- The Washington Times - Tuesday, January 14, 2003

Did you know that George Clooney's big break was in the 1988 sequel, "Return of the Killer Tomatoes"? Ten years earlier, Steve Peace produced the original "Attack of the Killer Tomatoes." And now, a generation later, Gov. Gray Davis named Mr. Peace as California budget director ($131,000 annually). Mr. Davis also named spouse Cheryl Price to a state board ($118,000 a year). Thus, Mr. Peace at-any-price now oversees what the Los Angeles Times termed the state's "metastasizing" $35 billion deficit, largely of the governor's making.
Rotten tomatoes?
Simply put, California's revenues under Mr. Davis increased comfortably more than inflation and population, combined. But California's governor and his zombie Democratic legislative majority ("Night of the Living Dead") spent considerably beyond even these surplus billions.
What can we (not) learn from Gray Davis?
m Since the time Mr. Peace created his first cult classic, the inmate population in California prisons has risen five-fold to about 160,000. Current numbers partly reflect longer prison sentences and the "three strikes and you're out" law. Yet, most of California's prisoners are classified "nonviolent." Arkansas, Montana, Oklahoma and Texas are some of the states looking to release certain prisoners early. Indeed, many of California's drug offenders probably should be released.
But would that sit well with the state's most powerful and fastest-growing union? The California Correctional Peace Officers Association was the largest contributor to the reelection campaign of Gov. Gray Davis. Three million bucks. And they received a $500 million raise. And commodities speculator Hillary Clinton thought she knew leverage!
The Democratic chair of the prisons legislative committee asks, "Do you want to see more seniors with their bag lunch, or do you want to see more people in prisons?" Maybe California's 500 age 70-plus prisoners should get their bag lunch on the outside.
But California's questions are cosmic. Why allow allied government unions to continue, in effect, to elect governors and legislatures? And should prison guards make more than teachers? Finally, do we need all these prisoners?
Anti-communist Richard Nixon went to China. Anti-crime Republican governors will sell prisons.
Which raises the definition of orthodoxy. Many Republican leaders opposed Democratic President John F. Kennedy's tax cuts. Now Republicans and President George W. Bush champion lower taxes. The Democrats, led by Gray Davis in California, want to raise taxes. Ironically, Mr. Davis has the chutzpah to blame Mr. Bush for California's problems.
Do the Davis tax proposals have implications for other states?
Mr. Davis proposes to raise taxes on politically incorrect smokers by another $1.10 a pack. They are mainly non-voters, even illegal immigrants. Here's a non-sequitur for other states the fiscal implications of dispensing scarce state resources to illegals. This remains a taboo subject.
The Davis sales-tax increase is mischievous. It's lost at McDonald's, blatant at the car dealer. More profoundly, the nearly 10 percent sales tax, if other states follow, will further erode the national sales-tax base. Consumers will turn even more to Internet purchases. In most states, buyers can avoid their state's higher sales taxes if the Web sales site has no in-state store.
Finally, there's the Davis soak-the-rich income-tax scheme. State income taxes, unlike cigarette and sales taxes, remain deductible at the federal level. So the feds subsidize the rich. (James Carville, eat your heart out.)
Here's the kicker. The teachers had amended California's constitution to require 50 percent of new state revenue for public schools. The Davis plan would shift the new revenue and certain state responsibilities to California's counties. Thus, Mr. Davis evades the education mandate. The teachers union refused Mr. Davis when he asked for a puny $1 million campaign contribution.
The real question is should Mr. Davis and other governors increase taxes permanently, if at all? Even in this fiscal swamp, interest rates remain attractive for state borrowing. Why not change procedures and borrow against the future?
If you want to know what not to do, look at California. For example, Mr. Davis changed overtime from weekly hours (over 40) to daily hours (over 8). This destroyed flexibility, comp time, and four-day work weeks. More recently, California adopted compulsory family leave, requiring every employer to become a social welfare agency.
No wonder a nationwide survey of business executives ranked California as the worst place to do business. As goes California, so goes the nation? Gray Davis hopes so. Then, business will have nowhere to move.

Arnold Steinberg is a political strategist with a background in economics and public policy.


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