Our holiday edition of the Capital Notes Podcast features a conversation with Leon Panetta about the issue of the year: budget gridlock.
Panetta, the well-known former White House chief of staff and congressman from Monterey, is now spending considerable time leading the bipartisan organization California Forward. Their mission: help provide substantive ideas on how to end the annual saga of stalemate over the state budget in Sacramento.
I spoke to Panetta for a story on budget reform that aired this morning on The California Report; this podcast includes the entire interview. The ideas put forward are intriguing, and substantive. Getting any of them put into place, though, is no easy task... and Panetta knows that.
The organization's proposals are listed in detail here.
[Note: Barring breaking news that I can cover, or add something substantive to, from back east while on holiday... return for more Capitol news the week after next. In the meantime, Happy New Year... and wake me when the budget crisis is solved. --JM]
And now, a pause from our regularly scheduled program. I'm headed back east for a few days with family... here's hoping all of you have a safe and happy holiday. Except for tomorrow's podcast (which was pre-recorded), no new postings are likely until after the New Year.
Yes, there might be budget news. But for now, I've settled in for a long winter's nap. Here's hoping you get to do the same.
An agreement on solutions to the state's fiscal crisis is still not in place, but it now seems pretty clear that Governor Schwarzenegger will ultimately accept the most contentious, and possibly risky, part of the plan: a tax increase approved with only votes from legislative Democrats.
The governor all but put the issue to rest at a budget crisis photo op this afternoon here in Sacramento. Though he's been asked several times in the last week as to whether he'd support such a tax increase, he's always left his stance on the issue somewhat murky.
Consider it much less murky now, as I asked him today whether he would ever sign a tax increase that did not have approval of a two-thirds majority.
"In order to save California," said Schwarzenegger, "I am forced to go and just negotiate with the Democrats at this point, and then also resolve this issue just with the Democrats."
That's not necessarily a surprise, given that most sources say the negotiations at this point are largely about the depth and specificity of spending cuts; even the infrastructure issues -- which were the subject of the governor's event next to a threatened levee on the Sacramento River -- seem on the way to being resolved.
But assuming the deal is struck, the majority-only tax increase sets the stage for a certain legal challenge and... once again... a series of "Arnold vs. the GOP" stories. The governor himself added to that storyline today:
"This [tax proposal] is an issue that I was, a situation that I'm forced in because of a lack of participation by the Republicans."
On the subject of the legal challenge, Schwarzenegger simply said this about lawsuits: "Some you win, and some you lose."
"Pay no attention to that man behind the curtain."
It's a great line from a great movie.
And in politics, it's used to convey the sleight of hand that's so common when it comes to fiery campaign rhetoric that occasionally doesn't fit with the nitty gritty of governing.
That tactic may very well be at the heart of Governor Schwarzenegger's latest Budget Armageddon Road Show, which touched down in Fresno on Friday and in Los Angeles this morning. Schwarzenegger certainly wants to make the point, and rightly so, that the impasse here in Sacramento is threatening dozens of important public works projects around the state. Not to mention the state's fiscal survival.
But both events seemed to force Schwarzenegger to borrow a page from the Wiz, by directing attention toward the impacts of the impasse... and away, somewhat, from the solutions to the impasse.
And yes, we're talking about the T word... taxes.... or, ummm, the more family friendly R word: revenues.
"They passed legislation with a whole bunch of high taxes, to punish you," said the governor on Friday, "as if they didn't do anything wrong, you did something wrong."
He was obviously referring to legislative Democrats and their non-Republican revenue proposal. But compare the above comment with one made today in Los Angeles by the governor:
"I'm interested in revenue increases, that's the bottom line."
Republicans have picked up on the apparent misalignment of the two statements. Balking at reports that Schwarzenegger met only with Democratic leaders on Sunday, Assembly GOP Leader Mike Villines said this in a written statement today: "We believe the Governor should instead keep his promise to the people of California and reject the Democrat tax increases."
The morale of this story: message-focused campaign events are sometimes a tough fit with with the complicated, and sometimes contradictory, world of budget negotiations.
And that leads to this question: if the governor and Democrats can, as some now believe, find a compromise on the issue of economic stimulus and spending cuts... how might the rhetoric change when it comes to the tax increase proposal?
Tis the season to be... squabbling about a solution to California's fiscal crisis.
On this week's Capital Notes Podcast, we look back at a very busy week on the state budget front. From competing proposals to defeated bills, controversial solutions, and the threats of Governor Schwarzenegger to veto the Democratic plan... and lay off state workers.
Capitol Weekly editor Anthony York and I check in for what that week might mean in terms of an eventual deal, and whose interests might be left out when it's all said and done.
And yes, the podcast is actually a few days late; the flurry of events at week's end pushed our weekly chat into Monday.
"I always set goals that are so high, they are almost impossible to achieve. Because then you're always hungry for climbing."
That was, for my money, the most noteworthy insight gleaned from the long profile of Governor Schwarzenegger on Sunday's 60 Minutes. The quip is probably the defining image of the governor, an image seen by both his admirers and his detractors.
