Pauls Proposition Picks Its that awful time of year when we have to try to figure out a long ballot

full of California state propositions. Ive had lots of requests for recommendations, so here I am, no more eager than any of you. Im going to describe each one, sort through the arguments, give you my recommendation and the recommendations of the League of Women Voters, the Sierra Club, and the LA Times (for each proposition they have a recommendation). Im hoping you will not only consider my recommendations, but also judge the arguments for yourself and check me against the recommendations of others. However since many have asked for a cut-to-the-chase, here are my recommendations in cheat sheet form: 30 yes 31 no 32 no 33 no 34 yes 35 no 36 yes 37 yes 38 no 39 yes 40 yes In California the whole idea of voter-decided propositions was an early 20th century reform by the Progressives, led by Governor Hiram Johnson. At the time it was a real reform the state legislature was basically owned by the major railroads and mostly did what the railroads and their cronies wanted. The Progressives tried and failed to pry the fingers of the railroads off the legislature, and so decided instead to go around the legislature by giving the authority to write laws and amend the state constitution directly to the people. Since they couldnt clean up representative democracy, they would switch a lot of power to direct democracy. The cure for the ills of democracy would be even greater democracy. All this was to deal with the very real excesses of the Gilded Age, in which the disparity of wealth vastly increased and big money manipulated democracy to its own advantage. Now here we are a century later, in the Second Gilded Age, with the disparity of wealth again vastly increasing and big money again manipulating democracy to an extraordinary degree (see Citizens United). And what was once the great populist reform, the idea of direct democracy by propositions, has, like many reforms, been subverted over the years to where it has been mastered by big money and harnessed to the purposes of big money. Dont blame the rich if the average voter were not so easily misled propositions could still be a real reform. 1

What has happened, particularly since Prop 13 in 1978 showed that propositions could be worth huge amounts of money, is that a huge industry has been built up in which propositions have become big business. Call it the Proposition-Industrial Complex. Gone are the days of citizen volunteers putting together a proposition, gathering signatures outside supermarkets, raising a little money with bake sales, and hoping for the best. Now huge moneyed interests hire consulting businesses that specialize in propositions. They craft multiple versions of a proposition and focus-group test them. Then firms are hired to generate signatures they specialize only in this aspect of the business, and they pay by the signature. A typical cost of getting the signatures to put a proposition on the ballot can be as much as $3 million, and the campaign in favor of the proposition has not yet begun. Then an array of political consultants are called in to manage the campaign, to construct the ads, to focus-group test the ads, to place the ads, to generate fake buzz on the internet, to handle the press, to round up endorsements, and so on. In a state the size of California the cost of all this is enormous. What is most objectionable about all this, though, is not how expensive it is, but how effective it is. It turns out a lot of money now buys you a lot of talent that is very good at figuring out how to manipulate voters. In fact, if youve got the money, it is amazing how good at this these hired guns have become. As one example, in the June 2012 election some health advocates and do-gooders supported Proposition 29, which would have raised the state tax on cigarettes and dedicated the increased revenues to improved medical care for children. Mom and apple pie! Less than one-quarter of voters smoke, and everybody wants better medical care for children. Do the math -- cant miss! Three months before election day Prop 29 was polling a 70-30 win a landslide. Then the No on Prop 29 forces went to work, with huge amounts of tobacco industry money to spend. Their hired guns knew the specialized business of defeating a proposition. This is a different world where you dont have to advocate for a candidate or a policy, you dont even have to actually make any arguments against a proposition, you just have to create feelings of doubt about it. They put together a huge ad campaign conveying simply the message that the proposition was poorly drafted and might have unintended consequences. The ads did not cite any example of poor draftsmanship or unintended consequences, they just vaguely created that doubt. One of their most heavily used ads showed simply a pencil and the words: Prop 29. Poorly drafted? Nothing else needed to be said. The ad spending was huge, and after the ballots were counted Prop 29 had been defeated by a small fraction of one percent. The opponents not only spent big to prevail, they didnt spend a dime more than they needed to. They had it calibrated perfectly. Thats impressive. Thats depressing. 20% of the electorate was moved from support to opposition by well-crafted fluff and the power of paid advertising. So the reform has been co-opted. What was once the tool of average citizens has mostly become the tool of big money. 2

And propositions have other problems: they have given the legislature a good excuse to be ineffective (most of the big decisions that need to be made are so constrained by propositions approved by the voters that legislators have very little discretion left to make those decisions), and years of propositions amending the state constitution have so cluttered it up with the picayune and the impossible that the California state constitution is the laughingstock of every constitutional law class around the world. Ah, but a proposition about propositions is not on the ballot. Instead, there are eleven propositions, two of which are initiatives to amend the state constitution, eight are initiatives to create or amend state laws, and one is a referendum on the redistricting of State Senate districts via a process that was established by, what else, a proposition. What follows is a discussion of those eleven propositions. Props 30 and 38. I will take these two together, since they are in effect competing with each other. My recommendation is yes on 30, no on 38. League of Women Voters is a yes on 30; LA Times is a yes on 30 and a no on 38. California has been in budget crisis for a number of years, in significant part because of constraints the voters have, through the proposition process, put on legislators. Add to that some budget-busting political moves by the past two governors (Davis and Arnold). And then on top of that the state got hit with the budgetary tsunami of the Great Recession beginning in 2008. For reasons of unrealistic risk behavior on Wall Street and in the financial markets in general, and inadequate policing of those behaviors by investors, rating agencies, and government agencies, financial panic hit and created a severe national downturn in economic activity. Out in the states, including California, this meant that through no fault of their own their existing tax provisions suddenly brought in far less revenue, and some of their existing spending programs, most notably social safety net programs and unemployment compensation, shot up automatically. California, like most states, has a requirement that its budget be balanced each year. Granted, there is some wiggle room in how that is calculated: the capital budget is separate from that requirement, and there is always the human capacity for smoke, mirrors, and hopeful denial. However, even the wiggle is ultimately limited, and in this case the wiggle was billions smaller than the looming problem. Why Jerry Brown wanted to be governor in this impossible situation is beyond understanding, but he did. From the beginning he said he would deal with the tsunami by cutting spending, and he has. But the cuts required were a huge share of the total budget, and as the climb out of the recession proceeded slowly, deeper and deeper cuts were required each year. Given the nature of the state budget, you cant make big cuts in the budget without making big cuts in education, social safety net programs, health, and public safety/prisons, because thats where the big spending is. And 3

