California’s GOP Looks to 2 Businesswomen but California’s Political Leadership might need Business Experience

It has been recently reported that California’s Republican Party is pinning its hopes on ex-CEO’s since the state’s Republican base has fall drastically since its hay day during the 1980s. After Arnold Schwarzenegger replaced a Democrat in 2003 to become California's governor, fellow Republicans were hopeful the former movie hero's popularity would help arrest a long decline here. But six years later, Republican voter registration continues to fall, and now many in the party are pegging their hopes on two former corporate chief executives: Meg Whitman and Carly Fiorina. Ms. Whitman, former president and CEO of San Jose-based online-auction company eBay Inc., in February threw her hat into the ring for the 2010 race to succeed Mr. Schwarzenegger when his second and final term as governor ends in January 2011. Ms. Fiorina, former chairman and CEO of Hewlett-Packard Co., this month registered a campaign committee called "Carly for California" for a potential 2010 challenge against Democratic Sen. Barbara Boxer.

However the fact that the Republican Party is pinning its hopes on business women made me wonderful should California’s look for political leadership with business experience especially since the beginning of this decade, it has had major budgetary problems that has resulted in major cut backs to government services and higher taxes for many California businesses in order to balance the state’s ballooning budget. So the star power of both CEOs is likely to give them some momentum. An August Daily Kos poll gave the 53-year-old Ms. Whitman 24% support among California Republicans ahead of the June 8 primary, topping support for her two main challengers, state Insurance Commissioner Steve Poizner and former U.S. Rep. Tom Campbell. A July poll by Rasmussen Reports showed Ms. Boxer with a slim lead of 45% among likely voters to 41% for the 54-year-old Ms. Fiorina in a hypothetical match-up. Ms. Boxer cited that slim lead in a fund-raising letter she sent to potential donors July 29. "We've got our work cut out for us," Ms. Boxer said in the letter.

Still, with the GOP in California primed to tap the likes of business leaders, it could be a great maneuver since the budget woes that plagued the state were seen as disastrous and the steps taken to balance the books were even more catastrophic to some. If America was on the brink of bankruptcy than California was swimming in it since it was sending out IOU’s to those it owed. However the good news about the budgetary problems of California might have created an opportunity for a post-partisanship comeback. Nobody is celebrating, but Gov. Arnold Schwarzenegger and state lawmakers have just demonstrated again that it's possible to bridge the deep partisan divide that has frozen California's Legislature in a condition of near perpetual gridlock.

Last week, for the second time in five months, Schwarzenegger cobbled together a difficult budget plan and joined lawmakers from both parties to support the compromises necessary to pull the state back from the brink of insolvency. In February, he got fellow Republicans to raise taxes temporarily. And now he has persuaded Democrats to make deep and permanent cuts in spending. Both budgets passed with bipartisan votes. They had to, thanks to California's much-maligned requirement that a two-thirds majority of legislators approve any spending bill. And both plans passed despite withering attacks from some of the most powerful interest groups in the state. Most of the focus lately has been on what Schwarzenegger and the Legislature have not done, namely solve the state's fiscal problems once and for all. And that's a valid criticism. California's government will be struggling to make ends meet for years to come. But in the middle of the worst recession since the Great Depression and in the wake of the collapse of the state's once-booming housing industry, solving the entire problem now might be close to impossible.

What Schwarzenegger has done instead is to stabilize the state's finances and enact a handful of reforms that will reduce spending in the future. He has also set the stage for the final year of his two terms in office, when he will try to finish the job he was elected to do — bringing the budget back into balance — while enacting even more sweeping reforms that could change the very structure of California government. If he can do either or both of those things, Schwarzenegger could well leave office as a success. That would be amazing, considering that a few months ago he was given up as politically dead, a lame-duck, irrelevant. Of course, Schwarzenegger himself has to bear much of the blame for the string of deficits over which he has presided. He inherited a mess, but as a candidate in 2003, he never should have pledged to roll back the car tax, and he could have won the state's historic recall election without doing so. But once he made that pledge the centerpiece of his campaign and decided, correctly, that he needed to follow through after taking office, Schwarzenegger should have insisted on spending restraint from the Democrats who controlled the Legislature. He did not.

