October 29, 2004 - From the October, 2004 issue

Schwarzenegger Assesses His First Year: Touts Successes, Collaboration & Centrism

After winning the controversial and historic recall election on October 7, 2003, Governor Arnold Schwarzenegger assumed office at a time when Calfornia was reeling from energy trading scandals, a lackluster economy, and a year of contentious politics. This month MIR is pleased to print excerpts from an interview between Governor Schwarzenegger and Leon Panetta, former Chief of Staff to President Bill Clinton, and head of the Leon and Sylvia Panetta Public Policy Institute at CSU-Monterey Bay. In this interview, Schwarzenegger assesses his first year in office, and covers a variety of topics, reaffirming his role as a conciliator, sharing his views on California's business climate and need for new infrastructure investment, and asserting his not inconsistent support both for the environment and economic growth.


Arnold Schwarzenegger

When I was elected on October 7th last year, what I had heard from a lot of people was that this state cannot be governed, it's too complicated.  Some even say you can never make the Democrats and Republicans work together because of the way the system works with initiatives and with legislators.  And some say that the financial crisis is too big, that it can never be solved, and on and on and on - all negative stuff.  I read this in papers, and heard it on television.

But the reality of it is, everything can be done.  And I knew that I would be able to bring the two parties together, because if it was in my bodybuilding sport, or if it was in show business or in business in general, I always have been a uniter. And this is exactly what happened; I went to Sacramento and we started working together.

And so today, when I look at what we have accomplished, I would say that it is largely because Democrats and Republicans were able to work together, and because the people of California have gotten confidence again through the recall election last year, because they felt that they really have the ultimate power.  They made the changes in California, and so they put now the pressure on the legislators for them to perform.  So the people really have the ultimate power.

Doing my job as Governor gives me great pleasure.  I'm so excited every morning when I get up, and I know that I can make an impact on people, and I can really reach out and help people in California, be the people's Governor.  By continuing to sign bills, and following through with our goals of stimulating the economy, bringing jobs back, and stripping away some of the obstacles to our businesses, we make sure that California's businesses can flourish again and compete with other states and countries. In fact, California is like a country. We have 35 million people.  We are the sixth largest economy.  And believe me when I say that by next year we will be again the fifth largest economy. But to get there, we have a lot to do.

We must protect local governments.  In the past 12 years, California has stolen 40 billion dollars from local governments.  And you know, this was unfair. That's why we signed a compact with the local government, which will be Proposition 1A on the November 2nd ballot.  And I hope that everyone votes yes, to protect local government once and for all, because local government are the ones that provide all these important services.

We must not raise taxes. This is so important in stimulating the economy.  I know there are people always trying to make us raise taxes, and to create more revenues.  But raising taxes means that the public sector will again be heavier, and heavier, and getting more and more bloated, which we don't want.

I remember very clearly, when I spoke to Finance Minister Netanyahu in Israel when I was down there on my recent trip to Israel, and I said to him, "How did you fix the problem in Israel the way you did?"  And he said to me, he said, "Well, let me tell you something, Arnold.  There was an interesting story.  I was a commander in the military, and our instructor lined us all up, and he said to us, he said, ‘Okay.  We do a little game here, a little race.  Pick up the guy next to you, and then race to that finish line.'"

He said, "The guy next to me was about the same weight I was, so I picked him up and put him on my shoulder.  The guy next to him was a little skinny guy, and then next to him an overweight guy.  So he picked him up, barely could hold him.  Next to him was a muscular, big guy, and next to him was a little guy, and he picked him up."

He said, "We ran towards the finish line.  The guy next to me, who was the little guy with the overweight guy on top of his shoulder, collapsed.  I made it step by step, and made it to the finish line.  But the other guy, the big muscular guy with the little guy, he beat me."

So I said, "Well, Finance Minister, what does this have to do with my question?" 

So he said to me, he said, "Well, the bottom guy represents the private sector, and the top guy represents the public sector."  He said, "If the public sector is that heavy, the private sector cannot carry it, and therefore it will always lose.  You cannot make it if the public sector is bigger than the private sector.  Therefore, we have to reverse that.  We have to put the public sector, the guy on top, on a diet, and then we can make it." We can make it by not raising taxes.

But the reality is that in order to make it, in order to make California great again, we have to draw our resources and make some necessary investments. The Pat Brown and Reagan administrations didn't even spend a percentage of revenues on social programs, yet we spend 10 times, 20 times more now than in the 60s.  Now let's talk about infrastructure. Then, we spent approximately 10 percent of revenues, and now we spend maybe 1 to 2 percent.

