ANNIVERSARY SPECIAL: Tax cuts, privatization, sleaze, and the demise of California
When the first issue of the Bay Guardian hit the stands in 1966, it was still really possible to talk about the California dream. The state had seemingly limitless potential and was in many way a model for the nation a free public university system that was the envy of the world, an economy that provided jobs to hundreds of thousands of new arrivals, the beginnings of what would be the nation's premier environmental movement pushing to save San Francisco Bay, save the coast, save Lake Tahoe ... and the Free Speech Movement, the Summer of Love, the United Farm Workers Union, and so much more that was transforming politics and culture in the United States from the West Coast.
Twelve years later, it was all falling apart. Eight years of Gov. Ronald Reagan and then the passage of Proposition 13 launched a very different kind of movement out of the West, a movement that sought to dismantle the public sector and the social safety net, to treat government as the enemy, and to use culture wars to convince working-class Americans to vote against their own economic interests.
And now California is being described as the nation's first failed state. Gov. Arnold Schwarzenegger the second Republican actor to hold that role has driven the state to the brink of bankruptcy. The University of California is drowning in red ink, raising fees and turning away students. The state's water system is a mess; cities and counties are in fiscal collapse; the economy's in the tank; and nobody seriously talks about a California dream anymore.
The story of how that happened and how the diseases of tax-revolts, privatization, government corruption, and public disempowerment spread east from California is the focus of this 43rd anniversary issue. It's both enlightening and a bit scary to read through old issues, because in hundreds of stories over the past four decades, the Guardian has warned of exactly what was to come.
The very first issue of the Bay Guardian talked about the "historic election" pitting the incumbent, Democrat Pat Brown, against Reagan. A lot of people in the emerging "new left" were arguing that there wasn't a bit of difference between the two, and that you might as well sit out the election. But the Guardian had a different take. The election was really about the direction California wanted to go, the paper said, a choice between a state that cares about the public sector and social welfare and a state where those things don't matter.
"Reagan's stands typify the temper of the cause," the Nov. 7, 1966 editorial stated. "He is on record, at various times, in opposition to the progressive income tax, Social Security, Medicare, the anti-poverty program, farm subsidies, the TVA, the Civil Rights Act, the Voting Rights Act, public housing, federal aid to education, and veterans hospitalization for anything other than service-connected disabilities. How can a man or a movement govern the state of California with such a political philosophy?"
Reagan's election may have seemed like a fluke, but it was nothing of the sort. By the mid 1960s, with the counterculture and equally important, the economic left looking to make major inroads in American policy, the broad outlines of a right-wing attack plan were in place.
That's something the Guardian always recognized that powerful people who moved the levers of government typically did so with a long-term plan.
In San Francisco, part of that plan was the transformation of a human-scale city to a West Coast version of Manhattan. The idea: tear up South of Market (then mostly low-income housing) for a shiny new convention center and hotels. Dump dozens of big high-rise office buildings downtown. Construct a fixed-rail system to carry suburban commuters into the dense downtown. Drive up property values massively and if that means blue collar jobs and working class people had to go to make way for wealthier office workers, so be it. In the end, of course, the architects of the plan landowners, developers, bankers, and big business leaders became immensely wealthy.
On the state and national level, their plans were broader. Even so, they had one major aim: throttle the pubic sector. Cut off the funding for government programs, reduce regulations, undermine any concept of a welfare estate and cut taxes on the rich.
As we report on page 8, the architects of this plan are happy today to talk about how it worked how Reagan launched his war on government back in the 1970s, how a group of well-funded think tanks developed plans, and political consultants took advantage of people's fears (and the Democratic Party's failures) to put those plans into action.
The movement really got off the ground in 1978 with the passage of Proposition 13.
Prop. 13 emerged from a state in the middle of a massive growth spurt and a heated political cauldron of money, race, and Legislative failure. Howard Jarvis, a Republican landlord lobbyist who hated taxes, hated government, hated public schools, and disdained most Californians "63 percent of [public school] graduates are illiterate" and would have no need for public libraries, he once quipped took advantage of a gaping hole in political leadership and set off a movement that would cripple the United States of America.