Even with what Schwarzenegger has done and the fact California’s budget problem is solved for now. Well this is the moment that should make all California’s wonder how long will post-partisanship survive in a state that has gone through extreme budgetary problems twice in less than a decade. This is all the more reason why innovative and creativity is needed in the state of California in order to create a new tax base and economic base for a state that struggles to balance its books. That is why perhaps the state of California needs to look to business leaders so that they not only balance the budget but they prevent meaningless laws from being created that won’t solve the state’s budgetary concerns. One knock on Gov. Schwarzenegger is that he let the Democrats write a mostly meaningless "balanced budget amendment" and presented it to the voters in early 2004 along with a $15 billion bond to restructure the state's debt and borrow some more. He promised that the two measures combined would wean the state off its flow of red ink. But with no long-term plan for slowing the growth in spending, that goal was a mirage, and Schwarzenegger bounced from year to year, using borrowing, fund shifts, one-time money and gimmicks to make the budget appear balanced even as the state kept spending more than it was taking in.

Schwarzenegger could get away with that as long as revenues were growing, as they did through the middle of the decade. Each year's new money effectively covered the shortfall from the year before. But once the housing bubble burst, the state's economy tanked and tax receipts plummeted, no amount of gimmickry could paper over the deficits. By the start of 2009, the shortfall had reached an estimated $40 billion — the difference between the taxes the state was collecting and the cost of providing all services at their current levels for another year. Schwarzenegger and the Legislature had no choice but to cut spending, raise taxes, or both. The result in February was a bipartisan deal that the governor and Democratic leaders fashioned, remarkably, not with Republican moderates peeled away from their caucuses but with the conservative Republican leaders of the Assembly and Senate. Assemblyman Mike Villines of Fresno and Sen. Dave Cogdill of Modesto, along with four other Republican lawmakers, agreed to a temporary tax increase in exchange for the Democrats' support for a spending reform designed to create a rainy-day fund to sequester tax revenue when the economy was strong so that it could be used to avoid deficits in a recession.

Half the taxes and the spending limit, along with several other measures, were put on a special election ballot to be ratified by the voters. When the voters rejected the deal, it was widely viewed as undoing the entire February budget package. But in fact most of that package remained in place. The biggest effect of the vote was on the long term, with the loss of projected revenue from the taxes three and four years down the road. Only about $6 billion of the new shortfall — eventually estimated at $26 billion — came about because of the May 19 vote. The rest was due to the deepening recession and its effect on tax revenues, and to rising costs in government as more people sought public services in the downturn. The new gap would have been $20 billion even if the voters had approved all of the special election proposals.

But the vote did have important political ramifications. Although the campaign against the measures was funded by public employee unions opposed to the spending limit, the result was widely interpreted as a rejection of new taxes, and Schwarzenegger said he would not support any additional tax increases. His position might not have mattered anyway, because the Republican leaders who voted for taxes in February had since been replaced, and no Republican legislators appeared willing to provide the votes necessary to raise more revenue. Instead, Schwarzenegger and the legislative leaders produced a revised budget that accelerated some tax revenue, borrowed from special funds and local governments, and cut projected spending by $15 billion to bring the books back into balance, at least temporarily. The state spent $103 billion through its general fund in 2007-08. In 2008-09, that dropped to $92 billion. The latest budget reduces spending to $84 billion for the coming year — just a little more than the state spent in Schwarzenegger's first full year in office.

Schwarzenegger also won bipartisan support for a series of reforms he has been pushing to slow the growth in spending over time. One repeals automatic cost-of-living increases for public assistance grants that have been in place since Ronald Reagan was governor. Another shortens the time families can be on welfare before losing their grant. He also won new anti-fraud requirements for the state's fastest growing public assistance program, and a plan to computerize and centralize enrollment for health and social programs that could eventually result in the elimination of thousands of public employee positions. The effects of the spending cuts will be felt in almost every corner of California. Schoolchildren will see larger class sizes and, in many places, a shorter academic year. College students will pay higher tuition. Poor children will get less health care, disabled people will have fewer hours of help from caregivers in their homes, immunization programs will be curtailed, local police and fire service will be cut back, parks will get less maintenance, and the state's streets and highways will go without repairs. State offices will be closed three Fridays a month for the next year as employees take unpaid furloughs that amount to a 15 percent pay cut.

