Budgetary Judgment Day
By Cameron O. Kistler
Posted October 01, 2004

How Ahnuld pumped up Sacramento
Before the Governator pumped up Sacramento, California was mired in a fiscal crisis. Former Governor Gray Davis simply lacked the political capital to push a new budget through the state legislature. As always, the Democrats refused significant spending cuts, while the Republicans adamantly refused tax hikes. It was politics as usual. The significance of this 25th hour gridlock cannot be overstated.
California has the world’s fifth largest economy, and governmental instability in Sacramento can send a global shockwave larger than Arnold’s biceps. The bigger you are, the harder you fall. Arguing about the minutiae of Schwarzenegger’s budget is about as useless as discussing the merits of Arnold’s 1978 bikini wax (all I know is that Maria Shriver seems to be ok with it). The sole criterion by which Mr. Schwarzenegger should be judged is his effectiveness in getting a budget passed and whether his rivals could have done a better job.
An outsider to the political order of Sacramento, Schwarzenegger rose above the political bickering between the political parties in securing passage of a budget. First, he was able to prevent a Republican backlash in the state legislature against the higher spending caps in his budget. As Governor Davis’s futile attempts to pass a budget attest, there is no way the Republicans would have ever caved in to a Democratic governor on this issue. By carving out a politically moderate ground, Arnold successfully used his political resources to force concessions by both parties. Secondly, and perhaps more importantly, Arnold utilized his star power and media savvy to pass Propositions 57 & 58. These propositions allowed California to, for one time only, issue bonds to cover its revenue shortfalls, while at the same time forcing the state legislature to adopt responsible spending behavior (something all politicians find difficult to do).
Arnold’s support was absolutely vital in getting the amendment passed – he successfully turned around public opinion on the Propositions by touring California and through his memorable appearance on the Tonight Show with Jay Leno. What many critics of Governor Schwarzenegger fail to recognize is that if these Propositions didn’t pass, massive spending cuts, larger than the ones enacted, would have been necessary. Instead of criticizing Governor Schwarzenegger for raising the cost of tuition, students should be thanking him for keeping the increases as small as he did.
Others criticize Governor Schwarzenegger for not raising taxes. Firstly, new taxes were a near political impossibility. The Governor had a difficult enough time trying to get the Republicans to accept higher spending caps; new taxes would have been anathema to the Republicans in the legislature. Secondly the effectiveness of higher taxes is highly questionable. The extremely progressive tax code of California tied the state’s revenue source to high economic growth. Therefore, when the tech-boom ended, the state’s source of revenue dried up. Raising taxes even more would have provided a strong disincentive to do business in California - exacerbating the problem that created the shortfall in the first place, as tech businesses move elsewhere.
Californians are in Governor Schwarzenegger’s debt. By flexing his massive political muscles, he passed a budget plan that would not have succeeded without his support. This was vital to preventing a situation that would have damaged the economy as well as caused massive cutbacks in services for California. Many more students would not have been able to attend college, many more teachers, cops, and fire fighters would have lost their jobs, and many more people would lack basic health services. Some Democratic girlie men complain that government cannot provide them all the services that they desire, but those people are simply ignorant of the dire political situation that California faced.




