The Magazine

Losing Propositions

It was a "fantastic" election--for Schwarzenegger's union enemies.

Nov 21, 2005, Vol. 11, No. 10 • By ARNOLD STEINBERG
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THERE ARE MANY REASONS CALIFORNIA governor Arnold Schwarzenegger lost all four of the ballot issues he imprudently placed before the voters in a $300-million special election last week. But among these reasons, education is paramount.

Many Republican parents and Republican women stayed away from the polls or voted "No." And there were the independents who had once supported him, along with the "Schwarzenegger Democrats" who'd helped bring him to office just two years ago and now were disenchanted with "the governator," largely over the education issue. Then when Schwarzenegger came out swinging in Propositions 74, 75, 76, and 77--reform measures about which more in a moment--he appeared punitive, seeming to move against schools and teachers, against cops and firefighters and public employees generally. Voters saw him in a power play. One voter who earlier had supported him said to me, "He's so arrogant, he's a fool."

Broadly speaking, Gov. Schwarzenegger last week reaped the penalty for blowing his first year in office. He arrived in Sacramento in November 2003 with, to use his favorite word, "fantastic" popularity: a secure Republican political base, clear majority support among independent voters, and solid inroads among Democrats. This was the time for him to have confronted the tough budget issues and to have faced down the powerful teachers' union, the California Teachers Association (CTA). He could have won, or at least laid the groundwork for a future victory.

But Schwarzenegger, though he seems to have been strategic in his personal life, setting and achieving goals (Mr. Universe, big money, a prestige marriage, Hollywood stardom), has been tactical in politics. In October 2003, California voters removed their governor, Gray Davis, and replaced him with Schwarzenegger in a special recall election. Only a year before, Davis had been reelected, and Schwarzenegger had been focused on his own plan to run for governor in 2006. With that in view, he'd sought to expand his political résumé by sponsoring a vanity ballot issue, Proposition 49.

This measure, once triggered by certain revenue conditions, would create a new statewide program of after-school activities, at an annual cost of nearly half a billion dollars. The state's leading newspapers, most of them liberal, had opposed Prop. 49 as fiscally irresponsible. Indeed, it was exactly the sort of unfunded mandate that Schwarzenegger, as governor, would decry. But since the measure required no tax hike, it had provoked only limited opposition from anti-tax groups, and since it took no funding away from education, the CTA had endorsed it. Schwarzenegger was misled by his easy rapport with the CTA, mistaking the union's willingness to back yet another new government program for friendliness to him. Schwarzenegger had appeared in television ads for Prop. 49, which, thanks in part to the CTA, had won. Little did Schwarzenegger suspect that just three years later, the CTA would destroy him.

TO APPRECIATE how the education issue defined last week's special election, it is necessary to rehearse some of the background to California's budget woes. Notably, all the way back in 1988, the state's voters adopted a CTA-sponsored ballot measure to amend the state constitution. Proposition 98 was a unique and reckless claim by public schools on roughly half of any growth in state revenue. If revenue rose in a boom year (remember the dot-com bubble?), that new level would become the baseline for future budgeting for public schools, even if a recession ensued. Research at the time indicated that Proposition 98 could be defeated, partly because it's easier to persuade voters to vote "No," but partly because this argument tested potent: The proposed constitutional change would tie the hands of the legislature and was fiscally irresponsible. Shortsighted Republicans, however, influenced by the politically ineffectual state chamber of commerce, failed to mount a vigorous opposition and let it pass by default, locking in an unsound public policy that has haunted them ever since.

Even before he assumed office, governor-elect Schwarzenegger was told that reform of the state's archaic budget process would require modification of Proposition 98. A smart and successful businessman, Schwarzenegger also realized intuitively that funding for schools should be tied to their performance. He enlisted former Los Angeles mayor Dick Riordan, whose passion is education, and whose obsession is accountability, as an unpaid education adviser. Riordan wanted major reforms to provide more authority for principals, and to hold them and teachers accountable. But Riordan did not last. He quickly realized that the CTA would never agree to these reforms, even as a tradeoff for retaining Proposition 98. Chastened by his experience with the teachers' unions in Los Angeles, he saw the naiveté of Schwarzenegger's charm offensive with the CTA. The union was more patient. It cleverly waited out Schwarzenegger's political honeymoon, and his window of opportunity closed.

When Schwarzenegger came into office, the voters were in a reformist mood. They had tired of business as usual. They had just recalled Gov. Davis, less than a year after returning him to office by a comfortable margin. They were excited by the seemingly authentic and genuine Schwarzenegger. They felt the state had been fiscally mismanaged, was in deep money trouble, and needed a big-time overhaul. This was Schwarzenegger's chance, and he blew it.