Brown, to the consternation of many of his Democratic allies, made deep cuts in all those areas. Education has been particularly hard hit. Education in California was in trouble before the Great Recession hit in 2008. In the 1970s California schools were consistently rated in the top two out of all 50 states. Then in 1978 came Prop 13, cutting and permanently limiting the property tax on which most of our education system depended. A Rube Goldberg system was cobbled together through the state to try to reduce the damage caused by Prop 13, but that system could never cover more than a portion of that damage. In the past decade California schools consistently rated in the bottom 5 of all states. Then came the Great Recession. It is estimated that in the past 4 years education has taken another $15 billion in cuts in California. The impact on everything from class sizes to materials has been considerable. This past year Gov. Brown proposed a somewhat different direction: that the budget-balancing exercise should now consist both of further spending cuts and tax increases, with the tax increases falling more on the wealthy than on others. Republicans blocked the tax increase side of that, leaving the proposition mechanism as the only way to get it done. At this point in the story we have to bring Prop 38 into the story of Prop 30. As Brown was putting together his version of a tax proposal (which would become Prop 30), the teachers unions and Molly Munger were putting together their own versions of the same. The risk was that if two or all three of these proposals actually went on the ballot, they might in the ensuing confusion divide support and result in all losing. Discussions ensued. Brown made concessions in the direction of the other two proposals. The teachers unions, recognizing the importance of the concessions obtained and of getting something passed to benefit school kids, withdrew their own proposal and backed Browns. Molly Munger, recognizing the importance of Molly Munger, did not. Her proposal is now on the ballot as Prop 38. A word about Molly: she is the daughter of Charlie Munger, Warren Buffets partner at Berkshire Hathaway. She is richer than God. She is also a sincere civil rights and education advocate. And her ego is as big as her fortune. Her idealism, her fortune, and her ego are the driving forces behind Prop 38. It is now personal. On the revenue side, Browns Prop 30 would increase the state income tax on individuals making over $250,000 or couples over $500,000. To be more exact, those in the over $250K/$500K bracket would see their top marginal tax rate go from 9.3% to 10.3%. Those in the highest bracket (over $500K/$1 mill) would see their top marginal rate go from 9.3% to 12.3%. Dont expect to see the wealthy reduced to panhandling. These income tax increases would affect about 1% of all income tax filers, or less than 1% of all California adults. The increase would be in effect for tax years 2012 through 2018 and then automatically expire. In addition, there would be a temporary one-quarter percent increase in the state sales tax, 4

increasing the tax from 8% to 8.25% (localities can and would continue to be able to add up to 1% on top of that for local purposes, which is what creates small amounts of local variation in the sales tax rate around the state). The sales tax increase would also be temporary, but importantly would be in effect for a significantly shorter period than the income tax increase only four years, 2013 through 2016. On the spending side, Prop 30 would put the increased revenues from its tax provisions (roughly $6 to $8 billion in the first year) into the state General Fund, meaning they are not statutorily dedicated to education. However, two other realities mean that most of the increased revenues would go to education. First, since Brown was obligated to pass a balanced budget this year, his budget both increases state education spending by just over $6 billion assuming Prop 30 passes, and then turns around and eliminates about $6 billion of that if Prop 30 does not pass. So if Prop 30 passes, most of the revenues it raises will go to education in the first year. Beyond that, Prop 98, passed back in 1988, guarantees that at least 60% of all new revenues must go to education. And since other program areas, such as the social safety net programs, have also been severely cut, it seems appropriate that a minority of the revenues raised should go to them. Mollys Prop 38, on the revenue side, would rely entirely on income tax increases (no sales tax increase), would raise more revenue (about $10 billion a year)0, and would raise it for a longer time (12 years vs. 7: 2013 through 2024). Most importantly, however, its income tax increases would hit most income tax filers, not just the wealthy. Her proposed income tax increases kick in at only $17K/$34K. And at the upper end, her income tax proposal is also less progressive than Browns: in the over $500/$1 mill bracket, she would raise the marginal rate from 9.3% to 11.3%, while he would raise it to 12.3%. California has a problem in that even though we think of its taxes as progressive, they are not. The state income tax is mildly progressive, but that is fully offset by the regressive nature of state sales taxes and various excise taxes. Taken all together, Californians at all income levels, poor to rich, pay about the same percentage of their income, on average, to the state. That is reprehensible. And with Republicans getting away with labeling themselves as anti-tax when in reality they are anti-progressive taxes (income and property taxes) and just fine with regressive taxes (sales taxes in particular, and, at the federal level, payroll taxes), the situation threatens to get worse. At first blush, Molly appears to have the edge in nudging the states tax system slightly in the progressive direction, by not increasing sales taxes at all. But she then appears to undo most if not all of that good by a less progressive approach to her income tax increases as compared to Browns. Add to that the fact that Brown has his sales tax increase last only a little over half as long as his income tax increase. If Prop 30 wins, and if there is a political battle over what should happen as its end approaches in 2018, the sales tax increase will have already gone away, and only the upper-end income tax increase will still be part of the status quo and that could play an important part in how that battle is resolved.

