Schwarzenfailure

When comparing the state of affairs in California now to those in 2003, one could be forgiven for thinking that the Gray Davis Recall was unnecessary. The people of California removed Gray Davis from office in 2003 largely due to his mismanagement of the State Budget. Having failed to account for the eventual collapse of many .com companies, Davis signed a number of budgets that increased government spending to levels beyond the revenues the state took in. When faced with a choice between cutting spending and raising taxes to close the revenue gap, Davis opted for the latter. Californians, who had grown weary of seeing businesses leave the State, were no longer prepared to subsidize wasteful government programs through increased taxes. A voter revolt was on, and Gray Davis faced a Recall Election.

Much was made of the historic nature of the Recall Election. Pundits throughout the country viewed the Recall as something of a temper tantrum, and they laughed when they learned that the open nature of the election allowed personalities like Gallagher, Gary Coleman and porn star Mary Carey to seek the State’s top job. While many in the news and commentary business viewed the Gray Davis Recall as a joke, Californians knew that it was serious business.

Unfortunately, the effort to remove Gray Davis appeared doomed in the days immediately following the certification of the recall petition. Davis, while heavily unpopular, was still the best-known candidate in the election. And he only needed to win a simple majority in the Yes/No portion of the ballot to maintain his position. Serious candidates like Congressman Darrell Issa, Lieutenant Governor Cruz Bustamante, State Senator Tom McClintock and former Los Angeles Mayor Richard Riordan emerged as potential frontrunners in the battle to succeed Davis, but it seemed that the recall would fail unless a major star entered the race to turn the election on its ear. Then Arnold Schwarzenegger made a surprise announcement on the Tonight Show with Jay Leno, and the recall was on.

At first, Schwarzenegger made all the right noises. He was going to stand up to the State Legislature, to the public employee unions and to others who had crippled the State’s economy by piling onerous spending obligations on to the taxpayer. He was going to close the budget deficit by borrowing in the short term and using the extra time this bought him to convince Californians that the State Government had to start living within its means. He promised that he would never raise taxes to balance the budget. Schwarzenegger, seen as too moderate by many Republicans, was able to convince enough conservatives that he provided the State’s only hope in getting rid of the incompetent Davis. Riding the wave of popularity and purpose, Schwarzenegger swept to victory in 2003 and was sworn in as Governor in January 2004.

Schwarzenegger first got to work by repealing a tax increase that Gray Davis had just signed into law. Seeking new revenue sources to fund additional State spending, Davis had signed legislation that tripled the Vehicle Licensing Fee in California. Beyond soaking the average California motorist, the tripled tax hurt the automobile industry as consumer price sensitivity to the tax increase kept potential car buyers away from the lots. Schwarzenegger recognized how much this tax increase had triggered the voter revolt against Davis, so he strengthened his own political popularity by reversing the damage Davis had done. Schwarzenegger followed this up by leading the charge for a number of ballot initiatives that would allow the State to temporarily balance the budget through the issuance of bonds. Schwarzenegger’s ballot propositions passed despite concerns from some that borrowing to close a deficit would only defer the root problem until later. By then, the State was taking in record revenues, as an active residential real estate market generated more income and property taxes to the Treasury. However, an irresponsible State Legislature ensured that annual spending increases would continue to eclipse the record tax revenues the State was bringing in. Schwarzenegger was to embark on a new challenge, using his popularity to tackle the State’s spending problem.

