California Woes: Gov. Brown, Milken Offer Their Fixes
California is still having a tough go of it financially.
Two men who grew up here, and whose careers went in very different directions, met in Beverly Hills this week to figure out ways to get the Golden State back on its feet.
That's why Governor Jerry Brown and Michael Milken took the stage at the Milken Institute's State of the State Conference Thursday.
Brown is facing a variety of structural problems as the state continues to spend more than it takes in.
"We need significant reforms throughout the pension systems, and I will be proposing them," he said, adding he will not take his own public pension until the problem is solved. He later told reporters he was joking about that.
But the Governor was not joking when asked, for the first time, about a bill he signed last Sunday called "The Dream Act." The new law will allow college students who are in this country illegally to apply for taxpayer funded state financial aid.
This as California's income is falling $700 million short of expectations so far this fiscal year.
Why give away precious tax dollars to those who shouldn't even be here? The Governor gave CNBC this answer (See video)
A recent review of bills signed or vetoed by Jerry Brown shows many decisions favored organized labor.
For example, municipalities in California can no longer file for bankruptcy without first getting state approval — a win for public employees who might find their contracts voided, as happened in Vallejo.
He signed a bill that bans Californians from using self-service checkout machines to buy alcohol in grocery stores. Shoppers will have to go through a regular checkout line, often manned by a unionized grocery store clerk.
The only big loss for labor was a bill Gov. Brown vetoed that would have allowed the state's childcare providers to organize.
At the same time, the governor has said: "There are too many damn regulations." He says he's reviewing a variety of regulations and hopes to strip out those holding the state back.
But when pressed for specifics on which regulations he'd like to see repealed for businesses, he was a bit vague.
Here's that encounter. (See video)
Gov. Brown said one group of regulations he'd like to see cut are those which the federal government forces on California prisons and schools.
"California is big enough that I think we can make our own decisions," he said. "If they (the federal government) want to give us immigration reform, I can take of that, too."
Michael Milken also knows a thing or two about the ups and downs of fame and fortune.
He invented junk bonds, went to prison for violating securities laws, created a huge philanthropic organization, beat back prostate cancer. These days he'd like to help California get its mojo back.
"Seventy percent of everything that happens in this country starts in California," he told CNBC during the Milken conference.
His solutions for improving the Golden State involve a renewed focus by parents on educating their children. He says middle-class families in 11 Asian countries spend 15 percent of their incomes on tutoring. In the U.S., it's 2 percent.
Asia's best and brightest — the people he says we should be attracting to America — often can't get in to college here, so they are starting to go to school in the UK, Canada and Australia.
Milken said that is a loss the U.S. can't afford.
He even talked about seemingly small things, like exercise, as important to California's recovery, due to the burden of health-care costs. "Even if you don't have a job, you can go for a walk," he said.
But Milken's most passionate moment came when he declared that Americans have, in essence, corrupted the idea of the American Dream, and then explained why.