The Sacramento switcheroo
The Republicans used a loophole in campaign-finance law, and boy are the Democrats mad about getting beat at their own game
Some years back, I met a teller of truths, which is rare in both politics and journalism, who made a career of sticking his neck out and noting that this or that emperor was wearing no clothes.
This truth teller, hated by both Republicans and Democrats—whom he continually embarrassed—is quirky multimillionaire Ron Unz. He plays a unique role in the current “scandal” over the Republicans’ quiet scheme to funnel nearly $1 million from an insurance company into legislative races last fall.
The truth is the 21st Century Insurance Co. dust-up rests at the feet of my very own people, the dastardly Democrats, who continually act in ways that make me hang my head in shame. But more on that a bit later.
The shy, wealthy Republican Unz was the first in the 1990s to utter publicly one of the most painful political truths I’d ever heard: that we, the people of California, had created a society of Latino teenagers who, after years of schooling in this country, could not read or write well in English.
Unz was right that Mexican-American students would soak up English reading and writing like sponges if given the chance. He pushed successfully for the passage of Proposition 227, insisting that denying the children English and forcing them to learn reading and writing in Spanish until fifth grade ruined their chances of success as adults.
One study by the Los Angeles Unified School District showed California had 1.5 million functionally illiterate Latino young adults, churned out by discredited “bilingual education.”
The intriguing thing about Unz was that he also spoke out earnestly in favor of relaxed immigration and against Proposition 187 and argued that immigration was the lifeblood of California and a tremendous plus for our society. He was rudely booed by crowds who thought he was going to say the opposite.
Naturally, Unz is hated by both sides—and most viciously so by the far-far left and far-far right.
I have learned to listen carefully to this unique thinker, who is one of the most likable and prescient people in California politics.
Unz warned me and others back in 2000 that the fund-raising “scandal” now hitting Sacramento was inevitable. Unz was utterly unsurprised to learn that the Republican Party used huge loopholes in California’s phony campaign “reform” law, Proposition 34, to move nearly $1 million from 21st Century Insurance into last fall’s state legislative races without anyone knowing.
Senate Majority Leader John Burton proposed Proposition 34 and made sure his attorney, Lance Olson, who represents the state Democratic Party and many Democrats, wrote it. Republicans were given input into Proposition 34 because both parties sought to overturn a tough reform act voters had passed, Proposition 208. But, as was widely reported, the majority Democrats controlled the final wording.
In 2000, Unz, others and I warned on TV and in columns that the Democrats were creating in Proposition 34 the very loophole later used by 21st Century Insurance. Then-Assembly Speaker Bob Hertzberg denied it, writing me a letter chiding me for stating such a thing.
Campaign-reform expert Tony Miller agrees with me that Hertzberg “was probably naive about what was going on. But certainly, the key authors knew they were creating the loophole.”
Proposition 34 radically empowered county political parties, allowing them to accept unlimited funds in the final flurry of campaigns. Despite this vast new power, however, the law bizarrely left county parties under a legal category allowing them to keep secret the source of all last-minute contributions until after the election.
Unz claims the scheming Democrats never dreamed the Republicans would use this loophole before they did, nor so deftly.
Said Unz, “I warned and warned everyone that the Democrats had designed Proposition 34 so that there would be a period where unlimited amounts of money could be secretly channeled through local parties, and that is exactly what this insurance company did—but they did it to the Democrats.”
You know what I say to the Democrats? Heh, heh, heh. Sit in your stew and roast for a bit. You’ve richly earned it.
I’ve watched the spectacle in Sacramento as the witty old Burton, badly outmaneuvered by the Republicans using Proposition 34 and thus beaten in a key state Senate race he tried to buy for Democrats, has condemned the Republicans for using Burton’s private loophole.
Booming with phony righteousness, Burton insisted, “We will support legislation to close this loophole!”
Hmmpph! Another yawning crevasse will merely open quietly somewhere else. Unz says Proposition 34 has loopholes aplenty.
“The party that has the massive advantage in money and fund-raising always benefits most from looser rules,” said Unz. “The Democrats are infuriated by this? They shouldn’t have set up such a crooked system clearly designed to legalize money laundering. I guess the thing that would make the Democrats happy is if the law stated that only the Democrats could use the loopholes.”
