Why Meg Whitman can save California
As former Goldman Sachs CEO and ousted New Jersey Governor Jon Corzine can attest, a business background hardly guarantees political success. Though California is no startup website, former eBay boss Meg Whitman, now the GOP’s nominee for governor, might have the right skill-set to tackle the Golden State’s fiscal challenges.
Not that getting the top job will be a simple click of a mouse. Although Whitman handily beat primary opponent Steve Poizner 64 percent to 27 percent, it took $80 million to do it. And California is a heavily Democratic state. Candidate Barack Obama won by 24 percentage points over John McCain in 2008. And her opponent in November Jerry Brown, is a former governor and canny pol. But Whitman’s billion-dollar fortune and voter unhappiness with Democrats nationwide might be enough to seal the deal.
Then the fun would really start. The state’s $1.8 trillion economy is afflicted by a 12.6 percent unemployment rate — the nation’s third highest — and a budget gap of $19 billion. And California has at least another $60 billion in underfunded public employee pension liabilities (perhaps as much as $500 billion when adjusted for realistic market returns and volatility), helping it earn the lowest credit rating among the nation’s fifty states.
The dire situation would seem to require a chain-saw-wielding turnaround artist capable of slashing spending and smashing unions. But a governor is not an all-powerful CEO, as many execs-turned-politicos have discovered. Instead of making unilateral decisions, governors must persuade legislatures and interest groups, as well as rally public opinion.
It’s a challenge that would not be entirely unfamiliar to Whitman. True, ebay was a growth business for most of her tenure. But growing the online auction firm into an Internet giant required massaging and nurturing a large and disparate community of buyers and sellers. She had to discern the messages of the marketplace and react astutely. As governor, she would need similar capabilities in balancing the needs of differing constituencies, be they voters, teachers unions or municipal bond investors.
Whitman also understands how government can accidentally create an environment hostile to business. The Tax Foundation ranks California as having the third-worst tax climate in the nation, including high sales and capital gains taxes. The candidate says if she was starting eBay today, she might choose Texas over California. If California voters see things the same way as the Whitman campaign come November, they just might “buy it now.”