Posts tagged Jerry Brown
A Clue to Brown’s Pension Strategy
Jan 29th
Shuffled in with Arnold Schwarzenegger’s last-minute appointments was one – a very good one – that almost slipped by largely unnoticed, until The Buzz blog at the Sacramento Bee outed it today:
Among other actions on his way out the door, then-Gov. Arnold Schwarzenegger appointed Cameron Percy to the California State Teachers’ Retirement System board in December.
Percy, 26, has a graduate degree from Stanford. While he was a student, he helped write “Going For Broke: Reforming California’s Public Employee Pension Systems.”
That’s the report that Schwarzenegger and Co. used as a source for the oft-cited and highly disputed calculation that California’s Big Three pension systems faced a collective $500 billion in unfunded liabilities.
If there’s one thing California’s public employee unions hate, it’s the Stanford report – so they are decidedly unhappy with Percy’s appointment. When Percy et. al. released their study (which you can download here), CalPERS immediately fired off a page chock full of stats that lacked one critical piece of information: Its own calculation of the unfunded liability. I’ve spent over 30 years in the communications business where we have a word for that sort of thing: stupid.
The unions’ pension unfunded liability calculation, it turns out, is about one-tenth that of Stanford’s: a measly, insignificant $55 billion. Why worry? That’s only $1,500 out of the pockets of every man, woman and child in the state and, heck, it’s not going to get any bigger, right?
The difference between the two numbers is that Stanford used a 4.14 percent “risk-free” discount rate, the rate private companies must use when calculating their pension liabilities. California’s public employee pensions use between 7.5 percent and 8 percent – a performance they’re not achieving, and most experts agree they have no hope of achieving on a sustained basis, and certainly not now.
With public support for Brown’s special election tax increase proposal barely breaking 50 percent in the early polling, he knows passing the tax increases may force him to bite the union hand that fed his election campaign, and submit a companion pension reform proposal with real teeth. So far, Brown, who left Oakland with its own $310 million in unfunded pension liabilities, has only talked about minor tweaks – just enough to not tick off the unions, but hardly enough to show voters he’s really serious about fixing California. Look for support of the tax increase measures to drop dramatically if Brown doesn’t take the unfunded pension liability more seriously.
Percy’s nomination will give us a clear insight into Brown’s thoughts as he grapples with this dilemma. The appointment must be confirmed by the Dem-dominated Senate, but Percy may not even get that far, since Brown has the power to boot him and name his own appointee. How Brown,and the Senate act on the appointment will tell California voters and public employee union bosses what they can expect from Brown. It’s routine for incoming governors to replace the nominees of out-going governors, but there’s nothing at all routine about this case.
Crazifornia on CalWatchdog
Jan 10th
The good folks at Pacific Research Institute’s CalWatchdog blog – Steve Greenhut, to be specific – posted another one of my op/eds today. Here’s a little intro to encourage you to read more:
If Gov. Jerry Brown has any chance of draining California’s budget swamp of red ink, he’s going to need more than aggressive spending cuts and votes for more taxes, as he proposes. He’s also going to need a resurgence in California’s business environment, but at one of the state’s few commerce success stories, the ports of Los Angeles and Long Beach, there are more signs of classic California non-competitiveness than there are of a return to health for the state’s business sector.
Yes, activity is up by single digits over last year at the ports, which are America’s busiest, as companies slowly bring in more goods from Asia to rebuild inventories they had let drop through the Great Recession. But even as more than 12 million containers will be unloaded at Southern California docks this year, there are grave threats to the future of Southern California’s logistics behemoths, and they’re posed by exactly the same elements that threaten the rest of the state’s economy – powerful unions and California’s incessant compulsion to be a world leader in the environmental movement without thought to the cost.
To read the rest of the piece, click through to CalWatchdog.
Here are the other Crazifornia op/eds they’ve run:
Daily Caller – From RINO to Redux
Jan 3rd
The Daily Caller, one of the nation’s leading conservative news websites, ran my Moonbeam Inaugural op/ed today. It also appears below, but please read it at the Daily Caller (here), since they’re always interested in seeing how many readers their op/eds get.
Thanks!
