Conan and his shtick

Well, hellooo carrot and stick. Governor Arnold Schwarzenegger just displayed dramatic examples of both in his dealings with the California Legislature, which is still reeling from them and is scrambling in private to figure out how to deal with them.

But the real story as 2003 wraps up is the psychology of the governor himself, what we’ve learned after watching him for little more than one month in office and what it portends for California’s fiscal health.

Schwarzenegger is a neophyte to Sacramento politics, where nothing is really as it appears and where most legislators are working with both a public agenda and a private agenda. With his boyish grin and beefcake image, it’s easy to forget that Schwarzenegger has mastered both strategic and tactical thinking in two other highly competitive, big-money venues: global bodybuilding and Hollywood filmmaking.

Called “the Oak” for his immense size and impenetrable concentration during the 1970s, Schwarzenegger found unique ways to psych out his opponents, who were among the most adept competitors in the world at psyching out competition.

In one of the few biographies about him, Arnold Schwarzenegger: A Portrait, by George Butler, one scene portrays a manager teasing Schwarzenegger that he might win his seventh Mr. Olympia title because he knew some judges. Schwarzenegger responded that he was interested only in influencing competitors like Mike Mentzer: “Already, Mike Mentzer has left the gym this morning. [Mike] said, ‘You’re driving me crazy with that smile.’ … So this afternoon he misses training to see a shrink. He should remember that another Austrian was king of the shrinks. I could advise him for free.”

Schwarzenegger abandoned much of his early bluster when he adapted to the more subtle, and at times vicious, high-stakes game in Hollywood. He figured it out fast and rocketed to the top because of his mastery of strategy, and he never abandoned his constant use of strategic thinking. When he realized that his hulky killer persona was hemming him in as a star and turning off some filmgoers, for example, he set out to make comedies that showed another side. Twins and Kindergarten Cop were huge hits.

Sacramento has a far lower profile than either global bodybuilding or the film industry. Yet far more is at stake: California’s fiscal health, for one. Moreover, Sacramento is the petri dish for leaders who move to Congress, and Sacramento is the place where the huge unions are increasingly playing kingmaker as they attempt to assert domination over California politics.

When Schwarzenegger went back to the negotiating table in early December to hammer out a deal with Assembly Speaker Herb Wesson on his fiscal recovery act for the March ballot, Schwarzenegger was not merely showing Sacramento that a guy once called the Oak knew how to bend.

Schwarzenegger gave up significantly more ground than did Wesson, by abandoning his and the Republicans’ key demand for a true spending cap on the Legislature.

But Schwarzenegger was not simply negotiating a deal. He was administering a crucial psychological test to the Legislature, not a usual move for somebody used to world-level competition in two other industries. He could have dug in his heels, insisted upon the spending cap and launched a petition-gathering drive to put his spending cap and bond package on the November ballot.

Given the mood of California voters toward the Legislature and its spending habits, I think Schwarzenegger could have won handily.

Instead, he administered this test: If I give you guys a big concession—if I offer you a carrot by clearly backing off from the spending cap I want, and if I make you look good in the bargain—will you give me something big back?

Essentially, Schwarzenegger was asking, “What sort of folks am I dealing with here? What sort of integrity and mettle have they got?”

So, Schwarzenegger compromised, upsetting several Republicans by giving back too much. Yet he continued to press for the thing he wanted even more: immediate cuts in current-year spending by the Legislature so money could be freed to repay cities and counties that lost out when Schwarzenegger reversed the tripling of the car tax.

He’d made a campaign promise to the cities and counties to make them whole again, and he intended to fulfill it.

But the Legislature shined him on. Schwarzenegger proposed those current-year cuts so money could be freed for cities and counties. Yet his proposals were not even allowed onto the floor of the Legislature for debate and a vote. Instead, Senate President Pro Tem John Burton and Wesson sent the Legislature home until 2004.

Mayors and sheriffs in cities and counties, who needed millions of dollars restored to them for December alone, were furious. They squawked angrily at Schwarzenegger and the Legislature and threatened to sue the state.

