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Economist Evaluates Meg Whitman's Campaign Promises

Laura Cueva |
September 2, 2010 | 4:45 p.m. PDT

Staff Reporter

The Race for California
The Race for California
It’s no secret that politicians can make some outrageous claims. So, it's no surprise that when Republican gubernatorial candidate Meg Whitman put out a 48-page booklet outlining her policy plans for California, some were skeptical.

One person in particular was so skeptical, he decided to take Whitman on and investigate her economic claims, not only for accuracy, but for real-world applicability.

Michael Reich is a professor of economics at the University of California at Berkeley, specializing in labor and employment. His research publications cover numerous areas, including the economics of racial inequality, low-wage labor markets, and the analysis of labor market segmentation.

He recently researched some of Whitman's plans, and reported his findings in a paper titled Can Californians Trust What Whitman is Selling? An Analysis of Gubernatorial Candidate Meg Whitman’s Economic Policy Proposals.

Neon Tommy reporter Laura Cueva spoke with Reich to discuss what he found, and what he thinks voters should know.

Laura Cueva: So what made you decide to investigate Meg Whitman’s proposed economic principles?

Michael Reich: Well, I was looking at the 48-page booklet and I was interested. She had a detailed economic program that talked about how many areas of industry were suffering in California. There were casual analytical errors and, certainly, I was skeptical about any impact of cutting taxes for the rich and about the spending that she wants to cut. I decided to investigate further and research specifics with the help of some other economists up and down California and compiled it all into this report.

LC: Why haven't you also analyzed Jerry Brown's proposals?

MR: I looked at Jerry Brown’s website, but there was not much on it except [information] on green jobs, which is okay, but is only part of the total. And just before my report was released, he added part of a jobs program to his website and some information on the educational infrastructure. I had a comparable analysis of his program and it’s really not detailed enough to do that.

LC: There’s a quote in your report that states "Cuts in these programs (meaning education, health, and social services) will reduce the state’s potential to grow in the future." At this point, aren’t spending cuts our only option? How else are we going to reduce our $20 billion budget deficit?

MR: We should have a balanced approach. To get out of the short-term crisis, it would help if the federal government gave more within each state. For example, California is going to get a billion dollars to help education and health care. That’s one part of it that [Whitman] doesn’t talk about. Secondly, I think you have to have some balance between increasing taxes and cutting services, because it’s just impossible to cut services without damaging the ones we really want to have. We need to have the Department of Motor Vehicles functioning and we have to fix the education system. It doesn’t make sense to cut them any more than we already have.

LC: Whitman says she wants to cut overhead and direct more money to the classroom. Is this something she can do?

MR: She and Jerry Brown both want to simplify some of the regulations in education. And don’t get me wrong, I don’t think all regulations are good, or that they can’t be improved. There are too many separate programs in education, so simplifying some of the programs is good. But what she really wants to do is cut spending in the education budget. She thinks that there’s too much overhead wasted in bureaucracy. What that ignores is that California has a lot less overhead than other states. We have limits on how many supervisors, school superintendants, and administrators there can be per child in a district. The schools’ education budget is so low in K through 12 that there are hardly any librarians or support staff. The support staff is people who aren’t directly in the classroom, like bus drivers, cafeteria workers, secretaries, janitors, that’s where most of those jobs are. The school district has to have some money for those areas.

LC: So you’re saying that these jobs, bus drivers, janitors, etc., that’s what she considers overhead and bureaucracy?

MR: Yeah. She’s saying stuff like 60 percent of spending goes to classrooms directly and the rest goes to overhead. I mean, in a school the classroom is part of the school, but so is the cafeteria, you know?

LC: On her website, Whitman states she wants to "unleash more green innovations." What are these and how will they help the state’s economy?

MR: Again, it’s deregulating and cutting taxes. And then, of course, everyone says they’ll appoint a committee that’ll look for opportunities in green innovations, and that’s good, but that’s not going to have much effect. There’s not so much there.

LC: You don’t really mention immigration issues in your report. Have you looked at any of the economic consequences of her stance on immigration and her proposed “economic fence”?

MR: I didn’t touch on immigration in my report because there’s nothing very specific about jobs in immigration. It seemed to me more of a social issue than an economic issue. It just seemed to me that she was following the standard Republican Party approach, saying that people can’t be illegal, that it should be punished if you’re illegal; not talking as much about creating a legal path or integrating immigrants into the economy. This is a very active area of research among economists; in fact, immigrants are disproportionally represented among entrepreneurs and people that start businesses.

LC: Will any of Whitman's proposals be good for the state?

MR: She wants to put more money into the University of California system … And, she said she wanted to simplify some of the regulations in the area of education, which is okay. But mostly, no. It’s mostly taking the state in the wrong direction. Though some regulations are really good for the state, she totally ignores the housing mortgage crisis. It’s worse in California than anywhere. We could’ve done something about it, we still can do something about it at the state level, regulate the industry more. I think the mindset that she’s working with is to cut taxes, and especially cut taxes on capital gains and for the rich. Freeing the industry from all these constraints is just the wrong framework. That’s why I think there’s so little here to be valued.


To reach reporter Laura Cueva, click here.



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