By Joe Garofoli
President Obama made the widening gap between wealthy and poor Americans a major theme of his State of the Union speech, but it’s unlikely he’ll be able to shove legislation through a gridlocked Congress this year. Instead, the real action could come in California.
When state voters cast their ballots in November, they could be making decisions on several measures intended to bring the income levels of rich and poor closer together. They include a cap on hospital executives’ pay, more taxes on oil companies and a higher minimum wage.
There’s real money behind each effort. The hospital CEOs are being targeted by a deep-pockets union. The oil-tax measure would be financed by a rich former hedge-fund manager, and a Silicon Valley millionaire is behind the minimum-wage hike.
The money lining up against them is just as formidable. Business groups, the health care industry and oil giants are expected to do whatever it takes to try to defeat what some conservatives denounce as the products of class-warfare ideology.
“Both the business community and free-market advocates are going to come out on this strongly,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association, which has been at the forefront of California’s antitax and small-government supporters for more than 30 years. “I do believe that while most people might be a little bit sympathetic to the rhetoric, they understand that we still live in a society where we try to reward merit.”
That isn’t stopping Democrats from trying to make income inequality a major issue through 2014. Many figure that proposals to raise California’s minimum wage to $12 an hour, cap nonprofit hospital executives’ pay at $450,000 a year and tax oil companies for each barrel they extract in the state could bring out their voters in an otherwise sleepy midterm election year.
“It’s something to influence the atmosphere,” said Democratic pollster Ben Tulchin of San Francisco, who has been surveying public opinion on wealth- and equality-related issues for several years.
Even though he’s not running for re-election, Obama hopes talking about these issues will give him a political adrenalin shot, too. A Quinnipiac University poll released in January showed that only 40 percent of voters approved of the way Obama was doing his job. Among independent voters, the president’s support dropped to 36 percent.
A boost in California
Regardless of his national approval rating, hearing Obama talk about the disparity issue before both houses of Congress will send political ripples to California, where he enjoys stronger support and Democrats dominate the Legislature.
“One thing that tremendously helps us is the national climate and the national conversation,” said Ron Unz, a wealthy Palo Alto conservative who is funding the ballot measure to raise the minimum wage to $12 an hour by 2016.
The wage is already scheduled to rise to $10 by then from the current $8, but Unz says he wants to see it raised faster. If low-income people have more money in their pockets, Unz says, they’ll be less dependent on government social programs.
His proposal is wending its way through the state’s initiative approval process, but given Unz’s pledge to fund the signature-gathering process, there is a strong likelihood it will appear before voters.
“The fact that the Democrats in Washington have decided to focus on it means that the media and the voters will be focusing on it a lot,” Unz said.
Also likely to appear on the ballot is the measure that would cap nonprofit hospital executives’ pay at the same level the president of the United States earns.
Proponents, who began gathering signatures this month, say more than 75 percent of the hospital beds in California are in not-for-profit hospitals, which include giants like Kaiser Permanente and Sutter Health.
Paying the ‘fair share’
In January, the Service Employees International Union-California put $500,000 toward the campaign. Proponents say they already have $2 million banked to gather signatures for the measure, which is roughly what it takes to propel an initiative onto the ballot.
“We’ve raised this as an issue for a long time, and now it happens to match up with a lot of other things going on in California and nationally,” said Dave Regan, president of SEIU-United Health Care Workers West. The leaders of not-for-profit institutions should be doing their part to help keep health care costs down, he said.
Making sure everyone pays his or her “fair share” is also at the heart of a possible attempt by a billionaire former hedge-fund manager, Tom Steyer of San Francisco, to raise taxes on oil companies.
Oil-tax plans unclear
Steyer is now a climate-change activist who thinks oil companies should be taxed on each barrel produced in the state to raise revenue. California voters soundly rejected such an oil severance tax in 2006 after petroleum companies spent $95 million arguing against it.
Steyer is coy about his plans to place the measure on the ballot through NextGenClimate Action, his political action committee. He has said he prefers to let the Legislature pass such a tax. But lawmakers have shown little desire to do so, and Gov. Jerry Brown has said that he will not approve any new taxes this year.
Nationally, petroleum interests gave $70 million in 2012 to candidates and political committees, according to the nonpartisan Center for Responsive Politics, and analysts expect them to fight such a measure in California. Steyer’s comments after Brown released his budget this month served as a preview of how he would pitch the tax to voters.
“The issue here is not more taxes — the issue here is who is paying their fair share,” Steyer said. “We need to look for ways to reduce the tax burden on hard-strapped Californians, and we can do that by making sure those oil companies — who are reaping billions by exploiting resources that belong to all of California — are treated the way they are treated in almost all the other states in our union.”
Dismissed as rhetoric
Some conservatives dismiss the inequality issue as warmed-over tax-the-rich rhetoric concocted by Democrats to drum up turnout.
“If you are the modern Democratic Party — and you just spent 50 years explaining that you were going to have a war on poverty and then people see that 50 years later there’s more poverty than ever — you’re looking and feeling pretty stupid,” said Grover Norquist, president of Americans for Tax Reform, an influential antitax organization.
Coupal said Unz’s proposal is “the strangest thing I’ve ever seen coming from him.” Raising California’s minimum wage “should be called the Guaranteed Teenager Unemployment Act,” he said, because employers will be less likely to spend more money on younger workers.
However, there appears to be crossover support for raising the minimum wage — even Fox News commenter Bill O’Reilly has given it a thumbs-up. A national Pew Research survey released last week found that 69 percent of those surveyed think the government should do either “a lot” or “some” to reduce the wealth gap.
Unz, who ran for governor in 1994 as a Republican and authored a ballot measure four years later that effectively eliminated bilingual education in California, says his proposal is actually conservative, because it puts money directly in the hands of citizens and not the government.
“The notion of trying to make society better by increasing the taxes on the wealthy people may or may not have merit,” Unz said. “But the easiest way to make poor people better off is to have them get more money. If you raise taxes, maybe they get some of the money — some of them may not.”
— Reach Joe Garofoli at email@example.com