Arnold Schwarzenegger Contemplates His Legacy

"You came to office in 2003 and said you were going to save California," I said to him yesterday, as he puffed a cigar outside a Washington steak house. "California isn't saved. In the last couple of years, in your mind, what happened?"

"Well, in the last couple of years, you can answer that for yourself," he said.

"In 2003, when I came in, we rebuilt the economy; we created a million jobs; we reformed workers compensation, which gave the state back around $59 billion; we went in and did exactly what we promised. ... We passed initiatives for $42 billion in infrastructure; and we did all of that, were about to, you know, pass all sorts of --"

(I interrupt at this point and reminded him that his approval rating was 60%.)

"-- and then the economy started going down worldwide. Actually California was more affected because of the housing market. We lost more jobs because we rely a lot on construction and the housing market. All of those jobs that we created -- the economic slowdown started taking them away again. So we are now back again in a crisis stage. So a lot of great work was done, but still certain work needs to be done so that when we have an economic slowdown, we won't be affected so much financially."

Schwarzenegger's argument is not universally accepted among the state's political class, which isn't inclined to give him his due for trying despite the economic downturn. They say that he overpromised. That he took on the unions at the wrong time. That he fell into the budget gimmickry trap that hamstrung his predecessors. There is some truth to this, but then again, as much as they decried California's broken budgeting or its tax structure, Democrats and Republicans did not foresee the magnitude of the global financial collapse.

California faces a budget deficit of about $20 billion this year. Schwarzenegger has said he won't sign a budget that doesn't include pension reform or long-term budget reform, or one that does include a tax increase. He has instead taken a meat cleaver and wants to chop away virtually everywhere. Under one scenario, California would be left without a social safety net. The most vulnerable would be most hurt. 

This is a negotiating position: with pension reform, the starkest cuts could be spared, and though you will not hear this from Schwarzenegger, something akin to a small tax increase (but called a "fee") is probably the only way to get his reforms done. 

I asked Schwarzenegger whether, if Democrats were too beholden to labor, Republicans ought to take a look at their anti-tax orthodoxy, too. Especially with $20 billion to cut. He smiled. "It's not that simple."

Raising taxes during a recession will slow economic growth, he tells me, just when it is starting to pick up a little. He acknowledges that he had to raise taxes last year -- that was when the deficit was $60 billion. He doesn't want to chase any more businesses away, and he can't get Republican votes for a tax increase even if he wanted one, which he doesn't, sincerely. (At both the state and local level, it takes a super-majority vote to both pass a budget and raise taxes.)

"There are still too many things that don't make sense," he said. His favorite example: unionized state employees are the only people who can mow the lawn or fix the locks on school properties. "I mean, I'd have the kids mow the lawn," he says, facetiously (I think).

The point is that until unions take "haircuts" and acknowledge a new reality that is less secure and stable for them, he won't even consider raising taxes. The pensions part of it really frustrates Schwarzenegger. The state's commitment to its CALPERS pension fund will rise by 2,000% next year. It would take a five minute colloquy in the legislature to restore pension promises to where they were before they were increased in 1999 (when times were flush). There is a chance of a deal, and it comes about in part because Schwarzenegger has matured as a politician.

In 2005, he campaigned against the unions, castigating them. They fought back, hard, on a variety of issues, including some of Schwarzenegger's beloved political reforms, and they beat him. 

"I regret my not being more inclusive," he said. "So if I would do it again I would bring in the parties rather than just attacking them. I would try to bring them together, and maybe I wouldn't get everything, but I think I would have gotten something."

(He notes with an aside that merit pay and ending teacher tenure are more politically acceptable today because President Obama supports them.) 

Assume, for the moment, that budget reform does not pass. Schwarzenegger still has considerable accomplishments to recite, especially in the environmental realm. His state's auto emissions standards are now the nation's, and its renewable usage standards will soon be. Indeed, when I asked him what his advice for the next governor would be, he said that he would tell him or her -- Jerry Brown or Meg Whitman -- not to undo "the environmental things." He pushed for and passed a measure that would sharply reduce partisan redistricting in the state, although in practice, since it's a Democratic state, Republicans would benefit. Proposition 14, which scraps the state's partisan primaries and replaces them with a top-two advancing system, faces court challenges, and but if survives, it will produce candidates in the Schwarzenegger mold: socially liberal, fiscally conservative. (The Chamber of Commerce was a huge financial backer of Prop 14.)

As we conclude our conversation, I ask him about another unheralded accomplishment: his focus on obesity prevention among kids, which includes some fairly significant restrictions on the beverages that schools serve. He likes Michelle Obama's national emphasis on participation and exercise, but "it must be combined with policy," he said, including big changes to the national school lunch program.

I asked him if it gets more difficult to maintain his bodybuilder's physique as he gets ... not so young.

 "It sucks," he said, standing up, smiling broadly. 

 Preternaturally optimistic, even Arnold Schwarzenegger is not immune to aging.