Editor: This is Part 2 of Jim Miller’s examination of San Diego as the “Wisconsin of the West”. Here is Part 1.
While the web of right wing, corporate-funded think tanks are clearly feeling their oats in the Scott Walker era, their rise was a long time in the making. They were, importantly, the intellectual replacements for unreliable “liberal” universities where the state-funded intellectuals could not be counted on to carry the water for the corporate class. In a 2006 piece, “Indy by the Sea,” I trace the roots of the contemporary right and discuss how and why the think tank strategy came to be:
As historian Howard Zinn and others have noted, after the breakdown of the business-labor consensus that grew out of the New Deal, the movement toward accelerated globalization and capital flight, and the rise of the new right, the American power elite sought to curb what Samuel Huntington called the “excess of democracy” that arose during the 1960s and began to actively support and generously fund think tanks designed to influence and/or criticize the media, shape the public debate on a wide range of political, cultural and economic issues, and counter the influence of progressive academics in the universities.
They have largely succeeded by consistently demonizing the government at all levels as inefficient and corrupt; valorizing the “business model” and “market based government;” dividing the cities from the suburbs via anti-tax populism; and peeling off working class white voters first with Nixon’s “Southern strategy” which capitalized on the Southern white backlash against civil rights, and then with what Thomas Frank calls “backlash populism” which seeks to replace economic anger with “culture war” rage at godless liberal elitists.
In so doing, there has emerged a strange marriage between the religious and libertarian right which, it appears, will win a seminal victory with the appointment of Judge Samuel Alito to the US Supreme Court, shifting the balance to the right for years to come and endangering a whole host of reproductive, civil, and economic rights.
It is worth noting that the Citizens United case that brought unlimited corporate cash into the system is perhaps the most notable legacy of this shift on the Supreme Court. What was already a stacked deck in terms of campaign spending has become a totally rigged game in favor of big money. To put this in perspective, consider that, as the Center for American Progress has recently reported, in the 1977-78 election cycle corporate PACs (Political Action Committees) outspent labor union PACs by $5.6 million. Today corporate PACs outspend labor PACs by $200 million. So much for “big labor.”
Thus we are back to the future with a new crop of robber barons (the same ones who sank the economy in the first place) offering up solutions for how to save us from the mess they created. Their answer: austerity is the “new normal” and everyone needs to sacrifice to solve our budget deficits. And this is presented with no irony despite the fact that the top 1% of earners are the only ones to have increased their share of wealth over the course of the great recession and American corporations posted record earnings in the final quarter of the last year. Indeed, corporate profits have risen 12% since last year as the Great Recession has begun to ebb for them, but hiring is tepid, if not stagnant depending on the sector.
This should not be shocking, however, as, over the last 30 years, worker productivity has grown by 80% while workers were only compensated for 12 percent of that gain. Now the profits that came from cut backs and increased worker productivity during the economic crisis will simply be put into the bank accounts of the corporate elite while they call for budget discipline for everyone else. Hey American worker, enjoy the new normal.
But there is more:
Above all else, the agenda of the right-wing think tank movement is privatization. When government fails, the answer is always to hand over the commons to the corporate world who do it better and more efficiently than the public sector. We are told this ad nauseum even after Enron, Haliburton, and Abramoff and the K Street gang do all they can to prove it wrong–it is the big lie that keeps on lying. What is privatization? As Si Kahn and Elizabeth Minnich define it in The Fox in the Henhouse: How Privatization Threatens Democracy:
Privatization is a concerted, purposeful effort by national, multinational, and supranational corporations (and individuals, families, officeholders, nonprofit and religious organizations they have made or promise to make enormously wealthy) to undercut, limit, shrink, or outright take over any government or any part of the public sector that (1) stands in the way of corporate pursuit of even larger profits, and (2) could not be run for profit.
Kahn and Minnich go on to point out that privatization, like the outsourcing of government jobs, “leads not to decreasing but to increasing the number of lousy jobs,” and it does little to lower existing taxes. Their study notes that, “What is perfectly clear is that, even if a major privatization takes place, and even if the quality of service goes down, taxes usually remain the same. The difference is that more of those public funds go into private corporate pockets.”
So why do it? Kahn and Minnich suggest that such snake oil is sold to the public in order “to destroy independent, democratic government itself.” With no “big government,” there are no pesky taxes on corporations, bothersome safety or environmental regulations, no limits on development, and, ultimately no real checks on the power of capital.
As Nicholas Confessore of the Washington Monthly has reported, Jeb Bush’s “outsourcing of millions of dollars” of state work in Florida to private contractors has resulted in “little evidence that doing so has improved state services” but has, more importantly from the right’s perspective, “vastly improved the financial state of the Florida Republican party.” The same is true of President Bush’s proposed efforts to privatize about half the total of federal jobs which, Confessore notes, “may or my not save taxpayers much money,” but will surely, “divert taxpayer money out of the public sector into private sector firms, where the GOP has a chance to steer contracts towards politically connected firms.
And this is really the end game of the whole privatization agenda—opening up the public sector for profit making entities, whether it makes sound economic sense or not. Sell the commons, democracy be damned.
The Center on Policy Initiatives’ recent work on the outsourcing of six city services is a case in point. As CPI has noted, “Asked point blank for an estimate of the savings [to city taxpayers], city administrator Wally Hill said he didn’t have even a rough estimate but relied on projections by the pro-privatization Reason Foundation.” So the fox really is running the henhouse. Anyone who cares about the right of citizens with modest means to have a say in our democracy should be disturbed by this, whether it is happening in Florida or San Diego.
