A Paler Shade of Gray

In the beginning was the money. Gray Davis isn't running for anything in 2000; he is just now beginning the second year of his initial four-year term. Yet in his first 13 months as governor, he's managed to collect about $1 million a month for his campaign treasury. That's about five times as much as Pete Wilson, his Republican predecessor, was able to assemble during his first year as governor.



Davis may be the most prosaic of pols, but his fundraising has long been the stuff of legend. His entry into politics, back in 1973, was as the gofer for liberal money-man Max Palevsky during Tom Bradley's first successful campaign for mayor of Los Angeles. But it was Senator Alan Cranston to whom Davis looked in awe; Cranston, Davis has said, was his hero, the man who taught him you could never be too zealous, too methodical, too unflagging in the pursuit of campaign dollars.



Indeed, it was Davis's reputation as a latter-day Cranston, the supreme schnorrer of Left Coast politics, that scared off his potential Democratic rivals in 1998. All, that is, but airline magnate Al Checchi and congressional Representative Jane Harman, who spent $40 million and $20 million, respectively, of their own money in the gubernatorial primary. The greasy pole had never been quite so slippery, and Davis had to wage the most brilliant and disciplined campaign that California had seen in decades in order to prevail.



Hence the standard explanation for Davis's Homeric fundraising: As George Wallace, coming off an early election defeat, vowed never to be "out-niggered again," so a traumatized Gray Davis vowed never again to be outspent.



A Golden Triangle



But there's an ideological dimension to Davis's fundraising that's been largely overlooked. In a sense, Davis has been triangulating for dollars. With both houses of the state legislature controlled by heavy Democratic majorities and presided over by the leftmost leadership in the history of the state, if not the nation--Senate President Pro Tem John Burton and Assembly Speaker Antonio Villaraigosa--Davis has gone to traditionally Republican donors and, in essence, has sold them insurance policies. Only Davis stood between California's agribusiness, insurance, and oil industries and the threat of some red-green holocaust.



There was nothing subtle about the process, though Davis did endeavor to keep his fundraisers out of the public eye. The media learned only inadvertently, for instance, about Davis's reception with the state's HMO honchos, which happened to coincide with the legislature's consideration of a patients' bill of rights. And thus Davis raised money not just from his traditional union and trial law allies, but also from such Republican stalwarts as the Gallo Wineries, GTE, Pacific Telesis, and Rupert Murdoch's Fox Studios. He was, after all, the last line of defense against a resurgent liberalism.



My intent here is not to reduce Gray Davis to mere bagman. He is the sole Democratic governor of a major American state. California is the only major jurisdiction in the United States under wall-to-wall Democratic control. Davis presides over the single large-scale laboratory for capital-D Democracy in the land. Fundraising is the story because Gray Davis himself has concentrated first and foremost on fundraising.



He certainly hasn't devoted much energy to redefining Democracy, along first, second, or third ways. Indeed, Davis's first year in office has been marked by a curious disconnection between himself and practically everyone else. Republicans had controlled the governorship for the past 16 years. During that period, California fell from among the top-ranked states in terms of public services and public investment, to near bottom. Up and down the state, activists have been putting in extra hours to prepare statewide bond measures to build affordable housing, to rebuild the state's transportation system, and to boost school funding to the national average. Even the Republican legislators in Sacramento, who historically have supported public funding only for more prisons and bigger night sticks, have now come forth with their own plan to buff up the state's badly decayed infrastructure. In short, virtually everyone concerned about remaking California into a millennial version of the Golden State of the 1950s and 1960s--apex of the American dream, home to the nation's finest schools, universities, and highways--views the Davis era as a historic window of opportunity. Everyone, it seems, except Davis himself.



The new governor took office warning both legislators and activists not to expect very much. Always the most preternaturally cautious of pols (a recent profile in Time that hailed him as "fearless" was greeted in state by bipartisan guffaws), he was convinced he had wrested the governorship away from the Republicans because he had a firmer understanding of public opinion than they--and than his fellow Democrats. The polls told him that voters were concerned only about schools, and for months, he began all his meetings with state legislators--who were naively concerned about HMO reform or park creation or high-speed rail--with a recitation of the polls. (There is a quantitative literalism to Davis's thought. During one closed-door meeting early in his term with leaders of the state's labor movement, Davis informed them that they were responsible for about 6 percent of his 20 percent victory margin, so they shouldn't expect him to sign onto much more than 30 percent of their agenda.)



"I know Clinton's supposed to be poll driven," one assembly member told me last summer, "but Davis is poll obsessed."



