|
![]() Time to take politics seriously? Businesss Stake in the Budget Battle
For committing job creation and adding to our propserity, business faces
William
E. Saracino Lead analyst, California Public Policy Foundation Prosperity Projec Posted: July 23 The California Chamber of Commerce just released a new list of bad for business and job killer bills introduced in this still relatively young legislative session. Among the highlights:
tax and
fee increases
SB1X 3 and SB 17 (Escutia; D- Montebello) to ease
more burdensome, costly regulation SB 2 (Burton, D-San Francisco) to require employers either to provide health insurance for every employee in California and their dependents or pay a health care coverage tax into a state fund; SB 921 (Kuehl, D-Santa Monica) to create a new taxpayer-funded state bureaucracy establishing a single- payer healthcare system in California; SB 57 (Burton, D-San Francisco) to mandate yearly increases in the state minimum wage (the Chamber thinks this will cost employers $304 million annually); AB 572 (Yee, D-San Francisco) creating new incentives to sue employers by significantly expanding the bases for workplace retaliation claims and establishing new personal liability, new crimes, million dollar fines, and jail time for California employers; AB 623 (Lieber, D- Mountain View) moving Proposition 65 provisions into the Penal Code, criminalizing violations had enough? Theres plenty more. The Chamber lists more than 60 (!) of these bills. Boy, its sure fortunate business made all those campaign donations to Democrats. Otherwise, real trouble might be brewing! As the Chambers list indicates, at least some people in the business community know they are up against it in Sacramento. But this knowledge rarely issues in any concrete action beyond lobbying the Capitol as if office holders who owe their positions, their whole careers, to the support of their Party and the powerful constituencies whose donations and political support keep that Party strong, as if such office holders are going to oppose their Partys overall ideological direction because a lobbyist comes along and asks them to. Democrats primary constituencies include trial lawyers, labor unions, and a gaggle of pro-government regulation zealots, all of whose agendas not only diametrically oppose the interests of business and a free economy, but specifically target business either as the cash cows whose milk keeps these constituencies going, as the villain in the morality tales that underpin their ideological fantasies, or both Against this, business marshals its lists of job killer bills, its lobbyists, and its pro-Democrat political donations, in an effort to buy relief. After years of such political activity, comes this list of 60 bills, on top of recent workers comp, forced agricultural owner- union arbitration, and other sharp sticks in businesss eyes. As Dr. Venkman said in Ghostbusters: OK, the usual stuffs not workin. What, then, is businesss stake in the budget battle? First, of course, there are the effects for the states overall business climate of the particular spending, taxation, and regulatory proposals put forward directly or indirectly related to the business of enacting a California spending plan for 2003-04. But beyond the individual bills, there is the larger picture involving the overall political contest between the two dominant, competing ideas of governments proper role, represented, as a practical matter, by the two major political parties. It is at this level that business seems strangely disinterested in protecting its own interests. Business appears to reason that its sole proper concern is attending to its own business the production, marketing, distribution, research, financial management, and other activities necessary to keep going and that, therefore, political activity is little more than a distraction to be disposed of as quickly and cheaply as possible, that the concerns of politicians are too petty to be allowed to interfere with the serious business of doing business. In short, business ignores the overall contest between the parties, engaging only in ritualistic attempts to buy off this or that politician through campaign donations given without regard to the recipients position on business issues, only his apparent power to effect, one way or the other, enactment of business-impacting policy. Following this on the cheap gameplan, business gets its clocks cleaned regularly by Sacramentos big boys for whom politics is deadly serious. The first step toward seriously competing in this game is to adopt an equally serious understanding of the stakes, the players, the game plans, the timetables, the power structures all the elements that determine winners and losers in Sacramento and, on election day, throughout the state. Lesson One is to notice that this is a team sport: it is no coincidence that every bad bill listed at the opening of this article was authord by a Democrat. For that matter, it turns out that every one of the Chambers 60 bad bills have Democrat authors. Should we be shocked? By proposing such legislation, Democrats merely adhere to their Partys basic ideology. Republican ideas reject such policies. Exceptions can be found, but only often enough to prove the rule. Business owners may dislike Republicans, individually or collectively, or they may not. They may think Republicans are horribly inept if they do, they will have lots of company, within and outside the GOP (though business owners, like the rest of us, should consider carefully the source of most major media reporting on this subject before reaching conclusions). They may consider politics a dirty game, a bore, the province of small minds and smaller characters, and, to an extent, be right. But if they use any of these excuses for continuing to operate as they do now in Sacramento, business will continue to find politics every last unpleasant bit of it invading their worlds at every turn. This gorgon must be faced, not hid from or fed in hopes it will leave business alone. It wont, until it is defeated. That is businesss stake in the budget battle. Turning to some specifics:
