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Schwarzenegger's Lost Year

Kyle T. Webster

FOR ALL THE A-LIST DEMOCRATS and Hollywood big shots who packed the 3,332-seat Kodak Theatre early this year to witness presidential candidates Hillary Clinton and Barack Obama in their final pre-California-primary debate, only one received a long and loud ovation. That was former Gov. Gray Davis, spotted taking a balcony seat just before the debate, and for an instant upstaging the main event.

It seemed absurd at the time, that the first California governor ever recalled from office — one whose downfall didn’t even come through a respectable scandal or catastrophe, but through simple poor budgeting and lack of charisma — should fire up California Democrats. Upon his recall and replacement by Arnold Schwarzenegger in November 2003, Davis would seem to have been transformed, without hope of remission, into a symbol of failure, a healthful warning for future politicians about the limits of power in Golden State governance.

Were his fellow Democrats just feeling sorry for him when they gave him that long, lusty cheer? Were they indulging in some easy leave-no-Democrat-behind solidarity with their former leader? Or did they know something the rest of us didn’t?

That the Schwarzenegger administration has become Davis II is not an especially witty or original observation. Some critics have been saying it since shortly after Schwarzenegger took office.

Yet as 2008 ends, with just about two years (barring another recall) left in Schwarzenegger’s second term, California looks very much the way it did at the end of 2003 — only more so. The $38 billion budget deficit that prompted Davis’ recall has met its match in a state shortfall that is now by some estimates on track to top $40 billion. Gray Davis danced in the sunshine of the late dotcom boom, only to find state spending irreparably bloated once the economy tanked; Schwarzenegger allowed the budget to balloon throughout this decade’s real estate bubble and has no way to pay for it now that the bubble has burst.

Schwarzenegger and the Democrats had worked out an unusual legal maneuver that, without the normal Republican support required to raise taxes, would cost Californians more than $9 billion in extra income taxes, steep gas surcharges and fees. But the governor slammed the deal after Democrats refused to soften state labor and environmental rules which would provide an economic jolt to employers and builders. On Monday, standing near the 405 freeway in L.A., Schwarzenegger pointed to a project halted by the crisis and said that if the Democrats bend, he will boost taxes, which he called “revenues.”

Davis’ grasp on his own party’s side of the California Legislature weakened throughout his last years; Schwarzenegger’s never-strong relations with his fellow Republicans have degenerated into open conflict. As the stalemate wore on and his own party resisted imposing new taxes on Californians, the governor warned Republicans to put aside “ideological differences and negotiate and solve this problem” or “we’re heading toward a financial Armageddon.” Senate Minority Leader Dave Cogdill, R-Fresno, shot back that the governor is “bullying the Legislature.”

The scramble to close the revenue gap brought back even the idea of tripling the car tax — a move that proved suicidal for Davis but that Schwarzenegger (who would prefer a flat $12 increase in annual car fees) told the Los Angeles Times in November may be “a good idea” in “new circumstances.”

Schwarzenegger may try to point to the disastrous nationwide economy, in which 40 or so other states are experiencing budget strains, but he has a problem there. In an apples-to-apples comparison, California’s deficit as a percentage of its spending is one of the worst in the country, according to the Center on Budget and Policy Priorities.

Embarrassingly, Texas, the state most comparable to California in size, in its badly tanking economy and culturally challenging demographics, has zero deficit.

Californians might resent comparison to the Lone Star State. Gov. Rick Perry is a Republican who did not let his budget reel out of control by spending riches from the housing boom, while Arnold acted as if it would last forever, approving budgets that increased overall government spending by 40 percent — in just four years. Perry and a handful of governors resisted temptation, squirreled away fat reserves ­­­— did, in fact, exactly what Schwarzenegger promised to do.

Does all of this mean that Schwarzenegger really is just like Davis? The answer from former staffers, observers and California politicians — even the journalists who once covered his exciting first couple of years going after “waste, fraud and abuse” — is a definite maybe.

The real drama of the Schwarzenegger administration has been the spectacle of a big man dubbed the Austrian Oak during his weightlifting years now being cut down to size — a charismatic, visionary figure brought to stasis by a culture of laughably unimpressive politicians. California has a history of big-tent Republican governors ­— including Hiram Johnson, Earl Warren and Ronald Reagan — who left large footprints. If anybody appeared likely to restore some GOP razzle-dazzle to Sacramento after the frigid terms of George Deukmejian and Pete Wilson, it was Arnold Schwarzenegger.

 

Yet vast and lofty Schwarzenegger reforms — from restructuring government in response to a state “performance review,” to his reform-minded 2005 ballot measures, to an ambitious effort to mandate individual health insurance for all — have come and gone. Schwarzenegger would now probably like to see global-warming-emissions standards as his signal achievement, but that could easily falter.