Influenced partly by his wife, Maria Shriver, and other Democrats, Schwarzenegger opted to paper over the problems. He twisted the arms of Republican legislators to support a $15 billion bond scheme, while refraining from any real fiscal reform to resolve budget problems or tackle the structural deficit. He believed he could separate a "recovery" phase his first year in office from a "reform" phase the second year. This was a strategic blunder. He should have put all his chips on the table when he had a winning hand.

In addition, the new governor was unfocused. He had pitched his "recovery" bonds by saying he would not ask for more borrowing. Yet mere months later, he endorsed a politically correct but ridiculous $3 billion bond issue to subsidize private companies going into the stem cell research business. It would dispense $300 million in tax money annually, without legislative oversight, and regardless of whether the stem cell research showed promise. Like the after-school ballot proposition before he became governor, the stem cell proposition showed Schwarzenegger's lack of rigor.

Once in office, having failed to confront the CTA and other key players at the optimum time, he gave them the advantage when he did take them on. Earlier, he had negotiated Hollywood-style (a deal is a deal, unless . . . ) with the teachers' union. The CTA agreed last fiscal year to a temporary legislative adjustment to Proposition 98, and the governor promised to "repay" the education budget this fiscal year. It was a bad deal, inherently difficult for him to keep, and it merely postponed the inevitable. When he eventually reneged, the blow to his credibility was devastating. It would frame the special election.

Oddly, Schwarzenegger and his team seemed stunned, in early 2005, when the CTA ran ads attacking him. It would have been surprising if the union hadn't done so. Schwarzenegger responded in kind. But arguing over whether the governor had or had not reduced the education budget was a losing debate. The only real surprise about the CTA's conduct in the special election campaign was its later decision to borrow against future dues to finance an excessive media buy. It could have defeated Schwarzenegger at half the cost; the union's own vendors probably thought they'd won the lottery. (Republican whining that the unions and Democrats bought this victory is a cop-out. While his opponents outspent Schwarzenegger on television ads, the voters saw both sides' ads adnauseam.)

THE CENTERPIECE of Schwarzenegger's reform package was Proposition 76, which would have changed the state budget process and superseded Proposition 98, limiting the automatic, unfunded growth in spending on schools. It would have allowed total state spending to rise by no more than the average annual revenue growth for the prior three years. If the legislature did not do its job, Proposition 76 would have allowed the governor to resolve a budget deficit by unilaterally reducing appropriations. A similar approach is in operation in other states, although Schwarzenegger's campaign never made that clear to the public. Nor did he educate the public about the state's continuing budgetary woes. Just the opposite: Last year he let voters assume that his Democrat-blessed borrowing of $15 billion had resolved the crisis. And he failed to convey any sense of urgency about Proposition 76--the ostensible policy reason for the special election--speaking vaguely of "reforms." But he who initiates a special election must meet the burden of proof to win it.

It fell to Attorney General Bill Lockyer, a deeply partisan Democrat, to provide the summary of the measure that went on the petitions circulated among voters to qualify what would become Proposition 76 for the ballot. Lockyer's wording emphasized that the proposed measure would reduce education spending. Schwarzenegger should have seen the writing on the wall. Once the measure qualified for the ballot, Lockyer would be the one to determine its wording on the ballot, probably ensuring the measure's defeat. Even before circulating the petitions, Schwarzenegger should have abandoned this proposition and the whole idea of a special election. Instead, he mounted a costly television campaign, which in part urged voters to support Prop. 76 because it would provide more money for education. Nobody believed him. By this time, the governor was widely perceived as, at best, ambivalent and unreliable on school funding.

The CTA took pains to drive the point home. It made the assertion that Schwarzenegger would cut money for schools the center of its attack ads. And, indeed, Proposition 76 would have restrained the automatic growth in school spending assured by Proposition 98. And there's another twist. Remember private-citizen Schwarzenegger's something-for-nothing Proposition 49? The devil is in the details. It turns out the CTA had endorsed Prop. 49 only after Schwarzenegger rewrote it to "continuously appropriate" without legislative action, in the manner of the CTA's sacrosanct Proposition 98, and also to explicitly recognize the supremacy of Proposition 98. Arnold's Proposition 76 would have undone Arnold's Proposition 49. Sometimes the cure kills the patient.