In 2005, while still universally popular, he introduced a new set of ballot propositions designed to weaken the stranglehold union bosses had on rank-and-file union members, and, in turn, on all California taxpayers. Traditionally, union leadership employed a handful of intimidation tactics designed to prevent individual union members from fully exercising their voting rights in union elections. The leadership of the public employee unions had long established an unholy alliance with the Democratic Party and looked to ensure that the tie would remain unbroken. A portion of the dues collected from union members would be diverted to a political action committee with the stated purpose of representing the wishes of union members in political elections. This meant that a portion of each member’s dues would be sent to support Democrats, even though many rank-and-file union members are Republican. To maintain the flow of cash to Democratic coffers, union bosses set up an “opt out” system for those members who did not want to funnel their dues to support Democrats. Had the leadership used an “opt in” system, it would have been required to seek permission from the individual union members before contributing a portion of their dues to the Democratic Party. The “opt out” system allowed the union leadership to automatically funnel dues to its political action committees without the permission of the individual members. Should members not have wanted their dues to be diverted to the Democratic Party, they would be required to “opt out”, exposing themselves publicly and subjecting themselves to the implied threat of the kind of intimidation reserved for “self-interested troublemakers”. Schwarzenegger’s favored ballot initiatives were designed to abolish the “opt out” system and to ensure that union members were able to participate in union-related elections through a secret ballot system. Given the funding and organizational advantages the labor unions had, Schwarzenegger was going to have his work cut out for him.

The unions got off to a fast start in early 2005, noting that a special election would be employed to deal with these ballot initiatives. They ran ads that claimed that the special election was an expensive burden on taxpayers. Additionally, they alleged that Schwarzenegger was using the ballot propositions to scapegoat “hard working” Americans for the budget crisis and that the real culprits were Schwarzenegger’s “rich cronies” who were unwilling to pay “their fair share” of taxes to close the budget gap. Rather than honestly presenting the litany of useless, faceless bureaucrats to represent the position of the union leadership, the bosses employed sympathetic professionals like nurses, police, firefighters and school teachers to create the false impression that necessary services would suffer as a result of these initiatives passing. They encouraged the local news media to present the union bosses’ side of the story, and the news media cooperated by providing uncritical coverage of their position. Meanwhile, Schwarzenegger failed to respond to wave-after-wave of attack until September of 2005. By then, the unions had seized the popular advantage throughout the State, and Schwarzenegger launched a toothless defense in the hopes of salvaging the special election and maintaining the popularity he had come to enjoy. Needless to say, his efforts proved too little, too late. Schwarzenegger’s ballot initiatives failed, and he was left to consider how to position himself for his re-election battle in 2006.

Schwarzenegger caught a lucky break in 2006. The Democrats, seemingly emboldened by the Governor’s failure in 2005, nominated Phil Angelides, an unabashed tax-and-spend socialist to run against Schwarzenegger. Nationally, the Republican Party was taking a beating in the wake of the Hurricane Katrina coverage and a media-driven “Bush fatigue”. In an election year when the Democrats seized both Houses of Congress, Schwarzenegger was one of the very few nationally-recognized Republicans to achieve electoral success in November 2006.

Unfortunately, Arnold Schwarzenegger learned all the wrong lessons from the unsuccessful special election of 2005 and his successful re-election of 2006. Ignoring the facts that he ran the 2005 campaign poorly and that he only managed to win re-election in 2006 because he was facing such a neutered left wing straw man, he viewed these results as signals of a sea change in political thought. He took those results to mean that Californians and the American people as a whole had decided that the Republican Party needed to shift to the left if it wanted to win future elections. He started embracing policies of the left wing socialists who created the very problem he was elected to solve. He now sees himself as a canary in a coal mine on the environment and has fully bought into the job-killing, economy-draining global warming propaganda popularized by Al Gore. Meanwhile, residential real estate, which covered for Schwarzenegger’s budgetary incompetence by generating record revenues to the treasury, is in decline. Schwarzenegger no longer has the revenue resources to support the overspending he’s enabled the legislature to continue throughout his tenure as Governor. He’s even open to the tax increases he promised never to enact, though he’s played dishonest semantics games to create the impression that he’s true to his word. He is out of budget gimmicks to paper over the cracks, but rather than face down the problems, he has chosen to increase his national profile by scolding his own party.

Arnold Schwarzenegger is an unmitigated failure as Governor. He has continued the State’s hostile attitude towards business that will lead to further job losses and a continual decline in the standard of living in California. Despite what he may think, back-breaking taxes and irresponsible government spending are too great a price to pay for nice weather and beautiful scenery. While I’m proud to have voted to recall Gray Davis, I, like many Californians, regret that I voted for Arnold Schwarzenegger.