Governor Lays Out Truth, Sometimes Stretches It

Gov. Arnold Schwarzenegger is telling it straight -- and he’s telling it with a spin. A mix of truth and truth-twisting.

We’re hearing both candor and claptrap as Schwarzenegger peddles Propositions 57 and 58 on the March 2 ballot.

Prop. 57 is the $15-billion Sacramento bailout bond. Prop. 58 is the budget-balancing requirement intended to eliminate the need for any future Prop. 57s.

The bond is a tough sell because people don’t naturally buy the concept of taxpayers going into hock for several years -- from nine to 14 -- to pay for current, routine government spending.

Schwarzenegger will need to use all his charm on this one. Polls show that voters are shunning Prop. 57 while embracing Prop. 58. But both must pass for either to take effect.

Truth and twisting were both in evidence last week as the governor touted his ballot props to senior citizens at the huge Rossmoor retirement community in the San Francisco Bay Area.

Why seniors? Campaign strategists believe retired folks are particularly receptive to the governor’s populism pitch -- his anti-politician spiel and call for citizen empowerment. They like being asked to get involved and have their voices heard.

Also, they understand the need to get finances in order. And they turn out to vote.

But a recent poll by the Public Policy Institute of California showed that the 65-and-older crowd is significantly less supportive of Prop. 57 than are 35-and-under voters. And the retirees are a lot more concerned about “passing state debt to future generations” than are people under 45.

Trying to sell seniors, Schwarzenegger alternated straight talk and spin. Some examples:

Straight talk: A man asked the governor whether Prop. 57 wasn’t just “bailing out politicians” and allowing them to avoid “the hard decisions.”

“You’re absolutely right,” Schwarzenegger replied. “But the bottom line is who gets hurt when the politicians have to make the hard decisions. It is the common folk -- usually the low-income people and the medium-income people.... [They] get squeezed.”

Poor people lose healthcare. The middle-class pays higher college fees. Everybody gets less police and fire protection. “We don’t want to make these drastic cuts,” Schwarzenegger acknowledged.

Spin: Prop. 58 is “the never-again spending limit,” the governor said. “The politicians will never ever be allowed to spend more money than the state takes in. No more deficit financing.”

Somebody better tell Schwarzenegger’s budget-writers. His spending plan for the next fiscal year relies on $2.6 billion in “other loans and borrowing,” according to nonpartisan Legislative Analyst Elizabeth G. Hill. Included is a 20-year, $929-million bond to partially cover the year’s pension contributions.

Also, there’d be a $6-billion budget shortfall left for the 2005-06 fiscal year, Hill estimates. The governor’s aides peg it at only $3 billion. Whatever, it would be spending more than the state takes in.

Straight talk (then a dodge): A woman beseeched Schwarzenegger “to promise right here, again” not to raise taxes. Under any circumstances.

“This is what this is all about,” he responded. “We can do the job without raising taxes and making further cuts ... but people must vote ‘yes.’ ”

But no unconditional commitment. When she tried to pin him down, he quickly cut her off.

Spin: “We are not borrowing new money. We are refinancing an inherited debt [for] lower costs.”

The current Gray Davis budget called for borrowing $10.7 billion over five years for a total financing cost of roughly $800 million. That plan is legally suspect because voters didn’t approve it. So Schwarzenegger has countered with a $15-billion bond and asked for voter authorization. But the larger sum and longer payback would cost at least $4 billion in interest. The only lower cost would be in annual loan payments.

Straight talk: A man asked why he just didn’t cut politicians’ pay and perks.

“We can punish the politicians all we want,” Schwarzenegger replied, “but this is a $22-billion debt.”

Indeed, if the governor eliminated the Legislature and every state political office -- including his own -- it would amount to relative chump change.

Spin: The most disingenuous of all is Prop. 57’s title: “The Economic Recovery Bond.”

Schwarzenegger’s argument has validity: Balancing the books would signal to CEOs and Wall Street that California again is a good place to invest. “We’ll be back in business.”

But this bond isn’t about recovering the economy. It’s about patching a massive budget hole and paying for the governor’s car tax cut.

Schwarzenegger is shooting straight and he’s spinning. If voters reject the bond, real people will be hurt and some will pay higher taxes. That’s actual, not abstract.

But such borrowing, in principle, is poor policy. It’s not populism and it’s no panacea.