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By Anonymous Mike, pseudonymously.



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Friday, December 5, 2008
 
The Napolitano Bubble

Okay I've been through the tech bubble, the real estate bubble, and now the oil price bubble; maybe we can start talking about the Napolitano bubble.

I feel like one of those people who writes a biography of an athlete who is still in mid-career but I'm going to take a crack at trying to write-up the Napolitano legacy as far as Arizona; who knows it could also be her political epitaph. I think you break her career into 3 stages:

Part 1, The Rise: 1998 or so to 2006

Part 2, The Plateau: 2007-2008

Part 3, The Future: November 2008 onward

Let's do the easy part first, The Rise.

Her's was the meteoric rise. We forget with her crushing 2006 gubernatorial victory that she was barely elected for attorney general in 1998 and governor in 2002 winning both by narrow margins. That 2006 election was almost anti-climatic because she was such a dominant figure in Arizona that no one of any significance in the Republican Party wanted to run against her. I mean come one, Don Goldwater was a serious primary candidate and while probably a great guy had as his dominant qualification that he was Barry's nephew. It got to the point that the Republican-dominated Legislature sent her a budget that allowed her to claim during the election that she was both a tax cutter and spender. She was truly the Sun God because the whole of the Arizona political world revolved around her.

The Plateau.

Look you crushed your opponents, winning your election handily and bringing Republican margins down in the Legislature, where do you go from there? I mean you are so far up that you had to come down a bit right? So she didn't lower the sea levels, get us all Google-like jobs, and turn our fine state into the land of milk and honey. On top of that, whether it was too high expectation, staff departures, or just sheer political exhaustion her two main attempts to build a lasting political legacy- TIME and the state trust land ballot initiatives- were horribly bungled not even making it to the ballot. Worst of all, the political agenda of the last 12 months was dominated by the budget deficit, that's no way to generate warm fuzzies.

The Future

She's half-way out the door with her resignation promised as soon as she's confirmed as Homeland Security Secretary, probably as soon as late January. She will leave a state with the worst budget crisis in the country in terms of percentage of deficit and with expected revenues only returning to FY2007 levels in 2011. Her opportunity to run for Senate in 2010 has been dimmed by McCain's decision to run for re-election. Her political coat-tails were shown to be short by the fact that the Democrats lost seats in the Legislature.

So what is her legacy?

I am going to argue that her rise, or "The Rise" from 1998 to 2006, was in part a bubble. I don't think anyone will doubt she is a capable politician but it's a long way from 2-term governor to political collossus and while the former is fact I don't think the latter is necessarily deserved. First because her timing was extremely fortunate. If the Republicans didn't commit fatricide during the AG primary race in 1998, does she squeak through? If the Hull Administration didn't seem so tired, both her and Groscost tainted with the alt-fuel fisaco, and the downturn in the economy does she get by Matt Salmon on the slimmest of margins? If she doesn't win either election, and though she ran smart campaigns both times I think her fate rested on the events I mentioned above, none of the rest matters.

Look at her first term as governor. Her reputation relies on two foundations. First was stewardship, that she brought Arizona from a massive budget deficit to massive budget surpluses. Second was her control of the border. In the first case, the downturn that caused the deficit was short-lived and could be largely managed through one-time measures, the surpluses started rolling in long before the bag of tricks was used up. To top it, it has become clear that the massive increase in revenue that fueled those surpluses was largely one-time monies and not sustainable; however by treating that money as recurring allowed her to be that tax-cutting, high-spending politician running for re-election in 2006. In short a major part of her popularity was not sustainable.

The second part, immigration and border control, is a head scratcher. Over the past 6 years, she has been a true political genius because she has been on the wrong side (in terms of popularity) of the debate; she only sent the National Guard to the border to forestall the Legislature, she was against the successful ballot initiatives on the issue. However she's managed to develop a solid national reputation on the issue by seeing which way the parade was going in Arizona and then jumping to the front in order to claim the credit

I think that probably brings up a possible third part of her popularity; the fact that she was able to portray herself as a moderate and never got pushed against her base. Democrats accepted her relatively strong (for a Democrat) enforcement measures because they understood that she was politically triangulating herself in relation to the likes of Russell Pearce. When she was the height of her political power, they accepted the relatively incrementalist agenda because she spent the surpluses and vetoed symbolic bills such as abortion restriction proposals; in short her centrist measures were seen as stoppoing much worse (for them) initiaitives from the Legislature. I guess that's the other story from the last 6 years, low expectations from Democrat rank-and-file. Well it helped her because I didn't recall her once having to be pulled left to satisfy her base; as long as she was seen as just slightly to the left of the Legislature she was okay and could still operate as a centrist.

So I'll argue, again, that her Rise had to do with being dealt extemely favorable ground, both fiscally and politically, and enough political smarts to capitalize on it. That's not a bad thing and there are alot of people who have had their careers buried in the political graveyard because they lacked her skills, but that's a long way from her being the transformational figure some claim.

I think the Plateau and the Future have to be dealt with together because they are intertwined. Yes, some of the inertia and mistakes could be attributed to the staff departure and mistakes or just the realization that the fun fiscal times were over, but I think a good deal was due to Napolitano looking to her future. The only question was which one? US senator or cabinet officer? Up until the late Spring, it could be either or but I think once she started to stump hard for Obama her heart was set on the cabinet officer job. As the year wore on and she travelled more on the campaign trail, taking her out of the state, you could tell her heart wasn't in it. Here's why...

If she was going to run for senator, say planning for 2010, then she would serve out her term as governor. If she was going to serve her term out as governor, then she would have to solve the budget problem. By late Spring 2008, no one could think that budget was going to be a short-term dip as in 2003; it was going to take time and political capital to solve. However her solution was to scrape some Republican moderates and get a FY2009 budget passed that was based on 6% growth in revenue at a time when revenue was shrinking; it was an extreme act of fiscal dishonesty and everyone knew that it would have to overhauled. However it was to buy her time at the cost of Arizona's fiscal health. Rather than working on ways to get Arizona back on the way to that health, she then committed her Summer and Fall to stumping for Obama.

Let's face it she might not have yet resigned as governor, but she emotionally vacated the position a long time ago. Whether you wanted to trace it to the post-election doldrums, the excitement of possibly going to Washington, or whatever... If she wanted to stay and finish out her term then she would have approached the past 8 months on the budget from a much different standpoint understanding that restoring the state to fiscal health as early as possible was the key to her political future.

Now her legacy in this state and any future she may have here is in the process of being formed right now and this will continue through the Spring as we try to grapple with the deficit. If you think a budget deficit is a short-term phenomena, then you can try and solve it with some gimmerckery like the roll-over and tapping cash funds, however those don't work long term and can only paper over a structural deficit. If you think the deficit is going to be a multi-year mess then you look long and hard at reducing that structural deficit. Governor Napolitano has had two deficit budgets, looked at them as only short-term problems, and right we hava structural deficit of $2 billion which as a percentage of the budget is one of the highest in nation. Her legacy depends on the next several months, as the Republicans work to close that structural deficit, that this is what a Governor Brewer inherited and not made.

In a perfect world, I am sure Governor Napolitano would have wished that all of this came 12 months sooner. If she was going to Washington in December 2007, before the deficits, before the Democrat reverals in the Legislature, she would have a different sheen to her reputation