What went wrong with the Schwarzenegger governorship, leading to what has shaped up as the debacle of 2008? Take your pick:

Nothing went wrong with

Schwarzenegger’s governorship

While the governor declined to be interviewed for this article, his office points to such successes as the 2006 passage of the infrastructure bond initiative (a move that has received praise from President-elect Barack Obama); the incredibly hard-fought drama that resulted in passage of workers’ compensation reform in 2004; the measure to end legislative gerrymandering approved by voters last month; and his insistence on a “rainy-day fund” during this year’s endless budget squabbles. Others point to the passage of Assembly Bill 32, a sweeping law aimed at climate change.

“His workers’ comp reform was historic,” says former state Sen. Jim Brulte, the widely respected GOP Senate minority leader back when Schwarzenegger still believed he could reform Sacramento. Schwarzenegger upended the nation’s most disastrous workers’ comp system, which by 2004 was wiping out small businesses and nonprofits that couldn’t pay per-worker insurance premiums of more than $6 for every $100 in wages. Brulte says that single reform, still bitterly attacked by its opponents, “has helped the business community and created jobs. And he’s the first governor in recent history to have a plan for growing California’s infrastructure. You’d have to go back to Pat Brown to find an infrastructure plan and implementation.”

Brulte acknowledges that Schwarzenegger failed to make radical structural changes to California budgeting and governance as trumpeted in the governor’s 2004 California Performance Review. But, says Brulte, “Revolutionary ideas are hard for status-quo folks to accept.”

It’s not Arnold’s fault; the state is ungovernable

“California governorship does weird things to people,” says Robert Salladay, a journalist who gathered a major following with his detailed, against-the-grain stories about Schwarzenegger’s struggle to fix Sacramento, published in the San Francisco Chronicle. “After Schwarzenegger,” says Salladay, “I’ve become a thorough pessimist about the idea that anything can be done, save through a wholesale slaughter of the constitution and all the laws we now have about how the state does budgeting.”

Brulte points to stridency in the Republican and Democratic parties that has driven average voters away but increased their grip on Sacramento. “In 1990, 8 percent of registered California voters declined to state party preference. Today, 19.4 percent are decline-to-states,” says Brulte. “Who are those people? They’re moderate Republicans and Democrats who looked at the right and left wings of their respective parties and said, ‘I don’t have much in common with you, so I’m leaving.’”

For several years, hardcore partisans have been in control of both parties in the Assembly and Senate. So, Brulte says, “I don’t think it’s accidental that Gray Davis, an instinctively moderate Democrat, had trouble with the legislative wing of his party, and Arnold Schwarzenegger, an instinctively moderate Republican, has had the same problem with his own party.”

Schwarzenegger moved away from his core principles

California Republicans say it is Schwarzenegger who abandoned them ­— or was never with them. During his appearance at an Assembly Republican caucus in September, GOP legislators needled the governor — by wearing their clearly marked name tags.

Former staffers and legislators speak angrily of the governor’s habits of snubbing grassroots Republicans as being uncool, and instead hanging out with newfound friends like then–Assembly Speaker and Democrat Fabian Núñez, ducking out of GOP conventions, and famously warning the GOP that it is “dying at the box office.” Today, the Republican leaders cut off by Schwarzenegger routinely skip the “Big Five” meetings that lately have been held between the governor and Democratic leaders — a schism that former minority leader Brulte, a major voice at Big Five meetings who made sure the governor and GOP legislators had open lines, would never have dreamed possible.

California Republicans are a weird bunch, and Schwarzenegger’s fit with his rural, socially conservative partisans was never all that clear. “Arnold has always befriended people, socialized with people, and even married into a family of people who were to the left of him,” says Joe Mathews, who once covered him for the Los Angeles Times and authored The People’s Machine: Arnold Schwarzenegger and the Rise of Blockbuster Democracy. “He may have been surprised by what [Republicans] were like when he did begin to spend time around them.”

 

But Arnold is a Milton Friedman acolyte, so that reasoning doesn’t explain why Friedmanites — such as libertarians who contributed to the performance review — are especially disillusioned. Nor does it account for the widespread animosity toward Susan Kennedy, Schwarzenegger’s chief of staff, who has overseen what may go down as Arnold’s worst year as a political leader.

Kennedy, a former Davis-administration Cabinet member, was chosen by Schwarzenegger after his disastrous 2005 special election, and her presence allows Schwarzenegger to offload much of the day-to-day work of governing. Griping Republicans say that’s the problem, blaming her for the abandonment of Schwarzenegger’s right flank. “People are scared to death of Susan,” says a former staffer who, like other Kennedy critics, insists on anonymity. “She holds a grudge and is willing to take people out.”