All things considered, I expected to like Mollys revenue provisions better, but I ended up preferring Browns. Mollys prop 38, on the spending side, does not send the increased revenues to the General Fund, but instead sends them to a dedicated trust fund and specifies exactly what those funds can be spent on. For 2013 through 2017 that would be 60% on schools, 10% on pre-schools, and 30% on paying down the states debts. Thus, for the next 5 years, the same share of funds raised in either prop 30 or 38 would go to schools, though Prop 38 would raise more funds in total. Thereafter until 2024 the shares would be 85% to schools, 15% to pre-schools, and none to paying down debt. Within the amount going to schools prop 38 specifies further breakdowns as to where the money will go, with considerable specificity, but that is beyond my scope. As best I can tell, one other difference on the spending side is that in the Brown prop 30, some portion of the increased revenues can go to higher education, though it would be a relatively small portion, while in the Molly prop 38 there is no increased funding for higher education. Enough of mere substance, now lets get down to what really matters here, the politics of it. Molly did some good: she was part of the tango that got Brown to reduce his proposed sales tax increase from one-half percent to one-quarter percent., making his tax proposal more progressive. One of the key skills in politics is knowing when to declare victory. It is not one of Mollys skills. Prop 30 and 38 are conflicting propositions even if they both were to pass, only one could go into effect. And the one that would go into effect would be the one with the most yes votes. But Mollys Prop 38 will not win it will not even come close. The only pending question is whether Browns Prop 30 will win or lose, and that is an open question. The electoral math here is pretty simple. The anti-any-tax crowd and organizations, including the Republican Party, will vote no on both. The state teachers unions and their allies will vote yes on 30 and no on 38. The goodgovernment types will do the same (League of Women Voters is yes on 30 and neutral on 38, LA Times is yes on 30 and no on 38, etc). Polling shows that Prop 38 will go down by a large margin, and Prop 30 will be close. So if you believe that even some of the recent cuts to education should be restored, the only thing that matters is voting yes on Prop 30. But then Molly makes it worse by throwing an ego-fit. She has decided that even if Browns Prop 30 is the only remaining viable way to get more money to the school kids for whom she genuinely advocates, she will work to defeat Prop 30 even though her own Prop 38 has no chance. Having already spent $31 million of her own money to advocate Prop 38, she then started pouring millions into an ad campaign to attack Prop 30 and bring it down. This was heading toward no money for schools from either proposition. It was the ultimate My way or the highway. Molly funded attack ads basically arguing that Prop 30 was a fraud. Jack Pitney, a political scientist at Claremont McKenna College, says the ads could well bring down 6

both propositions. This is fratricide. She wants to pass her own initiative. She thinks its a better idea, but a negative commercial is likely to bring down 30 without helping 38. And the big winners in this competition are the opponents of both. But wait, theres more. You couldnt make this stuff up. Charlie Munger has not only a daughter, Molly, he also has a son. The son is also rich as God, but is as far rightwing as Molly is left-wing. The son is also pouring millions of his own funds into California propositions, not to support Mollys prop 38, but to defeat Browns prop 30. So both Molly from the left and her brother from the right are spending millions to defeat Browns Prop 30, even though they agree on nothing else (except that its pretty cool to be really rich). Bring on the script-writers from Dallas. After Mollys attack ads on Prop 30 ran for over a week, some of her pro-education allies talked her down off her ledge, and she discontinued the attack ads and went back to merely promoting her own proposition. But the question remains whether the damage has been done, and whether schools will get out of this election with any new funding, even if it is only partial restoration of the cuts they have suffered. I recommend a yes vote on 30, because it is the only chance we have of undoing some of the damage we have done to education in this state, and I recommend a no vote on 38 because irresponsible behavior like this should not be rewarded. Prop 31. My recommendation is no on 31. League of Women Voters, Sierra Club, and LA Times all urge a no vote. This is the fruitcake proposition lots of different bits in it, all jumbled together, some of those bits are reasonably tasty, if a bit wonkish. But in the end its mostly a jumbled mess of bits. This tries to be a package of various reforms. Its got a requirement that the governor and the legislature use a two-year budget cycle, rather than the traditional one-year cycle. That has some superficial appeal, in that wed only have to listen to the hysteria about the budget deadline not being met half as often. But it is on the wonkish side, so its hard to get too excited about it. Its got a pay-as-you-go requirement pay-go in wonk-speak which requires that any significant proposal by the Governor or the legislature to raise expenditures or reduce revenues at the same time find a way to pay for that proposal, i.e. to find offsetting spending cuts or tax increases. Again, pretty good idea, if a bit wonkish. Congress had such a rule in the late 1990s, and then-President Clinton and the Congressional budget types used it to good effect to reduce the annual deficit to zero (strongly aided by a robust economy). George W. Bush came into the White House, had his Congressional allies terminate the rule so he could pass his tax cuts without 7

paying for them (and then invade and occupy Iraq without paying for it, and then enact a Medicare Part D without paying for it, etc). The result was massive deficits, which the Republicans now criticizing the deficits of the Obama era blithely voted for and have now conveniently forgotten. But pay-go is where this proposition starts to leave the tracks. It would apply paygo rules to the legislature and the governor, but not to the proposition process. (An earlier version of this proposal, unlike the one on the ballot, would have included a pay-go requirement on propositions.) By not covering propositions this provision would actually push fiscally irresponsible proposals from the legislature into the propositions, and California has a long history of propositions doing more fiscal harm than the legislature does. There is a lot of history saying we need more fiscal decisions made where the legislature and the governor can at least be held back slightly by checks-and-balances, and fewer made where the power of money is now even greater, i.e. in the carnival of the propositions. The likelihood is that this proposition has achieved the nearly impossible: a way to make California even more fiscally zany than it already is. And then there is the provision that really sinks this proposition into the mess category: what it calls community strategic action plans. Not surprisingly, this term is code for something that would not do well in the light of day. Local government is justifiably frustrated that the state sticks its nose into local business more than it should. The main reason the state does so is Prop 13, which severely reduced and limited a source of revenue for local government. As a matter of necessity, in the aftermath of Prop 13s win, the state had to cobble together various bits of revenue sharing with local government, to try to make less bad the mess that Prop 13 created. As a result, about half of the states sales tax revenues, and a lesser portion of the states income tax revenues, find their way back to local governments. But of course they come with restrictions and conditions, and of course it also means that local officials get to hold their breath in terror every year worrying about whether the state will ever agree to a budget. The upshot is that local officials spend a lot more time angsting about Sacramento than they would like. Community strategic action plans are supposed to give them back a greater degree of local power, but the reality is that this provision does not solve the real causes of reduced local power, and it creates a whole new set of problems. Under this concept, locals would draw up their own plans for what they wanted to happen in their community. Then any requirement in state law or programs that the local community thought disagreed with their own plan, they could ignore. Water pollution requirements, air pollution requirements, the statewide climate change requirements, limitations on annexations, limitations on depletion of groundwater, coastal protection and access, you name it, the locals could override. Granted, there is also a provision in this proposition that the legislature, by two-thirds vote of both houses, could override the local override (thoughts of Rube Goldberg), but again, with that two-thirds requirement we would simply be making worse the minorityrule problem we already have in the budget process. 8

