The Blog

Arnold Speaks

He's smooth and polished and comes fully equipped with wiggle room on taxes.

12:00 AM, Aug 21, 2003 • By BILL WHALEN
Widget tooltip
Single Page Print Larger Text Smaller Text Alerts

THE TERMINATOR broke his silence Wednesday, holding a press conference in Los Angeles to talk fiscal fitness and introduce his California Economic Recovery Council advisory team. As far as opening nights go, there were no signs of jitters or stage fright. The candidate was sharp, had command of his facts, and didn't back down from reporters' questions. The press will complain that he was short on specifics--but it's gonna stay that was until Election Day. Schwarzenegger is betting that voters want a winning style, not a wonkish approach.

Arnold's approach to pumping up California's economy: something old, something new; something borrowed, a lot that rings true.

The old: Schwarzenegger identified runaway state spending as the number one problem in Sacramento. As the father-of-four explained it, it's the same lecture he delivers to his 6-year-old son: You don't spend more than you make. That puts him in the same trim-the-pork camp as his two conservative rivals, state senator Tom McClintock and businessman Bill Simon.

The new: Arnold called for a 60-day review of state spending--in his words, "an outside auditing group"--to offer suggestions on how best to trim said excess. That's smart politics. It's proactive, results-oriented, and rings of Ronald Reagan's Grace Commission. (Note to calendar-watchers: If Arnold takes office in mid-to-late October, that group will have to kick it into high gear to impact next year's budget, which is drafted in early-to-mid December.)

The borrowed: Schwarzenegger announced that, once elected, he'd call a special session of the legislature to reform the state's out-of-control workers' compensation system. Former governor Pete Wilson, a Schwarzenegger co-chair, did the same in September 1992, making that issue Sacramento's battle royale the following year between the himself and the Democratic assembly speaker, Willie Brown.

And what rings true: Flanked by Warren Buffett and George Shultz, Arnold offered adult talk about California's economy, with a focus on job-creation and state credit ratings. As for the big question--would he raise taxes--Arnold was, well, adult about it. He said he didn't intend to soak anyone ("I'm principally against taxes"), but didn't rule out the unforeseen ("we can't ever say never"). That wiggle room will make some conservatives queasy, especially given California's history--both Reagan and Wilson raised taxes during their first year as governor.

Wednesday's press conference may not have been a window into Arnold Schwarzenegger's soul, but it did show what separates his campaign from the rest of the field. To the viewing public, Schwarzenegger is an outsider, not a politician--independently wealthy and not beholden to special interests. But on the inside, his ideals and goals are shaped and influenced by California's Republican establishment, many of whom fought the good fight, in the '90s, in Sacramento.

And for a first-time candidate seeking a road map to recovery, that's a good thing.

A decade ago, Pete Wilson faced the same challenge as Schwarzenegger does now--slow economy, massive deficit. Wilson came up with a two-track strategy: mend California's business, bring the tax code into the Information Age.

During his first year first in office, Wilson created a Council on California Competitiveness and charged it with removing barriers to job creation and increasing economic activity in California. The chairman of that council was Peter Ueberroth, the former baseball commissioner (who's also now a recall candidate).

The council's report, released in April 1992, provided Wilson with the ammunition he needed to sell the public on California's sorry economic state. In Los Angeles County, for example, 72 separate governmental agencies oversaw environmental policy. It also gave Wilson needed nonpolitical cover. In addition to Ueberroth, 17 other leaders from business and labor served on the council. With California once again bleeding jobs, Schwarzenegger would do well to follow this model.

As for taxation, Wilson turned to Shultz and the brain trust at the Hoover Institution--some of whom (Michael Boskin, John Cogan) have already joined Arnold's economic council. In his 1994 State of the State message, Wilson asked Shultz to investigate how California could leverage tax relief for further growth. In 1995, based on the recommendation of the Shultz-led Task Force on California Tax Reform and Reduction, Wilson proposed an across-the-board 15 percent tax cut for California individuals and businesses.

Perhaps Schwarzenegger will end up on the same dual track of business climate and tax relief. Perhaps he'll even borrow some of the ideas that Ueberroth unveiled the other day, such as a one-time tax amnesty, renegotiating state labor contracts, and cracking down on Medi-Cal fraud.