductions for public employee union political campaigns, much of that money is going to the "No on 30" campaign, which has booked millions in TV and radio air time.

After raising very little all year, in the last several weeks the SBAC has suddenly raised about $20 million, mostly from Munger, Jr., with all but a few dollars coming from extremely rich people, including a few other billionaires, a few corporations, and an elite Republican fundraising group.

Joel Fox, the career anti-tax/pro-shrink government advocate who appears to be the only ongoing member of the SBAC, ought to drop the "S" and call it the Billionaire Action Committee.

In addition to the irony of Munger, someone known as a political reformer, sliding around the state's campaign advertising disclosure law by using the SBAC to veil his massive spending, there is the irony that one of the major complaints about Prop 30 is that not enough in the way of public pension reform has been achieved to justify it.

With the sort of money the Mungers and the other mega-rich folks spending through the Small Business Action Committee are throwing around, a public pension reform initiative could definitely take flight in this state.

But the campaign to do such an initiative died aborning, removing a key element that Brown needed to push for more through legislation.

It would seem that, protestations to the contrary, trying to defeat tax increases for the rich is a much bigger real priority than trying to enact more in the way of public pension reform.

Schwarzenegger got what his spokespeople, including the current spokesman for "No on 30," described as "historic across-the-board pension reform" enacted two years ago. Brown expanded on that this year, while acknowledging there is more to be done. But with a pension reform initiative going nowhere, he had no additional leverage.

The Small Business Action Committee provides an intriguing veil for the funding of the "No on 30" campaign. It's a political action committee run by career anti-tax/small government activist Joel Fox, an amiable fellow who was the director of the Howard Jarvis Taxpayers Association. He 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 cited, 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.

In the first half of 2012, the Small Business Action Committee PAC raised about $60,000. In the last few weeks it has received around $20 million from just a few sources, mostly Charles Munger, Jr.

And not a small business among them.

Before his sister emerged from relative obscurity -- I'd never heard of her before she surfaced as a big initiative proponent -- Charlie Munger, 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.

Which makes his biggest financial venture to date in politics all the more ironic.

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