Yet in a revealing moment in a video at bondaccountability.ca.gov, Kennedy sits behind the governor, wearing her face of infinite suffering, as he gives a speech and signs an executive order related to infrastructure bonds. As he’s wrapping up, she leans forward to remind Schwarzenegger not to snub Republican Assembly Leader Mike Villines (who is leading the charge in Sacramento this month against Arnold’s suggestion of significant new taxes plus cuts). It is Schwarzenegger himself who gave low priority to his relations with his own party, and made his distance from Republicans an odd point of pride, which left him a man without a party. Now, in the budget slog, the governor has failed to win even the few Republican votes needed for an agreement.

He can only dream big, and California is getting smaller

“I am a governor that does not believe that the action is in Sacramento and sitting around the office,” Schwarzenegger said during a July photo op at a Shasta County firefighting compound. “That is not going to do anyone any good.”

In November 2006, voters approved $42 billion in Schwarzenegger-favored infrastructure bonds for highways, roads and transit systems, schools, housing, parks, levees, and water-supply systems.

But by last week, the headlines reported the cancellation of nearly 2,000 highway-improvement, housing, prison and other projects after the state’s tanking credit rating and budget fiasco forced the obscure Pooled Money Investment Board to cancel $3.8 billion in infrastructure financing.

Infrastructure, as conservative Republican Tom McClintock frequently points out, was largely abandoned after the 1960s in California. Since 1958, the Democrats have controlled the 120-member state Legislature for all but three or four years, and have steadily shifted spending from basics like roads and reservoirs to social programs. Yet infrastructure is a key part of Schwarzenegger’s ambitions for a legacy. Says Salladay, “He’d like to be a Pat Brown II, building dams, monuments, things you can actually see.”

Yet Schwarzenegger’s biggest project of all, the one that propelled him into office in 2003, requires the passion for the intricacies of governing that he lacks: California’s dysfunctional budgeting.

He’s just bored

If there’s a thread running through Schwarzenegger’s career — world-championship bodybuilder, No. 1 global box-office earner, shrewd and successful real estate investor, entrepreneur do-gooder, all areas of effort that have led to a residual goodwill from associates — it’s his ability to achieve dominance over his environment and keep an eye out for the next main chance.

Schwarzenegger’s decreasing willingness to spend time in Sacramento and his standard-business-hours schedule imply to some that he is ready to move on. “There is a sense that things are winding down in the Schwarzenegger administration,” says a former staffer. “There’s still a lot he can do, but he’s not spending any time in Sacramento. He’s averaging about one night a week, down from three or four nights a week a few years ago,” when he famously lived at the Hyatt Hotel across from the Capitol and could be chatted up by passersby while he dined at restaurants like Esquire Grill and Chops.

Maybe it has dawned on the governor that Sacramento’s bureaucracy and budget will grow even when they should shrink, and that California voters are willing to borrow and spend with abandon. (In November, voters agreed to take on at least another $23 billion in debt, most of which will be paid back by their children and grandchildren.)

Disengagement would explain his willingness to cede the daily details to others, and the laid-back demeanor with which he delivers even apocalyptic warnings to the cameras. He has two years left as governor, and is constitutionally barred from running for the White House. A run for the U.S. Senate also seems unlikely. Barbara Boxer’s seat is not especially vulnerable, and Dianne Feinstein would be taking on a terrible job if she left the U.S. Senate to run for governor, despite polls indicating she would win.

 

Some wonder if he might end up as a roving climate-change envoy in the Obama administration. “He’s got an environmental platform, and he communicates on that better than Al Gore does,” says Rob Stutzman, Schwarzenegger’s former communications chief, who is often blamed for pushing Arnold too far into the Republican fold during the failed Year of Reform, just as others now blame Susan Kennedy for pushing him into the arms of the Legislature’s fiscally undisciplined Democrats.

Stutzman, who spent thousands of hours with the governor, says he “would not rule out a return to Hollywood.” For Arnold, he says, “Clint Eastwood is truly a hero ... who came up as a movie star playing violent caricatures, didn’t get any critical acclaim, had a career in politics, then came back and won Oscars — got acclaim from the industry for making great art.”

Another possibility is a run for L.A. mayor four years from now — a move that would massively disrupt any effort by Antonio Villaraigosa to anoint his own City Hall successor.

But all these moves are well in the future, and marveling at Arnold Schwarzenegger’s career isn’t as fun as it used to be. Most Californians are too preoccupied with rising taxes and “fees,” uncontrolled spending, lousy services, and broken state politics to care about a superman who turned out to be a flash in the pan.

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