Davis’ Economic Plan Is Simple: Spend Bond Money Faster

Sacramento

Like President Bush, Gov. Gray Davis has a new economic stimulus plan. Unlike the president’s ambitious undertaking, the governor’s is simple and doesn’t require haggling with legislators. He can activate it himself.

Davis intends merely to pump a few billion dollars into the California economy by escalating expenditure of construction bonds.

Not a new concept -- other politicians have advocated this in the past -- but Davis is doing it.

Last November alone, voters authorized $18.6 billion in projects -- $13.1 billion for schools, $3.4 billion for water and $2.1 billion for housing.

“We have about $21 billion in bond issues,” Davis tells me. “We’re going to accelerate distribution of that money into our economy, thereby expediting the creation of jobs....

“There will be over $200 million in housing money going out in January, and that will create, by itself, 68,000 jobs. That money normally wouldn’t get out the door until very late this year.

“Same thing with school construction. We want to double the money that gets out the door in half the time. You can look for about $300 million a month for the next year. We’ve already greased the skids.”

Davis’ pump-priming will be spelled out in detail this week -- a week of extraordinary media attention when he’ll have a unique opportunity to speak directly and often to Californians. He’ll give a second-term inaugural speech today, deliver the annual State of the State address to the Legislature Wednesday and propose a new state budget Friday.

A balanced budget. That’ll be fascinating to watch, but painful to the ears as all the special interests -- from teachers unions to health providers to anti-tax crusaders -- wail at the proposed program cuts and tax hikes.

Look, the state’s in the hole by $35 billion over the next 18 months, according to Davis’ projections.

Cut spending, raise taxes. There’s no other way.

Davis already has proposed $10.2 billion in cuts and juggles.

This is the week the governor must open the budget books and reveal all -- show exactly how he proposes to balance accounts.

And here’s his pitch: This record flow of red ink is not the fault of Democratic mismanagement, as Republicans contend. The culprit is the listless economy, which has greatly reduced income taxes paid by the wealthy. And who’s mainly responsible for the economy? President Bush.

Most states, in fact, are suffering budget problems, although not as severely as California.

“No state can regenerate its economy by itself,” Davis says. “Washington has a much larger role to play. Washington ought to get off the dime and pass an economic stimulus plan that puts Americans to work.

“I don’t want to just see more tax cuts -- tax cuts for the wealthy.

“Secondly, they need to extend unemployment benefits. Thirdly, they should reimburse all states for the cost of homeland security.”

Davis figures the feds owe him $350 million for homeland security reimbursements.

Like Davis, Bush will unveil his economic stimulus package this week. It’s expected to include a tax cut on stock dividends, but also two things Davis advocates: extension of unemployment benefits and state aid for jobs creation.

Davis’ theme for the week: “I’m going to focus like a laser beam on creating new jobs and stimulating California’s economy.”

Get used to the laser beam lingo. Davis loves it.

On Friday, he announced he’ll focus like a laser beam on helping train Californians for biotech jobs. “It’s one of the few industries that is growing, offering high-paying jobs but in desperate need of lab technicians.”

California’s volatile economy, Davis says, “wreaks havoc with any long-term plans to improve education, health care, roads, because you can’t plan.”

What’s sorely needed is a new tax structure that generates steady revenue, even in a roller-coaster economy. But Davis won’t be proposing anything specific this week.

He’s approaching this budget differently, however. “We’re approaching it straightforward. We’re going right at the problem. There’s no evasions. We’re not ducking.

“Last time was a different deal. The whole world, from Alan Greenspan down, told us it would be a very short recession. It didn’t make a lot of sense to throw people off health and welfare programs just to restore them 12 months later. Now we’re digging in for the long haul. We have to make serious changes.”

Moms and kids will get tossed out of health clinics.

Davis can blame George W. Bush and his economy. Davis isn’t running for president, but the president’s still a handy target.