Schwarzenegger talks money, Prop. 8 and Obama

Gov. Arnold Schwarzenegger visited The Times on Nov. 14. Below is a partial transcript of the discussion he had with editors and reporters.

Arnold Schwarzenegger: I was here last time to talk about the budget, and here we are again. We are in a special session of the legislators that we started Nov. 6, and the bottom line is that we have to make decisions based on what has happened this last month. It always happens so fast -- the stock market, the housing crisis, the mortgage crisis -- and therefore, because of our tax system, we are seeing a decrease in revenues….

And so because of that, I called a special session in order to deal with those things, but not only to deal with budget because that’s kind of a common thing … but we also at the same time want to tackle the economic problem and stimulate the economy by recognizing that we have these billions of dollars in infrastructure bonds that have been approved by the people but have not been appropriated. So we just need to push that out as quick as possible, of course being sensitive to the fact that there’s only a certain amount of projects that are ready to go….

And the, also, to change some of the labor law, some of the laws that we have, and to deal with keeping people in their homes. So that’s why we have made a proposal changing and modifying the mass modification of the loans so that we have reduced the monthly payments, reducing interest rates or prolonging the payments 25 years, 40 years or whatever … and create a 30- to 90-day period where people don’t have to go into foreclosure but stay in their homes so they have time to negotiate with the banks and the lenders and all that.

The fourth thing I want to mention is that the unemployment benefits are going down because previous administrations have added benefits … without really matching it up with additional funding. It’s one thing to talk about benefits, it’s another thing if you don’t have the funding -- you eventually run out, and that time has come now….

These are all the problems that we are facing, none of which are not doable; you know, this is all manageable. The key thing is that if you make decisions, if you have to make decisions, make them now. Don’t wait until the next budget time, don’t wait for after my State of the State, don’t wait for my next budget presentation. Do it now because the decisions and what needs to be done will be twice as difficult each time we wait.

And the legislators have responded very well….

Jon Healey, Los Angeles Times (just after Schwarzenegger had discussed his optimism in working with legislators): In that spirit of optimism, we urge you again to consider the Vehicle License Fee.

Schwarzenegger: Well, just so you know … everything is always on the table. My preference is to do the sales tax increase, but I would never go into a meeting and say, “And by the way, never bring up this tax or that tax, or this idea or that idea,” because otherwise you can’t really get kind of creative debate going if you start limiting what the debate is. Some people do that; I don’t. I made it always very clear that if I hate something, you can bring it up and you can show me why it is a good idea…. This is a crisis situation, and one has to look at it as I ask everyone of the legislative leaders to look at it in a fresh, new way under this new world that we operate in. It’s not the same world as it was two months ago.

Nick Goldberg, L.A. Times: So do you support reinstating it at its old level?

Schwarzenegger: I’m not supporting anything because I never negotiate against myself…. But we will have this debate; we just started getting into it.

Jim Newton, L.A. Times: Do you have in mind when you look at the $11 billion and change that you’re trying to make up what the ideal ratio of cuts to increased revenues would be?

Schwarzenegger: In our plan, we have about 50-50.

Newton: Would you like to see it stay somewhere close to that?

Schwarzenegger: I think it makes it easier to negotiate. Democrats say, for instance, “We’ll match every dollar you raise in cuts.” I think under these circumstances, we have already made $9 billion in cuts between the last budget negotiation. So I think that’s a fair way to go, and I encourage them not to look at the $9 billion that we have talked about, but to think even more than that … because there’s no indication yet that there’s a rebound or that there’s something coming back. So therefore, let’s always assume the worst. Not that we have any evidence of that, but let’s assume for a second. And then if something gets better, great.

So I just want to make sure they don’t think that with the lower amount, everyone will be happy because we did something. Let’s go for the whole deal.

Healey: How do you balance the potential damage on the struggling economy of higher taxes against the potential damage on the struggling economy of lower government spending? How do you win this thing?

