The Lesson of June 2010: Corporate Power Can Be Beaten


Posted on 09 June 2010

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By Robert Cruickshank

In looking at the disparate results of the June 2010 election, there are two themes that stand out to me:

1. Republicans will do what they are told by their corporate masters. Meg Whitman and Carly Fiorina won their primaries because they spent an enormous amount of money to tell Republicans that they should vote for CEOs because they're smarter than everyone else and more likely to beat the Democrat this fall. That's it.

Joe Mathews has a good take on Whitman's victory, but it really does come down to her money. Same for Fiorina. Both dominated the messaging and TV airwaves with their ads, and did so early and often.

But it's not only the money - it's who they are. The Republican Party is the party of big corporations, with a voter base that believes big business can do no wrong. Look at the maps: Props 16 and 17 did very well in the Republican-friendly counties of Southern California. Prop 16 went down in the Central Valley partly because of voter anger at PG&E over the smart meters, but in SoCal where PG&E is unknown, Republicans said "sure, let's give corporations whatever they ask."

2. Corporations can be beaten. For the rest of California, however, unlimited corporate power is not seen as a positive thing. Letting them dominate and distort our elections with their money is rightly seen as a huge problem, whereas to Republicans it's business as usual.

The defeat of both Propositions 16 and 17 is a major victory for progressives whose importance cannot possibly be underestimated. PG&E spent $40 million to pass it. The opposition? They spent $100,000. But with groups like the Courage Campaign (where I work as Public Policy Director) pitching in to help educate and organize voters, we were able to mobilize progressive activists to get the word out about this bad proposition, turn out to the polls, and make sure Prop 16 went down. Prop 17's story was very similar, with opponents being outspent 10 to 1.
 
We weren't able to beat Prop 14 or pass Prop 15. The voters really do want major political change, and don't yet understand the benefits of public funding. But Prop 15 did much better than Prop 89, which suggests victory for clean money is near.

As we go into the fall campaign season, the arc of this election is now clear: it is a battle between corporate wealth and populist democracy. Our victory in Prop 16 and Prop 17 show how we can win that battle. Time to build and organize to win again in November.

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Robert Cruickshank is the Public Policy Director at the Courage Campaign. He is also a contributing editor at Calitics.com.

this comment was submitted at http://biggovernment.com/tdelbeccaro/2010/01/22/california-democrats-ign...

in response to Thomas Del Beccaro:

Wow, what a painfully biased and inaccurate article. First, California's "Medicare for all" legislation involves healthcare already provided by the state, but removes the 33% profit of insurance companies, allowing not only for cost-savings to the state's annual budget, it also allows for preventative services that would lower future healthcare costs.

Second, you claim California is suffering from a chronic and prolonged budget crisis brought on by runaway spending and exorbitant taxing. That just simply isn't the case. CalChamber's website shows California's business taxes are lower and more favorable to business than most other states. Recent revelations about Texas' budget deficit further allays worry California's crisis is worse than GOP controlled states where business taxes are kept disproportionately low. The real culprit to the golden state's budget crisis is the commercial property tax assessment following Prop 13's passage and the 2/3rds majority rule that has allowed the GOP minority to block any revenue generation like a natural resources extraction fee which exists in every other state in the union, Democrat and Republican.

In fact, according to the LA Times Michael Hiltzik, since 1997 there have been more than 1,500 tax breaks, credits or reductions in California, and only 83 tax increases because tax breaks require only a simple majority while increases in California require a 2/3rds supermajority. It's no wonder at the secretary of state's website you can find listings of political lobbying committees sponsored by oil companies like Chevron "to maintain the 2/3rds majority rule."

It is estimated that at 240 million barrels a year, a 9% oil extraction fee, which is lower by half to Alaska's or Texas' resources tax, would generate $1 billion per year for California. But GOP candidates block any attempt to levy this tax, one imposed by every other state in the union.

An even bigger tax break for business comes as a result of prop 13's passage. Property was supposed to be reassessed at the time of sale, but because commercial property sales can be complex, from corporate mergers to wall street buyouts, commercial property owners have created a loophole that allows them to avoid reassessment. A report recently found that commercial property before prop 13 counted for 60% of property tax revenue to the state, with 40% residential property. Last year, however, in every county in the state, homeowners now pay 60% of the revenue as most commercial property in the state remains assessed at 1970's and 1980's tax rates. A majority of these property owners are out-of-state, making this tax break for established businesses unproductive in returning money to the economy and, rather than help new small business, this loophole gives established businesses a huge advantage over new businesses trying to break into the CA market.

The revenue lost through this loophole? $7.5 billion dollars annually. AB2492 (Ammiano), seeks to rectify this problem, but GOP legislators and the governor oppose it.

Just those two issues, unresolved because of the 2/3rds majority rule and held in place by pro-business mostly GOP legislators, account for $8.5 billion in revenue. Now let's hear where you come up with $8.5 billion in revenue or why you believe residential property owners should shoulder a greater burden in taxes or why you believe companies like Exxon, which the Drudge Report claimed "paid no federal taxes last year despite $10 billion dollar quarterly profits" should not pay California anything for extracting and refining its finite natural resources. First defend these egregious and unfair tax breaks, then we can discuss Schwarzenegger's $2.5 billion in corporate tax breaks the GOP wouldn't rescind amidst this "crisis" and we can perhaps begin a real dialogue based on facts, not political cynicism.

Californian's need to fairly assess commercial property by supporting AB2492, levy a natural resources extraction fee on oil and gas like every other state in the union, and rescind Schwarzenegger's $2.5 billion in further corporate tax giveaways. That $11 billion dollars, restored to the state's coffers, will go a long way toward solving California's annual budget shortfall. It is business interests that have manipulated state politics and created this crisis, as much as any real estate meltdown. When times were good business leaders said it was time to reduce taxes to businesses because the state had enough revenue, but when the economy tanked, those same lobbyists said a poor economy requires business tax breaks. You would think they'd understand they can't have it both ways, but their GOP influence has allowed business interests to create this crisis, then point the finger at the poor and social programs, as this author has done here. But read closely. He cites no real evidence because none actually supports his premise.