Arnold Matters

Larry Kudlow
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Posted: Oct 10, 2003 12:00 AM

Are conservatives underestimating the significance of Arnold Schwarzenegger's election to the California governorship? I think they are.

The Austrian-born actor's stunning victory could be as path-breaking as the Proposition 13 ballot initiative of 1978. That property-tax-hike recall set the stage for a nationwide taxpayer revolt. It emboldened Ronald Reagan to firmly embrace supply-side tax cuts that had been proposed to him by economist Arthur Laffer, Rep. Jack Kemp and others. Post Proposition-13, broad-based tax cuts became a staple of federal and state political life, lasting right up to the tax cut signed by President George W. Bush in May.

No two historical episodes are ever completely alike. But, like Proposition 13, Schwarzenegger's campaign victory is an overthrow of the old-liberal order in Sacramento -- a political regime that decimated California's businesses and economy with high-tax, high-spend and overregulation policies.

On the campaign trail, Schwarzenegger was fond of saying, "The problem is not California, the problem is Sacramento." Schwarzenegger's statehouse victory represents the re-emergence of an important idea: It is time to set statewide policies that will promote the creation of new businesses in increasingly left-wing California.

Ever since he announced his candidacy on Jay Leno's late-night TV show, Schwarzenegger has been consistent that low-tax conservative fiscal policies are the key to solving the California economic problem. Such policies would stem the outflow of smart money, smart people and small businesses. Schwarzenegger's pro-business stance is a startling change -- not only for the Golden State, but for the nation.

Politicians in both parties ran from supporting business in the aftermath of the highly publicized corporate scandals. But the essential Schwarzenegger fact is this: He believes that business creates jobs. He also understands that rising incomes from job growth will create a stable revenue base for the state budget.

Democratic presidential candidates, with the occasional exception of Sen. John Kerry (my fellow Democrats like jobs, they just don't like the businesses that create them), are all trashing business in the hope of riding a populist revolution against the Enrons of the world. That Schwarzenegger is unafraid to defend business in this political climate is quite remarkable. It's just as remarkable that a majority of California voters (if you include Tom McClintock's totals) agreed with Schwarzenegger's point of view.

If you're a conservative, what's not to like? Sure, Schwarzenegger may describe himself as liberal on social issues, but he is against late-stage partial-birth abortion, favors parental notification for minors seeking abortions and has no appetite for massive social-service spending on illegal immigrants.

Conservatives should also enjoy Schwarzenegger's repeated attacks on liberal interest groups. He made it clear that government employee unions, teachers unions, trial lawyers and the casino Indian tribes conspired to support a highly liberal government in Sacramento. He stated that these well-funded special interests rode roughshod over the weak Gray Davis, a man who started out centrist, but moved way left by tripling the car tax, allowing illegal immigrants to gain drivers licenses, mandating expanded health care and workman's-compensation rules that cripple business, and increasing the number of state government employees and their salaries by a huge 20 percent.

Gov.-elect Schwarzenegger has already stressed, "I campaigned that I will not raise taxes, and I say this again: I will not raise taxes." Rather, he intends to rescind the onerous car tax, and overturn lucrative pay raises for state-government employees, as well as burdensome health-care mandates.

Schwarzenegger will also have the opportunity to void the unbelievable $42 billion in energy contracts signed by former-Gov. Davis, and will have the authority to rescind much of the 40 percent budget expansion put in by Davis in recent years.

Schwarzenegger's policy compass and his clear support of private business over public government should be electrifying conservatives -- not disappointing them. He will give pro-growth policies a much-needed shot of adrenaline. He will also pump up a Bush administration that lately appears to be pandering to the protectionist special interests of the old-line National Association of Manufacturers and its anti-Bush unions.

Schwarzenegger will be a formidable national campaigner on next year's re-election trail, one who can stiffen President Bush' s backbone in promoting new pro-growth tax- and Social Security-reform measures. In editorials and stump speeches, Schwarzenegger has adopted Ronald Reagan's optimism. He frequently cites the "shining city on the hill" phrase that framed much of the Gipper's positive message. "Can California regain its glory days?" Schwarzenegger asks. "I am confident that it will."

I'm also confident that Arnold Schwarzenegger will rejuvenate conservative politics and its influence on the nation.