Just over seven years ago, as Arnold Schwarzenegger ran for governor in the 2003 recall election, he constantly visited small business after small business over a period of weeks in September and October.
The companies ranged from trucking firms to makers of airplane parts, from builders of movie sets to outfits that paint the sides of luxury buses used by traveling music acts.
At each stop, Schwarzenegger decried California’s allegedly lousy business climate, warning that unless he were elected firms like those he visited would move to Nevada or other out of state points where land was cheap and governments promised all manner of tax breaks.
“We’re going to have to fundamentally change the business climate in California,” Republican Schwarzenegger said. It was a mantra very similar to what unsuccessful GOP candidates Dan Lungren and Bill Simon chanted when running for governor in 1998 and 2002.
How to Alter the Business Climate
Schwarzenegger won big. And now the Republican candidate to succeed him, Meg Whitman, has been out on the stump for most of the last year, repeating precisely the same lines in the same kinds of places.
“We’re going to have to fundamentally change the business climate of California,” Whitman intoned the other day in the warehouse headquarters of a small soft-drink company, Function Drinks, in Culver City. Sound familiar? The only difference between her line and Schwarzenegger’s oft-repeated one was one preposition. Maybe that’s because her campaign’s lead strategist, Mike Murphy, also handled Schwarzenegger.
Schwarzenegger, of course, didn’t solve the alleged problem of businesses leaving the state. One possible reason: While some do depart – and some have always departed in good times and bad – they are almost always replaced by new companies, often started by immigrants.
Northrop-Grumman’s headquarters move to Virginia when the firm gets new owners and goes private, but Google’s headquarters in California expand. Nissan of America shifts its headquarters to Tennessee to be near its factory, and smaller firms move into its old building. Of course, if you listen to the companies, neither the Northrop-Grumman move nor Nissan’s had anything to do with supposedly onerous state regulations; the aircraft firm said it had to be closer to decision-makers in the Pentagon and Nissan wanted to consolidate at its assembly line.
But politicians, especially Republicans out to reduce capital gains taxes and eliminate environmental rules, have made business climate laments a replacement for the law-and-order theme they used so often in the 1970s and ‘80s. Remember the “elect Democrats and crime will rise” claim? Except crime fell. So the GOP had to find new themes, and the most common of the last 10 years is that Democrats kill jobs.
Looks Like a Backfire
Oops. Unemployment skyrocketed under Schwarzenegger. Still, Republicans often say they’re trying to rescue California from liberal Democratic rule and its consequences, forgetting that Republicans have been governors of this state in 27 of the last 40 years. Each appointed more than 2,500 persons to run California’s agencies and regulatory commissions. Which means most California regulations were set by Republicans, even if the Legislature has usually been dominated by Democrats.
That doesn’t stop Whitman from repeating the same lines and going to the same places as the last few Republican candidates before her.
“Our goal will be to not let a single corporate headquarters move to another state and to compete for every job,” Whitman said at Function Drinks. “We will streamline regulations and compete with other states.” Schwarzenegger promised exactly the same things – and signed the AB32 anti-greenhouse gas law that is now a GOP whipping boy.
Much like Schwarzenegger, who promised to cut the vehicle license tax and did (costing the state $4.5 billion per year over the last seven years, more than enough to cover all of the most recent projected state deficit), Whitman pledges to eliminate the state capital gains tax.
Something else similar: Schwarzenegger won big campaign dollars from car dealers for his promise. Whitman won the endorsement of the Los Angeles police union in exchange for her promise to exempt cops from most pension reforms. That's what led to the infamous “whore” remark from an aide to Democratic rival Jerry Brown.
While Schwarzenegger had the power to cut the car tax unilaterally (after which car sales dropped, counter to his promise), Whitman can’t dump the capital gains tax on her own. Brown claims doing so would cost the state $5 billion per year, “and where are we going to find that kind of money?” Legislators also know this, so don’t expect this campaign promise to be fulfilled anytime soon if she wins.
Even in the friendly corporate environments she, like Schwarzenegger, seeks out, all has not always been smooth for Whitman. Take the day she went to the San Francisco headquarters of the Internet user-review site Yelp only to be confronted by a young employee who pointed out that her platform is almost identical to what didn’t work for Schwarzenegger.
It adds up to déjà vu on the campaign trail, little more than a rerun, with the major difference being that when Whitman blasts the business climate, she’s complaining about a fellow Republican who said exactly the same things while getting rid of a Democratic governor.
Mr. Elias may be contacted at tdelias@aol.com.
His book, “The Burzynski Breakthrough,” is available in a soft cover, fourth edition. For more Elias columns, visit www.californiafocus.net