Schwarzenegger: I think that’s why you have to find the middle ground, that you have to say to yourself that none are good, but under the circumstances it’s the only solution you have. It’s like when you go to the doctor and he says, “You nee heart surgery.” I mean, what choices do you have? It’s not like you go in there and say, “Oh, I love heart surgery”….

Right now under the circumstances, with the limited amount of money we have, I think this is the right decision to make, and I’m very very clear about that. But it also gives us, as every crisis does, it gives you a chance to revisit and say, “What has caused this problem?” What has caused the problem is not the economic slowdown. What has caused the problem is that our tax system is based on what is going on in Wall Street rather than what is going on in our economy. Our economy is … not taking a dive. We have such a diversified economy that’s holding up -- biotechnology, high technology, they are all holding up … even though the housing market and all of this is dragging it down. But our volatile income tax -- we are relying so much on income tax -- has taken a dive of 10%….

So that’s why have come to an agreement with the legislative leaders and our office that we are going to establish a bipartisan tax commission of very smart people that will go in and study all the taxes in the United States and see which one is the most sound and include bits and pieces from those accountings and learn from that, not to have to redesign the wheel, and use the different taxes because ours is very, very old and it’s outdated.

And I will ask the tax commission when they get together for the first meeting to basically be very radical in their approach. Come up with any idea, great ideas, a new system of thinking, and then let’s debate that and then create something that reflects kind of the economy….

Marjorie Miller, L.A. Times: To what degree do you think increasing the sales tax will further depress consumption?

Schwarzenegger: I think it will have some impact, but like I said, I think that everyone will now come in and would have their own recommendations and there will be people saying, “I think a penny and a half is too much. Lower it to half a penny and do something else, or bring it down to a penny and do something else.” This is our way; we could not see another way of going, but these negotiations have been me and the four other leaders, so they will have their own ideas about this….

Newton: You mentioned speeding up some of the bond-funded projects that are out there…. How many are there that are approved and vetted and ready to go that you could just expedite the money and you could being quickly?

Schwarzenegger: Well that’s what we are looking at right now because we have communicated with the local governments to give us a list of things and to really dig in there. It’s always the most difficult thing to make the local governments respond to that and right away come up with a list of the inventory of the different projects…. All of this will create immediate jobs….

Newton: Where’s your sense of where the Republican Party is today, and what do these election results tell you about the party’s future?

Schwarzenegger: Well, I think one of the Republican governors, Bobby Jindal, said something to effect of, “The Republican Party got fired”…. I think that the real bottom line is that, I look at the whole thing differently because I’m not a party person. I think that the more we keep talking about that party versus that party, I think the more damage we do because the more divisive the people will get, the more divisive the politicians will get, and therefore nothing will get done. I think it is absolutely counterproductive, all this dialogue. I think it’s counterproductive to talk about blacks versus Latinos, women versus men -- all of this kind of stuff, when you talk about these things, it’s all divisive.

I think we should look at it as one state or as one country that has different interests -- people have different philosophies -- but always with the common goal to fix America and to make life for the people better or to overcome the obstacles that we are facing right now, not to go and talk about the Democrats trying to come up with a package to help the auto industry and what the Republicans are coming up with. What kind of dialogue is that? It’s divisive, so therefore I will discourage people from going in the direction of analyzing because it’s not about the party. It doesn’t matter what happens to the Republican Party; it doesn’t matter what happens to the Democratic Party….

Look at the history of America. You always will see that there’s one party up, the other party’s down, then that party’s up again, the other party is down. You’ve got to look back at the history and just say that always will happen, just that maybe the Republican Party wasn’t in touch with what the people need right now, so they’re down right now. We’ll figure it out and maybe we’ll come back again. The biggest mistake we could make is if they overreact and become more conservative….

