Barack Schwarzenegger

Reed Galen
Republican Strategist in Orange County

Following House passage of the Fiscal Band-Aid, President Obama was clear that he does not want a repeat of the past seven weeks’ drama. That may be true, but the bill he signed does exactly that both in the near-term (March) and the longer-term (December 31, 2013).

It now appears that the country’s finances will be something that both the White House and the Capitol will contend with almost continuously save some ‘grand bargain’ that no one at this point seriously believes is possible.

This sort of persistent budget trouble, and its effect on President Obama’s second term and his long-term legacy resembles that of former California Governor Arnold Schwarzenegger’s time in office.

Obama, like Schwarzenegger, was swept into office on tidal wave of anger, excitement and joy as they were singular figures, larger than life, promising to fix what ailed their people and early on, delivering on their campaign pledges.

In California, Arnold passed major policy proposals with a Democratic legislature including sweeping worker’s compensation reform, freeing many businesses from a crushing burden, scaled back the state’s hated car tax, passed a series of budget stabilizing ballot initiatives and in 2006, on his way to a soaring reelection, signed the country’s most comprehensive greenhouse gas law, AB32.

 

Barack Obama had a similarly successful first two years policy-wise, albeit amidst a slow recovery and with the help of two Democratically-controlled houses of Congress. Both the Stimulus package of 2009 and Obamacare were sweeping policy victories, regardless of the political and practical problems with both.

Following reelection, California enjoyed just a few short months of harmony before the financial crisis began to appear on the state’s ledger. The balance of Schwarzenegger’s term was little more than the state staggering from one budget fight to the next – with ballot measures and tax increases making both the governor and the legislature highly toxic by the time his second term ended.

Hobbled by the state’s precipitous drop in revenue as wealthy Californians’ stopped paying capital gains taxes and the housing industry imploded, the Golden State’s budget had billion-dollar holes in it – many of them structural in nature – were so dire that not even tax increases and spending cuts could solve the problem.

President Obama faces a similar scenario before he’s even been sworn into his second term. The bill Congress passed on New Year’s Day was universally disliked and simultaneously thought to be universally necessary. But the sequester cuts were put off for only 60 days. Right in time to coincide with yet another debt ceiling fight.

Add to this, the deal extended parts of the Farm Bill and unemployment insurance for another year, by the time we get through our spring fighting season, Congress will be unlikely or unwilling to take up any major policy initiatives short of those they believe most voters can universally get behind – banning assault rifles probably has a much better chance than comprehensive immigration reform.

If the president truly wants to avoid Arnold-style stagnation of not only the economy, but his second-term agenda, he and the Democrats would be wise to swallow some of the cuts necessary to get the country back on solid financial footing.

If they refuse to do so, and simply continue kicking the can down the road, the Obama presidency, from a policy perspective, will effectively end sometime in mid-2015 when a dozen or so Republicans and Democrats begin vying in earnest to replace him.

Arnold was a supreme optimist and for the vast majority of his governorship, was well-liked by Californians – his crossover appeal garnered him a great deal of goodwill with the polity. But by the end, even those who liked Arnold personally had turned on him.

Obama has that same appeal to voters – they like him as a person. However, that support will erode rapidly if the president appears to be merely presiding over dysfunction – and not as a solution to it. The bully pulpit is important – but only if you actually accomplish something by using it.

Arnold’s California experience should be a teachable moment for the White House in a larger respect. The point at which a general government can no longer get its finances in order – when the budget becomes the fulcrum around which every other conversation swings, little substantive accomplishment is possible.

We haven’t yet seen the script for Obama’s second-term. To the extent that he and his advisors are drafting it – success lies only in truly putting our fiscal issues to rest – anything less than that will find the President looking back at what he might have done.

Galen was Arnold Schwarzenegger’s Deputy Campaign Manager in 2006. He can be reached at reed@jedburghs.com.

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