The measure marked the final, fatal end in California of the era known as the '60s a period when the left was ascendant, when taxes on the wealthy funded education, infrastructure and programs for inner cities, and when economic and cultural liberalization seemed to be spreading across the nation.
Rising property values, driven by rapid population growth, were driving up property taxes and the problem was real. Long-time residents, particularly people on fixed incomes, saw their taxes rise so high they couldn't afford to stay in their homes. The Legislature could have addressed that (with, say, a split-roll measure that taxed residential and commercial property at different rates) but utterly failed to move on the crisis.
A series of assessor's office scandals didn't help, either. And, at the same time, the California Supreme Court ruled that rich school districts had to share revenue with poor districts, infuriating wealthy white property owners.
Jarvis and his partner Paul Gann circulated petitions to roll back property taxes and make it almost impossible to raise taxes in the future. It passed with 65 percent of the vote.
Of course, big businesses (particularly utilities) were the big winners. As the Guardian pointed out on June 1, 1978, the top five utilities in California alone (including Pacific Gas and Electric Co.) would gain billions from the tax cuts.
But beneath it all was a simmering discontent with government something Jarvis had set afire and would later be used by Ronald Reagan and the right-wing operatives who backed him to undermine the New Deal, the social safety net, and the basic social contract in America. The antitax folks played to white people who didn't want to see their money going to minorities, to the middle-class folks who thought (thanks to the assessor scandals) their tax money was being wasted by corruption and to a lot of younger people coming out of the 1960s who had learned from Vietnam, COINTELPRO, and Watergate not to trust government.
The Bay Guardian opposed the measure strongly: "Most analyses indicate that without replacement taxes, hundreds of thousands of California public servants would be thrown out of work (which is exactly what Howard Jarvis intends) ... " a May 18, 1978 editorial noted. "Vote for Prop. 13 only if you favor decreased government services (including cutbacks in everything from libraries to schools to street-cleaning crews and possibly police and fire departments) and are fond of half-baked measures that favor the rich."
Prop. 13 set off a national movement to cut taxes and riding that wave, Reagan was elected president in 1980. He immediately set about attempting to slash taxes on big business and the wealthiest Americans, and eliminate environmental, workplace safety, and employment regulations.
You can see the results in California and across the nation. The very strategies that emerged in this state and that the right has supported over the years have come very close to destroying the United States economy, leaving millions out of work while the gap between the rich and the poor has risen to unsustainable levels.
Part of the reason this national attack on government and the public sector worked was the failure of Democrats to recognize that corruption matters. It was no small wonder that Californians were losing faith in government in the 1970s and 1980s, the state Legislature, under the Democratic control of Speaker Willie Brown, was awash in sleaze, paralyzed by lobbyist influence and campaign money. Yet leading Democrats, fearful of Brown's power, did little to reign in the appalling corruption.
In fact, when Brown became mayor of San Francisco, the entire Democratic Party, from the president of the United States on down, seemed to treat him as royalty despite the fact that he was selling the city to every developer and corporate lobbyist who waved money under his nose. When taxpayers knew that a large part of their money was going to fund juicy jobs for Brown's cronies and pet projects, it was hard to argue for higher taxes.
And it was the Democratic Party leadership in San Francisco who presided over two of the greatest examples of privatization of public resources in modern history: the Presidio and the Raker Act. Rep. Nancy Pelosi was the author of the bill that, for the first time, turned a national park over to the private sector and hardly a Democratic leader in the city dared to lift a finger in opposition. And for decades since the Guardian first broke the story in 1969 the city's Democratic power brokers have bowed and genuflected to PG&E and allowed the private utility to control the local electric grid and block implantation of the federal law that mandates public power for San Francisco.
And now PG&E wants to pull off one of the greatest feats of privatization in American history. The company has launched a ballot initiative that would wipe out any further attempts at public power in California, essentially guaranteeing that private companies, not the public sector, control the vast, critical resource of electric power in this state.
It's the latest big battle between two divergent visions of America and this time, the folks who have done so much damage to this state and this nation can't be allowed to win. In fact, maybe the campaign against PG&E can be the turning point, the time when California realizes that privatization, attacks on the public sector, tax cuts for the rich, and political sleaze are a formula for disaster.