The rest of the segment? Well, the online reviews from both the left and right on the political spectrum weren't that great. By the way, it should be noted (since CBS did not) that correspondent Scott Pelley didn't just interview Schwarzenegger... he was also the moderator of the governor's climate summit last month in Los Angeles. There were clips of the guv at the event in last night's segment, but no mention of journalist Pelley's dual role.
That's Governor Schwarzenegger's take on the Democratic deficit relief package sent to him this afternoon, an opinion that he said will lead him to veto the $18 billion proposal.
The governor didn't waste much time knocking the plan down; the Legislature had wrapped up work just a little bit before he appeared before reporters and declared the package dead on arrival.
"I was very disappointed," Schwarzenegger said. He then went on to say that the plan never met his definition of a solid economic stimulus, and rattled off a list that Capitol watchers have been hearing about since last night, like not enough public-private partnerships, and not enough public works projects exempted from the California Environmental Quality Act (CEQA).
"It is one thing when you say economic recovery package," he said. "But when you read through it, it actually doesn't do anything."
And he made special note of the package's spending cuts, especially its approach on state employee salary reductions, declaring that the "special interests" had apparently won again (comments reminiscient of Arnold 2004/2005).
The governor took on that issue, and more, in the clip you can hear below.
Democrats immediately struck back for what they say was a too hasty rejection of their work.
"The governor claims he wants to negotiate but then says things must be exactly as he wants," said Assembly Speaker Karen Bass in a written statement. "That is astonishing given the crisis we face."
What was perhaps more interesting was that the governor didn't reject the $18 billion package because of its unusual, and controversial, majority-only tax increase that dominated the legislative debate today.
"I don't get into those debates," he said. "I let someone else do that." Later, as he walked off stage, Schwarzenegger told one reporter that had the stimulus/cuts part of the plan been to his liking, he would've signed it.
So what next? That's the $40 billion question. Democratic leaders say they've sent legislators home for the holidays, but the governor urged them not to leave. And if they come back, what's the key to a deal? Less deference to labor unions when it comes to state worker cuts? More deference to the business community? Less demands from Schwarzenegger?
(An interesting moment today: the guv made it clear that some demands made by the GOP -- worker overtime laws and the like -- weren't deal breakers; "I'm more than happy to compromise on that," he said.)
Hard to see how this process just needs a little more time. Meanwhile, the fiscal crisis looms even larger, even as most thoughts will now turn to the holiday week ahead.
It's not quite over, but there will be no surprise that the Democratic package of majority vote taxes and spending cuts will be on its way to Governor Schwarzenegger by mid-afternoon.
The Schwarzenegger administration worked the phones of those of us in the press corps last night to insist that the guv will veto the package if it doesn't have certain things. And judging today's proposals by the list laid out last night, a veto seems possible.
Democrats are arguing that their concessions on infrastructure projects-- more private sector work, less environmental review -- are fair ones. But aides said the governor wanted such changes for more than just a small list of projects. And Schwarzenegger also reportedly wanted deeper cuts... including more long-term cuts, more cuts in the IHSS (in-home supportive services) program, and more state worker salary cuts (including possible furloughs).
At this juncture, there's a lot of complaining about who's going out further on a limb, the governor or Dems? The majority party certainly has some rank-and-file members who aren't voting for these bills as they move off the floor (about a half dozen at last count), and traditional Democratic interest groups... from labor unions to environmentalists... are grumbling.
On the other hand, Schwarzenegger's apparent willingness to entertain the "reduced calorie" (majority vote) tax proposal puts him squarely at odds with a lot of his occasional allies -- some of whom are already spoiling for a fight in court or at the ballot box.
On a lighter note: one blog reader says he and his colleagues started to clock some of the stem-winding floor speeches this afternoon... measuring the length of the speech against the governor's deficit clock. Ticking in at $470 more deficit every second, the reader offers a pricetag of $112,800 for the speech of Sen. George Runner (R-Antelope Valley) and about $100,000 for the speech of Sen. Mark Leno (D-SF).
With the budget deficit package negotiation still being discussed in private meetings (no floor sessions yet in either chamber), it's come to my attention that there are some great movie clips that sum up the chaos of trying to reach accord at the state Capitol.
Yes, we're stepping away from the serious analysis for a moment.
It started with yesterday's explanation of the so-called "triple flip" tax swap of 2004, and the Rodney Dangerfield movie that featured the "Triple Lindy" diving maneuver.
Last night, in an exchange with a Democratic staffer, I suggested that those of us in the press corps wish we could send the following message to legislators:
... That is, if we really had any way of helping them sort out the $40 billion problem.
His reply: perhaps everyone should use the advice of Chevy Chase...
But I usually feel like another Chevy Chase character -- a reporter, of course -- when trying to get people to clue me in on what's going on:
But a former GOP staffer suggested a far more, well, universal suggestion as the budget saga continues:
And with that, we now return to you to your regular programming...
Well, maybe we should've all gone home a while ago.
Late word from Democratic leadership: no vote tonight on their $18 billion budget deficit plan, due to delays in drafting bill language. Expect votes, we're told, tomorrow morning.