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The Governator: What a sad artifact of a bygone era that moniker is. Arnold Schwarzenegger circa the 2003 “total recall” election was going to sweep all before him as California governor, bringing the same élan and toughness he had on the big screen to fighting special interests and restoring his beloved state to competitiveness.
That was before Governor Arnold got a severe beat-down in a November 2005 special election from the unions and Democrats (a.k.a. “girly men”) he had taunted during his ascendancy. Schwarzenegger pushed four far-reaching reformist ballot initiatives that all went down under a blizzard of spending and propaganda by California’s entrenched interests. With no screenplay to save him, the much-reduced Governator simply buckled and switched sides.
His new role is as a supporting actor in the Golden State’s fiscal destruction. If the future happens in California, we all should tremble at its ever-expanding debt, falling credit ratings, crushing pension obligations, suffocating regulation, and rising taxes — with environmentally preening, ill-considered restrictions on carbon emissions thrown on top. California Democrats are only slightly ahead of national Democrats, so the country’s fiscal future may be in preview in Sacramento.
Schwarzenegger presided over the creation of a budget deficit worse than the one that led to his ousting of Democratic governor Gray Davis in 2003. The state has a $42-billion deficit that state legislators have been holding all-night sessions to try to patch over and that sent Schwarzenegger begging to Washington for a bailout. The state has been buffeted by the housing crisis, but the ultimate cause of the mess is relentless, heedless overspending.
California has roughly doubled its budget during the past ten years — like the recently passed stimulus bill, except spread out over a decade. Over five years, Gray Davis boosted spending from $75 billion to more than $100 billion, and his “fiscally conservative” vanquisher got it north of $140 billion. Davis managed to keep spending even during the devastating dot-com bust, and Schwarzenegger’s election brought only the briefest respite on the inexorable upward climb.
The politicians aren’t entirely to blame, although at every sign of the unsustainability of the state’s fiscal practices their reaction has been to resort to more gimmicks and borrowing. California’s voters have recourse to an initiative process they have used to make responsible budgeting as hard as possible. They passed a proposition in the late 1980s that basically locked up half of state spending for the schools, no matter what. Even in November, with fiscal disaster looming, they passed another $10 billion in bonds for high-speed rail, apparently on the theory that a state can never have enough debt.
The new budget deal will cut about $15 billion in spending and raise roughly the same in taxes, including the car tax over which Schwarzenegger pounded Davis in 2003. The deal has its worthy provisions, but fundamentally it is more of the same. California will remain overtaxed, overregulated, and overburdened by a public sector that is the state’s sole boom industry.
Schwarzenegger spoke movingly during his first campaign for governor of what California meant to him, of its dynamism that fostered entrepreneurial dreams. That California is disappearing. Schwarzenegger now governs the Michigan of the West. California has the fourth-highest state unemployment rate in the nation and is routinely ranked among the worst states in its business environment. Almost 1.5 million more nonimmigrants have left the state than moved to it during the past ten years.
Once, Schwarzenegger was supposed to be a model for a more appealing, more moderate Republican Party — socially liberal, yet fiscally conservative. All he has demonstrated is, to paraphrase Barry Goldwater, that moderation on the road to fiscal ruin is no virtue. The GOP’s social liberals are overwhelmingly fiscal liberals, too — witness the party’s social liberals in the Senate signing off on the stimulus bill, liberalism’s proudest fiscal accomplishment since the 1970s. As for the Governator, he said hasta la vista long ago.