The king is dead

As the state’s economy caves, Gov. Arnold Schwarzenegger makes a last, futile grasp for power

Nothing says action hero quite like throwing the women and children overboard first. That’s precisely what Gov. Arnold Schwarzenegger attempted to do with his blue veto pen during the recently completed state budget process. Only timely intervention by Democrats in the Legislature prevented further destruction of California’s frayed social safety net.

“The 2008–09 budget and related legislation reject many of the governor’s proposed deep cuts in Medi-Cal and other health programs,” reports the California Budget Project, a nonprofit agency that provides fiscal and policy analysis on the state’s finances. Nevertheless, the budget extended the 10 percent cut on Medi-Cal payments to providers and capped or reduced payments to children receiving dental and eye care from the Healthy Families Program, among many other cuts.

“The budget [originally] more or less zeroed us out,” said Deborah Ortiz, vice president of public affairs for Planned Parenthood Mar Monte, which serves 40 counties in California and northern Nevada. “Overall, we made it through fairly well—we took no greater hits than the others.”

Never say never, Deborah. Buried amid the hoopla surrounding passage of the long-delayed budget is a constitutional amendment that grants the governor emergency powers in between budgets to unilaterally cut state operating funds by up to 7 percent and suspend most cost-of-living adjustments and pay-rate increases. It seems the two-thirds supermajority voting requirement, which has gummed up the works in Sacramento for three decades, just isn’t good enough for Arnold.

Now he wants to be king.

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Of course, before he’s measured for the crown, Schwarzenegger will have to contend with the very same supermajority requirement. The constitutional amendment granting him emergency budgetary powers will appear on a special-election ballot early next year, and must be approved by two-thirds of the voters to pass. No doubt “the people’s governor” will launch a full-scale charm offensive, but my guess is that the people have wised up, or will have, by the time February or March rolls around.

That’s because, in case you haven’t noticed, the wheels are coming off the economy. “It’s like they say, it’s a perfect storm,” says Ortiz. “We’re losing a huge significant revenue source [federal], coupled with state budget cuts.” Not to mention an economic recession. The former Sacramento state assemblywoman and senator sat through some of the budget negotiations, and called the future projections “chilling.”

Translation: Despite what Barack Obama told you in the second presidential debate, the economy is going to get a lot worse before it gets better. It seems highly unlikely that the electorate will support a self-proclaimed people’s governor whose primary fidelity throughout his five years in office has been to the financiers of Wall Street—the folks who got us into this mess in the first place.

In fact, the constitutional amendment that would grant Schwarzenegger unprecedented budgetary control stipulates that the state’s debt payments, the money owed to the investors who buy the state’s bonds from investment banks, cannot be cut. Everything else is on the table, including financial assistance and medical care for the less fortunate, whose numbers grow with each passing day.

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It’s good to be king, until someone yanks your robes off. Recall that right around the same time the state budget was being passed, American International Group, the world’s largest insurance company, received an $85 billion, taxpayer-funded loan from the Federal Reserve to prevent the collapse of the company. AIG is the underwriter for billions of dollars in risky, securitized mortgages that Wall Street has been smoking like crack cocaine for the past decade. When you or I can’t pay the bills, we file for bankruptcy. AIG calls in its chits, receives a bailout, then proceeds to spend $440,000 on a lavish company getaway in Half Moon Bay.

Such clout doesn’t come cheap. According to the National Institute on Money in State Politics, between 2004 and 2007, AIG donated $4 million to political campaigns across the country, including more than $3 million in California alone. During the same time period, Schwarzenegger received $87,900 from AIG, the third highest individual donation in the country.

That’s the kind of company kings keep. Security and investment banks were the third largest donors to the governor’s 2006 re-election campaign, forking over $1.5 million, outstripped only by the $4 million donated by real-estate interests and the $5.5 million Schwarzenegger loaned himself.

In other words, the greatest economic catastrophe in generations has been brought on by the governor’s biggest campaign contributors, Wall Street and the real-estate industry. Now that the damage has been done, he wants unlimited authority to cut the state’s budget.

This spring, it’s time for voters to clue the governor in. We outgrew our use for kings two centuries ago. Why would we need one now?