But there is plenty happening here:
In California, privatization advocates at think tanks like the Pacific Research Institute and the Claremont Institute argue that, according to Cokorinos, “a key political objective for the right wing is to compel states and localities to compete with one another in a frenzy of deregulation and privatization that will supposedly attract investment . . . Taken to its extreme, this would involve a race to the bottom where perfect efficiency equals no regulation, and the perfect state is a minimal government that simply secures the sanctity of contracts and provides for the common defense.”
In addition to the work being done at the Pacific Research and Claremont Institutes, the Reason Foundation cranks out an endless flow of pro-privatization propaganda aimed at lambasting the incurably wasteful inefficiency of government in contrast to the flawless productivity of market forces. Through the use of “performance reviews” which inevitably show how government just doesn’t work like the business world, the idea of “performance-based government” is promoted as the final solution for the hapless public sector which just needs to be put to sleep. As Cokorinos observes, “the performance review, while long a part of organizational culture public and private, is used [in Reason Foundation reports] as a non-threatening entry point to achieve an ideological purpose” to identify inefficiencies that require the expertise of right wing think tank experts to be solved.
DeMaio, in his time at Reason, and others after him have promoted a radical privatization agenda by releasing annual Privatization Reports that have advocated the privatization of military housing, education, transportation systems, public roads and highways, housing, major infrastructure projects, and much more.
In San Diego, DeMaio founded the Performance Institute in 2001 and set about bringing the skills he learned at Reason and while working to starve the beast in the Beltway with Newt Gingrich at the Congressional Institute to San Diego, where the conservative old guard seemed to be in peril with labor, environmental activists, and other progressives gaining new political clout.
Democrats controlled the city council for the first time in the history of the city and a significant political realignment seemed possible. Still DeMaio quickly made himself a presence, setting up a well-funded operation, issuing reports, working the local media, and positioning himself to influence policy if the opportunity arose.
Enter the pension crisis like manna from right wing heaven. DeMaio could now present his agenda as the tax-free solution to San Diego’s nightmare. If successful, San Diego would be a model for a national assault on the public sector at the municipal level. As Cokorinos notes, “The Beltway privatization and downsizing campaign model, combining think tank backup and political networking, was introduced to California by the Reason Foundation in 2003 and then to San Diego by DeMaio in an effort to make the city a prototype for similar drives across the country.” In documents such as “The Citizen’s Budget” and “The Citizen’s Budget Plan,” DeMaio argues for the breaking up of public sector unions and the radical reorganization and downsizing of city services like libraries, environmental services, the traffic division, and more as well as the outsourcing of many other city services.
Who needs libraries or parks anyway, right? But it’s not hatred of bookworms or park lovers that’s really driving this agenda; it’s Machiavellian political calculation. It’s a way to step on your enemy’s throat.
DeMaio’s plan, according to Cokorinos, “hews closely to Grover Norquist’s agenda of defunding unions as part of the right’s long term strategy to cement their long term dominance.” Hence, with the Union-Tribune, the local Republican Party (Nehring also edits the virulently anti-union Labor Reform News), and many other willing allies in the local media and the business community, DeMaio successfully made unions THE source of all that ailed San Diego when the roots of the pension crises are far more complex.
Indeed, the practice of defining above average returns earned by the pension funds as “surplus earnings” began in 1980 when the tax-phobic city government used this hypothetical money in order to cover a cost-of-living increase for the city’s retirees.
As the New York Times has noted, “San Diego authorities continued to rely on the pension fund’s ‘surplus earnings’ until 1996.” That year, the city borrowed millions from its pension plan to help fund the Republican National Convention and numerous other projects. Hence, while union members may certainly regret their leaders stupidly agreeing to temporarily under-fund the pension system, rank and file city workers are clearly not responsible for the problem. A long history of starving the city of revenues is also a central, though nearly never reported, part of the problem.
San Diego was particularly vulnerable to such a dangerous scheme because of its long history as a center of anti-tax, anti-government ideology. When California’s Proposition 13 in 1978 limited property tax revenues and imposed supermajority requirements for raising taxes, cities were forced to find new ways to fund urban needs and pension funds became targets of opportunity.
Unlike other California cities, San Diego lacked a utility tax, had fewer city fees, and imposed much lower taxes on its citizens. This led to problems in funding city infrastructure projects, meeting neighborhood needs, and paying competitive wages to city employees. Even today, Cokorinos observes, San Diego businesses and residents pay a far lower proportion of their incomes to taxes for providing city services than do the residents in the rest of the state’s ten largest cities. Still, when fires hit, homeowners blame the under-funded city for not saving their homes. When it rains, residents blame the under-funded city for sinkholes and the failure of pipes and other infrastructure they refuse to pay for.
And while some on the local right might be happy to oppose cuts in some services when it serves their political interests, don’t let that take your eye off the ball. Anyone who wants to go anywhere in the contemporary Republican Party, can’t stand by any public service for too long—especially if he or she can find a private enterprise to run it “more efficiently.”
OB library and/or Balboa Park brought to you by company X can’t be too far down the line. Otherwise, you might have to think about revenue, God forbid! In the meantime, it’s a good way to divide and conquer. Pit the public against city workers by blaming their “overly generous” pay and benefits for the lack of services that you’d just as soon privatize anyways. Stand outside the library at a rally while you are fighting to bust the librarians’ pensions. It’s the neutron bomb theory of community politics—who needs the people to tell you where the books are anyway?
Tune in next week for the final installment of this sad tale.