Taxes The Democrat answer to the budget dilemma that four years of their profligacy has brought on is a one- note symphony of raise taxes on everything and everybody. They will occasionally mouth the words spending cuts for the media or in hopes of gulling the more guileless members of the GOP caucuses, but their spending cuts have all the heft of cotton candy and will melt away just as quickly once the tax increases are agreed upon. The California economy endures the ninth highest tax burden in the country. Senate Democrat Leader John Burtons reaction to that, as he recently told the Los Angeles Times, was that we still lagged significantly behind other highly developed states like Massachusetts, New Jersey, and most of the progressive northeastern states. At last an honest man! Democrat progress for California is emulating Ted Kennedys Taxachusetts. Burton understandably shies away from making comparisons between California and neighboring Oregon, Nevada, and Arizona. The businesses and citizens of all three of these states carry a tax burden between 20 and 40 percent less than that imposed on Californians. It shouldnt take qualification for MENSA membership to figure out why these states have received a steady flow of California expatriation. This year, Democrats propose to deal with a seemingly ever-growing deficit with higher taxes not surprisingly, though the scope of their tax and fee hikes might be: on cars, personal income, business income, cigarettes, alcohol, business transactions, junk food, business property, goods and services providers currently exempt from taxation, Internet purchases, gasoline, the general sales tax, hunting licenses, diapers, etc., ad nauseam. If it breathes, moves, or takes up shelf space, tax it. The Republican alternative is simple and direct. No ... repeat: none ... repeat: zero tax hikes. Instead, the GOP proposes a relatively painless 9 percent across- the-board spending reduction and rolling over a portion of the debt to next fiscal year. That ends the crisis completely. The budget is balanced, the inconvenience is spread broadly across a wide spectrum of citizens, and the state is spared another growth spurt of intrusive, wasteful government. The comparison between the two parties approaches couldnt be starker, and it illustrates that California businesses and taxpayers are in this battle together: what is good for the average family is good for business, and vice versa. Senator Tom McClintock recently made the point with his usual lucidity in the Orange County Register: Skyrocketing business taxes ultimately fall on families in one of three ways: as consumers through higher prices, as employees through lower wages, or as investors through lower earnings. And most investments arent the fortunes of wealthy fat cats theyre mom and dads retirement savings. Conversely, higher taxes on families mean less disposable income for families to spend with their local merchants and businesses. And higher taxes, as deficit cures, are nearly always counter-productive. Government revenues shrink because they re- duce private sector spending for sales taxable purchases, for income tax-producing jobs, and for business tax-producing business growth. Pete Wilsons 1991 tax increases, passed to solve that years budget crisis, were followed by further economic contraction and deeper budget deficits. Californias fiscal woes continued until all Wilsons tax increases either expired or were repealed. Meanwhile, the national economy (feeling the full effect of Ronald Reagans early 80s tax cuts) roared ahead, eventually dragging along the California economy. But will the states economy have even that eventual solace to look forward to? Putting it another way: do Democrats even those who talk about temporary tax increases, intended to last only until the budget chasm closes ever vote to reduce or eliminate a tax, fee, or other device that brings in money for them to spend? May I see a show of hands? No hands? Good, Im glad to see everyone is paying attention.
Regulation On regulation, see the Chamber bills listed earlier (and ask for the full list: call the California Chamber of Commerce, contact Sara Lee, at 916/444-6670). An unmistakable theme that Democrat policy proposals hammer home again and again is that businesss legitimate interests, not to mention its beneficial roles as job-provider and major taxpayer, are matters of zero importance. If anything, running a business is seen as a kind of alien or enemy activity. The workplace is designated a laboratory for testing liberal social theories; business owners, managers, and employees are to be forced to conform to liberals quasi-religious moral codes; business profits are to be diverted to finance as many liberal state-run program ideas as possible; privacy for business owners and managers is to be invaded; business owners who violate any of the vast web of liberal-imposed regulations are to be treated, to an ever-growing extent, as criminals, suffering prison sentences and other criminal penalties; and the fruits of productive business activity are to be opened up as booty for as many liberal special interests and political support groups as possible A mania appears to be loose here, a manic appetite to squeeze every last golden egg from the goose as quickly as theyll come, alongside frenzied efforts to kill off the hated goose completely. Quite a study in abnormal psychology, no doubt, but the point for business is that the game has ceased to be a game at all.