Also in the proposition are substantially expanded powers for the governor to unilaterally make his own budget cuts. Any time the governor would declare a fiscal emergency, the legislature would have 45 days to pass the governors revised budget proposal or some modification of it. If they did not, the governor would have unilateral power to cut whatever he wanted, except that he could not cut any spending required by the state constitution or the federal government. But that exception covers the vast majority of all state spending (the larger share of which is required by the state constitution through provisions put in the constitution by, what else, various propositions). So the governor would have virtually unlimited power to cut as much as he wanted out of a minority of the budget. Cut a lot out of a little is an odd way to go about this. The biggest concern here is that it would be easy for the party of the governor to block action in the legislature precisely to throw the unilateral power to their governor. Even if that party were in the minority, because of various supermajority requirements put into the budget process by, you guessed it, various propositions, it could block action. There are lots of other bits floating around this fruitcake, but I think that is enough to get the flavor of the thing. If this proposition were a paper submitted in an undergraduate political science class, it would be considered well-intentioned but nave, and would be lucky to get a C-, even in these times of grade inflation. I recommend a no on 31. Prop 32. My recommendation is no on 32. League of Women Voters, Sierra Club, and LA Times all recommend no as well. This proposition masquerades as non-partisan when it is in fact extremely partisan. It pretends to be an even-handed political reform when it is a political hatchet job. It prohibits both unions and corporations from using payroll-deducted funds for political purposes. Sounds even-handed. Except that corporations rarely use payroll deduction as the fund-raising tool for their corporate PACs, and unions almost always do. So in the real world this proposition would virtually shut down union political fundraising, while leaving corporations a free hand to keep raising political funds the way they do. Typically corporate PACs raise a lot of money from relatively few top employees, so payroll deduction is not a particularly useful way for them to do that (trust me, I created and ran a corporate PAC). Unions, in contrast, raise money for their PACs with very small contributions from a whole lot of employees for them payroll deduction is the only practical way to do that. This proposition is cleverly and I would say fraudulently designed to appear evenhanded when it is actually a gun aimed only at unions. It also poses as political reform, by prohibiting unions and corporations from contributing directly or indirectly to candidates or candidate-controlled committees. 9

Sounds like it would get some of the excessive amounts of money out of campaigns a good thing, right? Actually it does nothing to restrict so-called independent expenditures, which are now where the big action in political spending is. These are the same type of expenditures the Roberts court declared to be unlimited in the Citizens United case. So a corporation (now held by Citizens United to be a person for purposes of the First Amendments right of free speech) can give unlimited amounts of corporate money (it no longer even needs to have a separate PAC) to a PAC run by Romneys most loyal staff person, but now technically a separate organization from the Romney campaign and not, theoretically, coordinating with it. Most of the blitz of Romney campaign ads now hitting swing states like Ohio are funded not by the Romney campaign but by the nominally independent PAC led by his loyal staffer. Similarly, a union could give as much as it wanted from its own funds (not limited to its PAC funds) to a PAC run by a loyal Obama staffer but nominally separate from the Obama campaign. So the best you could say about this part of the proposition is that it doesnt really do anything to limit money in campaigns. However, its a bit worse than that, because many corporations have a lot of non-PAC money to throw around, but most unions do not. This is another proposition brought to you by a few very rich right-wingers, looking to cut off funding to anyone who doesnt share their political views. And in a political world that has become so determined by money, cutting off the other guys cash is the best way to assure dominance of one point of view. Remember Mollys very rich right-wing brother? Hes contributing millions of his personal wealth to two proposition campaigns: no on 30 and yes on 32. A shadowy group in Arizona has been funneling millions into the yes on 32 campaign, because all kinds of big donors who dont want to be disclosed as donors can give money to this group and then avoid disclosure by hiding behind its label (Arizona does not require disclosure). Slimy stuff. I recommend a no vote on 32. Prop 33. I recommend a no on 33. LA Times is also a no on 33. One guy with lots of money. Thats the key to this proposition. This is actually his second time out with this one he lost in the first attempt. No matter. It just takes more money. George Joseph is the guy; hes a billionaire insurance executive. He has a different idea for how the auto insurance business ought to be run, and he thinks using a proposition to change state law would be a good way to implement his different idea. California has more people and more cars than any other state. Auto insurance here is therefore a huge business: $21 billion a year in auto insurance premiums. Even a slight change in the way this business works can be worth a lot of money. The auto insurance business is regulated by the state in order to prevent discrimination on such grounds as race, wealth, or income, to prevent fraudulent sales pitches for insurance, and to assure that insurance companies do in fact have the reserves necessary to pay the claims they have committed to pay. The 10