Save in one instance. Over the past year, poll after poll has shown that Californians are willing to pay higher taxes to fund teacher training, higher pay for better teachers, smaller classes--in short, better schools. (Depending on how the questions are posed, support ranges from 60 to 70 percent.) Davis will have none of it. The only way he could destroy himself, he is convinced, is by agreeing to a tax hike, no matter how carefully targeted.



As Davis sees it, the Democrats spent 16 years in California's political wilderness for the sins of Jerry Brown and others even more liberal than he. And Davis has spent the subsequent 16 years repudiating his wayward liberal past as Brown's chief of staff. No matter that Brown's liberalism was entirely cultural, not fiscal. The Brown administration vied with Republicans to cut public outlays in the aftermath of Proposition 13. No matter that times may be different now, with the state drowning in money, joblessness at a 30-year low, and 60 percent more Californians in the top tax bracket than in 1990. No matter that a super-rich class has emerged in California--in 1997, the wealthiest 1 percent claimed more income on their taxes than the bottom 60 percent--that can probably weather a hike in the highest marginal state tax rate over its current 11 percent. No matter: The ghost of Howard Jarvis still haunts Davis's dreams. (It alternates with Al Checchi's bankroll.) No taxes shall be raised on Gray Davis's watch.



The Minimalist



Davis's 1998 Republican opponent for the governorship, Attorney General Dan Lungren, ran such an abysmal campaign that Davis never really was forced to outline or defend his policies in any specificity. When Davis arrived to take the oath in January 1999, the sum total of his program was to call the legislature into special session to adopt a modest series of school reforms. In short order, the legislature mandated a proficiency test for graduating high school seniors (to be implemented in 2003), required a ranking of schools by a performance index, appropriated some funds for failing schools, and instituted a peer-evaluation process for teachers.



By mid-March, the entire program was enacted. There followed a peculiar, almost embarrassing, interval--which in some ways persists to this day--in which political, business, and activist elites waited for Davis to tell them what else he wanted to do, even as Davis insisted that he had already done it. Within the mind of Gray Davis--where polls dictate action on schools, and caution dictates no major new spending or tax hikes for the same--the achievable had been achieved. Democrats in particular were befuddled. Their governor had conducted the overture, they were still settling into their seats--and strangely, he was telling them that the concert was over.



As Davis's chief strategist Garry South saw it, Davis was just "saving the Democrats from themselves." But the bills that the Democrats were starting to move through the legislature-- for HMO reform, to restore overtime pay for work in excess of the eight-hour day, for gun controls, and for reduced auto insurance "lifeline" rates--were hardly the stuff of political suicide. They were poll tested, too. Taken together, though, they spelled too much activism, too much expense, for the new governor. Besides, he hadn't even mentioned some of these topics on the campaign trail.



So when the editorial board of The San Francisco Chronicle asked him about HMO reform this summer, Davis's response was to snap, "Did you see one commercial on health care [that was part of his gubernatorial campaign]?" Later in that interview, he bridled at the notion that anyone but he could even legitimately advance an agenda. "They [the Democrats in the legislature] have a totally different view of the world than I do, totally different," Davis fumed. "It was my vision that commanded a 20-point victory, the largest victory in 40 years. People expect government to reflect the vision that I suggested. Nobody else in the legislature ran statewide. Their job is to implement my vision. That is their job."



Which effectively would have limited the legislators to managing myopia. Fortunately, they revolted.



Essentially, Burton and Villaraigosa wrestled Davis to a draw. At the end of year one of California's Democratic Experiment, the Democrats have enacted some very decent regulatory reforms of industry practices, required more equitable rates and humane standards from insurers and hospitals, and restored overtime pay for the over-eight-hour day. But they have done nothing to address the chronic underfunding of education, to offer coverage to the state's seven million medically uninsured residents, to reduce a staggering housing shortage, or to rebuild the state's infrastructure. In a word, Davis was willing to regulate, but utterly unwilling to spend the public's money.



The regulatory achievements are genuine, even if Davis scaled almost all of them back before signing them. The senators and assembly members wanted to create affordable auto insurance policies for the millions of low-income uninsured drivers. Davis cut it back to a pilot program that will be available only in Los Angeles and San Francisco counties. Health consumer advocates pushed for giving patients the right to sue HMOs for treatment delayed or denied; Davis signed the bills after insisting the patient first had to exhaust the internal appeal process, and limiting coverage to certain major illnesses and injuries. He signed a bill, sponsored by the California Nurses Association, that required the state's Department of Health Services to set and require minimum nurse-to-patient ratios for all licensed hospitals; he vetoed a bill setting standards for nursing homes. He made a series of excellent appointments to the state's labor and consumer boards, but when the state's newly unionized home care workers (who are funded chiefly by state government) wanted a line in the budget that would enable them to make more than the minimum wage, Davis declined.



