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Conan The Destroyer

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Written by Robert Cruickshank
Friday, 17 July 2009
How Arnold Schwarzenegger Is Using the Budget Crisis to Wreck California's Future. It was Governor Arnold Schwarzenegger's "let them eat cake" moment. In a New York Times Magazine article published on July 5, the governor explained that the budget crisis doesn't personally affect him. "Someone else might walk out of here every day depressed, but I don't walk out of here depressed," Schwarzenegger told the Times' Mark Leibovich. "I will sit down in my jacuzzi tonight. I'm going to lay back with a stogie." Although the quote vividly described the governor's complete lack of concern or empathy for the Californians that are suffering as a result of the budget crisis, it also revealed his strategy for framing his role in solving the mess. Arnold Schwarzenegger sees himself as a man with bold, sometimes even liberal ideas who is forced to propose massive budget cuts as a result of a broken government and a deadlocked legislature. The reality the governor is attempting to hide is much different. Far from being a wise man trapped in a bad system, Arnold Schwarzenegger is directly responsible for much of the present budget crisis. His proposal to inflict crippling cuts on core government services is not something he was forced into doing. It is his attempt to impose a “shock doctrine” solution onto California, where public spending is slashed in order to further enrich the already-wealthy. The now-famous “jacuzzi” quote may make the governor sound like Marie Antoinette, but we would do better to see him as Conan the Destroyer, determined to leave a trail of suffering in his wake, determined to ruin what’s left of California’s future. It is certainly true that the legislature is deadlocked, thanks to the rule requiring a 2/3rds majority to pass a budget or a tax increase, which enables Republicans to unite and block revenue-generating solutions. California is also being hit harder than most other states by the recession, as tax receipts have declined sharply – including a 33.8 percent decline in personal income tax revenue in the first half of 2009. Those numbers do not tell the whole story behind the current $25 billion deficit. Arnold Schwarzenegger is responsible for a significant portion of that shortfall. His first act upon taking office in 2003 was to block a planned increase of the Vehicle License Fee (back to its previous level). It saved the average household just $150 a year, but costs the state $6 billion per year in funds it must pay to cities and counties who had previously funded much of their operations by the VLF. The governor, keeping his “no new taxes” pledge, closed the $10 billion deficit he inherited from Gray Davis almost entirely through bonds, costing the state another $4 billion per year. The governor frequently speaks of the need for “shared sacrifice” as justification for massive spending cuts, including this week’s proposal to suspend education funding guaranteed by Proposition 98 and deliver as much as $10 billion in cuts to schools that are still reeling from the $9 billion cut they received in the February budget deal. But there are two groups that have never been asked to sacrifice anything by the governor: large corporations and the wealthy. The only tax increases he has ever embraced were an increase in the sales tax and an increase in the personal withholding rate on income taxes. Both were part of the February budget deal, and both are deeply regressive in that they hit the poor harder than the rich. Since then the governor has refused to even consider Democratic proposals to close corporate tax loopholes and follow the lead of states like Texas and Alaska in taxing the extraction of oil from California territory. Arnold Schwarzenegger’s approach to the budget crisis is one of outright destruction. Since 2007 he has signed budgets that cut over $30 billion in state spending. Now he wants to slash aid to the disabled, scale back Medi-Cal, and deliver a deathblow to public schools. These cuts will have damaging effects in both the short-term and the long-term. In the short-term, these cuts are negating the impact of President Barack Obama’s stimulus. As state workers are laid off and as most Californians struggle to make ends meet with less state assistance than ever before, consumer spending continues to decline. In turn that leads to higher unemployment, as well as further declines in taxes collected by the state. It is the long-term impact of Arnold Schwarzenegger’s cuts that is most disturbing. In a state where youth unemployment is nearly 20%, the cuts to higher education that are making a UC or CSU education unaffordable for all but the upper middle class and the wealthy combined with the looming cuts to K-12 schools are likely to create a generation of inequality. Without a skilled, educated workforce, employers will steadily abandon California for those states that have not decided an education is expendable. The cuts to health care and disabled services will likely create an underclass of the sick. The governor’s blithe dismissal of all considerations of economic recovery can only be seen as deliberate. Rather than follow President Obama’s lead, he has chosen to follow the path of President Herbert Hoover. Whether Democratic legislators will fold yet again and embrace the cuts remains to be seen. No matter what happens in Sacramento, it is time for Californians to stand up against this attack on their livelihoods, their economic security, and their future. Robert Cruickshank is Public Policy Director for the Courage Campaign.

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