When former Republican Governor Pete Wilson & Co. started the ball rolling on electric power deregulation in California, there were probably many results they didn't anticipate. Not least is a revival of social-democratic and populist politics in the Golden State.
The Left Coast may turn out to be just the left coast after all. Having gone into eclipse in the mid-nineties with the passage of the anti-immigrant Proposition 187 and the rise of deregulation fervor, and suffering through two years of disappointment under moderate Democratic Governor Gray Davis, progressives are again on the move, with even the preternaturally cautious Davis, a potential 2004 presidential contender, along for much of the ride.
Most Californians now favor both a state takeover of the power grid and the establishment of a public power authority. Most don't believe there's a real power shortage and blame their utilities and the out-of-state power companies for manipulating the situation. Two-thirds oppose deregulation, and in a Los Angeles Times poll 60 percent opposed new nuclear power plants. Meanwhile, organized labor, consumer advocates and environmentalists are coming together to urge a dramatic expansion of public ownership of power and an end to the decades of private utility dominance in California politics that led to the debacle. "We're fighting to protect jobs, hold the line on the environment, protect against rate increases for fixed-income consumers and to keep the utilities out of bankruptcy to protect workers," says California Labor Federation chief Art Pulaski.
Coalitions have come and gone over the years, but shifts in political tectonics caused by the power crisis make this one's prospects far better. "The atmosphere is dramatically different," notes former State Senator Tom Hayden. "You can work for years hitting your head against the wall. Then crisis can lend clarity, making many things possible."
Even some Republicans are questioning the utilities' decision to shovel money from their nearly bankrupt operating companies into the safe havens of their holding companies. But that's as far as they'll go. It doesn't matter, though. Democrats control the governorship and both houses of the legislature, and although they needed Republican votes to pass emergency bills allowing the state to enter into long-term contracts to buy power and distribute it through the utilities, they don't need Republicans to enact more far-reaching measures.
Outside the political establishment, a populist consumer movement has been revitalized, with former Nader associate Harvey Rosenfield making credible threats of an omnibus energy initiative on next year's state ballot. Lost on few is the fact that the 30 percent of Californians with municipal power are in good shape. "I want a coherent plan to restore reliable and affordable electric power with a public power authority as its centerpiece," says Rosenfield, head of Ratepayer Revolt. "It would look a lot like Prop 103 [an insurance reform initiative he wrote in 1988], with re-regulation of the market and consolidation of duplicate agencies." He goes on to say, "If they pass a bailout, we'll reverse it at the ballot box."
Governor Davis, like others in the establishment, sees Rosenfield as a gadfly who finally finds himself in the right place at the right time. Davis believes he can head off an initiative by limiting rate increases through the election. That's far easier said than done, however, even with the state on the verge of entering into long-term electric power contracts. And no one wants to look like they're caving in to utilities' demands for a second bailout in five years (the first being the $28 billion they got as part of the 1996 deregulation package). So the debate has shifted--away from an earlier proposal of Davis and Assembly Speaker Bob Hertzberg to get stock options from the utilities in exchange for an infusion of state money and toward a proposal by State Senate President John Burton and State Treasurer Phil Angelides for a state takeover of hard assets and an ongoing role in the power business.
Davis and Hertzberg have been more solicitous of the utilities than Burton and Angelides, with Davis neglecting to mention the utilities' central role in crafting the disastrous deregulation in his tough-sounding State of the State address in January. Indeed, Davis opposed Rosenfield's unsuccessful 1998 anti-deregulation initiative, a move Hayden describes as "part of an overall shift of the Democratic Party to market ideology and deregulation to avoid the 'big government' image."
But as the crisis has worn on, the utilities have tried to push the blame onto the Davis administration, and Davis has moved closer to Angelides and Burton (brother of the late Congressman Phil Burton, whose most famous saying was, "The only way to deal with exploiters is to terrorize the bastards"). There's a very good reason for that. Public polls show widespread disdain for the utilities and their role in fomenting the crisis. Private research goes further, indicating that people are very open to sweeping government solutions. Says one Davis associate: "Even some people who don't like government have had enough. They want a sense of control. They think government can give them that, and the market's given them chaos." The coalition of consumer and environmental groups backing Rosenfield's initiative also supports Burton and Angelides's plans for a takeover of the power grid and a state power authority, as does organized labor.