How illuminating for the new governor, whose first test of the Legislature had come to a close.

Now Schwarzenegger has a solid feel for how legislative leaders handle compromise.

They don’t. In Sacramento, compromise has come to mean squeezing as much as possible out of the other side. Period.

So, the Oak went and got a stick.

Now, that’s not proof of strategic brilliance, considering use of the stick is a classic tactic once the carrot has failed. But it was a clear demonstration of his readiness to use power.

The stick was provided by a law signed by Gray Davis but never used by the indecisive former governor. It allows the governor to get around the Legislature by directly appropriating money in times of emergency.

Schwarzenegger reinstituted $2.65 billion to local governments and further directed that $150 million in line-item budget cuts be made immediately to help offset the payments to cities and counties until the Legislature makes further cuts.

At Schwarzenegger’s December 18 press conference, it was as riveting as things get in policy-wonkish Sacramento to see Oakland Mayor Jerry Brown charge gleefully to the dais, never leaving Schwarzenegger’s shoulder, and then boom out, “The governor exercised executive power to the max! That’s the only way you get anything done around here!”

Mayor of Los Angeles James Hahn appeared deeply moved, saying, “Wow, what a difference a week makes,” before breaking into a standing ovation for Schwarzenegger.

Schwarzenegger, the strategic thinker, naturally will continue to deal with the legislative leaders. But he will form alliances with the people whom he has learned can be counted upon to engage in honest compromise. To strengthen the hand of the honest compromisers, such as Democratic state Controller Steve Westly, who backed Schwarzenegger’s plan to return money to the cities and counties, the governor will take actions that also boost their gravitas in Sacramento.

So, watch for a higher profile for the so-called Bipartisan Group of less than 20 legislators, long dismissed as powerless by the hardcore partisans who dominate the 120-member Legislature. This group of reasonable Democratic and Republican pragmatists has gained the ear of Schwarzenegger. They played the key role in getting the grumpy legislative leaders to resume broken negotiations on the spending cap.

“We want things to actually work around here,” said Democratic Assemblyman Joe Canciamilla of Pittsburg, who co-leads the group with Republican Assemblyman Keith Richman of Northridge. Said Richman: “Now we’re talking with the governor about other solutions to other problems.”

The irony is that even if Schwarzenegger builds a fledgling bipartisan/moderate effort, he increasingly will be pulled toward partisan politics because of the coming presidential election.

With Democrats still nursing bitter wounds over the 2000 election controversy, with Howard Dean turning up the heat on President George W. Bush and with sharp divisions over Iraq, 2004 could be the most partisan election in memory.

Schwarzenegger already has been named honorary chair of the Bush-Cheney ’04 California Leadership Team, and he stated on December 18, “President Bush has shown great leadership by acting decisively to transform tough challenges into golden opportunities.”

By mid-2004, right when Schwarzenegger must complete a crucial budget deal with the majority Democrats in the Legislature, Sacramento will be an ugly quagmire of partisan gamesmanship. The governor will have to decide exactly how much to help Bush and the Republicans. Because whenever Schwarzenegger steps up to a microphone with a George W. ’04 banner behind it, a crowd of protesters is bound to appear, demanding that the governor go the hell home and take care of California.

Some of Schwarzenegger’s loudest critics will be the unions, whose leaders are fuming that he has singled unions out as the worst special-interest manipulators in Sacramento.

Union leaders can churn out busloads of protesters quickly, as they demonstrated throughout 2003 when they stopped the Legislature from making significant budget cuts by filling the halls with angry groups wearing matching T-shirts, and people in wheelchairs. The union leaders are no slouches when it comes to strategic thinking and the use of raw power, either.

So, the psychological game is afoot. But unlike Davis, who trembled at the sight of union buses in the capital, this governor clearly will play hard if he must.

The question is whether Schwarzenegger can use the tools he already has displayed in his repertoire—carrot vs. stick, personal charm vs. executive authority and bending vs. toughness—to crack open a system hard-wired to resist tampering.

Whether he fails or succeeds, it’s all going to be fascinating to watch.