In early summer, Davis issued warnings that too many gun control bills were headed for his desk. In the end, though, he signed them all: the ban on assault weapons and Saturday night specials, the bill requiring safety locks, the bill limiting gun purchases to one a month. But on no other crime-related issue will Davis permit himself to be outflanked on the right. He rejected a bill mandating a survey of the cost of the state's three-strikes law, which is clogging the prisons, and another that required law enforcement agencies to collect data on the racial composition of motorists pulled over for traffic stops. He rejected virtually every bill that created an alternative to incarceration, and declined to intervene to stop the execution of a Vietnam vet who had suffered from paranoid-schizophrenic flashbacks during the murder he'd committed. In the early 1980s, in one mad moment, Davis had asked Rose Bird, the death-penalty-reversing chief justice of the California Supreme Court, to preside at his wedding. He's been atoning ever since.



In light of Davis's Y2K State of the State address and his proposed new budget, both delivered this January, his second year seems likely only to heighten the intra-party battles of the first. Again, he has proposed some commendable initiatives--that are far too underfunded to address the state's fundamental problems. Again, he has cautioned his Democratic colleagues not to appropriate more funds or send him more regulations than he has requested. And already, the legislature is moving the very bills that the governor has promised to reject.



In his State of the State, Davis pronounced the battle for better schools to be the moral equivalent of war--and then funded it at the level of a skirmish. He proposed considerably enlarging the state's teacher-training institutes, creating college scholarships for the top students in all high schools, forgiving the college loans of graduates who agree to teach a few years in underperforming schools, and providing $10,000 for down payments on houses of the first 5,000 teachers who agree to teach five years in those schools. Good ideas all, but none of them sufficient to provide textbooks to the tens of thousands of pupils who still go without. Indeed, Davis's proposals brought state education spending to 40.7 percent of the budget--and by law, the state is required to spend at least 40 percent each year on education. The increase in school funding probably won't alter California's ranking in per-pupil spending, which is 41st of 50. (In Pat Brown's glory days, it was fifth.)



That Davis is not the second coming of the first Brown--master builder of the University of California, the water system, and the freeways--became clear fairly early on to the state's teachers' unions. The California Teachers Association (CTA, the state's National Education Association affiliate) is now planning a November ballot initiative that would require the state to raise its per-pupil spending to the national average. This was an idea that first surfaced during the 1998 gubernatorial primary, at which time Al Checchi embraced it and Gray Davis dismissed it. The CTA estimates the increase in spending will cost the state an additional $6 billion a year, likely requiring a tax hike (though if state budget surpluses continue to mount, perhaps not). Its polling shows a minimum of 60 percent support for the measure, even after the likelihood of the tax hike is explained.



In his January 2000 State of the State, however, Davis explicitly rejected the CTA's proposal. Indeed, three times in the course of the speech, Davis paused to tell his fellow Democrats to stop pushing the envelope. There were no corresponding exhortations to Republicans to get with the program, just warnings to Democrats to cease and desist. After telling the teachers to stand down, Davis told his legislative colleagues not to send him any more new gun control legislation, and to go slow on any initiatives that would increase funding for transportation. (Despite his cautions, a bill requiring the registration of all handguns and the licensing of all new owners has already passed out of an assembly committee.)



Nonetheless, Davis has since gone to great lengths to appear to be engaged in a major rebuilding of the public sector. His speeches are studded with references to Pat Brown and Earl Warren. He unveiled his budget with a grand pronouncement that he was going to increase transportation spending by $3 billion, though a cursory inspection of the budget itself revealed that he was merely reclassifying old money rather than allocating new. He did use the flood of new revenues, however, to fund two proposals he had vetoed in 1999: raises for home care workers and higher pay and standards for nursing home employees.



Fear of Abundance



It is, I suppose, grounds for encouragement that Davis feels compelled to try to convince Californians--the people who once inflicted Proposition 13 on the world--that he genuinely is seeking to increase public investment. It is surely cause for frustration, however, that this is largely an act. Davis's reluctance to invest is proving worrisome not just to liberals, but to the editorialists of the state's major papers and even to the business elite. A recent poll of 400 state business leaders showed their top priority to be more and better teachers, then school construction, then water infrastructure, then transportation infrastructure. Lowering taxes was way down the list.



There's ample reason for the elites to worry: California's three-decade plunge to the bottom of the public-investment pool is dizzying. According to the California Budget Project, during the 1950s, one dollar out of every $100 of personal income in the state went to building the schools, the roads, the water system. By 1997, that ratio fell to a paltry seven cents per $100.