From RINO to Redux
Jan 2nd
(Please read this post at The Daily Caller, since they’re interested in how much traffic their authors generate. Thanks!)
Today, Arnold Schwarzenegger signs his last gubernatorial documents and spiffs up the governor’s office so he can get his security deposit back as the next tenant prepares to move in tomorrow.
The man who promised his charisma was sufficient to break down the boxes that hobble Sacramento leaves the place with all its boxes intact, and more than a few new boxes to boot – they’re just painted a greener shade of regulatory over-kill. As it turns out, the Schwarzenegger legacy isn’t governmental and budgetary reform; it’s AB 32 and SB 375, California’s hysterical global warming twins, and the passel of business-strangling regulations spawned in their wake. The incoming governor is apparently intent on protecting Schwarzenegger’s green legacy with the appointment of John Laird, co-author of AB 32, as Secretary of Natural Resources, ensuring that natural resources, not resourceful humans, will continue to be the focus of California state government. The leftist YubaNet.com declared the Laird appointment “sets off green fireworks,” adding:
On the first day of the New Year, Governor Brown showed that he is committed to a green agenda by appointing John Laird as the Secretary of Resources. … From waste reducer to wildlife protector Laird is sure to make 2011 a great year for the environment.
But California’s regulatory crusade to coddle the environment without care for the cost is not going to be the focus for Jerry Brown, as much as he might like it to be – it’s going to be the budget, debt and the ever-less-sustainable public employee pension funding gaps. If Jerry Brown is going to succeed on that score, he’s eventually going to have to take on the public employee unions he empowered in the 1970s when he signed the law giving them truly impressive collective bargaining rights.
It was the unions that terminated the Terminator. When Schwarzenegger put four mostly sensible reform initiatives on a special election ballot in 2005, he was handily disposed of by the unions, particularly the California Teachers Association, which mortgaged its headquarters to buy even more anti-Schwarzenegger ads. By most accounts, Brown is also plotting a special election strategy to fix the budgetary mess. First, he will get a budget through Sacramento (now, thanks to Proposition 25, requiring only the votes of the Legislature’s Democrats) that will include sweeping cuts in spending for popular state services, then he will call a special election and ask the voters to do what even the state’s all-powerful Democrats don’t have enough votes to accomplish: raise taxes and fees.
He should be able to count on union support for the higher taxes, but the voter’s mid-term rejection of Prop 21’s “park tax” and their approval of Prop 22’s and Prop 26’s restrictions on Sacramento’s non-tax revenue generation tricks indicates Brown’s going to have a tough time pulling off a special election win. Even if he does – and especially if he doesn’t – he’s still going to have to deal with pension reform if he has any hope of fixing the state’s fiscal mess. Meaningful reform seems just about impossible under Brown, as Orange County Register opinion columnist Mark Landsbaum wrote today:
Considering their clout, if public employee unions had a better candidate to run for governor, wouldn’t they have run him? Why didn’t they? Because Jerry Brown’s candidacy was their dream come true.
California’s future will be anything but golden unless Brown pulls off a “Nixon goes to China” with the state’s public employee unions and brokers sweeping and significant changes to public employee benefits. Tweaking at pension formulas isn’t going to be enough. Even the wholesale selling out of younger public employees by older pension-rich ones isn’t going to pull California out of the hole. No, dialing back California’s half-trillion-dollar unfunded pension liability before the state’s finances collapse entirely is going to take the kind of reform that will pose a threat to the future clout of the very public employee unions that swept Brown into office.
Can he do it? I don’t think so. His appointments thus far, while still few in number, indicate that the Jerry Brown we’re getting is the Jerry Brown we feared we’d get – Moonbeam Redux. He will use the Democrat’s complete control of Sacramento and the money and influence of his union benefactors to do everything he can to protect the status quo, because unlike where Sacramento was when he first came into office on the heels of Ronald Reagan, Sacramento today is exactly as he would like it to be – fat with government jobs and programs, committed to environmental over-regulation, and firmly in the hands of the unions he knows and loves.
