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Eye on the News

Fred Siegel
Indebted and Unrepentant
New York and California stand virtually alone against the rest of the country.
3 November 2010

The big news from Tuesday’s elections—the GOP’s gains of 60-plus seats in the House, recapturing the majority that it lost in 2006—naturally makes one wonder about the divisions that the victories are likely to foment. Pundits are speculating on conflicts between the Tea Party and Republican regulars over spending; between the 25 remaining Blue Dog Democrats and the party’s liberal leadership; and of course between the two parties over budgetary matters, which could lead to gridlock.

But another division is likely to compete for center stage in the next two years: the split between, on one side, California and New York—two states, deeply in debt, whose wealthy are beneficiaries of the global economy—and, on the other, the solvent states of the American interior that will be asked to bail them out. This geographic division will also pit the heartland’s middle class and working class against the well-to-do of New York and California and their political allies in the public-sector unions.

While most of America turned toward the Republicans in this election, Democrats strengthened their hold on California and New York. In California, they won all the statewide offices and even made gains in the legislature, prompting the Orange County Register to describe the Republicans as having been reduced to “almost total irrelevancy in Sacramento.” In New York, Democrats similarly swept all the statewide offices and may have held on to the state senate, too, though three contests are still too close to call. Those three races are all that stand between New York’s GOP and a similar irrelevancy.

Some of the reasons for the Democratic victories can be attributed to individual candidates. In California, Jerry Brown, the once and future governor, comfortably defeated Meg Whitman, the wealthy Republican political novice and former eBay CEO. Whitman campaigned as a West Coast Michael Bloomberg, but without as much money or luck. In New York, a GOP figure like Suffolk County Executive Steve Levy could have given Democratic gubernatorial candidate Andrew Cuomo a serious run for his money; instead, the Republicans nominated Carl Paladino, whose wildness disqualified him with voters and helped drag the GOP’s highly competent candidate for comptroller, Harry Wilson, down to defeat as well. But candidates aside, New York and California lead the country in middle-class—often white—outmigration. That has produced a vicious circle in which the very wealthy, the urban poor, and the public-sector unions who define the Democratic coalition create a high-taxing, heavily regulated polity that drives business and the upwardly mobile to the exits.

Californians rejected an ill-drafted proposal to legalize marijuana, but they also adopted two resolutions sure to send their state deeper into the economic swamp. Proposition 23 would have suspended the state’s draconian environmental laws until unemployment, currently at 12.5 percent, comes down to 5 percent. It was defeated, 61 percent to 39 percent. Proposition 25, drafted by one of the state’s premier pressure groups, the California Federation of Teachers, sought to allow the legislature to pass a budget with simple majorities instead of the current two-thirds supermajority, which requires a degree of GOP support. Naturally, it passed. In New York, where the latest budget estimates suggest a $9 billion shortfall (up from an earlier estimate of $8.2 billion) for the fiscal year beginning next April, most of the state’s incumbents were unaffected by the national trend.

The mood in much of the rest of the country was quite different. In the nation’s interior, Republicans gained ten governorships and may have picked up as many as 20 state legislatures. In traditionally blue Minnesota and Wisconsin, both houses of the legislature are now in Republican control. This sets up what could be an ugly fight in which a Tea Party–inflected national Republican Party, encouraged by its strength in the interior states, forces California and New York—now heavily dependent on federal subsidies—to reduce their spending sharply. The coastal giants would no doubt respond by threatening defaults, which could affect the credit standing of the entire country, since many of the bonds are held by foreign investors. The upshot would likely be a high-stakes conflict about free trade, globalization, social class, race, illegal immigration, and public-sector unionism.

Fred Siegel is a contributing editor of City Journal, a senior fellow at the Manhattan Institute, and a scholar in residence at St. Francis College in Brooklyn.

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