Rebel With a Cause

Paul Goldman

White Men Can't Add

Move over Woody: Goldman scores a slam-dunk as Gov. Warner projects a $1.3 billion budget shortfall over the next two years.


Before the governor announced his deficit bombshell Friday - a $1.3 billion dollar shortfall over the next two years, essentially confirming my earlier fiscal predictions of a chronic structural deficit eating away at the state's fiscal underpinning - I was going to write about the historic honor of having being tarred and feathered with Virginia's first smear trifecta. That's right: This here Southern boy has now been called the NL word, the JB word, and the WR word. A friend mine gave me a white sheet the other day, saying she couldn't resist.

Admittedly, state Sen. Benny Lambert, D-Richmond, decried all the "crazy racial stuff" including the charge of racism hurled at me by the campaign orchestrated and/or financed by U.S. Rep. Bobby Scott, D-3rd, state Sen. Henry Marsh, D-Richmond, delegates Frank Hall, D-Dwight Jones, D-Richmond, and other government officials in the city.

Let me ask you: How many people can claim honorary membership in the B'nai B'rith, NAACP and now the KKK, all because he actually thought white and black Virginians could think for themselves, that they could be counted to judge a person or an idea on merit, not race, religion, or the other things Dr. King taught us were not truly relevant?

Imagine: A white person who can actually see a black person as a man and not a black man.

Here is an Aesop fable for you: Bobby Scott, Henry Marsh, Dwight Jones, Frank Hall, the Democratic Party establishment et. al. actually seeing Paul Goldman as a man, not a White Man, not a Jewish-White Man. Imagine: These guys actually admitting that maybe they said some hurtful things and that things got out of hand.....

Which brings me to the budget debacle, a statewide issue whose protagonists can learn something from what we achieved in Richmond fighting back the political establishment.

WAKE-UP CALL: Despite the happy talk coming from the Secretary of Financeless and Less, the governor tells us that the state budget now faces another $1.3 billion in red ink, with new deficits running all the way until 2006, long after Warner leaves office. Secretary of Financeless and Less John Bennett originally had promised the governor the deficits would end by now, but others had warned the governor two years ago they wouldn't. As they say, been there, done that: I watched as the experts promised Governor Wilder that their economic models said it would be over by the middle of his term, but it lasted all the way to end and then some.

Back then, Democrats were blaming Wilder for the problem right up to the end, with Dickie Cranwell even saying the governor was making up the crisis for political reasons. At least this time, they aren't blaming Warner.

Earlier this year, I wrote, among other things, that Gov. Warner's advisors were wrong in not telling him to veto the state budget passed by General Assembly. I said several things: (1) the "Deficit" Jim Gilmore fiscal trickery was continuing despite campaign promises to the contrary, and (2) the state was facing a mushrooming ocean of red ink, a structural deficit of $4.5 billion and counting, the next billion around the budget corner.

FACT: Despite his public posture, Senate Finance Chairman John Chichester, R-Stafford, has gone along with all the Gilmore-type gimmicks of recent years, even some "Deficit" Jim didn't think he could pull off.

Because the editorial boards and the Big Business Community are so desperate to raise taxes -- any tax -- they are lionizing Chichester even though he is the architect of as much of the structural deficit as anyone currently serving in the General Assembly.

There is a reason Chichester lost the LG's race a few years ago. Pundit Larry Sabato and others still want to blame the color of his skin, but those of us who were there know it was because he didn't offer a single creative idea. All he did was falsely attack Doug Wilder for being soft on crime. But even more importantly, Mr. Chichester was then, and is now, a creature of the senate political establishment.

Chichester thought he knew more than the people 18 years ago, and I don't think his attitude has changed.

Right now, Warner is the one on the spot, because in the end, the public holds the top guy accountable. Most of them have never heard of Chichester.

So what should Warner do?

First, learn from Wilder's experience. In retrospect, I gave Wilder the right fiscal and budget advice which, as House Speaker William Howell, R-Stafford, has now admitted, helped lead to Virginia's boom.

But I gave Wilder the wrong political advice in terms of General Assembly politics. He accomplished things policy wise because he took responsibility. For the same reason, he took all the political blame, something his detractors used against him quite skillfully.

For sure, reality has caught up with perception and Wilder is lionized today by both Gov. Warner and Speaker Howell for being the model of fiscal responsibility. But politics is a tough business, so the damage never gets fully healed.

In that regard, Warner is playing it far smarter, for he has managed to deflect any blame. It's a brilliant stroke in my judgment. My hat is off to him. I never would have bet he could adopt all of Gilmore's gimmicks and tricks without the press and General Assembly jumping on top of him.

Now, Warner may be changing his approach with all this talk about a major tax reform package. Only time will tell. So, I will leave the politics of it to the governor, as he has been far shrewder than I was. But on the policy side of the equation, I think time has proven that my analysis and recommendations of how to deal with budget shortfalls have withstood the test of time, both under Wilder and now under Warner.

Thus, it now comes as no surprise that Virginia faces yet another billion-dollar deficit despite the fact that Secretary of Red Ink John Bennett says state revenues are running hundreds of millions of dollars higher than projected just a few months ago.

Let's stop here for a moment. How could Virginia have gotten itself into such a fiscal mess, a state that was ranked as the best managed one in the country just a few years ago, a state that had nearly a billion-dollar Rainy Day Fund two years ago, one of the biggest in the nation? The reason is simple: The red ink, hidden by phony budget numbers concocted to sweep the structural deficit under the rug and make everyone look good, is flooding out of control. So much of the stuff is spreading like that famous scene in the Ten Commandments when Moses changes the color of the Nile. 