Jerry Brown’s real challenge arises from the fact that the status quo will be impossible to protect unless the state’s businesses shake off the national recession and the state’s obsession with business-flogging and somehow begin to generate more jobs and more tax payments. Short of that unlikely salvation, it’s anyone’s guess how Brown will succeed in keeping his benefactors happy while dodging California’s looming fiscal black hole.
Thank God for California’s Public Employees!
Dec 23rd
Cross-posted at the FlashReport Weblog on California Politics
I’m looking sadly at the family refrigerator, imagining it as barren white slab, stripped of all the children’s artwork that makes it such an emotional focus of our home. And I’m thanking God for California’s public employees, because they made it possible for the Pearce clan, and all California clans, to enjoy the best of Crayola art while we put away the milk and cold cuts.
And it’s not just that. Without the fine folks whose paychecks are signed by John Chiang, we would be living in a gloomy and dangerous place. (I thought California was a gloomy and dangerous place, but now I know better.) We wouldn’t have known of this great debt we have to our state employees were it not for Willie Pelote of the American Federal of State, County and Municipal Employees, who wrote an open letter to Jerry Brown and published it in today’s California Labor Federation blog,
“Imagine being unable to take a walk in a park on a sunny afternoon or being unable to borrow books from the library or to hang a picture drawn by your child at school on the refrigerator.
“Imagine traversing potholed roadways or waiting hours to catch a train or bus home after work or telling your children that you can’t afford to send them to college.”
Pelote tells us that’s not just what could happen, no, it’s what already is happening for “the majority of Californians who have to work for a living” – as opposed, I suppose, to that minority of trust fund baby Californians who sit around drinking champagne and sending their butlers to cash their dividend checks. Why? Because we’ve bought into the false reality of thinking we can balance the budget by doing with a smaller state government. Foolish us!
I’m so glad Pelote made this an open letter instead of one of those infernal closed letters, because now I understand the risks to the very bedrock of American ideals – equal opportunity and a fair deal – that we would face if we ever eliminate a single additional state employee from the payroll. It’s not just that these folks are “stewards of the sources of our common wealth,” why they’re “necessarily more highly educated, more highly skilled, and more highly experienced” than the rest of us schleps. And that’s why they all rush to retire at 50 or 55 with their full salary and benefit package for life – if they didn’t, they’d become so much more educated, skilled and experienced that their heads would probably explode.
Pelote is really trying to help the incoming governor, because Lord knows, the man’s got a Gordian knot of problems to deal with. I’m sure Brown is relieved that the solution to it all is so clear. First, Pelote says, we’ll drop those pesky Enterprise Zones and the tax credits they provide to evil private sector employers. Then we’ll eliminate all those nasty corporate tax loopholes because they might encourage private companies to hire people who otherwise could become AFSCME union members. And the state should just knock off this crazy hiring of private contracting firms because, as Pelote has already explained, the public sector guys and gals are better educated, more skilled and more experienced – and let’s not forget, they’re nicer, less self-centered and more responsive, too!
Then, just to make sure there’s enough money flowing in to keep those benefits dollars flowing out, we’ll raise taxes. Not just any taxes, but taxes on capitalist, free-market types by taxing stock trades. That’ll hurt Wall Street, and we all know it’s Wall Street that we have to blame for our ills, not public employees, like the ones that forced Wall Street to give home loans to just about anyone, and the dedicated state employees who invested CalPERS money in top-of-the-market real estate. With the bureaucrats doing such a smashing job, why bother with a free market anyway, Pelote asks?
“If the free market is really as ideal a mechanism for creating wealth as its supporters claim, then why must taxpayers subsidize the operations of private sector companies?
“In fact, since the private sector has so far been unwilling or unable to produce the kinds of jobs we need to pull California out of recession, that is all the more reason to be vigilant with our tax dollars.”
Amen! Now that we’ve regulated and taxed it into oblivion, let’s just do away with that burdensome private sector entirely. Pelote and his union friends, smart as they are, can see a better world, where California agencies, departments, commissions, boards and councils will employ all of us, and as our union fees go to feather Pelote’s bed, we’ll spend our time writing regulations for each other in one big, happy festival of oversight and micromanagement, with comfortable salaries and splendid retirements for all.