Schwarzenegger should also have known his poll-driven but still thoughtful school reform, Proposition 74, was doomed from the start. It would be guilt by association with Prop. 76. The measure proposed to increase from two to five consecutive years the period required for a teacher to achieve tenure. It would also have made it easier to dismiss a tenured teacher who received two consecutive unsatisfactory performance evaluations.

Back in 2003, when disenchantment with Gov. Davis was at its height and Schwarzenegger's stock was soaring, all he had to do to become governor was stay out of trouble. His campaign was brief--measured in weeks, not months--and he coasted to victory without ever being seriously vetted by an opponent or the press. Along the way, he gushed about the need for more money for schools. He never even hinted that education was about anything more than dollars. A serious conservative would have prepared the voters for education reforms. It apparently never occurred to Schwarzenegger or his advisers that he was setting himself up for a fall.

Once in office, Schwarzenegger gravely miscalculated. Lulled by his high job approval (64 percent approve, 17 percent disapprove), he ducked a confrontation with the CTA, a sacred cow. But CTA ad campaigns over many years had cultivated a public obsession with school spending, not reform. Indeed, the CTA had been able to roll back charter schools and fend off school choice altogether.

Surely, Schwarzenegger is right about the need to reform teacher tenure and make it easier to fire incompetents. It is to his credit that he ultimately tried to address these issues with Proposition 74. But his flagship reform, Proposition 76, was tagged early by the CTA as anti-education, and it defined this special election. Proposition 76 was behind in the polls from the outset. Incredibly, Schwarzenegger's pollsters tried to hide the truth by using a paraphrase to "explain" Proposition 76 when they tested its popularity, rather than presenting survey respondents with the wording that would appear on the ballot. But the defeat of Proposition 76 was a foregone conclusion. As for Proposition 74, it was perceived as linked, a power grab by a governor hostile to public education.

Schwarzenegger made matters worse by strongly supporting two ballot propositions originated by others.

Proposition 77 was about redistricting, an unexciting issue. It was mainly an alibi for the failure of Schwarzenegger, a popular governor who spent big money, to gain a single legislative seat in the prior year's election. Proposition 77 would have replaced the current system of reapportionment with the drawing of districts by three retired judges. In itself, this was a loser--a similar "judges" reapportionment initiative had been defeated 20 years ago. Besides, Schwarzenegger was portrayed as imperial, wanting to let three obscure white guys in a back room carve up California. The White House, Karl Rove, and the Republican National Committee were less than enthusiastic about a plan they thought threatened several Republican seats in Congress. Former Republican House leader Dick Armey signed mailings against Prop.77. Leftist-turned-conservative David Horowitz did radio spots against Prop. 77. Schwarzenegger, meanwhile, as if he didn't have enough problems of his own, endorsed an anti-Republican redistricting plan in Ohio.

Things went still further downhill when Schwarzenegger embraced Proposition 75, which would have required a public employee union member's approval before his or her dues could be used to support a political campaign, a scheme known as "paycheck protection." This measure had originally qualified for next year's ballot, and might have passed. It was initially popular. But in the context of the special election, it seemed punitive, as if the governor were trying to crush his union enemies. Just before Election Day, the Wall Street Journal observed that Schwarzenegger's opponents were portraying him as "the foe of those who treat the sick, teach the children and protect homes--as opposed to a foe of their union leaders."

By linking his now unpopular brand (Schwarzenegger's job approval had fallen from +47 to-21) with these four ballot propositions, Schwarzenegger ensured all of them would lose. He had hoped that yoking the four measures together would help them pass: that Proposition 75, polling way ahead, would carry the other three (74, modestly ahead; 77 a toss-up; and 76, which had started it all, losing badly). The more likely outcome occurred: Proposition 76, seen as reducing public education spending, killed the slate.

This was no liberal plot. Even the Los Angeles Times endorsed Propositions 74, 75, and 77. Rather, the special election reaffirmed the need for conservatives and Republicans to change the way the education issue is debated. Until the conversation moves beyond funding to include reform of tenure, charter schools, and eventually school choice, conservatives will continue to lose.

IT WOULD HAVE BEEN BETTER if there had been no special election, as even the governor now publicly admits. He says it's hindsight. But the truth is, this wipeout was predictable and therefore avoidable. It was also costly. Not only has this debacle diminished the governor's prospects for reelection next year. More important, the mishandling of these ballot issues is analogous to that of two school choice measures defeated in California in 1993 and 2000. Once again, needed public policy reforms have been needlessly repudiated.

