Can Meg Whitman Govern California? And Why Does She Even Want To Try?

They must be gluttons for punishment.

Amidst the bleakest fiscal crisis in California’s history, no fewer than eight prominent politicians—three of them Republicans, five Democrats—have announced their interest in becoming the Golden State’s governor in 2010.

The state is running a $42 billion deficit, nearly 30% of the entire budget; its credit rating, downgraded to junk status, just supplanted Louisiana’s as the worst in the land; and its current governor, Arnold Schwarzenegger, recently transmitted layoff notices to 20,000 state employees. Legislators in Sacramento locked horns for months, with Republicans balking at over $14 billion in proposed tax increases. Even with tens of federal billions due to arrive from the Treasury, courtesy of Congress’s largesse, the budget shortfall gaped wide until legislators reached an eleventh-hour agreement. Now even that pact may be unraveling, as voters must approve certain measures in a special May election and even if they do, the budget gap may stillspan> top $8 billion<.

Incredibly, California has become a laughingstock of irresponsible governance even when compared to the general baseline across the public and private sectors of today. With unemployment above 9%, the Golden State is fast becoming a failed state.

But at least one candidate, Meg Whitman, the former eBay CEO, still believes that California is governable. A Republican who recently announced her candidacy for the highest job in the state, she told a standing-room-only crowd of more than 500 gathered here that, notwithstanding its seemingly insurmountable challenges, she “refuse[s] to let California fail.”

Whitman, who has been making the rounds, amassing endorsements, and garnering news magazine cover stories the past few weeks, focuses her message, and her candidacy, primarily on the economy, then on education, inclusiveness, and the environment—all set against the backdrop of the state’s spectacular near-collapse.

She’s tall, smiles a lot, and appears to actually listen when you talk to her. A relative political novice, she served in the top echelon of Mitt Romney’s and then John McCain’s presidential campaigns last year. Her name was floated as a potential vice president or Treasury secretary, and speculation about her plans intensified when she departed eBay’s board after ten years as its chief executive.

In her Irvine address, Whitman took swipes at tax-raising Sacramento Democrats and at Schwarzenegger with a thunderous applause line of “we need a governor who knows what she believes.” The Governator, once the toast of California Republicans, has fallen deeply out of favor with the party faithful; his early promise after supplanting the dreadful Gray Davis in a 2003 recall election has been snuffed out by repeated defeats by (some would say capitulations to) the state’s powerful labor unions.

But how exactly would Whitman avoid Arnold’s mistakes and revive California’s economic fortunes in spite of big labor? During her speech, Whitman waxed both eloquent and combative, arguing that “hard-working Californians are taxed out” and that the state’s next governor must hold the line on taxes while cutting spending. She also pointed to a 2003 nonpartisan statewide performance review that recommended relatively easy ways to cut $32 billion in spending over five years. Unsurprisingly, the Democrat-dominated legislature simply ignored it.

In an earlier presentation to a smaller group in San Diego, Whitman contrasted California’s parlous situation with the Herculean energies of Republican governors like Texas’s Rick Perry, who recently trimmed his state budget from $80 billion to $70 billion and slashed onerous regulations such that new businesses would have to apply for no more than two permits, period. A shocking 70% of all new jobs created nationwide between November 2007 and November 2008 were created in Texas. Whitman argues that only by embracing such true reform can California hope to get its mojo back; Whitman herself, a Harvard MBA, is no stranger to job creation: 1.3 million people now earn most or all of their livelihoods selling items on eBay.

But, again, how can the Texas model be applied to California, a deeply blue state with much more powerful labor groups? I asked Whitman’s spokesman, Mitch Zak, whether he could provide any specifics. Zak responded that Whitman intends to use both the carrot and the stick in dealing with the Democrats and the unions. While Schwarzenegger “gave up the stick when he first got his lip split,” Zak said, “Meg understands where she needs to get, and while she’ll be willing to try to collaborate, if that fails, she’ll also be willing to get aggressive.”

