March 17, 2018

Elections in a Deep Blue State

Into yet another election year we lurch. In California, battle lines are being drawn in key races and around key ballot measures. Perhaps well over $1 billion will be spent on political campaigns large and small across the state, with obscene sums thrown at the marquee contests for governor and U.S. Senator.

Having been in and around this business for 20-plus years now, it all feels a bit too routine and predictable. Maybe I’m wrong, but it feels like the major funders on the left, particularly labor unions and their affiliates, are enthusiastic and gearing up to add to their margin in the Legislature (while keeping all the statewide offices in Democratic hands).

Certainly, storm clouds are visible to the state’s Democratic power base; their recent state party convention underscored just how large the “Berniecrat” wing has become while more moderate voices of the party fade. Even more worrisome for them: A possible U.S. Supreme Court decision this summer that could strip government unions of the legal power to force all public employees to pay union dues. By their own admission, California’s government unions could face major reductions in membership and, by extension, the funds they extract from public employees to fund Democratic campaigns and causes.

This anxiety notwithstanding, California Democrats are feeling energized. The state’s voters gave them supermajorities in both houses of the Legislature in the last election (although sexual harassment scandals forced three legislators to resign and another to voluntary suspend herself, resulting in the temporary loss of Democratic supermajorities in both houses). A sizeable majority of California voters, according to polls, are strongly opposed to President Trump and supportive of the defiant posture and policies of Democratic legislators (and Governor Brown). The state’s economy is performing well (although here, too, we see dark and threatening storms on the horizon) and Golden State Democrats are happy to take credit for the prosperity that many (but by no means all) Californians are enjoying.

The state’s Republican leaders find themselves in a deep political hole, and they know it. They are trying to put on the best front as they try to win back enough legislative seats to deny a supermajority to the Democrats and maybe even build a margin of safety. (With 44.6 percent of voters registered as Democrats and just 25.4 percent registered as Republicans, brutally expensive campaigns to win statewide offices are out of reach for the GOP.) The traditional backers of Republicans—business interests—are approaching this election year with a mix of trepidation and resignation. Certainly not with enthusiasm. And that’s understandable, given the political realities of what California has become.

It is easy to bemoan the state’s political climate and its increasing hostility to the private sector (some sectors being more accustomed to legislative and regulatory hostility than others, but that’s a topic for another time). But for the benefit of every sector of the economy and the millions of people who depend on them for their own economic success, it would be better for California’s business communities to become more unified in the face of hostile public policy, and to play the cards we’ve been dealt (an overwhelmingly Democratic state electorate and political superstructure) rather than hope against long odds that we will miraculously draw an inside straight.

What does that mean? In my view, it means a unified multi-sector focus on independent campaign actions—often referred to as independent expenditures or Super PACs—designed to influence Democratic campaigns and the people who win them. Specifically, all private sector interests ought to come together to fund political campaigns that elevate pro-private sector Democrats over “progressive” candidates who espouse the policies of ever higher taxation, regulation and restrictions on private enterprise. These are the policies that are increasingly driving job-creators to Texas, Arizona, Mexico, and beyond.

Democratic legislators and candidates who dare to say “no”—at least some of the time—to the unions and environmental activists have traditionally been referred to as “moderates.” In Sacramento, we just say, “Mod Dems.” But maybe we need a new term, such as “Sustainable Dems,” in recognition of our belief that their moderation on economic and business policies offers the best hope for a sustainable California economy.

In recent months, a cross section of industry sectors has been working to form a loose coalition that would force greater debate in the upcoming race for governor around California’s worsening business climate. Perhaps it can be the start of a sustained effort to play the cards we’ve been dealt.