It’s interesting that Pelote – who, after all, is just a consonant and a vowel away from “Pelosi” – couldn’t find a way to get the words “retirement benefits” or “pension spiking” into his open letter, or that with all his talk of rosier state finances he eluded any mention of the state’s $500 billion unfunded liability for the retirement and lifetime health benefits of our cherished older stewards of the sources of our common wealth. I’d probably understand why he did this if only I were better educated, more skilled and had more experience.
Crazifornia Exclusive! Jerry Brown, Oil Baron
Apr 16th
I’ve done a lot of interviews researching the Crazifornia Project; this one was by far the most interesting. There’s a lot more to this story, but this op/ed – indicative of the kind of things you’ll read in Crazifornia – appeared in the Washington Times on-line edition on April 16, 2009.
Pearce: Jerry Brown, Oil Baron
Little-known Foreign Oil Holdings Might Tint Decisions
By Laer Pearce
When Jerry Brown recently held his first fundraiser as an official candidate for governor, he chose as the venue the Sacramento apartment where he lived the last time he held that office, after famously declining to live in the governor’s mansion. Faced with multimillionaire Republican opponents, Mr. Brown wants to be seen as just a regular public employee, trying to hold his own against tycoons at the top of America’s wealth disparity. While politically expedient, the image of Jerry Brown as everyman is patently false.
Mr. Brown has a lot of money – how much exactly is not public – and unhappily for his environmentalist and global-warming-alarmist supporters, it’s oil money. Even more unhappily for his campaign managers, it’s money that may have led him to an attack against California’s largest employer and a rewriting of state regulations to feather the family nest.
Sacramento Bee political columnist Dan Walters spent months researching the source of the Brown family wealth 30 years ago and recently shared the story with me in his small office crowded with family pictures, catty-cornered from the Capitol.
In a nutshell: After Jerry’s father, Pat, left the governorship in 1967, he was introduced to the Indonesian generals who had just overthrown the country’s post-colonial dictator, Sukarno, and set up a military junta. The former governor was able to cobble together a consortium of banks that lent $12 billion to the junta – “a lot of money in the late ’60s,” Mr. Walters said. The banks were interested in the immense Royal Dutch Shell petroleum holdings in Indonesia, which Sukarno had nationalized and the junta controlled.
The grateful generals then set up two trading firms – one in Hong Kong and one in California – that handled the oil-exporting paperwork and were rewarded with a fee for each barrel, “a little taste, as they might say in the Mafia,” Mr. Walters said with a grin. Pat Brown was given 100 percent ownership of the California brokerage and half-ownership of the Hong Kong office. The deal was a very lucrative one because California’s early clean-air standards set a sulfur limit for the fuel burned in power plants – a limit only the clean, low-sulfur oil from Indonesia could meet.
Jerry Brown, alone among the Brown children, didn’t get a share of the business, but that changed after Alaskan oil came on the scene and threatened the monopoly Indonesian oil had in California’s power plants.
Chevron had just finished building a refinery in El Segundo that was designed to process Alaskan crude to compete against Indonesian oil for the California power-plant market. Before the facility could refine a barrel of North Slope crude, however, Jerry Brown’s Air Resources Board – headed up by his former campaign manager, Tom Quinn – passed a new air-quality standard for sulfur just barely too high for Chevron to meet with Alaskan oil. That cemented the Indonesian monopoly, and the Brown family, as the only oil provider to the California power industry.
Not surprisingly, when Jerry Brown left the governorship, Pat Brown finally gave him his own cut of the family oil business.
“To this day, Jerry’s very sensitive about it,” Mr. Walters told me. “He just hates the idea that people will bring it up because what it is, is the Brown family is in partnership with these corrupt, murderous dictators. It’s not something that a Jerry Brown wants to be associated with.”
The junta generals of Pat Brown’s day have given way to the more transparent, democratic government that rules in Indonesia today. The question here in California is: Will Jerry Brown also become more transparent and share with voters the details of this foreign influence on his personal finances?
Laer Pearce is a 30-year public-affairs professional currently involved in the Crazifornia Project, chronicling egregious policies responsible for tarnishing the Golden State.
