Last week’s stock market crash offered hope to Republicans looking to return to California in 2022. When times are good, people don’t want to change. When the going gets tough, the tough guys want to elect someone else.
Many reasons have been given for the Republican loss of the Sept. 14 reminder to Governor Gavin Newsom: a hangover from Donald Trump. Latinos are still angry with Republicans for Proposition 187 from 1994 – 27 years ago. Republicans want to end school mask mandates and kill children. Democrats are doing a great job everywhere.
But if you read the Official Voter Information Guide sent to all voters by Secretary of State Shirley N. Weber, the reason was there. In Newsom’s signed rebuttal to the call by supporters of the recall to oust him, he wrote, oddly in the third person: “[H]e adopted his $ 100 billion return to California plan, the largest economic stimulus package in state history. As part of this plan, two in three Californian families receive at least $ 600 in direct assistance and 200,000 small businesses will benefit from our assistance programs.
If you give voters $ 600 each, most of them will vote for you.
Another $ 500 was given to families with at least one child. It is “for children”!
But things can change. In the 2003 recall, Governor Gray Davis, instead of enjoying a $ 38 billion surplus like Newsom, incurred a $ 40 billion deficit. This was after Davis increased his spending by 15% two years in a row.
Another good example happened right here in Orange County. In 1994, Treasurer-Collector Bob Citron, a Democrat, had a high 8.5% annual return for the Orange County Treasury Investment Pool, nearly double the state’s 4.7%. He was re-elected in June for the seventh consecutive time, garnering 61% of the vote against John Moorlach, a local accountant who had warned that the investments were too risky.
That fall, the Federal Reserve raised interest rates and collapsed the investment pool. In December, Orange County declared bankruptcy, losing $ 1.7 billion. Citron resigned and the Supervisory Board appointed Moorlach as its replacement. Moorlach served in that office, then as supervisor and state senator, until recent financial dizziness blinded voters to the unfolding economic realities.
I am certainly not predicting what the Fed will do. Don’t take the investment advice of a political columnist.
But the Evergrande crash last week in China shows, at the very least, that its economy now affects ours directly. In 1994 or 2003, China’s economy was not big enough for a recession to affect ours much. It is now.
The Wall Street Journal reported on September 21: “China’s economic model is running out of steam, and the process of putting it on a new course is likely to bring more Evergrande-type errors.
And US inflation is now reaching 1970s levels. 1970s inflation ended when Fed Chairman Paul Volcker raised interest rates to 13%. It sparked a terrible recession that in 1980 brought Ronald Reagan to the White House and the first Republican control of the US Senate in three decades.
The message to Republicans in California should be: Prepare. The GOP actually has some good plans: Reforming an education system that despises Latino and black children. Reduce taxes and regulations to improve the country’s worst business climate and the country’s most expensive housing market. Repairing an electrical network that starts forest fires.
It took Ronald Reagan three tries to reach the White House, losing in 1968 and 1976. In 1980, times were good. He was ready. The Republican Party too. The country too.
Longtime Register columnist John Seiler blogs at johnseiler.substack.com