I asked Zak what kind of aggressiveness he had in mind, and he suggested Whitman could deploy leverage through collective bargaining, executive orders, or even California’s notoriously open-ended initiative process. Although Zak declined to identify specific ballot measures that Whitman might consider, it’s no secret that the unions deeply dread “paycheck protection,” i.e. giving unionized employees the right to decide whether their dues are spent on political advocacy, and merit pay for teachers.

This approach dovetails with Whitman’s second passion: improving California’s woeful educational system. Once the pride of the country, the Golden State’s schools have fallen into disrepair, in thrall to overweening teachers unions.

In contrast, Whitman praises former Florida governor Jeb Bush, who fought tooth and nail against the unions to open hundreds of charter schools, embraced merit pay, and compensated math and science teachers more than others. (The admiration is mutual: in a recent interview with Fred Barnes, published in the Wall Street Journal, Bush praised Whitman as “the kind of person who’s lived and managed and led through the disruptive changes that are going on in our lives.”) Nowadays, the lowest quintile of Floridian Latino students outperforms the overall average California student—proof, says Whitman, that states with ethnic demographics similar to California are fully capable of educational greatness.

Whitman’s educational philosophy meshes with her desire, according to Zak, to “build pathways for women, Latinos, and 18-29-year-olds” to enter the Republican Party in full force. In a recent San Francisco Chronicle article, Whitman frankly acknowledged that “we need to bring back women into the Republican Party.” (At the same time, she insists that “my career has been about delivering the results, being easy to work with and putting my head down and getting the job done,” not her gender.)

In order to reach out to new voters, Whitman plans to leverage her technology expertise. While she credits President Barack Obama’s team with unleashing the power of Web 2.0 tools, she also pointed in the San Diego meeting to the creative efforts undertaken by French president Nicolas Sarkozy during his campaign. France employs a strict “equal time” policy requiring television channels to provide fringe parties like the Communists with the same amount of airtime as mainstream ones, but Sarkozy cleverly skirted this requirement by “broadcasting” his message 24/7 on six different channels on his website.

Whitman believes that such resourceful tactics are absolutely necessary for success in the campaign of today, and she feels she’s best positioned to exploit the latest online technologies.

Finally, Whitman acknowledges that contemporary voters, especially in California, care about the environment. She told the crowd here that the state “needs to maintain the strongest possible environmental standards.” But at the same time, she said, “we need to apply balance and common sense” and “we should look at the environment as an economic opportunity.” By streamlining regulation, Whitman believes California can create a new Silicon Valley of alternative energy entrepreneurship.

Still, challenges abound for Whitman. In the GOP primary, she will face former congressman Tom Campbell and Insurance Commissioner Steve Poizner. All three candidates are fiscal hawks and social moderates; only Whitman vocally supported Proposition 8, which defined marriage as the union of one man and one woman. (On Hugh Hewitt’s radio show, Poizner said he voted for the measure, noting that while he supports domestic partnerships for gay couples, the voters of California have now spoken clearly on the gay marriage issue.)

I asked Zak whether reports in the San Francisco Chronicle that Whitman didn’t vote in Republican primaries before 2008 and that she gave money to Democratic candidates would hamper her primary campaign. Zak told me that Whitman would “own” her past decisions and wouldn’t try to excuse them away. At the same time, Zak says, until 2008, Whitman’s time and focus as eBay’s CEO led her to contribute to candidates on both sides of the aisle who were friendly to technology.

If she wins the primary, Whitman will face one of many high-profile Democrats in what will surely be an expensive and bitter general election. Some early polls have her leading San Francisco Mayor Gavin Newsom and Los Angeles Mayor Antonio Villaraigosa and narrowly trailing Attorney General (and one-time governor) Jerry Brown. Speculation on the Democratic side centers on whether Senator Dianne Feinstein will throw her hat into the ring; DiFi, 75-years-old and the Senate Intelligence Committee chairwoman, hasn’t yet ruled out a bid.

And so, the punishment gluttons are off to the races, with Whitman firmly believing she’s got the inside track on becoming the Golden State’s next governor—assuming there’s anything left to govern by 2010.