At the same time, most Californians will pay higher income taxes, sales taxes and car taxes, at least for the next two years. For a family of four with an income of $100,000 and two cars, the tax increase will amount to more than $1,000 a year. None of that is pleasant, but all of it, and more, is required to balance the cost of the state's services with the taxes it collects to pay for those programs. And none of it would have happened without bipartisan agreement among Schwarzenegger, the Democratic leaders in the Legislature and two sets of Republican leaders. They have not solved the budget problem for good, but they've made some progress, and they have demonstrated that California just might be governable if its political leaders are willing to lead rather than posture and pander.

With solutions to California’s problems like this, it is no wonder why perhaps California needs some business savvy political leaders to lead the revolution for a new California. What the GOP of California is doing is positioning itself to frame the discussion around the economy which is what the state needs to be concerned about and it is perhaps business experience that is needed in some of the state’s highest posts. Think about it, if one or both Republican women are elected, party officials say, the victory could help rescue the California GOP from a steady slide since its heyday in the 1980s, when Republican Gov. George Deukmejian served two terms and a former governor, Ronald Reagan, was in the White House. California's Republican-party registration fell to 31.4% of voters in 2008 from 38.6% in 1988, amid a rise in independent voters, according to the Public Policy Institute of California, a nonpartisan think tank in San Francisco. Democratic registration also has fallen, but to 44.4% from 50.4% over the same period, according to the institute.

"The California Republican Party is smaller, less influential than it used to be," says Ray McNally, a GOP consultant in Sacramento. "But it has the potential to regain its past glory, and it all comes down to which candidates we field for office." Political observers say the business-leader credentials of both Ms. Whitman and Ms. Fiorina could be a big draw at a time when California is facing a monumental economic crisis. The state had to issue IOUs this summer before lawmakers agreed to a deal to close a $24 billion budget shortfall, and has been running in the red almost chronically for the past two years. With California's unemployment rate running at 11.9% as of July -- among the highest in the country -- economic issues are likely to take front and center in the state next year.

"The bottom line for the voters is the economy and jobs," says Allan Zaremberg, president of the California Chamber of Commerce, which endorsed Mr. Schwarzenegger for both his gubernatorial terms. "Our goal is to make that the No. 1 issue for the candidates just as it is for the voters." The emphasis on economic issues could help offset both women's weaknesses in another area: Both are considered moderate on social issues, in a state party that has long been dominated by conservatives. Both are pro-choice on abortion. Democrats, meanwhile, insist both are still too conservative for California. "At the end of the day, they're still garden-variety Republicans that are to the right of where Californians are on fiscal issues, the environment, and choice," says Steven Maviglio, a Democratic strategist in Sacramento.

One obstacle the GOP faces in California, as elsewhere, is that demographic trends, such as increased immigration, tend to favor Democrats. In the governor's race, political strategists say, a woman's presence on the general-election ballot could signal an inclusive image for Republicans. So far, state Attorney General Jerry Brown and San Francisco Mayor Gavin Newsom are leading polls among Democratic candidates for governor. "Republicans face a few different demographic challenges nationally, and running one or two high-profile female candidates in California helps address at least some of that problem," says Dan Schnur, director of the Jesse M. Unruh Institute of Politics at the University of Southern California and former head of communications for Sen. John McCain's presidential campaign.

Some Democratic strategists dismiss the gender advantage, saying both women were also members of a class reviled by many Americans: CEOs. And they say Ms. Fiorina brings considerable baggage: She was pushed out as H-P's chief in 2005, following her tumultuous rein at the Palo Alto computer giant that began in 1999. Ms. Fiorina also was sidelined as a surrogate for last year's GOP campaign after saying neither Mr. McCain nor former Alaska Gov. Sarah Palin could run a major corporation. A spokeswoman for Ms. Fiorina said the former H-P chief gets criticism, as well as praise, because she is decisive. "She is strong, she is outspoken, and it comes from who she is," said the spokeswoman, Beth Miller, who added that Ms. Fiorina has received hundreds of emails from supporters around the country urging her to take on Ms. Boxer.

