Arnold’s veracity problem

I hope it’s dawning on the governor that the great, big, complicated reform plan he wants to sell to Californians won’t come as easily as his big wins last year, in which he forced thousands of cheaters off the workers’-comp rolls and slashed the nation’s highest car tax.

But truly big reform—broad, complex changes in the way the state governs itself and in the way Sacramento spends our taxes—has never been an easy sell. California voters prefer glitzy, one-hit wonders over broad policy. We’re a Proposition 13, term-limits, three-strikes, gubernatorial-recall kind of state.

Now, however, Arnold Schwarzenegger is taking a page from the playbook of former Governor Ronald Reagan, who, in the 1970s, tried to fix the broken system of rising property taxes and legislative overspending. Reagan went to voters with a sweeping plan to trim government and fix the tax structure.

Reagan was a popular, telegenic governor—not unlike Schwarzenegger. Yet, his big fix-it plan was fought by all sorts of entrenched interests and went down to defeat. For all of its reformist content, Reagan’s proposal was broad, hard-to-grasp change. It wasn’t the one-shot fix Californians so love.

Yet, Reagan proved prescient. Just a few years later, California was in a pitched uproar over skyrocketing property taxes and blatant overspending by politicians who didn’t give a damn. Voters embraced a powerful, one-hit wonder known as Proposition 13.

Like Reagan, Schwarzenegger sees Sacramento as a bloated bureaucracy that often works against the citizenry. He’s also pushing an agenda of sweeping change. But he’s dragging an albatross that Reagan didn’t have: a self-inflicted veracity problem that the powerful status-quo crowd can bludgeon him with.

Schwarzenegger promises the moon and then backs out. We saw hints of this last year, for example, when Schwarzenegger promised that his workers’-comp reforms would lead to quick reductions in insurance costs for small businesses and others.

As Schwarzenegger must have known (after all, I myself knew this even in early 2004), whenever a state government adopts a major reform of workers’ comp, such as California just did, the insurance companies don’t lower rates until they fully judge whether the reforms are creating lasting cost-cutting. There’s nothing quick about it. Risk-averse insurers require a verifiable, lengthy history of lowered costs before they cut their rates. It takes months. It can take a year or more.

Today, months later, Schwarzenegger’s reforms are working. Insurers have seen lasting reductions in medical costs because cheating workers and sleazy doctors are being drummed out of the system. Gradually—not quickly, never quickly—insurers are responding with lower rates.

Schwarzenegger also promised he would wring vast sums of money out of Washington, D.C. And he promised that in 2005-2006 he’d give public schools about $4 billion in extra money.

These were impossible promises. They reveal a bewildering side of Schwarzenegger: his habit of tarnishing his own word. Does Arnold need to attend Fundamental Rules of Governing, 101? In this class, the governor would learn that political leaders break virtually every rule of decent conduct in the free-for-all that is Sacramento. But at the end of the day, there’s one promise that the warring sides expect not to be broken: a person’s word.

Predictably, Schwarzenegger is being hammered by Democrats for failing to get the promised big money from Washington. Now he’s stuck in the pathetic position of trying to prove he’s really turning that situation around.

The other day, for example, at a press conference in Southern California, the governor accepted a fat check from Washington to fight homelessness. That’s nice, but voters did not elect Arnold to participate in such ceremonial window-dressing, à la Gray Davis. They elected him to get results.

As one Republican analyst who was involved in the Davis recall told me, “Arnold is not vulnerable to conventional political attacks like he’s unkind, or motivated by greed, or a tool of special interests. His record will be measured on achievement and accomplishments. So, if the Democrats attack him on what he has delivered—this is his zone of vulnerability.”

According to some analysts, for every $1 a California taxpayer sends to Washington, California gets just 77 cents back. The broad consensus is that we get screwed. That’s what Schwarzenegger said he would fix.

As the governor surely must know, they hate us in Washington—and that’s been the case for years. Powerful congressional committee chairmen who hail from Southern and Midwestern states grab far more money from Washington than their states ever pay in. These states get more than they deserve—as they have for years—by milking California and other disliked, big states.

