Ilustration by Juan Alvarado

It’s money, baby. Campaign money and, of course, public money. With just under a month to go and the new Field Poll showing what all polls besides the L.A. Times poll show — a big lead for the recall and a tight race between Cruz Bustamante and Arnold Schwarzenegger, leader of a Republican pack that became a bit less fractured with Peter Ueberroth’s withdrawal after the poll was conducted — money matters more than ever. Before we get to the monetary machinations of Bustamante, easily the swingin’ twister extraordinaire of this race, and of Schwarzenegger, the man with the moola who is nonetheless raising still more, we go to the public’s money. After all, there wouldn’t be a recall at all if the state’s budget weren’t just a leetle bit more out of whack than Gray Davis said he thought it was. But at least Davis knows what caused the state’s record budget crisis. Bustamante does not have a clue. You didn’t read this in the L.A. Times, but the lieutenant governor made a serious gaffe Sunday in Fresno, during and after his big rally.

He gave a major speech announcing that he will spearhead the campaign against Proposition 54, the racial-identity initiative. It’s a way for him to spend millions he has just raised from Indian casinos in violation of state campaign-contribution limits while continuing to promote himself.

Bustamante will star in the commercials. It’s yet another gambit, of course, but arguably legal and what we expect from a career politician handled by Richie Ross, one of the slickest political consultants around. What we don’t expect is that Bustamante, a former Assembly speaker, does not know what caused the state’s record budget crisis. In his speech, he claimed that the power crisis caused the budget crisis.

“We had a $10 billion budget surplus and they [power generators] stole it from us,” Bustamante declared. “Now 50,000 kids can’t afford the higher college tuition we have to charge.” That is simply flat wrong. The budget crisis was caused by the state spending more money than it was taking in, not by money being “stolen” from the state’s general fund by power generators. Thanks to the deregulation scheme that Bustamante co-authored, the generators made off with a lot of money from consumers. But not from the state budget.

After his speech, the Weekly asked Bustamante if he really believed the power crisis caused the budget crisis. He launched into an off-point ramble about the generators manipulating California’s electric-power market. Reminded that that was not the question, Bustamante at first asked the Weekly if we were from California (we’ve met dozens of times), then offered this: “We had to pay substantial amounts of money out of our coffers, in order to be able to pay those electric bills. We had to pay for that. That money came out of the taxpayers.

“They gouged us,” he said, referring to the generators. “They took our money. No matter what you say or how you couch it, those folks took our money. As a result, that’s put us in the deficit situation we are in today.”

Nope. Wrong answer, Cruz. Not to put too fine a point on it, but the lite guv either is dissembling or just does not know what he is talking about. The power crisis did not cause the budget crisis, as anyone who bothered to read the newspapers during the power crisis knows.

With the utilities essentially insolvent, for a time the state took over the role of buying electric power on the spot market. Fortunately, Gray Davis and other elected officials who do things, such as Treasurer Phil Angelides, realized that the power purchases could create a state budget problem, so they pushed through a plan to sell power bonds, which more than covered the state’s power purchases, leaving the state’s general fund intact. Despite what Bustamante quite insistently said, the state’s power purchases had no effect on the state’s budget.

It is obvious that Bustamante does not know what caused the state budget crisis, which precipitated the recall election in which he is now participating. He also does not understand the dynamics of the power crisis, merely the seminal event in the unraveling of Gray Davis’ political standing.


Fortunately for Bustamante, Richie Ross understands another kind of money. Political money. As reported by the Weekly, the clever consultant tried to slip through a purported loophole in the Proposition 34 campaign-spending limits to launder huge contributions from Indian casino interests into the Bustamante campaign. He then decided to ignore a late-breaking state Fair Political Practices Commission (FPPC) opinion saying this should not be done, continuing to take huge checks. Democrats said they didn’t expect the press, distracted by decades-old Schwarzeneggerian musings about life’s excesses in the fast lane, to make a big deal out of it, so he would keep taking the big casino money.


However, anticipating more heat, Ross came up with a plan to spend the tainted millions on anti–Prop. 54 ads starring Bustamante, who read the relevant text at his rally word for word, looking down at it. Some say that may not pass legal muster, either.

Ironically, Ross may have received an earlier go-ahead from the FPPC to launder the casino money directly into Bustamante’s gubernatorial campaign. FPPC Executive Director Mark Krause told the Weekly a few weeks ago that the practice was acceptable, that it was “an accounting device” that the commission had discussed. Ross was very likely told the same thing. But after the press began to focus on the practice, the FPPC began a classic Sacramento shuffle.

