Longshot Neel Kashkari challenges Jerry Brown for California governor

California Gov. Jerry Brown is running for re-election on his economic record, which means he’s got at least one thing in common with his feisty Republican challenger.

As it happens, Neel Kashkari, a onetime Wall Street investment banker and top aide in George W. Bush’s Treasury Department, is also running on Mr. Brown’s record. At every opportunity he reels off a string of damning economic indicators: the state’s 24 percent poverty rate; a 16.2 percent youth unemployment rate; unfunded pension liabilities in the hundreds of billions of dollars; growing income inequality; and the loss of a string of high-profile businesses to other states.

Mr. Brown remains a heavy favorite in this heavily blue state, but political observers say Mr. Kashkari, a political neophyte making his first run for elective office, is making him work to secure a fourth term as governor.

Earlier this month, Mr. Kashkari pulled up in front of the state capitol in a black Tesla to underscore the electric car manufacturer’s recent decision to build a giant $5 billion battery plant in Nevada instead of California.

“This just symbolizes the magnitude of his [Mr. Brown’s] utter failure. This is what it comes down to: Is somebody going to fight to rebuild the middle class?” Mr. Kashkari told reporters. “Jerry Brown doesn’t understand that there’s a problem. If Jerry Brown had been doing his job, he could have been sipping champagne with [Tesla Chairman] Elon Musk last Thursday instead of getting clobbered by me in the debate.”

But Mr. Brown has a comeback: As bad as California’s economy may appear, it was a lot worse before he took over as governor in 2011 during the Great Recession.

“A lot of people forget the mess that California was in just four years ago. There were a million jobs that had been lost. Our budget deficit was astronomical: $27 billion. We hadn’t had a budget on time in probably 10 years,” Mr. Brown said during the Sept. 4 debate.

“When I went up there, I rolled up my sleeves, I started cutting that budget,” said Mr. Brown. “The legislature gave me one that I didn’t think was tough enough, so I sent it back to them. I vetoed the first California budget in the history of this state, but it sent a very powerful message.”

Mr. Brown ticks off his administration’s achievements: 1.4 million net new jobs; budget surpluses in 2013 and 2014 after years of deficits; a cap on state pensions and increases in employee contributions; and investments to start paying down the state’s debt and building up a rainy day fund.

Who’s right? They both are, says Jack Pitney, politics professor at Claremont McKenna College in Claremont, California.

“Brown has the advantage of working off a very low baseline. The California economy underwent really tough times during the Great Recession, in part because the housing bubble burst very loudly in this state,” Mr. Pitney said. “From such a low point, any progress looks great.”

Mr. Brown’s optimistic message might not fly in any other state facing similarly dire economic circumstances, but this is California, a virtual one-party state where fundraising, voter registration, political activism and media coverage heavily favor the Democratic incumbent.

A Field Poll released Sept. 5 found that Californians surveyed are increasingly positive about the state’s direction, with 43 percent saying it was on the right track and 41 percent saying it was on the wrong track. Four years ago, 80 percent said the Golden State was on the wrong track.

Feisty challenge

But analysts also credit the 41-year-old Mr. Kashkari, the Hindu son of Indian immigrants who’s worked as an aerospace engineer and an investment banker with Goldman Sachs, for running a smart, attention-grabbing insurgent campaign. As an assistant treasury secretary under President Bush, Mr. Kashkari oversaw the Troubled Asset Relief Fund (TARP) bank bailout program after the 2008 financial crisis.

At the same time, he’s limited by Mr. Brown’s enormous fundraising advantage, a lack of name recognition and the inherent obstacles that come with running in California as a Republican. The party’s statewide registration dipped to 28.5 percent earlier this year.

The challenger has displayed a flair for seizing the limelight: He spent a week this summer living like a homeless man in Fresno, eating at shelters and sleeping in parks, to highlight California’s still-high poverty rate.

Mr. Brown leads in the latest Field Poll by 50 percent to 34 percent, which was actually an improvement for the Republican. The San Francisco-based pollster’s June survey had Mr. Kashkari trailing by 20 percentage points.

“He’s doing extremely well with what he has. He’s operating on a guerrilla level, going from radio station to radio station, and he was very effective in his debate with Gov. Brown. The bad news is practically nobody saw it,” said Mr. Pitney.

The one-and-only Sept. 4 gubernatorial debate was carried live on California Public Television, the cable public service California Channel and Telemundo, along with public radio, but not the broadcast network affiliates. Mr. Kashkari, who attacked Obamacare and the state’s troubled high-speed rail project championed by Mr. Brown, got generally favorable reviews against his far more experienced opponent.

“He showed himself to be a very prepared and articulate debater,” Jessica A. Levinson, a law professor at Loyola Law School in Los Angeles, told The Wall Street Journal. “I don’t know what Neel Kashkari is going to run for next, but I don’t think he hurt his cause.”

The respected English weekly The Economist, in its review of the debate, noted that while Mr. Kashkari “will not unseat California’s Democratic governor he may help his party in the long run.”

Mr. Brown, 76, gained a reputation as a frugal budget-cutter during the first two years of his term, but he also won income and sales tax increases with the passage of Proposition 30 in 2012. Those hikes were temporary and begin to expire starting in 2016.

Some of his latest economic moves have been criticized as sops to the state’s powerful labor unions. A year ago he signed a bill raising California’s minimum wage to $10 by 2016. This month he said he would sign a mandatory sick leave bill, which would make California only the second state after Connecticut to require employers to give paid days off to ill employees.

“If anything, I think some of these things are actually going to hurt job creation and hurt the ability of folks who grow businesses in California,” said Lanhee Chen, a research fellow at the Hoover Institution at Stanford University, who’s advising the Kashkari campaign.

“Look, [Mr. Brown] hasn’t done anything to fundamentally improve the business environment in California. He’s been focused on some very, very limited reforms,” Mr. Chen said. “And the other issue is he’s been focused on some things that frankly shouldn’t be occupying his attention, like this plastic bag ban.”

Mr. Brown said during the debate he will probably sign a bill banning single-use plastic bags statewide and charge 10 cents each for paper bags, calling it a “compromise” that takes into account “the needs of the environment and the needs of the economy and the needs of the grocers.”

Mr. Kashkari responded that there was “no chance I would sign that,” and drove home his point last week by wheeling 6,500 paper bags into the state capitol, one for each of the jobs expected to be created by the Tesla plant — in Nevada.