regulatory scheme for automobile insurance has been prescribed in some detail by, what else, proposition in this case Proposition 103 in 1988. Under Prop 103 auto insurance companies are allowed to base their premiums on three factors; driving safety record, number of miles driven each year, number of years of driving experience. In addition, the states Insurance Commissioner may allow premiums to be based on several other specified factors, one of which is that companies may base premiums on how long you have been with that insurance company. Insurance companies may not, however, base premiums on how long you have maintained continuous insurance with any other insurance companies. Thats what Mr. Joseph wants to change. His proposition would allow an insurance company to charge more to a person who had been with that company for two years, had had no insurance for the two prior years, and had been insured by another company for the two years before that, as compared to a person who had been insured by that company for two years and by another company for the previous four years. That sounds pretty technical why would anyone care enough to spend millions of dollars to get that change? Think about it: who is most likely to have that lapse of auto insurance for a year, or two, or three? Its disproportionately going to be someone who is of color, is poor, is low income. Prop 33 is a backdoor attempt to reintroduce discrimination by race, wealth, and income, the same discrimination that is prevented by Prop 103. And to an industry this big, it could be worth a lot of money. Its too odious for most reputable insurance companies to be seen near it, but Mr. Joseph, hes going for it. A second time. I recommend a no on 33. Prop 34. I recommend a yes on 34. League of Women Voters is also a yes, as is the LA Times. This is straightforward: it would end the death penalty and replace it with life imprisonment without possibility of parole. The death penalty can be argued from many different angles. Im going to limit myself to three: cost, deterrence, and political philosophy. The cost of the current death penalty system is horrific. The various levels of judicially-required appeal are numerous, and the time and expense of each level are huge. Those sentenced to death can ultimately appeal to the state Supreme Court and to the US Supreme Court, but what really runs up the bill is the numerous appeal steps before either Supreme Court. It is common for the appeals process in death penalty cases to take twenty years or more. Since the death penalty was restored in 1978 (by proposition!), more inmates sentenced to death have died of old age in prison, in various stages of appeals, than have been executed. The actual numbers, in that time period, are that nearly 900 individuals have been sentenced to death, 14 have actually been executed, 83 have died in prison at various stages of their appeals, and 725 still sit in state prison at various stages of appeal. The legal 11

costs of all those appeals, the much higher imprisonment costs required for death row inmates -- who do you think is paying for all that? You! It is significantly less expensive to the taxpayer to imprison someone for life than it is to house them on death row, conduct all their appeals, and then ultimately execute them. Prop 34 is estimated by the objective Legislative Analyst to ultimately save taxpayers over $100 million a year. It is costing you a lot to preserve the fantasy that we execute a significant number of murderers. Lets be honest with ourselves and save a lot of money as well. The question is raised as to whether a death penalty is necessary to deter the most serious crimes. Deterrence is always a key issue, at any level of crime. In the early 1980s we had a great rush of politicians to get on the war on drugs bandwagon. What that mostly meant in practice was that we upped the punishment for what were often rather minor crimes, each politician trying to outdo the next in advocating even tougher punishments. But in most crimes the perp either thinks he wont get caught or is so emotional he doesnt care if he is. The most effective way to increase deterrence is to increase the arrest rate. Most criminals dont believe they will be arrested, and the odds are they wont. Until they are arrested they are not thinking ahead to conviction, let alone sentencing. Crime rates continued to go up through the 1980s and into the early 1990s, so all the tougher punishments we required in various laws in the early 1980s did not seem to have much effect. (Crime rates did turn down in the mid- and late 1990s, and the great micro economist Steven Levitt has a wonderful analysis showing that the reason was not anything done by law enforcement or prosecutors or judges, but was the delayed demographic effects of Roe v Wade. But thats another story.) The reality is that a lot of crimes never result in an arrest, very few crimes are murder, very few murderers are convicted of first degree murder, very few of those are found to have the special circumstances necessary to get the death penalty, and very few of those who get the death penalty will ever be executed. There is no good reason why someone deciding to commit a crime, even a violent crime, would stop and consider the possibility of being executed. It is simply too remote a possibility. It has no deterrence value at the time the decision is made to commit the crime. And finally, it is political conservatives who generally support the death penalty, and yet it is political conservatives who believe most strongly in the limited abilities of government and in its fallibility. No matter how good a justice system we have, any human system is fallible. Some percentage of the time, we will falsely convict someone. The advent of DNA analysis has had the disturbing side effect of demonstrating that some of those sitting in prison were falsely convicted. At least in the case of someone in prison we can release them if they are belatedly proven to be innocent. After an execution, we do not even have that option. Imposing the death penalty is a claim of our infallibility, and no one can legitimately claim to be infallible. Unless we are prepared to elevate government to a god-like claim to perfection, we have no business sentencing anyone to death. 12

So the existing death penalty system punishes innocent taxpayers with higher costs, does not deter crime, and stakes an untenable claim to governmental infallibility. Life imprisonment without possibility of parole would be better on all counts. I recommend a yes vote on 34. Prop 35. I recommend a no on 35, as does the LA Times. Yet another case of one guy with lots of money. This proposition involves human trafficking, which is a crime under federal law and under state law. It would change state law but not federal law. Prop 35 would expand the definition of human trafficking. Under state law, human trafficking involves coercion, such as forcing someone into prostitution. Prop 35 would expand the definition of human trafficking by no longer requiring a coercion element. For example, if someone passed along on the internet images of a minor deemed to be erotic, they could under Prop 35 be charged with human trafficking (in addition to charges under existing law for spreading images of a minor), even though they never had any contact of any kind with that minor. Prop 35 would increase the punishment for human trafficking. Today it is a federal crime and a state crime, punishable by many years in prison, with longer sentences where minors or significant bodily injury are involved. Typically prop 35 would at least double the prison terms in existing state law for the various levels of human trafficking, and often increase the prison terms by a great deal more than that. So, how big a problem are we talking about here? How many human traffickers in the state of California are getting jail time and should be getting more? In the great state of California, with its population of 38 million people, as of March 2012 we had a grand total of 18 people sitting in state prison for any version of human trafficking. Either we have virtually no human trafficking problem in this state, or we do and we fail to arrest or convict those who engage in it. But we clearly do not have a problem of prison terms that are too short. As we have already seen (see prop 34 above), increasing punishment is rarely as effective as increasing arrest and conviction, assuming we do have a significant human trafficking problem. So what is going on here? Why is one guy putting up millions of dollars of his own money to push this non-solution to a non-problem? Is he the father of some poor girl sold into sex slavery by a deranged, meth-stoked boyfriend, and hes feeding his grief and regret by funding this crusade of vengeance? No. He is Chris Kelly, a former Facebook exec who got gobs of money in the Facebook bubble and is now spending a few million of it to stake his personal claim to running for political office. Finding some mom-and-apple-pie issue (who is in favor of human trafficking?) and authoring a proposition that postures on that issue is a time-honored way for an ambitious and impatient newcomer to claim an instant political resume in California 13