So that is what is wrong.  We have spent much more time, and put much more money, into social programs and into welfare programs, but not enough into our infrastructure.  So our transportation, highways, freeways, and our ports, they all need to be brought up to date.  We are behind the times in that, so it is important that now we slowly make a switch and put more money into the infrastructure. We have a few billion dollars here and there.  We will put that right into infrastructure, and then, slowly, we will decrease spending on social and welfare programs, and put more money into the infrastructure.  That's key, because the power of our economy is, as you know, into how we move goods and people around in the state. We have to really pay attention to that.

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We also have put the people back in power. I think that the biggest problem that I have seen here is how the special interests in Sacramento have tremendous power.  They really control a lot of the legislators.  There are very few legislators, both Democrat and Republican, that are not controlled by special interests.  And that is a sad story, because sometimes legislators don't make decisions based on what's best for the public's interest, but they make decisions based on what's best for the special interests. 

I think that is terrible, and I feel this is why the people have elected me and sent me to Sacramento, because they know that I have enough money that I cannot be bought. No one can offer me money to make a decision based on what's based on what's best for the special interests.

I want to be able to look across the table and say, "I'm going to make a decision that is based on what is best for the people.  I know you're not used to that, but I cannot be bought, so let's work on that and let's make a decision that's best for the people."  And many times, it really is a shocker to some.

Now, there are more than a thousand ideas being placed on my desk in the forms of bills.  Of course, some of them are bogus ideas, some of them are really great ideas.  So what we are doing right now, we have gone and taken this through the public process.  We've had public hearings because we wanted the input of the people, because we wanted to open it up and show them all the various different things that we were thinking of, and then we've let the public have their input.  They did that now, and now we're going to edit it down.  And then we're going to present - part of it we do through my office.  Part of it will be done through legislators.  And then the things that will not go through the legislators, we will go and take it directly to the people, and let the people vote on it.  I will put it on a ballot, because that's the only way we can get it done.

What we have to do is, we have to bring the whole government up to the 21st Century, make it a 21st Century government.  That's what we are trying to do.  We have to streamline government, we have to make it a better servant.  And we are going to accomplish that even though there are a lot of special interests out there, and a lot of forces that will fight us.  Ultimately, some of the decisions will be made by the legislators, and I know that the rest of the decisions will be made by the people, and I know that I can count on the people.  They will vote yes on those measures to streamline it and make government much more efficient.

We will of course communicate with the legislators ahead of time.  Richard Costigan, my Legislative Secretary is terrific, and has great relationships with legislators.  And he will be communicating with them, so we know what will fly and what will not. 

We also have to reduce our structural deficit. You have to understand that I have inherited the largest debt that any governor has ever inherited - 28 billion dollars. If we would have continued on this way with our spending, by 2006 we would have had a 60 billion dollar debt. You cannot fix a problem like this that was created over a period of five years in one year.  You cannot fix that. But we solved half of the problem.  So now we still have a little bit of structural deficit left. By stimulating the economy and creating an extra four or five billion dollars, or hopefully six billion dollars of revenue, and making still a few cuts, and being really disciplined with the spending, we will erase that structural deficit.  What we want to do is leave the money here in California and not punish the people.  We have to go and do it, the government has to do it. 

We also must protect the environment. Some people out there believe that Republicans are anti-environment. I don't think that this is true.  There are some that are, because some of them get confused and want to promote businesses in a way where it hurts the environment.  And I think we, Democrats and Republicans alike, have to watch out for those that are actually promoting businesses by hurting the environment.  We have to just make sure that there is a balance there, and that we get them away from going off the board.

I think everyone should be, every party, should be promoting the environment, Republicans and Democrats.  And I think it is very important when people elect politicians that they also look at their environmental record, because we've got to protect our environment no matter what the party is, because it has nothing to do with political parties.  Republicans and Democrats all want to breathe clean air.  They all want to enjoy clean water. 

But I also think that you can support the environment, and at the same time also support business.  It doesn't mean that when you go out and you protect the oceans, and you protect our coastline, and you protect our beaches from erosion, and you do the kinds of things that we did today with the Ocean Action Plan, that you destroy business. As a matter of fact, a lot of environmental ideas create business, create industry.  If you think about how many companies now in California are working on the hydrogen fueling, hydrogen cars and all that, there are endless amounts of companies.  It creates opportunity. 

Many have asked me what my legacy as Governor will be. I think very little about it because I think only about California.  I'm very focused.  I only concentrate on one thing all the time, and that is to make this again the Golden State, or what I always call the Golden Dream By The Sea.  We'll turn it around again, California.  We'll get it out of the mess that it was put in, and make it again a place that again people can be proud of.

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