Conservatism's Man to Watch

If Arnold Schwarzenegger can survive economic crisis, conservatism can too

Of all the conservative leaders staring down the barrel of a deepening economic crisis, few have more reason to sweat than California Governor Arnold Schwarzenegger.

When Schwarzenegger won the 2003 recall election replacing then-incumbent Governor Gray Davis he did so with widespread public support for two ballot propositions. One, Proposition 57, authorized the government to borrow $15 billion to pay off operating deficits. The other, Proposition 58, required the government of California to run balanced budgets.

Schwarzenegger has already had to address significant challenges in his tenure. Perhaps the most threatening was a confrontation with California teachers wherein circumstances forced him to abandon a deal he had struck with teacher's unions.

The deal allowed Schwarzenegger to cut $2 billion from the state's education budget in order to make up for shortfalls in state revenues related to an economic downturn. In exchange, Schwarzenegger promised not to challenge a law guaranteeing annually increasing funding for kindergarten through grade 12 and to restore the money in the next year's budget.

California's economy failed to improve, forcing him to abandon his promise under peril of running a deeper deficit.

The episode led to confrontations with nurses' and firefighters' unions and halved Schwarzenegger's approval ratings.

Schwarzenegger found his political capital depleted and was unable to successfully front several other ballot measures, although he still managed to get reelected with a greater portion of the popular vote in 2006 (it helped that he didn't have to compete against another Republican).

Now, Schwarzenegger is pushing six ballot initiatives that would help him deal with California's deficit. Among other things, the initiatives would cap state spending based on the state's revenue between 1998 and 2008, institute a new rainy-day fund, and borrow against various state programs, including state lottery earnings.

Schwarzenegger is facing opposition from state legislators who worry that his measures would handcuff the state of California in addressing future needs. They also worry about the risk inherent in borrowing against future lottery earnings, considering that there are no guarantees that lottery earnings will match Schwarzenegger's borrowing.

Schwarzenegger is pushing the initiatives as part of a broad approach to balancing the budget.

"Those who say we could have balanced the budget through spending cuts alone are guilty of political cynicism at its worst. Those are not serious people," Schwarzenegger recently said. "Those who say we could balance the budget through tax increases alone reveal their total economic ignorance and lack of math skills. Their grasp of economics must come from living on a hippie commune or something like that".

Schwarzenegger's approach to balancing his state budget is a delicate balancing act, but one that keeps in mind that economic health depends on long-term balanced budgets, even if that has to be accomplished at the expense of short-term deficits.

Schwarzenegger does enjoy the luxury of billions of incoming dollars in expected federal stimulus spending, but if he can successfully launch a fiscal and economic recovery in California, he'll provide a valuable model for other conservatives to follow.

Schwarzenegger has always proven to be a flexible conservative, carefully bridging pragmatic fiscal policies with socially liberal policies such as support for stem cell research.

Schwarzenegger feels optimistic about his opportunities for success.

"Sacramento may be an immovable object, but together we can be an irresistible force," Schwarzenegger mused. "With this reform, we can regain control over our budget."

If Schwarzenegger can indeed get a handle on California's economic situation he could supplant Ronald Regan as North America's model conservative, and conservatism would be the better for it.