state politics. He ran for attorney general in 2010 and did not do well. This is his attempt to burnish his resume for his next shot. A proposition as a self-promotion scheme by one very rich guy? Its happened before, and it has worked. Arnold spent over $1 million of his own money to push a proposition on education (mom and apple pie) in 2002, and that success helped him become governor a year later. Mr. Kelly is trying to take the same path. I recommend a no on prop 35. Prop 36. I recommend a yes on 36. LA Times does as well. This proposition is about Californias three-strikes law. Californias criminal statutes generally provide for specified ranges of penalties for each crime, and various factors, including whether the criminal is a repeat offender, can make those ranges more harsh than they would be for, say, a first time offender. So the principle is well-established that repeat offenders get harsher punishments. Three-strikes laws took that reasonable principle a step too far. I have already described how, in the early 1980s, America went on a rampage of imposing by law harsher punishments for a wide variety of crimes (see prop 34 above). It had no appreciable effect on crime rates, but we did it anyway. In the waning years of that trend, the notion of three-strikes-and-youre-out became popular (what about baseball suggested it would be a good model for our justice system to follow I cannot understand). California adopted three-strikes (What else? By proposition!) in 1994. The basic idea of three-strikes is that by the time you are found guilty of anything for the third time, you are clearly a really bad guy, and we are going to remove all discretion from the judge and require him to throw the book at you. Huge punishments were imposed for the third crime, no matter how minor it might be. It has not turned out well. First of all, since we have states that adopted threestrikes laws and states that did not, we can compare whether the crime rate trends of the former did better than those of the latter. They did not. (The crime rates of all states went down in the late 1990s, but see the discussion about Professor Levitt under prop 34.) Second, three-strikes laws have produced ridiculous results that have tarnished the credibility of our entire criminal justice system. To quote from the LA Times editorial: Under Californias three-strikes law, Scott Andrew Hove was sentenced to 25 years to life after shoplifting $20 worth of merchandise from a Home Depot store. Homeless people have been given more time than rapists and killers for stealing meals from food kitchens; drug addicts caught with small stashes have been swept behind bars for life. Since California voters approved the law in 1994, thousands of repeat offenders have received extraordinarily draconian sentences for third felonies that were non-violent and non-serious, helping to clog the prisons and, despite claims from the laws proponents, having no discernible effect on crime. 14

And third, the situation has gotten so bad that even some of the most tough-oncrime prosecutors in the state sometimes refuse to bring a charge against someone with two strikes because they know it will result in an unconscionable punishment for a very minor crime. Thus we are giving up arrest and conviction, which do have significant deterrent effect, in order to think we are being really tough on punishment, which often does not. Who were the idiots who enacted this law? Oh wait, it was us. Never mind. Prop 36 does not repeal three-strikes. Instead it takes the mild-mannered approach: it attempts to modify its worst aspects. Under the existing three-strikes law, anyone convicted of a third felony, no matter how minor or non-violent it might be, automatically gets 25 years to life in prison. Under the prop 36 modification of three-strikes, that third conviction would have to be serious and/or violent for the 25 years to life automatic sentence to be imposed. In addition, it would deal with the large number of prisoners in state prisons on 25 years to life sentences because of three-strikes. At present there are about 9000 prisoners serving the three-strikes sentence, nearly a third of which got that sentence for a minor and non-violent crime. Most of them have already served many years for that minor and non-violent third strike. Prop 36 would allow those whose third strike was minor and nonviolent to petition their sentencing judge for release, and the judge could grant that release only after finding that the petitioner no longer presented a public safety threat. So is the bottom line that we need propositions to correct the mistakes we made via propositions? I recommend a yes on 36. Prop 37. I recommend a yes on 37. Sierra Club is a yes. LA Times is a no. Debate about Prop 37 runs at two levels. At one level, the proposition is a relatively simple consumer disclosure requirement: put on the label whether the food you are selling contains genetically-engineered (G-E) stuff or not. And at another level this proposition is the lightning rod for those who want to debate the question of whether G-E crops should be allowed at all. The proposition itself does not ban food of any kind, but often the debate over the proposition does not reflect that fact. Full disclosure: I am not a geneticist. I am not the guy to fully understand the science. I do the best a policy wonk can do, but I cannot take this argument down to the molecular level, though Lord knows, there are lots of others who cant but are willing to pretend they can. Lets clear some of the underbrush first. This is just a labeling requirement. It says that if your food product contains G-E stuff, you have to put that on the label, and you cant call it natural. Big ag and big food processing and big food retailing have come down hard on this proposition, and are spending big to try to defeat it. Their fear is not about what it actually does, but that it might be the slippery slope to more 15

