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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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.)