The indices of the state's public performance make for some pretty glum reading. Three-fourths of the new teachers hired by the giant L.A. Unified School District this year lacked teaching credentials; half the teachers in the state quit within five years. Seven million Californians have no medical insurance--not just the greatest number but the highest percentage of medically uninsured of any state. One of every three newly uninsured Americans is a Californian. Though population is surging again, the state is adding roughly 140,000 new homes a year--down from the 250,000 annual level of the 1950s and 1960s. The percentage of Californians who own their own home is among the lowest in the United States, and in Los Angeles, an entire city council district--that's a quarter-million people--could comprise Angelenos who live, all quite illegally, in family-home garages. The freeways that connect the outer-ring suburbs of Los Angeles to the city are among the most clogged in the country. The list goes on.



And Davis demurs. He agreed to put on the March primary ballot a major park bond measure pushed by Assembly Speaker Villaraigosa, and a water bond, but he deferred transportation and housing bond measures to a later election. He rejected Villaraigosa's attempt to expand the number of Californians covered by the state's low-income health plans. Now, Villaraigosa is proposing that the state repeal a steadily growing car tax rebate that Pete Wilson inflicted on state finances shortly before he left office; the speaker would like to use the funds to boost school spending, obviating the need for the CTA's November initiative. As if this profligacy weren't bad enough, from Davis's curious perspective, the estimates of state revenues continue to swell: Another $3 billion has just been projected to be available, over and above his current budget estimate.



By all accounts, Davis is terrified that if he permits spending increases on multiyear programs, all kinds of calamities could then befall him. A Bush White House might cut back aid to the state. A drop in the market could slow the current torrent of tax revenues to a trickle. In either case, any new commitment he makes today may have to be paid for by higher taxes tomorrow.



He does not wish to spend, and he does not wish to hoard: Jerry Brown sat on an unexpended $5-billion surplus in 1978, which is largely why the voters enacted Proposition 13. Gray Davis is that rare politician for whom abundance is a crisis.



Meanwhile, the elites' expectations for heightened public investment seem to be exasperating Davis to no end. "There's a little journalistic cul-de-sac in Sacramento," he told Los Angeles Times columnist George Skelton recently. "They all judge me against the aspirations they have for a governor, or Checchi's overly ambitious agenda, or the agendas of the paid advocates whose job it is to extract taxpayer money for their programs." But with the state crawling with Internet millionaires, and with public willingness to pay higher taxes for better schools plainly on the upswing, the elites' exasperation with Davis more than matches his with them.



During the past 10 months, an apostle of public investment has arisen within Davis's own administration. Phil Angelides, an environmentally conscious developer who was elected state treasurer in the same Democratic landslide that made Davis governor, has become a kind of neo-Pat Brown for a decaying California. Angelides transformed the treasurer's annual report on the state's debt capacity into a battle cry to rebuild the state in a consciously progressive manner. The report calls on the state to eliminate the two-thirds vote requirement for local bond measures, to stop subsidizing exurb developments that are a 90-minute commute from work sites, and to fund the rebuilding of both the inner city and its adjoining working-class suburbs.



Angelides lays out a financial and political strategy for rebuilding the state--one that links the antisprawl activists of the upper-middle class to the working-class champions of rebuilding South Gate and South Central. The problem, of course, is that Angelides isn't governor. As for the actual existing governor, the state's investment advocates exude a steady pessimism. "There's no sense of leadership from Davis's office at all," one gubernatorial confidant laments. It's not that Davis doesn't understand the extent of the underinvestment in the public sphere. "This guy has a frighteningly good grasp of all these issues, with a huge level of detail," the confidant continues. "He knows this stuff down to the nth degree. But whether he can delegate tasks here, or get his people working in the same direction, or even talk to the voters of the state on this issue--I just don't know."



The delegation question is something of a red flag for Davisologists. The governor is a notorious micromanager, a control freak whose department heads must clear every utterance short of a sneeze with their chief. So reluctant is he to relinquish control that by November--10 months into his administration--he still had yet to name 20 of his 42 department directors. Nor could the 22 he had named hire their own deputies; that was Davis's department, too. In the Department of Consumer Affairs, none of the nine deputy director positions had been filled by the end of October. As of December, six holdovers from the Wilson administration still remained in their department director positions, awaiting their replacements.



Davis remains a popular governor: A poll in January 2000 by the Public Policy Institute of California (PPIC) gave him a 50-percent good-or-excellent approval rating. Just how intently Californians look to the governor for leadership is another matter altogether. In a December 1999 PPIC poll, 21 percent of respondents said they wanted the governor to provide the vision that shapes the state. Forty-two percent said they wanted the initiative process to play that role.



