Back when movie muscleman Arnold Schwarzenegger ran for governor for the first time in 2003, seeking to oust Gray Davis from the post to which he had freshly been re-elected, he was often accompanied by two types of people:
One group was car dealers, eager to see the state vehicle license tax lowered by about 60 percent, putting about $6 billion back into the pockets of Californians and thereby greatly increasing car sales. The other was small business owners who invariably said they were thinking of moving out of California because of its high taxes and strict environmental regulations.
“We need Arnold,” one owner of a San Gabriel tire recycling business declared in a prototype late September rally with Schwarzenegger smiling happily beside him. He threatened to move his operation to Las Vegas if Schwarzenegger didn’t win. “It’s just too expensive here and he’ll make things different.”
Schwarzenegger swears in his month-old memoir “Total Recall” (co-written with Peter Petre) that he did just that. For sure, he cut the car tax by $6 billion. That was his first act after taking office, and its consequences still reverberate: That $6 billion per year now adds up to more than $50 billion in lost revenue, much more than it would have taken to pay off the entire state deficit without any of the taxes that became big election issues this fall, and also restore most of the programs that have been cut back since Schwarzenegger took over.
Those includes everything from community colleges and state universities to work-for-welfare, road-building and in-home care for the frail elderly. But at least Schwarzenegger kept the promise he made both to voters and to the car dealers who were among the largest financiers of his campaign.
What about those small business owners? Listen to them now and you’d have to believe Schwarzenegger totally betrayed them. The single law about which they’ve complained most over the past six years is the 2006 Global Warming Solution Act, promoted and signed by Schwarzenegger and better known as Assembly Bill 32.
This one set up the cap-and-trade system that took effect this fall, limiting the amounts of greenhouse gases businesses can emit and gradually reducing them until they’re back to 1992 levels, when California’s populace was about 9 million less than today.
Schwarzenegger’s book doesn’t mention any consequences of his cutting the car tax, nor does he say much about what business lobbies like the state Chamber of Commerce say will be the negative effects of AB32.
He also ignores the middle class exodus from California that began in the mid-1990s and was largely spurred by coastal area residents cashing out their real estate and moving to less expensive states, a trend that increased all through his term in office, despite his promises to stem it.
An often-cited October report from the Manhattan Institute titled “The Great California Exodus” uses federal tax data to find that, for example, net out-migration to Texas in 2006-09, the heart of the Schwarzenegger era, averaged 41,300 people per year. To Nevada, it averaged 25,600 per year.
That one also got by Schwarzenegger admirer Joel Fox, former head of the Howard Jarvis Taxpayers Association and an anti-tax crusader, when he wrote about Arnold on his Fox & Hounds Daily blog.
“Schwarzenegger’s business-related record . . . deserves a bit of the spotlight,” Fox wrote shortly after the ex-governor’s memoir was published in October, without explaining why California regained from Texas its spot as America’s leading job producer only after Schwarzenegger left office.
Yet Fox – who served as a Schwarzenegger adviser – called him “a refreshing change for the business community” in an article with the headline, “If there were an Oscar for business-friendly, Arnold Schwarzenegger would have won it.”
Is that so? As with other parts of Schwarzenegger’s performance and personality, this was largely illusion.
Major businesses that relocated headquarters or built major factories outside the state during his tenure included Nissan North America, which moved to Tennessee to be nearer its largest assembly plant; Northrop Grumman Inc., whose headquarters moved to the Virginia suburbs of Washington, D.C. after it was bought by a private investment company; and Intel, which built new plants in Texas and Idaho while keeping its headquarters here.
Republicans and business advocates jump on Gov. Jerry Brown when similar moves occur on his watch, but neither Schwarzenegger nor pals like Fox ever said much about Arnold-era departures.
So much for total recall. This book, like Schwarzenegger’s term in general, would better be titled Flawed Memory.
Thomas Elias is a California author. Reach him at [email protected]