David Lauter, L.A. Times: There have been protests all around the state since the election about the passage of Proposition 8. A number of gay rights organizations [are talking] about trying to put another ballot measure on in 2010 to reverse this last one. Do you think that would be a good idea? Would you support that?

Schwarzenegger: Well, I’m the perfect one to talk to about that. Proposition 11, redistricting, has failed five times. When I heard that, I said, “They should just say, you know, we will recoup and we will analyze what went wrong,” because remember, it’s all about what the communication is. It’s the idea that to undo that is a good idea, and all we have to do now is just figure out how do you communicate to the people the right way.

I made my mistakes in 2005, not because that’s what I wanted to do, but just because of a lack of experience I did not realize that you have to really go out and get a hold of all these 2,000-some stakeholders that are interested in something like that and bring them in, and maybe spend a lot of time bringing them all together and come to a common denominator and then go out and do the initiative having this group together.

So I lost in 2005 and now, we won. And we won because we went to the League of Women Voters and said, “You have expressed interest, but the last time I did you said it was the wrong approach.” And then I went to Common Cause and said, “OK, let’s bring together the League of Women Voters and Common Cause. Let’s bring the AARP together. Let’s bring all the stakeholders together.” And then I even went to the ACLU, and they said because this will be disadvantaging minorities, and I said, “Let’s find out.” I gave it to the ACLU, and then they looked at it and said, “No, it’s an advantage for minorities the way it is drafted and much better than what we have now”…. So we reached out and we had 2,300 or 2,400 groups and individuals that came together and endorsed it.

So to go back to your question, I think that’s what you have to do. I mean, you can do all the protesting you want, I think that could actually backfire … so that’s not going to help you and make everyone be sympathetic…. It’s all about messaging and the way you want to sell something. So I’ve learned from mistakes; I think they’ve learned from their mistakes. Maybe they didn’t communicate the right way; I did not do any study on that, so I couldn’t give you any details. But I think more and more of the studies will come out on what went wrong and how they can do better the next time….

Healey: Have your people had any chance to talk to the incoming administration about the California request or the EPA’s attempt to stop California from regulating greenhouse gases from tailpipes?

Schwarzenegger: No, but I think that Obama has made it clear that, and McCain has made it clear, that they would give California the waiver….

Eddy Hartenstein, L.A. Times: Notwithstanding your extensive amount of campaigning you did for the McCain campaign and the president-elect’s hard feelings that he’ll have to get over … when you sit down with him, which you undoubtedly will some time, what are your asks of him, and what is your advice to him when he asks you?

Schwarzenegger: You’re talking about Barack Obama?

Hartenstein: Yes.

Schwarzenegger: First of all, if you don’t mind, I just want to let you know that I did one campaign event for McCain, so - (laughs)

Hartenstein: That was sarcastic.

Schwarzenegger: I know; I understand (laughs)…. The bottom line is that if I would sit down with him, I will just reiterate the importance the things that I just talked about. I would obviously recommend very highly not to have people around him making him scramble, because there’s everyone now going after him and having a long wish list. And I think it is not fair that someone should start out to go and everyone is just thinking about themselves. We’ve got to think first, let him build his administration and not ask for, right now, action. In fact, let’s build another presidency.

So I would just say that healthcare ought to be done, I think that bring the economy up ought to be done, keeping people in their homes ought to be done, creating jobs and creating a good relationship overseas again -- those are the things that ought to be done…. Anything that we can do as a state … any of those areas that he thinks that we can be helpful. I think more about being helpful than what I can get out of him.

Personally, I don’t need anything for the state, and let’s work together, let’s get rid of those obstacles and create a policy that can reduce the greenhouse gases, the same policy for all the states so the automakers don’t have to challenge having one for Illinois, one for Florida and one for California, which is very difficult. We only had to do it in this state because this administration just didn’t go in the direction of a national policy to solve the problem. So we had to go and take matters into our own hands, but our preference is to have a national policy, so we want to work with them on that.