As voters prepare to go to the polls next week, Republican Meg Whitman and Democrat Jerry Brown are hitting the campaign trail for their final push in the governor's race. And what is the biggest issue the next governor will have to deal with, according to California's likely voters? Jobs, or more specifically, the lack of them.
As of September 2010, 2.3 million Californians were unemployed. In the latest Public Policy Institute of California (PPIC) poll, released October 20, 59 percent of both Republicans and Democrats cited jobs and the economy as their most immediate concerns, making them among the rare nonpartisan issues this election cycle.
Both candidates have pushed job creation to the forefront of their platforms, touting their commitment to new jobs using slogans deployed at events and debates and in commercials. "Jobs are on the way," claims Whitman. "Let's get California working again," declares Brown.
But according to Steven Levy, director and senior economist at the Center for Continuing Study of the California Economy, neither candidate can do much, if anything, to stimulate job growth in the short term. Governors have limited power over economic growth, he said. "Nearly all of the changes in the California economy, historically, are related to changes in the national and world economy," he said. "Otherwise, you'd have the silliness that Arnold Schwarzenegger created the recession."
Instead, Levy said, the next governor can make a difference by laying out policy ideas for specific California-based industries that stimulate the economy down the road. "What [Whitman and Brown] ought to be talking about is the very small power that states actually have to affect their attractiveness--the business climate--so that California might get a higher share of the nation's jobs than it would otherwise through public policy," Levy said.
If the next governor will have little say in job creation over the next few years, what about those plans each candidate is touting? Whitman promises tax cuts and credits—eliminating the small business start-up and factory taxes, increasing research and development tax credits, promoting investments in water conservation technology in agriculture and eliminating the state capital gains tax.
Mark Paul, senior scholar at the New America Foundation, a nonpartisan public policy institute, finds many of Whitman's proposals, like the small business start-up tax and the R&D credit, to be nice but slightly empty gestures. He notes that their impact on businesspeople would be limited because these fees and credits are already business-friendly. The start-up fee, for example, is only $800 a year, which Paul says is hardly a deal breaker for bringing business into California. Similarly, California's current R&D credit is already at 15 percent, which is fairly competitive with the 20 percent credit offered federally and promised by Whitman.
Paul's biggest concern about Whitman's economic plan is her idea to eliminate the state capital gains tax. "What Whitman has proposed, were she be able to carry it out, would actually be bad for California," he said, because it would mean $5 billion less in tax revenue for the state's general fund.
Brown promises to stimulate green energy jobs, primarily by concentrating on local electricity generation, reducing energy demands and increasing building and appliance efficiency. He also says he will encourage business start-ups and expansions, primarily in the construction, manufacturing and infrastructure fields, and will invest in California's education system.
Scholars like Paul agree that investment in K-14 and higher education is needed to advance job creation and economic growth in the future by keeping California's best and brightest in California. "This is the human capital century, in which the ideas in people's heads, what they know, is going to drive economic growth where they are," Paul said.
But Paul's issue with Brown's plan is a lack of available funds to implement the ideas. "Those are all crucial areas for California's future and are the right thing to be talking about, but there is nothing specific about where to find money," he said.
Both Levy and Paul note that Brown has the right idea when he talks about green technology being an issue California could latch onto now to become an industry leader—and therefore, an area of job creation—in the future. "If we assume governments around world will make some move to reduce carbon emissions, then the places that create the solar technologies or any of those green technologies will become an important growth industry in future," Levy said.
But in the meantime, Paul says, California voters are only being told what they want to hear—promises of jobs that are unlikely to appear anytime soon. "This has been an insulting campaign for Californians," Paul said. "We're not being told the truth. We're not being treated like adults by either candidate. The adult truth is, governors don't get to have much say in job growth and the economy in the short-run."
Promises, Promises--And Not a Job in Sight by Lauren Callahan