While generally supportive, Davis's old boss, former Governor Jerry Brown, who pioneered conservation and renewable energy programs in his administration, sounded a note of caution. "We have to be careful about centralizing power in opposing the centralization of power," says Brown. "It requires a lot of thought to make sure that government doesn't merely replicate the same old patterns."
The price for a grid takeover remains unclear, as does the price of other efforts to stabilize the utilities. If any action looks more like a bailout than a buyout, Rosenfield's initiative, and Davis--still looking good in the polls--could be in trouble. This is especially true given future rate increases, which are assured. By next year (because a "temporary" increase in January will be permanent and a 10 percent reduction that was part of the dereg scheme expires) rates will be at least 20 percent higher than they were at the beginning of this year.
The state's big utilities have ridden high, wide and handsome over California's political range for a century, so much so that their leaders felt free to junket off to England with their putative regulators to gain inspiration from Thatcherite deregulation. But that's over. It's a supreme irony that a scheme designed to further the dominance of radical capitalism would trigger its opposite. Just as Pete Wilson didn't foresee that his anti-immigrant Prop 187 would lead to overwhelming Latino support for Democratic candidates a few years later, he and the other Republican free-marketeers who started deregulation didn't foresee that their market nostrums would trigger a resurgence of public power and populism. But in yet another of the unintended consequences that mark the deregulation debacle, they have.
As George W. Bush so fuzzily put it, "The California crunch really is the result of not enough power-generating plants and then not enough power to power the power of generating plants." Whatever that means, his main responses to California's deregulation crisis have been to tout drilling in the Arctic National Wildlife Refuge (ANWR) and to bar federal intervention that would curb the profiteering by big generating companies.
Since a tiny percent of the nation's electricity is produced by burning oil, drilling in the refuge is irrelevant to the problem. But, of course, it's quite relevant to the big oil and gas companies' expectations of a payoff from this Administration, in which they had invested millions in campaign contributions. They're salivating for exploration on hitherto off-limits federal lands with ANWR as the opening wedge. Bush plays along by fanning fears of power crises nationwide to overcome the pro-environment sentiment among voters. (Recent polls show that two-thirds of Americans favor a ban on drilling in the wildlife refuge.)
As for withholding federal intervention, that's simply the old-time deregulation religion preached by conservative pundits who blame the failure to deregulate fully for the California crunch. Actually, California's deregulation bill was drafted by the power companies, which made hefty contributions to grease its way through the legislature. Seeking to recapture from consumers the costs of their bad investments in nuclear plants, the utilities devised the very freeze on consumer rates on which they now blame the current crisis, and which they are trying to overturn in the courts. They also agreed to divest themselves of much of their generating capacity, leaving them vulnerable to the market manipulations of independent power producers--including their own parent companies, which are reaping huge profits from this contrived crisis. Those same parent companies are using their "near bankrupt" utilities to launder more than $20 billion in the stranded-cost bailouts that prompted the crisis in the first place.
Clearly, more bailouts for utilities and unleashing Big Oil to ravage the wilds are not the solutions to California's--or the nation's--power problems, especially when there is a native California solution at hand: municipal ownership and conservation. The model is the Sacramento Municipal Utility District, which, after closing down its one nuclear reactor in 1989, held prices steady, invested heavily in wind and solar power and promoted energy efficiency through programs like subsidized buyouts of old, energy-guzzling home refrigerators.
Unfortunately, Governor Gray Davis and the California legislature have chosen to ignore the lesson of Sacramento and to "solve" the crisis by throwing more billions in public money at the utilities. Davis should be using public money and eminent domain to buy the assets of these rogue utilities out of bankruptcy and turn them over to direct public control. A statewide network of public-owned, democratically run municipal utilities would work just fine.
Municipal ownership like Sacramento's is now being urgently considered by San Francisco and other beleaguered California cities. Rather than catering to his energy "adviser" Ken Lay of Enron (who injected $500,000 into Bush campaign coffers, making him the largest single contributor in the last election cycle) and the rest of the oil and gas companies, Bush should recognize that the wind and sun provide more than enough "power to power the power of generating plants" and that power is rightfully owned and most efficiently operated by the public itself.
