Reign of Chaos

High anxiety gripped California this week as the state’s politics and finances showed unprecedented signs of dangerous fraying. By midweek, neither major political party was set on who its leading candidate would be, despite persistent assurances from Democratic Party leaders that they would not challenge embattled Gray Davis and persistent press reports that Arnold Schwarzenegger was out and former L.A. Mayor Dick Riordan was in. And the Weekly learned that, despite months of contemplation of the central role of financing in the state’s cobbled-together budget, there is no set plan to sell $10.7 billion in “deficit bonds” to a Wall Street increasingly unamused by California’s growing debt load.

First, the Republicans. Schwarzenegger said early this week, “I’m neither in nor out” and said he might not have a decision to discuss after all on his ballyhooed Tonight Show appearance Wednesday night. He continues to hold high-level campaign meetings, chatting about the state’s crisis of governance with former Governor Pete Wilson and wife Maria Shriver last Friday and conferring at length Sunday night with Riordan at the former mayor’s beach house. The filing deadline is 5 p.m. Saturday.

Despite a report last week in the Los Angeles Times, Riordan had not settled on Schwarzenegger’s veteran political team of former top Wilson advisers in the event of his own candidacy. Several Riordan advisers named in the press say they do not know who will run or what roles they will have, if any. Riordan had asked former top aide Noelia Rodriguez, now press secretary to first lady Laura Bush, to pull together a team for him during her visit to L.A., but she has returned to Washington with things yet unsettled.

In its continuing effort to keep its fingerprints off the recall, the White House wants her to resign her first-family job, rather than take a leave of absence, if she goes to work for Riordan. She is said by a knowledgeable source to insist that controversial Democrats and Riordan friends Pat Caddell and, especially, Clint Reilly be kept out of the campaign mix and that Riordan commit to spending $10 million from his personal fortune on the campaign. Riordan’s wife, Nancy Daly, who is said to be less than fond of Republicans, reportedly wants name Democrats involved with a fusion candidacy.

For his part, amid defections among congressional Democrats, Davis is beset by a string of bad private polls which have top Democrats wringing their hands in frustration and speaking openly of what Senator Barbara Boxer calls “Plan 2.” Yet the polls were not nearly definitive enough to prompt demands for Davis’ withdrawal.

Davis has a needed big boost from labor, which insists that no name Democrat run on the recall-replacement ballot. But the Davis campaign acknowledges that he has not secured a commitment on his request for $10 million in campaign funds. After spending nearly all his $78 million war chest winning re-election last year and with most of what he’s raised this year blown on a failed counter-petition drive, California’s all-time fund-raising champ is in the unusual position of being essentially broke.

As Davis resorted to having his staff, rather than members of Congress, make calls to rein in the restive California congressional delegation, his best asset remained the reluctance of Senator Dianne Feinstein to offer herself as a replacement candidate. Most top Democrats agree that only Feinstein can beat a top moderate Republican like Riordan or Schwarzenegger. Ominously, however, Feinstein’s office denied Democratic national chairman Terry McAuliffe’s claim that she told him she would definitely not run. Though she is much more popular, labor is not as happy with Feinstein, who endorsed school vouchers in the District of Columbia and is not nearly so supportive of public-employee unions, which have made out well in the Davis years with pay and pension increases unmatched in the private-sector economy.

Top Democrats are fuming about the party’s situation, blaming Davis’ meltdown on years of negative campaigning and failure to provide a “positive predicate” for the public. But Team Davis continued the tactics it knows, launching a blizzard of lawsuits to delay or derail the recall election — nearly all thinly veiled moves by Davis minions or allies — the pattern with such legal machinations since the Weekly disclosed that the first such “concerned citizen” suit was actually concocted by the lawyer for the governor’s anti-recall committee. And the avowedly staunch centrist governor lurched leftward, making moves to motivate the Democratic base, such as embracing state Senator Gil Cedillo’s bill to grant driver licenses to undocumented workers. Davis vetoed the bill last year, despite Cedillo’s addition of some amendments to satisfy the governor’s post-9/11 security concerns. This year Cedillo presented what he considers an uncompromised version, and now Davis backs it.

Amid all this, the state’s financial disarray continues, with some $22 billion of deficit — $10.7 billion in “deficit bonds,” $3.4 billion in borrowing for pensions and against a tobacco lawsuit settlement, and $7.9 billion in carryover deficit — deferred to the future. The treasurer’s public-finance division won’t try to sell the budget’s linchpin deficit bonds, touted for months as key to a budget “solution,” until next March. The state has no underwriters for the bonds nor has the process for selecting underwriters begun. And with the continued downgrading of the state’s once pristine credit rating, there is no sense of how much the interest on the bonds will cost.

Though the public doesn’t know this, polls indicate that people sense a fundamental disarray, with three-quarters of registered voters saying the state is on the wrong track and holding the Legislature in equally low repute with the governor.

“This recall isn’t a right-wing thing,” insists Schwarzenegger.

“It may have started out that way, but it has become much bigger than that. It’s a rejection of the way the political class has been doing things, and people around the country are picking up on that.”

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