Beyond Tokenism?



If the Davis governorship is particularly frustrating for California progressives, it's because he is a minimalist governor in a state, and at a time, of maximalist needs and opportunities.



Consider, for instance, the explosion of poverty in a state that's approaching the classic definition of full employment. During the 1990s, according to labor market economist Goetz Wolff, the population of Los Angeles County (home to 30 percent of the state's population) increased by 8.5 percent, while the number of people living under the poverty line increased by 64 percent. The ranks of the poor in Los Angeles swelled from 1.3 million to 2.15 million. "It's as if we've added a city the size of San Francisco or San Jose," says Wolff, "composed entirely of poor people."



With the fall of the Berlin Wall, the aerospace industry--the state's leading source of middle-income jobs--was decimated. Over one million native-born whites moved to other states (chiefly in the Rocky Mountains and the Pacific Northwest, making them more conservative), while several million immigrants from Latin America and Asia moved to California, and into manufacturing and service-sector jobs that paid a fraction of the old aerospace wage. The 2000 Census is likely to show that the share of white Californians will have fallen to just 50 percent, while Latinos will constitute 31 percent of the state population. The flight of the middle class and the coming of the immigrant poor--and the splitting of the state into two economies, separate and unequal--are at the root of California's crises of public education, medical uninsurance, affordable housing, and a good deal else.



With crisis, however, has come opportunity. The Latino vote increased greatly between 1994 and 1998--in backlash against the nativism of Proposition 187, but also because the state's new-model labor movement has done a stellar job of registering, socializing, and mobilizing the new immigrant community. What progressives find exciting in California politics today is not just that record numbers of Latinos are voting and being elected to office. (With November's special election to fill a congressional vacancy, the greater Los Angeles area has just sent its sixth Latino to Congress.) What's exciting is that the new Latino voters are supporting school bond measures, minimum wage hikes, and pro-union initiatives--and supporting them by higher margins than any other group in the state, including African Americans. In Howard Jarvis's California, an aging white electorate defeated school bonds that would have benefited Latino children. In today's California, the electorate is changing: The more Latino it becomes, the greater the support at the polls for schools, and parks, and the entire public sphere.



It was Howard Jarvis's California, however, through which Gray Davis undertook his long march to power. During the 1998 campaign, Davis, who had taken up his duties as Jerry Brown's chief of staff in 1975, said repeatedly that he'd spent 23 years planning how to move the last 15 feet into the governor's office. Now that he's made that move, the state whose every political feature he knew intimately has suddenly and mysteriously changed. The limits of the possible have been expanded, not least by the scope of Davis's own landslide victory. Problem is, Davis has less desire to push those limits than any Democratic officeholder in the land.



As Garry South, the governor's longtime aide and political handyman, has noted, Davis's aversion to all but the most incremental increases in public investment is of a piece with the emerging fiscal conservatism of candidate Al Gore (whose California campaign, appropriately enough, Davis chairs). In a sense, the split between Gore and Bill Bradley over the issue of whether the Democrats should again commit themselves to major government programs mirrors the division between Davis and the California legislative leaders. Gore, of course, can argue that incrementalism is all that is possible so long as the Republicans control Congress. Davis faces no such external impediment to renewed activism. His impediment is entirely internal.



Ideology is partly to blame. Public investment has been out of fashion in the Democratic mainstream for a third of a century now, and for the better part of the past decade within the mainstream Euro-left as well. With the growth in the mobility of capital, and the even greater growth in the empirically shaky notion that public investment is antithetical to fiscal responsibility, the idea of public spending in one state went the way of socialism in one country. With states now running record surpluses everywhere, that bit of orthodoxy is beginning to change. But Davis seems determined that it not change in California on his watch.



Which brings us around to Davis's temperament: a lack of--and disdain for--imagination; a zealous minimalism. But perhaps the chief factor in Davis's paralysis is the sheer scale of his victory in the 1998 election, the unexpectedly huge dimensions of his support. That's the analysis of consumer advocate Harvey Rosenfield, who pushed and hectored Davis on HMO reform until Davis agreed to give patients their day in court.



"We all knew kids in high school who were desperate to buy a car," Rosenfield says, "who saved up for years in order to buy it. Then they're afraid to drive it for fear it'll be dinged. By Gray's own admission, he clawed his way from the anteroom of the governor's suite to the main office. Now that he's there, he wants to leave his governorship in the driveway. He's afraid to take it out--there'll be a fender-bender with somebody from a different viewpoint. He just wants to leave that sucker in the driveway."



At some point, tho

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