California Faces an Intra-Party Fight

As news reports out of California show, newly elected Governor Jerry Brown, is facing severe economic issues.  The budget is out of whack to the tune of about $28 Billion (in February of this year), near the size of the visible Massachusetts State budget—the part they talk about in The Globe.  The California State economy is in trouble and thus the State Budget is in trouble and state pensions are a big part of the issue.  Having defeated Ms Meg Whitman for a return to being Governor, and with a Democratic Party controlled State Assembly, he has his job cut out for him, as this article in Reason Magazine shows.  The title is "Farewell, My Lovely:  How public pensions killed progressive California" and the author is Reporter Tim Cavanaugh.  I like the title.

Pension money means money that is not going for other "Progressive" causes.  The article author talks about the view of Orange County Supervisor John M W Moorlach.♠  Mr Moorlach is the current County Board Chairman and a Republican.

Moorlach alludes to a striking feature of the current pension reform movement:  It is a revolt led by the supporters of big government. At every level, Californians want assertive government.

...

This is why the most aggressive lobbying for pension reform is coming not from fiscal conservatives but from progressives, who see the logarithmic cascade of pension liability as a threat to public parks, environmental programs, and rail transit.

Thus, one interesting aspect of the ongoing issue of pension reform is that it is a Democratic Party "in house" battle.  As Writer Cavanaugh notes,

The pension fight is properly understood not as a liberal-conservative issue but as a class struggle within the Democratic Party.

Some day we will see the same thing in Massachusetts and, as in California, it will be a Red on Red fight.♥

Mr Cavanaugh describes the situation thusly:

Yet when Brown looks out on Democrat-controlled California, he seems less like Caesar at the Rubicon than Wojciech Jaruzelski at the Gdansk Shipyard.  Brown is champion of a workers’ party with monopoly control, yet all his plans are being derailed by a labor movement nobody can harness.

The pensions are the problem here, it would appear.

Medium-term unfunded liabilities for government employee pensions are pegged by the Legislative Analyst’s Office at $136 billion—and that’s a lowball figure.  Legislative analyst Mac Taylor acknowledges in his current fiscal outlook report that the estimate leaves out billions in funding shortfalls at the pension funds for public school teachers and University of California employees.  In the next 10 years, taxpayers will most likely be on the hook for somewhere between $325 billion and $500 billion.  (Over the past five years, state revenues averaged $94.5 billion per year.)

The real battleground for pension reform is not Wisconsin, it is California.  It will be very interesting to see how it plays out.

For me it is sad to see California figuratively slipping into the abyss.  It would be not only sad but economically devastating to those of us in Lowell to see the same thing happen in the Commonwealth of Massachusetts.  As they say, an ounce of prevention is worth a pound of cure.

Regards  —  Cliff

♠  In the interest of full disclosure, Mr Moorlach represents the district where I used to vote, before I moved to Lowell.
♥  What?  With Massachusetts being through and through Democratic controlled, how can it be Red on Red?  Please don't confused convention with reality.  The Red and Blue convention, long before it became the colors of US political parties, was the way of showing forces in a battle on a map.  We, the good guys, were BLUE and the bad guys, the enemy, were RED.  Thus, in this situation, RED on RED, since ... well, you understand.