Tuesday, August 17, 2010

California Prospects

Here we are, well into August, and the top two candidates for governor still haven't provided voters with any kind of detailed road map for pulling the state out of the swamp. The American Prospect's Harold Meyerson, doing a temporary stint for the Los Angeles Times, has an op-ed piece which offers the candidates a clue as to how bringing the state back could be accomplished.

Both Whitman and Brown understand that loss of manufacturing is a key factor in the state's economic decline, and they have put forth economic plans to address it. But neither of their strategies does enough to restore the state to its onetime industrial preeminence.

Whitman seeks to remedy the problem through classic Republican policies: reducing taxes and regulations on businesses. Some of her targeted tax cuts make sense, like increasing the R&D tax credit and creating a tax credit for factory equipment. But the massive cuts she proposes to state services will only further the decline of California's aging infrastructure and harm a public education system that badly needs improvement.

Brown also favors tax reductions for factory equipment, and outlines other incentives to boost manufacturing. He also commits himself to major infrastructure upgrades, and he singles out the clean-energy sector as the industry the state should do most to help. Unlike Whitman's plan, his clean-energy program has a demand as well as a supply side: By mandating that 33% of the state's electricity come from renewable sources, his plan would create a larger market for the industry it seeks to boost.

Brown's ideas are good as far as they go, but they don't go far enough in one key particular: identifying the revenue sources for the improvement of our infrastructure and the rebirth of our manufacturing. ...

How can the state, in its sadly depleted condition, make that kind of investment now? One possibility might be a state infrastructure bank of the type proposed on a national level by Connecticut Democratic Rep. Rosa L. DeLauro. As DeLauro has sketched it out, such a bank, by committing $25 billion in public funds, could generate close to $600 billion in public-private funds going to build or improve rails, roads, bridges, airports and the like. Another possibility could be a state innovations bank, which could fund some of the clean-energy activities that Brown has proposed, and could help innovative new companies scale up to mass production here rather than go abroad. Former Intel CEO Andy Grove has identified this stateside scaling-up issue as crucial to America's economic future. If California has any of the ingenuity and gumption it used to have, surely the state can play a role in helping innovative companies thrive here.

As Atrios keeps reminding us, "With interest rates this low it's stupid for the government not to borrow absurd amounts of money to spend on things like rebuilding crumbling bridges and redoing water/sewage systems." There's nothing wrong with borrowing the money (except for California's dismal rating from the Wall Street types) or from pounding down the door of the federal government to push Rep. DeLauro's good idea into actual law.

California has pulled itself up in the past (as Mr. Meyerson reminds us), particularly under former Governor Pat Brown (the current candidate's father), whom Mr. Meyerson calls "California's greatest governor." Funding a state bank for the purposes of shoring up our educational system, our infrastructure, and our fledgling energy businesses was talked about in the past, but the idea never took hold. I think the time for that idea to take hold is now.

The trick is getting the candidates to talk in specific terms about such an approach. Neither seems willing to take that risk at this stage, which is unfortunate. California voters are desperate for some kind of answer to the problems we face.

There's still time for such a frank discussion, but November is drawing close. Hopefully Jerry Brown will start campaigning more vigorously by talking in the specific terms the electorate is thirsting for.

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