U.S. SENATE : Amid Economic Gloom, Spotlight Falls on One Issue: Jobs

Politicians used to say there was only one issue: jobs . . . jobs . . . jobs. In California’s U.S. Senate races this year, the issue is jobs, jobs and more jobs--jobs eliminated, defense jobs threatened and new jobs promised by candidates.

If issues really matter, Californians will vote on Nov. 3 for the candidates they trust the most to help revive the Golden State’s tarnished economy and to convert defense industry pink slips into sold, post-Cold War paychecks.

Never in modern political history have Californians been so concerned--fearful even--about the economy, according to statewide public opinion polls.

Unlike California’s quick rebound from past recessions, this recovery--when it comes--is expected to be long and slow. And the emerging California economy will be a restructured mix of manufacturing, trade, services and finance.

California is particularly sensitive to the “peace dividend,” the extent to which the defense budget can be reduced and the proceeds applied to domestic programs that Democrats, in particular, say were neglected during the 1980s. Since California was the nation’s leading defense and aerospace producer during the military buildup, it also stands to lose the most jobs through post-Cold War cutbacks.

In the contest for a two-year Senate seat, Democrat Dianne Feinstein, the former San Francisco mayor, and Republican John Seymour, the appointed incumbent U.S. senator, promise if elected to work hardest at reviving the sputtering economy. On some points, their programs are similar, primarily in the area of tax benefits to energize investment. Both generally are considered moderates within their own parties and sympathetic to business.

Major thrusts of their programs differ sharply, however, reflecting in part their support for the proposals of their party presidential nominees, Bill Clinton and George Bush.

Feinstein declares that government must prime the pump. Reagan-Bush trickle-down economics did not work, she says. Cut the defense budget by $135 billion over the next five years and channel the savings into an “invest in America” program that would revitalize the nation’s crumbling infrastructure: transportation, sewers, schools, harbors and other public facilities.

“The crux of this campaign,” Feinstein has said, “is that there has got to be a real peace dividend. We’ve got to go out and make a peace dividend.”

Seymour denounces such talk as discredited Democratic tax-and-spend rhetoric that will only doom the nation to more economic trouble and bigger deficits.

“Let me put it to you simply,” Seymour said recently to employees of Allied Mechanical, a defense-dependent Ontario metal-fabrication firm. “The economy of California will return when we get the federal government to stay out of our face, off our back and damn well out of our pocketbook. Business is overtaxed and overregulated.”

Seymour claims Feinstein’s cuts would amount to “a teardown” of the defense establishment compared with his gradual “build-down” that would maintain a strong military presence and allow for a less-wrenching transition.

In the race for the regular six-year term, Democrat Barbara Boxer and Republican Bruce Herschensohn also put heavy emphasis on jobs and the economy. And, as on most issues, they are even farther apart than Feinstein and Seymour--Boxer more liberal than Feinstein and Herschensohn more conservative than Seymour.

Boxer vigorously attacks the billions the United States spends to defend prosperous allies such as Japan and Germany. Like Feinstein, the congresswoman from Marin County wants massive cuts, with the savings going into domestic programs and a transition from a defense-based job force to a post-Cold War civilian economy.

“We must invest in America,” Boxer says in her standard speech, and invest in public education, in particular.

“When I started my campaign, I called around (to) some business leaders, Republicans and Democrats, large and small businesses, and I said, ‘Tell me, if Sen. Boxer could do one thing to help you what would it be?’

“Now I fully expected them to say, ‘Cut my taxes, change the capital gains tax.’ I really did. You know what they said? ‘Give me a quality educated work force.’ ”

Boxer adds, “For a few B-2 bombers, we could fully fund Head Start.”

Herschensohn, a former television commentator, is virtually alone--even within his own party--in wanting to maintain defense spending at its full $275-billion-a-year level without any cuts. The world is too dangerous for the United States to let down its guard, he says.

Herschensohn’s economic recipe is to provide an even more unfettered free-market economy than Ronald Reagan proposed as President: He would shift the federal income tax to a single rate with no deductions or exemptions in a program that also proposes to balance the federal budget.

With his plan, the economy would “just bubble,” Herschensohn said, but he also acknowledged there would be some offsets. When he was asked about the fate of federal workers put on the street by his plans to slash the bureaucracy, he said: “I’m sorry to say that has to be their problem. I can’t see where the federal workers are going to go.”

Feinstein and Seymour have focused more intently on the jobs-economy-defense issue. Their first television ads of the fall campaign featured an exchange of job-loss allegations. Seymour claimed that Feinstein’s defense cuts would cost California more than 300,000 jobs. She retaliated with her own ad claiming that California had lost 400,000 jobs since Seymour was appointed to office by Republican Gov. Pete Wilson.

Seymour’s claim was challenged even by the authors of a job-loss study cited by the Seymour ad, saying that the Seymour campaign grossly misinterpreted their analysis. Seymour said facetiously that he would take the blame for the 400,000 jobs if Feinstein would give him credit for the 3 million jobs created in California during the eight years he was a state senator.

Seymour constantly attacks the federal Endangered Species Act as a major threat to jobs and the California economy, saying it puts plants and animals ahead of jobs and people and threatens planned development.

“You talk about (protecting) a couple little birds,” Seymour said during a breakfast meeting with Southern California political writers. “Let’s put some dollars around it. The California gnatcatcher’s worth 200,000 jobs. That’s real. The kangaroo rat in the Inland Empire--San Bernardino and Riverside counties--is worth 30,000 to 45,000 jobs. Real jobs.”

Seymour attributed the figures to “various studies, economic studies.” In one case, he cited a study by the state Department of Food and Agriculture for his allegation that a federal water project reform bill would cost tens of thousands of jobs and $4.5 billion in economic activity in California’s Central Valley. But the study noted that such a dramatic impact would occur only in a severe drought. There would be no impact in normal water seasons, the study said.

Feinstein repeatedly quotes the U.S. Bureau of Labor Statistics about the job-creating power of investments that could be made in public projects with saved defense dollars.

“If we spend $1 billion building new housing, every $1 billion would yield 29,923 jobs,” she told Los Angeles Town Hall. “Local and inter-urban passenger transit yields 44,310 jobs for every $1 billion spent.”

The major reason the state budget deficit soared out of control in the past two years was unemployment, Feinstein said, adding, “The most important thing we can do as government these days is find ways to prime that pump, to give a sense of confidence so that banks can lend, people can borrow and we can begin to stimulate jobs.”

Seymour claims that Feinstein’s program would cost defense jobs and then raise taxes “to re-employ the very people she just sent to the unemployment lines.”

“That’s wrong. That’s crazy. We don’t need another federal boondoggle program taking the unemployed and putting them to work,” Seymour said.

What the nation does need, he told employees at the Ontario plant, is a program to allow companies like Allied to put part of their profits, tax-free, into research and development for converting military technology to commercial.

Feinstein also supports tax credits for investment in new equipment, capital gains tax breaks for new and expanding businesses and permanent tax credits for investment in research and development. She, too, believes that economic impact ought to be a greater factor in administering the Endangered Species Act.

The candidates also promote retraining programs to equip jobless defense and aerospace workers for other jobs. The current defense budget includes $1.5 billion for retraining and transition programs.