And not just the policies embodied in the four propositions. Belatedly, Schwarzenegger had also recognized the need to reform the state's public employee pension system. But his team ineptly drafted a measure that failed to provide for the widows and orphans of cops and firefighters who died in the line of duty. This, of course, energized the normally Republican public safety folks to oppose him. (He had already offended nurses with his notorious comment last December that he would "kick their butts" in Sacramento, as he does with other special interests.) Schwarzenegger eventually pulled the pension measure, but the damage was done. He and his team looked incompetent. And reform of the pension system was derailed.

Then there is parental notification. As long as anyone can remember, this issue has resonated with the public. Even some pro-choice voters believe parents should be notified before a minor has an abortion. That's why yet another issue placed before the voters last week--Proposition 73, "Waiting Period and Parental Notification Before Termination of Minor's Pregnancy"--was widely regarded as a certain winner. It polled well, and Schwarzenegger's political consultants were glad to have it on the ballot.

James Holman, a San Diego pro-life publisher of weekly newspapers, had provided much of the money to qualify the measure for the ballot. But he and his colleagues irresponsibly had not planned for a campaign. They probably reasoned that once the measure made it onto the ballot, it would easily pass. They also failed to anticipate the special election. Normally, the voters would have decided the fate of parental notification next year. But once a measure has qualified for the ballot, it goes before the voters at the next election. Schwarzenegger, himself pro-choice, endorsed Proposition 73 (though his team was divided). He hoped the measure would boost pro-life turnout, bringing more Republicans to the polls to support his reform propositions. Also, he could take credit for successful passage of Prop.73.

In the final two weeks of the campaign, however, Planned Parenthood began a limited television media buy with an effective ad ("Our daughters grow up so quickly these days. And we have so much to teach them. How to be responsible. How to make good decisions. If my daughter were to get pregnant, of course, I'd want her to tell me. But Prop. 73 can't force teens to talk to their parents. Some teens just can't. . . . "). It was a one-sided air war. The "Yes" side was reduced to grassroots activism among pro-life groups and churches. None of this was Schwarzenegger's fault. But the momentum to vote "No" generated by his slate is what assured the defeat of Prop. 73. It was defeated 52.6 percent to 47.4 percent.

THE SCHWARZENEGGER TEAM had hoped for a low voter turnout, but their own high-profile campaign raised the stakes. Besides, their strategy was flawed. Low turnout would favor the highly mobilized public employee unions. The CTA alone has 330,000 members. The California Federation of Teachers has another 70,000. The California Correctional Peace Officers Association (prison guards) has 25,000. Add police, sheriffs, firefighters, nurses, and all the other state employees and their families. The smaller the turnout, the greater the impact of these public employees. While teachers and cops turned out in droves, too many Republican parents and women stayed home or defected outright on the education issue. The result was a rout. Propositions 74, 75, 76, and 77 were rejected by, respectively, 55 percent, 53.5 percent, 62 percent, and 59.5 percent of the vote.

Consider the wreckage. Post-mortems will fault the governor's ideology. The media will write that the election results, like his bad numbers, prove he is too right-wing. And conservatives have other reasons for gloom. Since the election, Schwarzenegger has accepted responsibility for the fiasco, but earlier he gave credence to charges that he is too partisan. And his aides publicly criticized President Bush for coming to California shortly before the special election. Worse, Schwarzenegger has polarized the electorate without getting anything done.

Indeed, his final television ads actually implied that taxes would be raised unless Proposition 76 passed ("Say yes to 76, say no to a tax increase next year"). Schwarzenegger put his personal millions into the campaign's final days (relying on wishful polling?), hoping to salvage either 74 or 75, probably not 77, certainly not 76. So, what was he thinking with that final ad for Prop. 76? Maybe all along he intended to use a Proposition 76 defeat to explain away a tax hike. Democrats in the state legislature would jump at a tax hike, but Schwarzenegger (and Republicans) would still get blamed.

Early on, before the special election was irreversible, Schwarzenegger tried to negotiate a way to avoid it. Assembly speaker Fabian Nuñez said he would "check with my people." Schwarzenegger assumed that meant Democratic legislators, not union leaders. By then, the union leaders wanted a special election they knew they would win. Besides, their vendors saw dollar signs in the mother of all political wars. Told of the governor's overture, one of the unions' top political consultants said, "F--Arnold."

Maria Shriver never endorsed her husband's ballot proposals. Now, she will appear the supportive wife. She long ago settled on the team of advisers that has failed. Now, she is choosing a new team. And she will help shape policy, probably moving it left. That may mean more money for schools--but it bodes ill for major reforms that California needs.

Arnold Steinberg is a political strategist and analyst.