severe measures. They fear it will stigmatize their products. Does the fact that we put on labels whether a product contains peanuts stigmatize peanuts? Have peanut sales plummeted as a result? Hardly. The opponents are clearly over-reacting, but then thats lucrative for their consultants. The proponents are hyper-ventilating as well, though unfortunately for the proposition consultant industry they dont have nearly as much money to spend. Lets get real: the G-E crop business is a horse that left the barn years ago. Most of our corn crop and most of our soy crop the two foundations of most of our food products are already G-E crops, mainly modified for resistance to herbicides. Other food items are extensively G-E as well (as are non-food crops such as cotton), but corn and soy are so fundamental to our food system that they alone make the case. G-E is not going away, with or without prop 37. The G-E revolution of the last two decades, and the green revolution of the 1960s and 70s, and the manufactured fertilizer revolution of the 40s and 50s, now make possible, for better or worse, the dramatically increased food production of our time. And that dramatically increased food production made possible, for better or worse, the dramatically increased world population of our time. Just since World War II, world population has soared from 2.25 billion to 7 billion. Thats 4.75 billion more people on the Earth today because of those three food revolutions. Thats 4.75 billion reasons why there is no going back. The tough question, however, is whether there is any viable way going forward? It is not clear that all, or even any, of these great food revolutions will be sustainable. The fertilizer revolution, burning fossil fuels to make nitrogen-based fertilizers, jacked up food production in the short term, but depleted soils quickly, creating dependence on more and more manufactured fertilizers, and creating more and more pollution problems. The green revolution, with its super seeds that increased yields and shortened maturity times, further depleted soils, drained aquifers, prompted increased irrigation that caused increased salinity in many soils, and reduced crop diversity, making our food system more vulnerable. The G-E revolution further reduces crop diversity, greatly increases herbicide use (a significant water pollution problem), increases farm dependence on petroleumbased chemicals of various kinds, and creates the very real specter of unanticipated consequences in the form of unwanted genetic outcomes. The scientists employed by the several large corporations at the heart of these three revolutions in effect say, Dont worry. We solved the problems of the past. Sure those solutions created new problems of their own. But we will be able to solve those new problems in the future. Maybe they can. And maybe they cant. The only sure thing is that if we find they cant, we are major screwed. There is no Plan B. Weve already made our Faustian bargain, and we are all in. If there is a rude awakening in our future, we are billions of people over the real carrying capacity of the globe. It wont be pretty.

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As a point of reference, the human carrying capacity of the Earth for the thousand years prior to the industrial revolution ranged from about one-quarter of a billion to one-half of a billion. For most of human history it has been less than one-tenth of a billion. Were now at 7 billion and headed fast toward 8. So what should we be doing with G-E, given how far we are already in? In my inexpertise I am willing to boldly go where I shouldnt. There are two significant problems with G-E that we can do something about, even if that something may not be a full solution. We can reduce the risk of unintended genetic outcomes, and we can deal with the issue of unintended dispersal of genetics to neighboring crops. With respect to unintended genetic outcomes, the risk varies widely within G-E. Giving one variety of strawberry a genetic characteristic from another variety of strawberry is arguably not much more than an accelerated version of traditional cross breeding of those two varieties. Giving it a genetic characteristic from a blackberry is slightly less predictable. Giving it a genetic characteristic from a redwood tree has significantly less predictability. Giving it a genetic characteristic from a salmon has a lot less predictability. We already have a Food and Drug Administration with extensive regulatory authority. It requires pre-market approval of drugs (an approval process that can be quite lengthy and expensive) and of food additives, but not of food, which it monitors after the fact. If we required FDA to subject G-E foods to the test of premarket approval, and if we put the rigor of that approval process on a sliding scale proportionate to the risk (i.e. moving genes from strawberry to strawberry would involve a relatively easy and quick review, but from salmon to strawberry would involve more extensive review and higher standards of proof), then we would significantly reduce the fear of unintended genetic consequences. With respect to genetic drift, in which genetic material from a G-E crop drifts over onto a neighbors non-G-E crop and unintentionally modifies it, we have an intellectual property law problem that needs to be fixed. Our intellectual property laws were devised with mechanical inventions and published texts in mind. In the past few decades we have had to figure out how to extend those concepts to things like microchip design and smartphone shapes, and to things like G-E seed. We have some problems in the latter area, particularly with regard to this issue of genetic drift. There have been cases where one farmer (farmer A) plants a G-E crop, having purchased the seeds from a major corporation that has patented its G-E seed, and his crop sends pollen on the wind to his neighbors (farmer B) non-G-E crop, which then incorporates some of those G-E characteristics. In a reasonable world, farmer B would have the option, if he could prove the contamination and prove damages, of recovering from farmer A his damages. It is no different than if farmer A spilled toxic chemicals on the ground and they flowed over onto farmer Bs fields farmer A is responsible for the damage his actions have caused farmer B. However, under our unfortunate adaptation of intellectual property law to G-E, there are cases where in this situation the G-E seed corporation stepped in and sued farmer B for 17

stealing its intellectual property, and won! That is a ridiculous outcome and, among other things, a real threat to environmental law in general. So now that I have offended both the pro-G-E people and the anti-G-E people, lets get back to the particulars of this proposition. It doesnt do any of the things I have just suggested. It is remarkably modest. It is just a labeling requirement. The FDA already has guidelines for companies that want to label their products with respect to G-E, but does not require them to do so. Most European countries do. The major food companies are doing just fine in Europe. Ironically, the propositions attempts to be modest have been used against it. In defining what is G-E it often goes less far upstream than the organic labeling requirement we are all familiar with. For example, in the case of beef, if the cow has been genetically engineered, the beef has to be labeled as G-E. But if the cow is not G-E but has eaten some grains that are G-E, it does not have to be labeled. (In contrast, if the issue were organic certification, the cow would have had to have consumed only organic feed in order to be considered organic.) The opposition has jumped on that to create the impression that the proposition is badly drafted, and carves out special interest exemptions (not specified) there are ads saying why is my steak not labeled but something else is? The opponents are following the successful playbook of the anti-prop-29 consultants (see page 2): you dont have to prove anything; you just have to create vague feelings of doubt. Badly drafted? Opponents also make the claim that there will be high litigation costs. The proposition does allow consumers to sue if there is non-compliance. But get real, these are companies that already comply with far more complicated nutritional labeling requirements and in some cases organic certification requirements. This by comparison is far easier to comply with. There wont be a lot of litigation for the simple reason that there will be very little non-compliance. The neutral Legislative Analysis concludes of the litigation costs these costs are not likely to be significant in the longer run. A major hurdle for this proposition is the fact that newspapers depend heavily on the advertising dollars of supermarkets and food processors, the very people who have been put into a frenzy over what this might mean for them (an unjustified frenzy, in my view). As they say in the trade, Money talks and bullshit walks. Newspapers have mostly lined up against prop 37, and their endorsements have significant impact. Thats unfortunate, but thats the nature of the proposition process. I recommend a yes on 37. Prop 38. I recommend a no on 38. Ive already covered it in Prop 30 above. Prop 39. I recommend a yes on 39. The LA Times and the Sierra Club are both a yes. 18

