The Terminator's Final Days

After the June 8 primary election, the political focus in California will shift away from Gov. Arnold Schwarzenegger for the first time since 2003. He will still be governor, wrangling with the Democratic-controlled Legislature over another budget, this time trying to cut a $19 billion deficit.

But after June 8, attention will shift to the duel between the nominees to be his replacement. The Democratic nominee will be Jerry Brown, the former governor and current attorney general. Republicans will choose between former eBay CEO Meg Whitman or California Insurance Commissioner and high-tech businessman Steve Poizner.

The debate between the Republican and Democratic nominees is certain to be lively, especially about the economic and political disaster Arnold, as everyone calls him, will leave for his successor.

How different things are from seven years ago when Schwarzenegger ran in the recall election that dumped Gov. Gray Davis from office. Arnold’s election campaign was full of bombast and promise, spiced with rhetoric from his movie and bodybuilding careers.

He promised to “terminate” the state’s problems. He guaranteed he would end the “crazy deficit spending” that, under Davis, had ballooned to $40 billion, more than the entire budget of most states.

Arnold’s first two years in office weren’t too bad. He cut the dreaded car tax that Davis had increased. He vetoed numerous “job-killer bills,” as they’re called by the California Chamber of Commerce. He passed a reform of workers compensation laws that were bankrupting businesses. He could have done much better, such as working for an initiative to limit spending to the increases in population plus inflation.

But he at least performed a role as “gatekeeper” that protected state businesses and taxpayers.

In his movies, the Bad Terminator of Terminator in 1984 became the Good Terminator of Terminator 2 in 1991 and Terminator 3 in 2003, the year he ran for governor. But as a politician moved in the opposite direction: the Good Governor of 2003-05 became the Bad Governor of 2006-2010.

The plot point, as screenwriters call it, was a slate of four reform initiatives Arnold backed on the ballot for a special election he called for November 2005. All the initiatives lost largely due to record smear-campaign funding by the government-workers’ unions.

The initiatives would have: 1) limited the power of government-worker unions to grab members’ political contributions from paychecks without first getting the members’ approval; 2) limited state spending; 3) enacted redistricting for the state’s severely gerrymandered congressional and state legislative districts (a similar reform passed in 2008); and 4) given public school teachers tenure after five years instead of two, making it easier to cut out bad apples.

After the voters’ rebuke, Arnold sulked for several weeks, then in his 2006 State of the State address announced:

“I have absorbed my defeat and I have learned my lesson. And the people, who always have the last word, sent a clear message—cut the warfare, cool the rhetoric, find common ground and fix the problems together. So to my fellow Californians, I say—message received.”

It was unconditional surrender to the state’s Democratic majorities in the California Assembly and Senate, and to their handlers, the government unions. Spending restraints were cut. And Nanny State legislation, such as banning use of cell phones while driving, was signed.

But the worst occurred in my area of expertise, environmental law. Arnold long had been an Al Gore disciple on the global-warming bugaboo. He came to the issue from his wife’s family. Uncle Teddy, as Arnold called the late Sen. Edward M. Kennedy, long was an environmental extremist in the U.S. Senate. And cousin Robert F. Kennedy Jr. has made environmental alarmism his life’s work.

Yet it still was shocking when Arnold backed, and signed, Assembly Bill 32, called the “Global Warming Solutions Act of 2006.” After all, California is not a country, but a state. The bill would only affect the state’s industries, not competing industries in other states and countries.
AB 32’s central provisions mandated the reduction in greenhouse gas emissions of 25% by 2020. That meant refashioning the state’s industries in the decade of the 2010s—conveniently, after Arnold left office.

When signing AB 32, Arnold proudly announced: “Some have challenged whether AB32 is good for businesses. I say unquestionably it is good for businesses. Not only large, well-established businesses, but small businesses that will harness their entrepreneurial spirit to help us achieve our climate goals.”

Arnold has toured various “green jobs” production facilities across the state. There’s no question that such jobs have been created, for several reasons. First, there is market demand for such things as solar panels and trendy hybrid cars, such as the Prius. Second, subsidies paid for by tax dollars will be spent creating jobs. Third, mandates such as SB 32 will force companies to update equipment.

But at what cost? Numerous studies show that green jobs kill regular jobs. Just this May 13, the state’s own Legislative Analyst, the watchdog of the Democrat-run state Legislature, released a study that found the state’s economy “will likely be adversely affected in the near term by implementing climate-related policies that are not adopted elsewhere … because such policies will tend to raise the state’s relative prices for energy, such as electricity.” The result will cut business profits and reduce “production, income, and jobs.” The cause: “economic leakage, as certain economic activity locates or relocates outside of California where regulatory-related costs are lower.”

In June 2009, two economists at California State University, Sacramento, published a study which found that AB 32 would cost the state $182 billion “in lost output,” while killing 1.1 million jobs.

Even Socialist Spain weighed in negatively about “green jobs.” A study by the Juan de Mariana Institute found that, for every one green job created in Spain, 2.2 regular jobs were killed. Spanish newspapers called the green jobs program una ruina—a disaster.

It’s no wonder that unemployment has been rising in California even faster than the national rate. The prolonged national Great Recession obviously is most responsible for California’s 12.6% jobless rate in April. But as recently as 2006, California’s jobless rate was a small 0.3 percentage points above the national rate. Today, it stands at a staggering 2.7 percentage points above the 9.9% national rate for April.

AB 32 isn’t the only culprit. Also at fault is Arnold’s record $13 billion tax increase of February 2009, which was supposed to close a $40 billion deficit. Yet in 2010 a $20 billion deficit stubbornly remains. And the general business climate is one of fear of the state’s immense tax and regulatory burdens.

No wonder an April study by the American Legislative Exchange Council (ALEC) and supply-side economist Arthur Laffer ranked California among the “States That Do Everything Wrong.” Only New York, Vermont, and Illinois scored lower on the study’s “Economic Outlook Rank.”

And what ALEC and Laffer call “The Moving Van Effect,” of citizens leaving a state for another state, found 1.4 million exited California between 1999 and 2008. That was second worst after New York’s 1.7 million.

To bring a little bit of sense back to California, this November an initiative to effectively repeal the jobs-killing AB 32 will be on the state ballot. Called the California Jobs Initiative, it would suspend AB 32 until unemployment drops to 5.5% or lower for four consecutive quarters. Given the state’s other anti-jobs policies, that low threshold might never be reached until Ronald Reagan’s ghost returns and runs for office.

The initiative’s opponents don’t even try to refute AB 32’s jobs-killing reputation, but instead focuses on the initiative’s funding by Texas oil companies. The Web site’s URL tells it all:

It’s too early to say how well the California Jobs Initiative will do with voters, who are focused on the June election, not the November one.

But as Arnold leaves office, his major legacy, AB 32, could be effectively repealed by voters. Too bad they also can’t repeal the unemployment and other miseries he caused.