“We have not formally advised anyone that they can do this,” said FPPC chair Liane Randolph. “It is our clear statement of policy that the law does not allow this.” Not that the tame watchdog would offer more than a few perfunctory barks, as she said, smiling, “We get a thousand complaints a year.” She stopped smiling when asked how many such complaints involved $4 million in laundered campaign funds from casino interests.

The tide was turning (editorial writers weighed in around the state, and the FPPC scheduled a special meeting), and Ross wisely backed away, brewing up some lemonade with the Cruz–fronts–No on 54 move.


Speaking of lemons and lemonade, there is Schwarzenegger’s attempt to explain why he is receiving campaign contributions when he can afford to pay for his campaign himself. Schwarzenegger insists he won’t be swayed by contributions, noting that he is “strong-willed,” a superrich movie star and business mogul who will not be in the position of having to grub for money to ensure his survival. He further notes that while it’s been reported that he has “a goal” of spending only $5 million of his own money on the campaign, “I will, of course, spend what it takes.”

Indeed, most of the money in the Schwarzenegger campaign comes from Schwarzenegger. So why raise money from others? He suggests several reasons.

“Many people are excited about what I’m doing, they want to be part of it.” Think of this as the tribute theory. Another is the pragmatic theory: “People giving me money aren’t giving it to someone else.” Some Gray Davis supporters have gone over to Schwarzenegger, and Schwarzenegger’s fund-raising reduces the already slim likelihood that right-winger Tom McClintock can gain financial traction.

Then there is the power theory. Schwarzenegger agrees that he is putting together a bicoastal fund-raising operation, with big plans for New York. As governor of California, Schwarzenegger could become a huge player in national politics, though not president because he was born in Austria. Finally, there is the governance theory. “If Arnold tried to triangulate between the two parties in Sacramento,” says one top Republican strategist, “he could be whipsawed by the left and the right. He needs to have some control over the Republican Party, especially if he is going to bring it into the 21st century. Popular appeal is not enough; he needs a handle on the party’s resource base.”

Of course, with Arnold gaining all these handles, the people he is receiving money from might just gain a handle on him. There are, however, some signs of independence.

Although Schwarzenegger just received an unprecedented endorsement from the state Chamber of Commerce — the first time in 100 years that it has endorsed a gubernatorial candidate — the ex–Mr. Universe, as he told the Weekly last summer, strongly backs the state’s landmark anti-global-warming law, which had been targeted by the Chamber and other business groups as a major “job killer.” Schwarzenegger also backs major renewable-energy programs.

These are positions that Davis had to be lobbied into supporting, though the governor’s support, once gained, was very helpful. Schwarzenegger is showing some independence from the conventional business view, but it’s clear that his fund-raising will have to be scrutinized.

And what of Hollywood, the Terminator’s stomping ground and the happiest of hunting grounds for Democratic pols in recent years? Press reports on Hollywood money focus on it not flowing to Schwarzenegger. Duh. Most Hollywood stars and players are Democrats. The relevant point is that Hollywood Democrats are not rallying behind Davis and Bustamante. In a close race, that can make the difference.

The incumbent, who has impressed of late with some town-hall performances that would have been especially timely six months ago, probably didn’t impress Hollywood or anyone else with several tacky occurrences in recent days. In one incident, Davis campaign minions shouted down Maria Shriver, Schwarzenegger’s wife and JFK’s niece, as she tried to register voters at a Sacramento shopping center Monday. Over the weekend, Davis landed himself in hot water with this crack: “You shouldn’t be governor unless you can pronounce the name of the state.” Of course referring to the action hero’s famous accent, the governor didn’t seem to understand that Schwarzenegger’s “Kah-lee-fohr-nyah” is basically the way California is pronounced in the mother tongue of a third of all Californians, albeit without the Black Forest baritone. In his familiar style, Davis declined to apologize for the crack, calling it a joke, then blasted Schwarzenegger for opposing the bill to grant driver’s licenses to illegal immigrants — which Davis had just signed after vetoing it last year and which was necessitated by a bill Bustamante voted for in 1993. Just before that, Schwarzenegger — now running a fairly close second to Bustamante among Latino voters — had been mysteriously uninvited from the Mexican Independence Day parade, of which he was to have been grand marshal. Schwarzenegger received a letter of invitation just before he announced his candidacy, and a follow-up request a few weeks later, from a board member of the sponsoring Mexican Patriotic Civic Committee, who has since resigned over the incident. The Weekly has not heard back from parade sponsors. But even though more than 50 percent of Latino voters back the recall, L.A.’s Latino politicians, whose backing is crucial to the parade, are all lined up with the Democratic establishment.


And there they were with Davis at the parade, grinning and waving to their constituents in “Kah-lee-fohr-nyah.”

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