In California, my home state, Democrats have dominated the capitol since roughly 1970. In the last four-plus decades, they've controlled both houses of the state legislature for all but two years. They dominate the state bureaucracy and the leadership of most major cities. And they've long dominated the vast majority of statewide offices, the governorship excepted: Since Ronald Reagan departed in 1975, it has gone back and forth between Democrats (like current and former governor Jerry Brown) and Republicans, most recently the moderate Arnold Schwarzenegger.
Despite this, Paul Krugman, the Nobel Prize-winning economist and New York Times opinion writer, has managed to write a column that proceeds as if, insofar as partisans can be blamed, Republicans are entirely to blame for the state's woes, which he thinks are exaggerated, while Democrats bear no responsibility. As a Californian who hasn't given up on his place of residence, I'm glad to see Krugman thinks there are good times ahead for the Golden State, but the analysis that precedes his conclusion is causing me to doubt him. It's true that supermajority rules have constrained Democratic legislative majorities, that California residents have added to the dysfunction of state governance with the cumulative effect of constraining ballot initiatives they've passed, and that California Republicans are failures in too many ways to list. But I'd be guilty of false equivalence, dear reader, if I didn't assure you that Democrats bear more blame, largely because they've had the opportunity and responsibility to exercise so much more power, and weren't exactly starved of revenue compared to what other states take in.
Fine, let's set aside the question of who is more at fault. Here is a weaker claim. Democratic rule in California has included serious sins of omission and commission by the progressive-liberal coalition that has more often than not been in charge, and the left would do well to learn from those mistakes so that it can govern better, instead of pretending, like Krugman, that they don't exist, and that everything would function smoothly if only they were able to raise state taxes.
Here are five examples of misgovernance for which they bear full or partial responsibility.
Lesson 1: Gerrymandering Polarizes
The Democrats who've long run the California legislature have used their control over legislative districts as politicians are wont to do: as an incumbent-protection racket. Over time, everyone was put into safe seats, and the cooperative Republican minority was coming from such ridiculously unrepresentative districts that the whole party shifted sharply to the right: The primary was all that mattered. Thankfully, California voters handed power to a nonpartisan redistricting commission in 2010. Then in 2011, state Democrats went about gaming that system too.
Lesson 2: Public Employee Pensions Can Bankrupt a State
In City Journal, Steven Malanga provides a recent history of public employee pensions in California:
In 1991, with the nation mired in a recession and the state in a fiscal crisis, the California legislature closed the existing pension system to new workers, for whom it created a second "tier." This less expensive plan no longer required the worker to make a pension contribution, and it lowered the value of his pension to 1.25 percent of his final average salary for every year he had worked; further, he could begin to receive the pension only at 65. A 40-year veteran with a final average salary of $50,000 would thus qualify for a $25,000 pension, plus Social Security benefits.
The state's public-sector unions hated the new tier, of course, and their growing influence over CalPERS's board of directors meant that it, too, was soon lobbying against the 1991 reform. Six of the board's 13 members are chosen by government workers, and as union power grew in California, those six increasingly tended to be labor honchos. Two more members are statewide elected officials (California's treasurer and controller), and another two are appointed by the governor--so by 1999, when union-backed Gray Davis became governor and union-backed Phil Angelides became state treasurer, the CalPERS board was wearing a "union label," noted the New York Times. As the newspaper added, critics worried that the board had become so partisan that its "ability to provide for the 1.3 million public employees whose pensions it guarantees" was in doubt.
The critics were right to worry about CalPERS's bias. In 1999, the fund's board concocted an astonishing proposal that would take all the post-1991 state employees and retroactively put them in the older, more expensive pension system. The initiative went still further, lowering the retirement age for all state workers and sweetening the pension formula for police and firefighters even more. Public-safety workers could potentially retire at 50 with 90 percent of their salaries, and other government workers at 55 with 60 percent of their salaries.
CalPERS wrote the legislation for these changes and then persuaded lawmakers to pass it. In pushing for the change, though, the pension fund downplayed the risks involved. A 17-page brochure about the proposal that CalPERS handed to legislators reads like a pitch letter, not a serious fiscal analysis. The state could offer these fantastic benefits to workers at no cost, proclaimed the brochure: "No increase over current employer contributions is needed for these benefit improvements." The state's annual contribution to the pension fund--$776 million in 1998--would remain relatively unchanged in the years ahead, the brochure predicted.
But the board members knew that there was a downside. CalPERS staff had provided them with scenarios based on different ways the market might perform. In the worst case, a long 1970s-style downturn, government contributions to the fund would have to rise by billions of dollars (which is basically what wound up happening). CalPERS neglected to include that worst-case scenario in its legislative brochure. And though the board later claimed that it had offered a full analysis to anyone who asked, key players at the time deny it. Even the state senator who sponsored the law, Deborah Ortiz, says that lawmakers received little of substance from the fund's representatives. "We probed and probed and asked questions 100 times," she told the San Jose Mercury News in 2003. "The CalPERS staff assured us that even in the worst-case scenario the state's general fund would take a $300 million hit," a manageable sum in a $99 billion state budget. (The actual cost to the state budget, it turned out, was more than ten times that estimate--and it's still climbing.)
The catastrophic pension deal that Davis presided over had ramifications, direct and indirect, for cities all over the state. For a staggering look at the end result, see Michael Lewis' November 2011 article.