Tommy Thompson's track record as governor of Wisconsin bodes poorly for his tenure as head of the Department of Health and Human Services.
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To a degree that's hard to appreciate outside Wisconsin, Tommy Thompson's impending move to Washington to become Secretary of Health and Human Services will transform this state's politics. Now entering his fifteenth year as governor, Thompson has for so long and so completely dominated our political life that we are used to mapping its history in Steinbergian epochs. There is Old Wisconsin, a receding green landscape where one can still glimpse the tiny figures of Fighting Bob La Follette, Father Groppi, Gaylord Nelson and the circling ghost of Joe McCarthy. And then there is Today's Wisconsin, an eternal, life-sized present, physically more akin to northern New Jersey and better known as "Tommy's Place." That yet another political world will soon come into view has us more than confused. We are dazed with hope. We even seem to be breathing differently.
But enough about us. What can we tell you about our "man from Elroy," the tiny farming town, deep in our coldest sticks, that is Thompson's lifelong home and the place he long represented in the State Assembly?
First, don't underestimate him. Before becoming governor, Thompson's twenty-year career in the State Assembly was distinguished only by painstaking party hacking and strident but ineffective advocacy of then still unfashionable right-wing views. Among liberals, his election as governor was greeted as a brief hiccup in state politics largely attributable to a Rustbelt recession that still resisted sleep here. Thompson was thought to be nasty but a rube, sufficiently at odds with the state's centrist political culture to be transient in his power.
Boy, were they wrong. Upon taking office, Thompson moved immediately to tighten his control of the state apparatus, overrunning Wisconsin's traditionally independent civil service with a small army of intensely loyal and openly political appointees. He patronized continuously and at scale, afterward tapping a river of corporate cash to float easily from one landslide re-election to the next. And he simply rolled legislative Democrats, stabbing them to death with his magic veto pen. Wisconsin grants its governors the unusual power to strike not just line items but individual words and numbers, and to reduce any proposed expenditure. Used infrequently before Thompson, the power in theory makes legislative budgets the equivalent of phone books, ready for gubernatorial cut and paste. Thompson made theory practice, boldly invoking the power some 2,000 times to shape law in his own image, and not once was he overridden. Make no mistake about it--the rube ruled.
Second, don't box him ideologically. Thompson signed one of the nation's most punitive late-term abortion bans (later overturned, with many others, by the US Supreme Court) and is on record as believing that abortion should be criminalized except where necessary to save a woman's life, or in cases of rape or incest. But he's also strongly defended stem-cell researchers (who use extracted embryo cells) at the state university and worked with Madison's liberal US Representative Tammy Baldwin, who happens to be an open lesbian, on women's healthcare concerns.
He has crusaded ceaselessly against welfare recipients, eventually gaining national renown by time-limiting their eligibility for support. (This Wisconsin "miracle" is hardly that. It achieved massive reductions in welfare caseloads by simply losing track of former recipients or dissolving them in a sea of working poor.) But he's also been quicker than other welfare "reformers" to help those once on welfare rolls with expanded childcare assistance and health insurance, and extended those benefits to many others. He killed light rail in Milwaukee and is a god for the state's highway lobby. His most enduring legacy, indeed, won't be welfare reform but sprawl. However, as chairman of Amtrak, he's also recently promoted high-speed rail in the Midwest. As anti-union as the next Republican, he's supported joint labor-management efforts at worker training and job retention. And so on. Always happy to throw big bloody chunks of red meat to the right, Thompson makes deals with others, too. His only limit: "if business does not object."
Third, watch out. Thompson's intelligence and near-feral sense of power, along with his longstanding ties to the Bush family, samurai devotion to the Republican Party and close attention to political detail (not to mention his polished self-caricature as a happy Babbitt from the heartland, brimming with confidence and good cheer interrupted only by occasional tearful confessions of how much he loves public service, or the lightning decapitation of a political opponent) make him a formidable political force. Add in several hundred billion dollars in HHS programs and tens of thousands of lines of amendable administrative program code, and you have something worth worrying seriously about.