A spokeswoman for Ms. Whitman said she is focused on issues that Californians care most about now, including jobs and the economy. "She is a candidate who can provide the strong leadership Californians are looking for on these issues," said the spokeswoman, Sarah Pompei. Some Republican officials privately say Ms. Fiorina would likely defeat her only announced rival for the primary, Assemblyman Chuck DeVore, despite his popularity among conservatives. The reason, they say, is that Ms. Fiorina, with her greater name recognition, would likely be in a position to raise far more money to take on Ms. Boxer. Mr. DeVore issued a statement after Ms. Fiorina announced her exploratory run dismissing her as unclear on issues and "an inviting target" for the Democratic senator. "Whoever our candidates are," says Mike Villines, former Republican leader in the Democrat-dominated state Assembly, "the key for Republicans in the state is definitely focused on winning."

Still California’s economic and consistent instability to balance its state budget are major concerns for the state and that is why California’s should look toward business experience to perhaps help the state recover. California’s political leadership is in desperate need of reform and that requires real changes that perhaps someone with the knowledge and experience of running a company can bring to government. The biggest problem with the efforts to reform California government is they aren't reforms at all. The proposals surely would improve the situation, but they hardly would fix a state government that's lost touch with California residents. If you put a problem in front of California lawmakers, they'll first ignore it, then they'll blame the opposing party and finally they'll hold hearings that won't accomplish anything. Nowhere in this process will they find a solution.

For whatever reason -- term limits or just plain incompetence -- we have an entire generation of lawmakers who aren't wired to solve problems. Their only goal is to get re-elected or position themselves to run for another office. Look at the evidence -- Lawmakers can't pass a balanced budget on time or find a solution to California's water crisis. These problems aren't a priority for a political class that has been rewarded for doing nothing. Working hard to get a solution is not part of the job description. During last year's special session on the budget, many of them skipped it to take political junkets out of the country. That included the chairwoman of the Senate Budget Committee. Lawmakers will pass bills banning wild burros from private property and exempt golf carts from traffic laws in upscale communities, but they go limp when they are asked to solve a serious problem. Lawmakers have found security in embracing gridlock.

California was on the verge of bankruptcy and paying bills with IOUs, yet the best the Legislature could do was pass a phony budget to buy them a few more months. Solving the entire budget problem was just too difficult for them. So while groups like California Forward want to tweak California government, I say start over with a bold plan. I'd begin with three main proposals. Toss out the Assembly and Senate, and create a single-house legislature without the redundant staffs and inefficiencies of the current system. Dump the idea that a full-time legislature gives you representatives who work on state problems full time. It just makes them professional politicians who don't understand the real world. A part-time legislature would force lawmakers to go back to their districts and have other jobs so they understand how the laws they pass impact the places where they work.

Make the legislature nonpartisan so that the leaders are elected by a majority vote of all members, and not just the party in power. Lawmakers could still come from political parties, but this would force the leadership to appeal to both parties for support. That would have a moderating influence on the legislature. I got a kick out of Assembly Speaker Karen Bass the other day discussing the need to reform state government. She said she welcomes reform but the Assembly will reform itself on its own schedule. That's code for no reform because the Assembly is incapable of doing anything of substance, including reforming itself. Because lawmakers haven't solved our budget problems, the overspending continued for years. Now huge cuts have been made to programs, and the most vulnerable Californians have taken the brunt of the reductions.

It's time for someone to say this isn't working and tweaking state government isn't the answer. California needs dramatic changes in a system that doesn't work for anyone except the politicians. The "reformers" at California Forward are well-meaning, but many of them come out of the political class. They aren't going to make bold changes to a system where many of their friends still work. It's time for a part-time legislature in a single house. The Assembly and Senate are so last century. This is all the more reason why business leaders are needed in California and perhaps the GOP are on something with the selection of Meg Whitman as the GOP nominee for Governor and Carly Fiorina as the GOP challenger to Barbara Boxer for the United States Senate. So my suggestion to the Democratic Party is to look at business savvy leaders because any time a state deals with two budgetary issues in one decade that forces government shut downs and major layoffs than it is time for a change in the political climate and direction of the state.

California needs politicians who have business experience and experience at running big companies which is what California is or any state’s budget is. California needs someone who can balance its budget while growing its infrastructure in order to build on its economy while keeping the states taxes from being ballooned year after year after year at an enormous rate that hinders many businesses in the state if the taxes that passed this year to balance the budget are made permanent instead of temporary. This is the situation in California and why perhaps Californian’s should look for business leaders to lead its government into a newer and better future for a state starving for a greater vision than it has now.