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Daniel Weintraub

California Insider

A Weblog by
Sacramento Bee Columnist Daniel Weintraub

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« November 13, 2005 | | November 15, 2005 »
November 14, 2005

Clean Money

Supporters of the California Clean Money Act -- public financing for political campaigns -- plan to make a big push for their bill, AB 583, when the Legislature reconvenes in January, and they say they're looking for a new, dedicated source of revenue to fund it.

Here are my thoughts.

First, while I have never been a big fan of public financing, I think its time may have come. The defeat of Prop. 75 last week suggests that public employee union money will continue to be the primary source of funding for California Democrats for the foreseeable future. To a lesser degree, Republicans are prisoners of corporate money. While we often compare the public employee money to corporate money as if they were opposite sides of the same equation, they are not quite that. Corporate money tends to be from a much more diverse set of interests with a variety of goals. No one company has nearly the influence on Republican legislators that, say, the CTA has on Democrats. And business gives more to Democrats than the unions give to Republicans. Much of the time, when the public employee unions are pushing something in their narrow interest, almost nobody is pushing back on the other side. Did any individual company oppose the pension bills that went through a few years ago? The state, its people and its businesses would be better off if we find a way to elect Democrats who feel free to say no to the public employee unions. And the only way to do that is to wean them off that money, to match the union money with our money. The funny thing is that public financing has always been pushed by the left, as a way to free Republicans from corporate money. But in California I think it might play out differently.

For the revenue source, I'd suggest a 1 percent increase in the bank and corporation tax. (That's one percent of what they pay already -- not a percentage point on the rate, which would be a much larger increase in the total tax.) The corporations tax now brings in about $10 billion a year. A one-percent increase would yield about $100 million. I'd use that money to finance legislative races. Again, the business community, which normally squawks at both tax hikes and public financing of campaigns, should like this idea. It would be money well spent.

As for the method of distributing it, I'd prefer something as decentralized as possible. I like the "patriot dollars" concept that proposes using individual vouchers to allow each citizen or registered voter to direct his or her chit to a candidate of their choosing. I think this method has the added bonus of potentially re-engaging the public in government and civic affairs. When you feel like you have some money at stake, even a small amount, you tend to pay closer attention. The downside of this method is that each chit would be so small that, in practice, candidates would have to be well known before they could persuade citizens to transfer their chits, which gets us right back to where we are today. So another method might be more practical.

Many people would like to couple public financing with new limits on union and corporate dollars. That wouldn't break my heart. But I am philosophically opposed to such limits because I think they violate the right to free speech, and I think they just drive that money to hidden corners where it is more difficult to track. I would simply add the public money to the mix and hope it gave legislators some freedom from their normal impulse to kow-tow to contributors.

Finally, I would put a sunset on it. If all it did was add to the money-raising arms race, you'd want it to go out of business on its own rather than waiting for lawmakers to repeal it.

Posted by dweintraub at 4:57 PM

'Running a family like a business destroys it'

Some interesting stuff out there today from my favorite blogging economists.

Russell Roberts here on one of my favorite topics, business, profits and social responsibility.

Tyler Cowen here on universal health insurance, and reaction to his recent assertion that "we can't take care of everyone."

And Alex Tabarrok here on Bill Cosby, black people and shoes.

Posted by dweintraub at 2:49 PM

Are the airlines price gouging too?

A couple of weeks ago my wife flew from Sacramento to Washington, D.C. and back for less than $200. Over the weekend I was talking with a friend who was looking to book the same flight during the Christmas holidays. The price at the same airline for the same trip was now over $400. Why? Because more people want to fly over Christmas than during the last week of October. With demand higher, the airlines can charge more for the same product, even though their costs have probably not changed a whit during that time. Imagine, more than doubling the price of your product, just because more people want it and you control the scarce resource. Funny how we have come to accept wild price fluctuations in airline fares, but much smaller blips in the price of gasoline drive us crazy.

NOTE: If you think the air fares are themselves going up because of fuel costs and not demand for seats, think again. The round-trip fare from Sacramento to DC during the first week of December is $160.

Posted by dweintraub at 9:16 AM



At Crossroads, a panel of experts and the public debate the future of health care in California. We'd like you to join the conversation.

Daniel Weintraub


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