OK, tax wonks, this ones for you. California, like many states, has a corporate income tax. Where a big corporation does business in many states, the basic principle is that it pays state income tax in each state based on the portion of its income earned in that state. While relatively few California corporate income tax payers are multi-state corporations, most of the states income tax is paid by these relatively few multi-state corporations, because they are so big and do so much business in the state. So the whole subject of multistate corporations and how their California income tax is figured ends up being worth a lot of money. The question is, how is the share of their total income that is attributable to each state calculated? Traditionally, it was done by a three-part formula, that took into account sales in the state, the number of employees the company had in the state, and the amount of property it had in the state. In recent years, some states began simplifying that formula: they just counted the amount of sales a company had in the state. In a world where some states still used the old three-part formula and some used the newer, simpler sales-only formula, corporate tax departments figured out that it made sense (and cents) to put more of the companys jobs in states with the sales only formula, thereby reducing their total state income tax bill. As states figured out what was going on, more of them changed over to the sales only formula, so they would not be at a disadvantage in getting their share of the jobs. California was slow to get this done. It made the attempt last year in the great legislative wrangle over the budget, but it came out badly. Because so many multistate corporations doing business in California had moved jobs to other states to take advantage of this disparity in how states calculated state corporate income taxes, these moves had resulted in a California tax break to these large multi-state corporations of about $1 billion per year. Taking that loophole away therefore was declared by the Republicans to be a tax increase, and they had all taken the pledge to never increase taxes, no matter how much sense it might make. And in this case it made a lot of sense, since the disparity was sending jobs out of the state and was disadvantaging in-state companies who competed with these large multi-state corporations. No matter, the Repubs were opposed. And because the easily misled voters of California had years earlier put in place, via proposition, a requirement that any budget/any revenue increase be subject to a two-thirds vote, the minority of Repubs could block any correction of this problem. And did. The resulting non-solution was to allow multi-state corporations to choose which method they wanted to use. The obvious result was that they each picked the one of greatest advantage to them (perfectly reasonable) and the billion dollar break for multi-state corporations, and the incentive for them to put a disproportion of their jobs out-of-state, was perpetuated. It was a staggeringly stupid outcome.

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Now comes my chance to eat some crow. Into this disaster steps one very rich guy who decides this is unacceptable and hes going to do something to help his state. Meet Tom Steyer, founder of a hedge fund in San Francisco, and a very wealthy guy. He decides to take this one on, personally. He puts up $22 million of his own money, at last count, to do good. (OK, so sometimes rich guys really can do good in the proposition process.) Prop 39 is his baby. It would require multi-state corporations to use the sales-only method of calculating their income attributable to the state of California, as is now the case in most states. The result: about $1 billion per year in revenues from the multi-state corporations, an end to a tax code loophole that incentivizes multi-state corporations to put more of their jobs in other states, and an end to in-state companies being at a competitive disadvantage to multi-state corporations. And there are two other consequences as well. First, as it turns out, in addition to being very wealthy, Mr. Steyer is also environmentally-minded. His prop 39 dedicates about half the revenue raised by the proposition for just the first five years to construction jobs to reduce energy consumption and greenhouse gas emissions at public buildings. And second, in combination with existing features of the California budget process (by previous proposition), a significant share of the funds raised by this proposition would be required to go to public schools. OK, lets hear it for rich guys. I recommend a yes on prop 39. Prop 40. I recommend a yes on prop 40. League of Women Voters and LA Times are also yes. The theme here is the old Gypsy curse: May you get what you wish for and be truly unhappy. Republicans complained for years that the reason they did rather poorly in California was that the Democratic legislature gerrymandered districts so egregiously that it artificially reduced the number of Republican Assemblymen, State Senators, and US Congressmen. They demanded an independent, non-partisan redistricting process to delineate districts in a neutral and rational way. Or at least they wanted that in California, where they were a minority in the legislature, though in states where they had a majority in the legislature they wanted nothing to do with the idea. So after years of yammering, they got what they wanted. In 2008 and 2010, by proposition, the voters decided to take the once-a-decade redistricting process out of the legislatures hands and put it in a non-partisan commissions hands. That was done, and that commission took the 2010 census data and drew up new districts in a non-partisan fashion. The new maps were significantly different than the old, and in some areas required to incumbents to run against each other, something politicians never like to have to do. But as far as party balance, the general reaction to the new plans was that the non-partisan version was not likely to produce a significantly 20

different party outcome than the old. It turns out the old maps may have been weighted a little bit more toward the protection of incumbents of both parties, but they were not particularly weighted toward Democrats. Repubs were not happy, and they focused their concern on the state senate maps. They forced a referendum on the state senate maps that is what prop 40 is. They put approval of the state senate maps on the ballot, intending to urge a no vote. In other words, having gotten the non-partisan Commission process they wanted, they set out to kill its work. Having put the issue on the ballot, however, it began to sink in that this effort was very embarrassing. They were drawing attention to something it was not in their interest to draw attention to. Over time, cooler heads prevailed, and they have abandoned the campaign to urge people to vote no on 40. However their handiwork is still on the ballot. Since we went to all the trouble and expense to create this non-partisan redistricting commission, I suggest we approve their product. I urge a yes vote on 40. Thats it folks. Isnt direct democracy fun? What percentage of the electorate do you think have put in as much thought on this as you have? Did you notice along the way how many state issues and procedures have previously been decided by the voters through propositions? And how often the propositions we need to adopt now are to fix dumb ideas in previous propositions? And how few issues and procedures weve left to the legislature to resolve? Isnt it a tribute to the determination of the human spirit that through all this we still blame politicians for our screw-ups? Oh well. Please vote.

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