NEW FACT: But for the illegal use of the Rainy Day Fund this year -- Secretary of Red Ink Bennett knows full well the Rainy Day Fund was never meant to be a bailout mechanism to allow the politicians to hide the true extent of the fiscal mess -- the budget mess would have been harder to paper over during the Spring. 

This is one reason Moody's is so focused on rebuilding the Rainy Day Fund, for the bond-rating agency knows the politicians have been acting illegally.

So, again, what should Warner do now? 

He needs to understand the crucial difference between the situation he faces and the one Wilder faced.

My strategy in the Wilder years was based on an analysis of what would happen to state revenues once the worst recession since the Great Depression was over: state revenues would grow mightily, providing the money needed to raise teacher salaries, build a first-class education system, cut the food tax, invest in jobs, and provide for our children.

Now, admittedly, the size of the tech boom in NOVA caught me by surprise.

"Deficit" Jim Gilmore got the benefit of what Wilder's budget-cutting and the boom produced, not Don Beyer who had a lot more fiscal integrity, a lot more.

I ask you: Would Gov. Warner even be thinking of raising taxes but for the car tax program and its price tag, double, triple, who knows how much greater
than promised by Gilmore and one of the crafters of the final legislation, Mr. Chichester?

Of course not.

Warner thus faces a far different dilemma than Wilder. For as I have been saying, there is no foreseeable boom that can dig us out of the structural fiscal mess, for reasons articulated now over the years, starting with my piece in the Washington Post of 2001 defining the "structural deficit" I have been talking about ever since.

Wilder decided to make his choices up front at the beginning: Warner has opted to wait, until into his third year.

So, Wilder had more clout to get things done even though Warner has the higher polling numbers. 

Yet the irony is this: Wilder, by choosing early, gambled that his view of the economy five years after he left office would prevail. He was right and, so, his reputation has been made.

Warner, on the other hand, now realizes that his time is now, that five years from now, the economy can not be trusted to bail out his reputation one way or another, nor can he assume any successor will be looking out for a predecessor's reputation.

Thus, in terms of his reputation, he has now two choices. Play out the string politically, and leave office with high poll ratings but with the editorial writers and historians on his case; or try something no other Governor has done in any major way since Virginia became a true two-party state: Enact into law a sizable tax increase for general fund revenues.

Governor Baliles raised money for the transportation fund, not the general fund.

So you ask: What would I advise him to do?

Easy, I just did it in Richmond, and defeated the political establishment, albeit the Democratic One. I would put the tax reform issue on the 2004 ballot, and let the people decide. The public is savvy. People have common sense. They are going to the polls to elect a president. No reason why they can't also be trusted to make a fundamental decision on the future of Virginia.

Accordingly, I would call a special session of the GA for April to enact the necessary referendum legislation.

Speaker Howell and Attorney General Kilgore have thrown down the gauntlet, a risk the governor took by not announcing his plan prior to the 2003 elections. He bought time, but he also created a vacuum. Thus, the regular General Assembly Session is not going to give Warner what he can get by going directly to the people.

In political terms, Warner is putting all his eggs in Chichester's basket, which from experience I would not do. This is not meant as disrespect to Senator Chichester, who loves his state as much as anyone. But I have seen nothing to tell me he is the guy to deliver what this state needs in the 2004 GA Session.

I am not talking politics here: I am talking substance on finance and budgets. 

So, I would rather go to the people, the voters of Virginia, and thus go over the heads of the Establishment. As I told Doug Wilder, Virginia is a very establishment state so if you challenge the Establishment, you take a big hit politically, even if you win.

But if you don't challenge the Establishment, then you can not leave any mark.

The voters of Richmond were smart enough to see through all that "racial crazy stuff" as Democratic Senator Benjamin Lambert put it the other day when he decided to join me, and not his fellow legislators, in doing what was right for Richmond, backing the creation of an at-large mayor.

Gov. Warner backed my efforts in Richmond, admittedly from the bleacher seats, but it wasn't his fight. Besides, those of us with front-line experience had the situation under control. Now it is his turn, and that of Lt. Governor Kaine to deliver what they promised: passage of enabling legislation by the General Assembly.

Warner has far more money, far more help and far more power than I did when I went door to door to get referendum on the ballot.

If he is willing to do what I did in Richmond - putting everything into the pot -- then my bet is he can make a lot bigger history.

Virginia's finances are in a mess, and he knows it. But the problem requires more than a facelift, smoothing out the wrinkles in the tax code. It is time for a vision quest right now.

It is a truism that you sell a vision to the people, and the details to the legislature.

The General Assembly will give Gov. Warner a referendum election election, because the Republicans are convinced it will fail.

In 1985, I trusted the people while everyone else, including the governor, were certain Mr. Chichester was a sure winner. Nothing has changed in the last 18 years to make me change my view: Trust the people if you want to make a positive, fundamental change that will stand the test of time, not the senate political establishment.

-- November 17, 2003


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Paul Goldman, the Rebel With a Cause, was chief political strategist for the past two winning Democratic governors in Virginia and was credited with leading a "revolution in American politics" by The New York Times for his role in breaking America's 300-year-old color barrier in national politics.


You can reach him at