Sequel Rewrites Reagan’s Script

Gov. Arnold Schwarzenegger is back on script -- on the Ronald Reagan script.

Much of this movie is familiar: Actor runs for governor. Star-struck crowds elect him, figuring at least they’ll be entertained. Novice takes over state government as it teeters on bankruptcy. What will our hero do?

Here, the Reagan and Schwarzenegger story lines part.

In the original, the new leader courageously raises taxes, repulses the red ink and is never threatened again.

In the remake, the lead character borrows billions -- some of it from the next generation -- and survives. But the maneuver buys only a brief respite. Within months, he is back under siege.

What now?

Suddenly, the plots again run parallel. There are similar scenes involving the state finance director.

Let’s pause here for context: A finance director has the muscle to be the second-most powerful person in state government when taxpayers’ dollars are spent. In any well-functioning administration, the finance director exercises clout second only to the governor.

Back to the script:

For his first finance director, Reagan picks a dud. He’s a management consultant, Gordon Paul Smith, who has no experience in government and is not up to the job. Legislators ridicule him. He lasts one year, resigning “for personal reasons.”

Then Reagan wisely appoints the finance director he should have in the first place -- and would have if conservative backers hadn’t viewed the man as a dangerous liberal, one who had committed the sin of supporting Nelson Rockefeller against Barry Goldwater in the watershed 1964 presidential primary.

But Caspar W. Weinberger has impressive credentials. As a moderate Assemblyman from San Francisco, he helped stamp out corruption in state liquor control. He ran for attorney general, losing to a Richard Nixon protege. He was a state Republican chairman, host of a popular TV public affairs show and chairman of the government watchdog Little Hoover Commission.

And as finance director, Weinberger is hardly a liberal. He shows the traits that later, in Washington, will earn him the nickname “Cap the Knife.” He gives credibility to Reagan’s cost-cutting efforts. The pair click and, eventually, Weinberger becomes President Reagan’s Defense secretary.

For his part, Schwarzenegger initially chooses a finance director who has government experience in Florida and elsewhere, but not in California. She’s a bad fit. Legislators find her aloof. She’s too conservative for this governor. Donna Arduin’s influence wanes, and she lasts less than a year, resigning “for personal reasons.”

Learning on the job, Schwarzenegger next selects a Californian with imposing credentials -- a man fluent in politics who’s also a policy wonk. Tom Campbell, 52, is the biggest name to become finance director since Cap Weinberger.

He’s a former congressman and state senator from Palo Alto who has run twice unsuccessfully for the U.S. Senate. He holds a Harvard law degree and a doctorate in economics. He has been a Stanford law professor and currently heads the UC Berkeley business school.

He’s part liberal -- strong for abortion rights, gun control and environmental protection -- but a fiscal conservative.

And where does the story go from here? We’ll have to wait for it to unfold.

The state faces a projected deficit of roughly $6 billion next year. “My advice to the governor will be not to have any increase in taxes,” Campbell told reporters Thursday as Schwarzenegger announced his appointment. “That’s what sends businesses out of our state.”

Schwarzenegger acknowledged that autopilot spending is growing faster than revenue. The solution is “discipline,” he said, not taxes. “People don’t want to be taxed. They feel like it’s the government’s responsibility to live within [its] means.”

Later, I asked Campbell whether he’d ever voted for a tax increase. “I’d be surprised if I didn’t,” he replied. He was a lawmaker for 12 years.

How does he feel about all the state borrowing? “Nothing I can do about it, but I’m not a fan of it,” he said. “I’m a fan of paying as you go. Let me say, I don’t want to get any further in [debt]....

“There are two good reasons for borrowing: infrastructure or crisis -- FDR in World War II, Ronald Reagan in the Cold War.”

He didn’t say so, but it probably doesn’t include Schwarzenegger paying for a car tax cut.

Here’s how I visualize this story developing:

Schwarzenegger will soon move to the right on fiscal policy. His advisors have been signaling a more aggressive approach to program cutting in the next budget round. And Campbell is the perfect field general.

He truly is a compassionate conservative and more credible to Democrats than his predecessor. But he also can be a penny-pincher.

“Tom questioned everything,” recalls state Board of Equalization member Bill Leonard, a conservative Senate colleague. “He made everybody defend their position. He wasn’t going to spend a nickel more than he thought something should cost. That’s the role of finance -- to smoke out stuff.”

But hardly anyone, deep down, really expects to escape the deficit hole without raising taxes.

First, however, Schwarzenegger must show that he has done everything possible to pare programs and eliminate waste. That’s Campbell’s job.

Then there’ll be a tax-hiking scene. It’ll just come later in this movie than in the Reagan original.