All this California-hating was mentioned recently by the new state Department of Finance chief, Tom Campbell, at a budget-committee hearing in Sacramento. As Campbell, a former member of Congress for California, told the budget committee, “Believe me, California has this problem in Congress, getting the rest of country to care about its problems.” Campbell said members of Congress from the Midwest had an attitude of “Why should I care about your problem?”

Do they hate us because we’re beautiful? Because we have cool jobs at hip technology firms? Because California adults surf and hang-glide and otherwise behave like kids? Yes, yes and yes. Schwarzenegger can’t change that.

He’s made some attempts, initially calling together the deeply ineffective California congressional delegation in hopes of getting these 53 Democratic and Republican U.S. representatives to work together. What a fantasy. A recent study reported that California’s huge congressional delegation is just about the most partisan (i.e., the most warring and most ineffective) of all state delegations.

Since California’s 53 representatives won’t fight together against the Midwestern types, there’s little chance of fair reimbursement to California. Lately, members of Congress and Schwarzenegger have touted how they’ll fight to keep open California military facilities threatened by federal cuts.

Frankly, we expect these guys to fight that battle as a bare minimum. It’s nothing to crow about.

The governor even campaigned for President George W. Bush in Ohio. But sadly, U.S. presidents usually stay out of regional funding squabbles like the one facing California. There’ll be no help there. The governor conceded as much to a newspaper the other day.

My point is that Schwarzenegger almost certainly was informed of all these impossibilities before he made his promises. At least former Governor Pete Wilson tried something truly dramatic, by suing the feds to be reimbursed for the billions of dollars a year California taxpayers spend on non-taxpaying illegal aliens who stream here because of Washington’s border policies.

But Arnold isn’t suing. Just promising. And then not promising.

His most controversial broken promise stems from a deal he struck in 2004 to give extra funds to public schools this year—under a formula that, because of unexpectedly higher state revenues, meant schools were expecting $4 billion more. If the schools would just forgo a couple of billion in extra funding in 2004, when Schwarzenegger needed their help to cut the state budget, the governor would help out with lots of extra money in 2005.

School leaders agreed to forgo the big funding boost last year. But now Schwarzenegger is offering the schools an extra $2.5 billion—not an extra $4 billion. The powerful school lobby is using that broken promise to severely hammer the governor.

When a political leader breaks his word, he hands power to his opponents. Furious school leaders are working very hard to convince voters that Schwarzenegger’s $2.5 billion education increase is actually a fat cut. (Only in Sacramento would $2.5 billion extra be passed off as a cut.) But that’s what happens when you break your word—people lash out like mad.

A spokesman for Attorney General Bill Lockyer, who is promoting the schools’ views of this additional money, somewhat humorously declared to a reporter that the extra $2.5 billion for schools “writes off a whole generation of California schoolchildren.” And elected state Superintendent of Public Instruction Jack O’Connell told an audience he didn’t think “the citizens of California are willing to sacrifice the future of their children.”

Some journalists even went along for the ride, describing the additional $2.5 billion as a “cut.” You know you’re in trouble when the media buy into such obvious spin.

I don’t really blame the gaseous Lockyer and O’Connell. Arnold did this to himself. Sure Lockyer and O’Connell are fibbing—but they’re fibbing in response to Arnold’s fibbing. Schwarzenegger reneged on a deal. They’re going to make him pay.

There’s a lot to like in the governor’s four-pronged agenda, which targets many of Sacramento’s most indefensible practices through proposals to reform the state budget, government pensions, teacher pay and political gerrymandering.

But Schwarzenegger’s ideas are bound for a nasty ballot fight, because there’s no chance the Democratic Legislature will endorse them. In this, the governor can perhaps take heart from a January 26 poll by the Public Policy Institute of California, which found that 68 percent of voters want a direct vote on how to reform the budget. Voters don’t want to leave budget reform to a fight between the governor and Legislature—they want a crack at it themselves.

If anyone is capable of persuading Californians to ratify sweeping changes, it’s probably the unusual Schwarzenegger. But to beat the entrenched interests, he has to be believable. And right now, after tarnishing his own veracity, he’s being taken with a grain of salt.