Worth emphasizing here is that Thompson is not another half-cocked James Watt. By nature--and despite his Zeus-like reign in Wisconsin--he is a team player who treasures political discipline. But as a political pro, he seldom shows his hand before he plays it, and it is seldom possible to predict just what that play will be. You can only rest uneasy that whatever it is it will come at you full-bore. Prudence recommends both a readiness to respond in kind and more than the usual openness to the possibility of tactical alliance.
Good luck, America.
When W. gave the nod to New Jersey Governor Christie Todd Whitman for the top EPA spot in his administration, the tone-deaf national press corps praised the appointment of a "moderate" (largely on the basis of Whitman's inconstant pro-choice positions). A little digging would have revealed that Whitman has been an unmitigated disaster for New Jersey's environmental protection. Under her governance, fines of air and water polluters have plummeted 70 percent. Indeed, after her nomination the head of the Chemical Industry Council of New Jersey praised her to the Newark Star-Ledger for having restored "balance" to the state's enviro policies after the aggressively antipolluter measures taken by her Democratic predecessor, Jim Florio.
Thanks to Whitman's evisceration of state enviro regs as well as a raft of subsidies and tax cuts to developers, suburban sprawl gobbled up more open space and verdant land during her tenure than at any other period in New Jersey's history. Moreover, she decapitated the state Department of Environmental Protection staff by 738 employees in her first three years in office, cut the remaining staff's workweek by five hours, eliminated fines of polluters as a source of DEP revenue and made large cuts in the DEP's budget. That's why the New Jersey Sierra Club's Bill Wolfe has warned that Whitman might "dismantle [federal] EPA and take it out of the enforcement business. I believe that this is precisely the policy Whitman has presided over and legitimized in New Jersey." One mechanism was the Office of Dispute Resolution, which she established to mediate conflicts over environmental issues (usually resolved in favor of business). She also installed an Office of Business Ombudsman under the Secretary of State (the Star-Ledger labeled it "essentially a business lobby") to further grease the wheels of the bureaucracy for polluters and developers, and to act as a counterweight to the DEP.
If Senate Democrats want to take a serious look at Whitman's record in the Garden State, they should start with "Open for Business," a three-part exposé by the Bergen County Record in 1996. After a ten-month investigation, The Record detailed dozens of cases in which Whitman's corporate-coddling policies had circumvented laws designed to protect the environment. Often, those getting favored treatment were big campaign contributors, like Finn Caspersen, then chairman of Beneficial, at the time the nation's largest independent consumer-loan company. The firm got more than $182 million in taxpayer subsidies in the form of road construction designed to ease traffic around its lavish office complex in Peapack--improvements that increased the value of an open 700-acre tract that Beneficial owned nearby. While all this was going on, Caspersen, his family and their political action committee gave the state GOP $143,250.
A more recent example: For the past three years, Roche Vitamin, a manufacturing plant in Belvidere, has been "belching out 300 tons of methanol annually--at least 10 times the rate state permits allow," according to the Star-Ledger. And Clinton's EPA has been fighting Whitman's proposals to further dilute state regs controlling water pollution and coastal development, which would sanction gigantic increases in pollution and hand over environmentally sensitive lands to rapacious developers. No wonder The Weekly Standard's David Brooks praised Whitman's nomination (and that of her anti-enviro counterpart proposed for Interior, Gale Norton) as reflecting the Bush Administration's "corporate mentality."
Whether the Dems have the stomach for a real fight against Whitman is an open question--her nomination has already been endorsed by her state's influential senior Democratic senator, Robert Torricelli. (Says a knowledgeable state Dem: "This is The Torch's way of paying back [Woodbridge mayor] Jim McGreevey," whose aggressive politicking in the gubernatorial race caused Torricelli to abort his plans to run this fall. "With Christie at EPA, McGreevey's GOP opponent, State Senate president Donald DiFrancesco, becomes acting governor and gets a big advantage.") Whitman and The Torch also get campaign cash from many of the same corporate polluters, and such bipartisan influence-buyers are likely to go all out in lobbying Senate Dems on Whitman's behalf.