Look at the actions of Burton himself. During last fall’s election, he also quietly donated huge sums given to him by fat special interests and sleazy lobbyists—yet he now feeds the dopey media the story that the Republicans were the evil ones.
Last year, a few days after the fall elections, Burton shifted $1.125 million from his own campaign pockets to the California Democratic Party bank account, according to records of the California secretary of state.
Miraculously, that sum is very close to the $1.25 million the Democratic Party secretly spent, under the last-minute donations loophole, on three races that Burton was desperate to influence.
A mass infusion—more than $1 million—secretly was given to Democratic politico Rusty Areias, running for Senate in Southern California—the very race the Republicans secretly buttressed with $900,000 in 21st Century Insurance donations for their ultimately successful candidate, Jeff Denham.
Another $172,000 secretly went to two San Francisco County Supervisor races and was decisive in helping elect two allies of Mayor Willie Brown, a longtime pal of the San Francisco-based Burton.
Records show that right after the election, Burton handed $1.125 million to the California Democratic Party from the scads of creepy lobbyists and unions who always support him. Let’s say he was replenishing the cash that the party spent on Burton’s three candidates. Burton can’t do that. He can’t give more than $25,000 per candidate, according to Tony Miller.
Republican strategist Rob Stutzman, who helped get the money from 21st Century Insurance, said, “In some ways, what Burton did is even shadier because the money didn’t come in until after the election,” making it even harder for the public or the media to pick up on it.
Burton denies all this, of course. Burton refused to grant an interview to discuss the details of the huge money transfer and instead told an aide to repeat to me, “It didn’t have to do with shit. It was my surplus money.”
Yep, Burton innocently and coincidentally handed $1.125 million to the Democratic Party right after the party secretly spent a similar amount on his favorite races. Burton’s gift simply “augmented the party’s operating budget,” a spokesperson said.
Well, of course it did.
And it’s not just Burton. Take a look at the newly elected Democrat Secretary of State Kevin Shelley. Shelley got a lot of press in recent days by demanding that the California Fair Political Practices Commission investigate the possible illegality of the Republican use of money from 21st Century Insurance.
Yet Shelley has been unable to articulate exactly which law was broken. Interestingly, as widely reported last fall, Shelley has been involved in money-laundering allegations of his own.
Last fall, Shelley was entangled in an alleged scheme to help then-state Assemblyman Dennis Cardoza move thousands of dollars from his state campaign chest to his federal campaign chest—which is illegal.
Cardoza was writing checks from his state campaign chest to support other politicians, and within a few days, these pals would write a check in the same amount back to Cardoza to be deposited into his federal campaign chest.
Cardoza’s opponent in the race, Republican state Senator Dick Monteith, accused Cardoza of giving his friends—like Shelley—Cardoza’s own cash to hand back to him, cleverly placed this time into his federal pile.
Shelley and others insisted they were not involved in a switcheroo.
Gosh darn, there sure are a lot of coincidences in Sacramento.
Republican strategist Stutzman says that as long as the Democrats play every angle to win, so must Republicans. He makes no apologies.
“John Burton’s staff discovered how we went about doing this and fed it to the Los Angeles Times, and the truth is it took the Democrats about a month longer to figure it out than we expected them to take,” Stutzman practically chortled. “We knew they would be pretty ticked about it.”
The big money that Republicans sent to those candidates helped win a few seats the Republicans expected to lose. Those victories, seemingly small, created psychological power for the Republicans, which they have used to demand that Democrats make cuts in California’s bureaucracy and bloated programs instead of just increasing taxes.
It’s called a two-party system, with checks and balances. As a member of the radical center, I much prefer that system to all Democrats, all the time. So, while I wish my party would get out of the slime, and join people like Ron Unz in seeking true reform of campaign financing, I’m not-so-secretly pleased that the Democrats screwed themselves with their shenanigans and let a few Republicans take office.
The bottom line is that karma bit the Democrats in the ass. And that probably will mean a lower tax bite for you and me.