War continues between Russia and Ukraine as financial markets rise and fall, gas prices soar and fears over the future mount.
Gov. Gavin Newsom is sure to touch on world events in his State of the State address Tuesday, but he is more likely to list a series of victories his administration has notched.
Whatever topics he covers, Newsom is on firmer footing than his last address as he fought off a recall election forced by Republicans. By the time the election rolled around, coronavirus case rates had dropped, business and restaurants were mostly back and many fears had been quelled.
New fears have emerged to replace the coronavirus, which itself could pose yet another danger should fresh variants arrive on U.S. shores.
Coming out of the coronavirus pandemic, the state has about a $21 billion surplus it can use on a range of popular programs like expanding child care or universal health care. It has shut the door on mass evictions, and billions of federal dollars are available for infrastructure like electric vehicle charging stations and school related spending.
The foreign war may make an appearance, if only because it could offer an explanation for losses in state investments.
“I think Ukraine is going to be the answer if things go south,” said Mark Keppler, director of the Maddy Institute.
The surplus has resulted from a pandemic surge in the stock market, which found confidence in unexpected consumer spending despite a shutdown of brick and mortar businesses. But recent days have been far harsher to markets as investors scramble to reallocate investments or liquidate once robust stock portfolios. With little sense for what will happen with war in Europe, uncertainty has returned to the state and the gas pump.
Otherwise, the war has little to do with California or the slate of policies Newsom may advance. Those policies, which may touch on reclaiming learning losses in schools, adding state funded health care for undocumented residents or federally backed internet upgrades, could depend on the surplus. If California’s investment strategy, which has depended on the stock market, falters, money may no longer be in such great supply.
Newsom has gone from historically popular to simply popular during the pandemic back to very popular. Ahead of his reelection campaign, Newsom is likely back in a position where a strong push for higher office may again be feasible.
That push may depend on how persuasively he can claim a moderate record.
A progressive legislature has given him a way to do that, Keppler said. The Democratic supermajority in the legislature has pushed ahead with aggressive programs popular among its base. That, Keppler said, gives Newsom a convenient out if he’s accused of being too liberal during the next or future elections.
“He can then play to the right of that and say that’s too much and appear to be more moderate,” he said.
Inflation and much discussed interest rate increases could throw a curve ball at a booming employment market that has seen unprecedented employee choice and opportunity.
Debt is also unlikely to make the speech, Keppler said. The topic, typically not sexy with voters, would also open Newsom to Republican criticism. If there’s so much of a surplus, Republicans might say, why not give voters a tax break?
“I think things are going to get better over time,” Keppler said. “In some ways [Newsom] just has to ride the wave?”