Taking politics seriously By any measure, California business, at least California big business, sold its soul to the Democrats last year. The portion of big business donations that went to Gray Davis rather than to Republican businessman Bill Simon is about 92 percent. Donation patterns for the rest of the constitutional offices are roughly the same. A quick glance at contribution patterns in legislative races shows a bit more balance, but still indicates that Democrats got way more than half the business donations. To put this in perspective, suppose Republicans held a two-house legislative majority, routinely introducing and passing bills emaciating the tort law regime upon which trial lawyers depend for their lavish incomes and eliminating thousands of state worker jobs, cutting the pay of thousands more, and launching a long-term initiative to privatize most, if not all, public services and yet, notwithstanding any of it, trial lawyers and public employee unions not only went on covering Republican campaign costs to an almost embarrassing degree, but resolutely ignored the campaigns of pro-trial lawyer and pro-union candidates, largely or completely depriving them of donations. But perhaps a light is breaking through. Last election cycle, 21st Century Insurance Company did something that stunned and amazed many veteran California political observers, but which was no different from what every sentient interest group, except business, does routinely: it gave significant donations significant enough to be decisive in actual elections to the opponents of the Party responsible for blasting it repeatedly through its actions in office. 21st Century had been singled out for pillorying by the Democrats in the wake of the Northridge earthquake. In 2002 came the last straw: a Democrat bill extending the period for filing earthquake claims, enacted years after every policy holder, knowing the date of the old deadline (many years after the quake), had had ample opportunity to file their claims. 21st Century, which evidently had followed standard business practice in lavishly donating to Democrat campaign coffers over the years, vigorously opposed the bill. Legislative Democrats, showing the usual human concern for an adversary too passive to fight back, passed the claims extension on a party line vote. Then 21st Century tore up the usual script. Instead of continuing to bankroll its enemies, the company gave approximately $1 million to Republican Parties around the state, which, in turn, put the money, strictly according to the provisions of the current John Burton- authored campaign finance law, into GOP legislative campaigns. Under Burtons provisions, donations to political parties made shortly before an election need not be reported until the following year. 21st Centurys donations were instrumental in GOP wins in three hotly-contested and narrowly won legislative races, one in the Senate and two in the Assembly. About a month after news of the donations came out, Democrats complained to the Los Angeles Times, which dutifully ran lengthy exposŽ-style stories full of dark- sounding intrigue, but mentioning nothing actually illegal. This was payback from the Democrats and the liberals at the Times to 21st Century and to the GOP for committing effective politics. A secondary purpose was served in signaling other businesses that they should think twice before attempting to participate wisely in their own behalf in the democratic process. But the matter died down quickly when no one could find anything wrong with 21st Centurys actions. Suppose 10 businesses had acted like 21st Century. How many more Democrats, facing well-funded opponents, would have lost? Bill Simon came within a few percentage points of defeating Gray Davis, despite being outspent by $35 million. What if business had spread out some of that Davis 92 percent of donations more evenly? How many of the 60 job killer bills would have so much as seen the light of day, with Simons veto pen awaiting any that crossed his desk? What if GOP Controller nominee Tom McClintock, who lost by a razor-thin margin, had received even relatively small support from business? As Controller, Tom would have helped Californias long-term business climate in a thousand ways, not least as a future strong, pro-free market GOP gubernatorial or U.S. Senate candidate. Suppose business, instead of giving $2 to $3 million in the 2002 primaries to moderate Democrats (11 of the 12 they supported lost), had sent those dollars to Republicans. How many more pro- business legislators would be in place now to help kill the job killers? Business owners, and employees, stake in the budget battle is their right to make a living and freedom to run their productive lives as they, not Sacramento liberals, think they should. Perhaps more business leaders than those at 21st Century are beginning to see that. But then again, perhaps not. I just learned that a full complement of business lobbyists trooped to a mid- March Sacramento fund raiser for moderate Democrats. The event was put together by liberal Democrat operative David Townsend. The supposedly moderate recipients of the cash include incumbents who voted for many of last years Cal Chamber job killer bills, including the worst among them. Will this worm turn? No telling yet.
|
Copyright
© 2003 by The California Public Policy Foundation,
publisher of California Political Review and CPR Online
Post Office Box 931, Camarillo, CA 93011 | 805/445-9483 | [email protected]
Subscribe to California Political Review: click here