- The Washington Times - Wednesday, August 20, 2003

The raging ideological battle for the governorship of California seems to be sucking the political oxygen out of the rest of the country.

This fight is so big and noisy it has spilled over the borders of the nation’s largest state and into the national political mainstream — all but drowning out the droning debate in the Democratic presidential campaign.

“It’s almost impossible to get any real national attention while California is in play,” a senior Democratic adviser to Sen. Joe Lieberman told me this week. With next year’s caucus and primary calendar so front-loaded and compressed, Democrats have precious little time to build public support for their case against President Bush’s re-election. “Every month counts,” he said.

But as another frustrated Democratic strategist told me, “So far this has become an invisible primary for us and that can only help Bush.”

For the Republicans, however, the rarely used California recall election raises deep ideological questions about how pragmatic they are willing to be to seize political control of the state’s government.

Arnold Schwarzenegger, who initially looked like he was about to take control of the entire election, has had some stumbles that have forced him to re-evaluate his strategic and tactical plans.

The bodybuilding immigrant from Austria, who came here seeking the American dream, started out connecting with the state’s huge immigrant population, many of whom immediately identified with him. But then he admitted he had supported the state proposition restricting benefits for illegal immigrants, and that advantage quickly burst.

His emphasis on rebuilding California’s shattered economy by being a pro-business-first governor that would ease the state’s regulatory and tax burdens also took a beating last week from an unlikely adviser.

Conservatives who liked Mr. Schwarzenegger’s free-market beliefs and his admiration for libertarian economist Milton Friedman — one of Ronald Reagan’s tax cut advisers — were shocked when he named billionaire investor Warren Buffet, a tax-cut-hating Democrat, as his senior economic adviser.

They were further shocked when Mr. Buffett suggested California’s property taxes were too low and needed to be raised.

“Raising property taxes? That’s a political winner,” supply-side tax cutter Arthur Laffer sarcastically remarked to me last week. “That kind of advice will hurt him politically,” he added.

By week’s end, both the growing alienation from the immigrant class and Mr. Buffet’s raise-homeowner-taxes remark had indeed hurt the hard driving, self-confident movie star.

Conservative talk show king Rush Limbaugh was blasting him as “no conservative. Period.” His chief Republican rival, former gubernatorial candidate Bill Simon, was running ads calling Mr. Schwarzenegger “a liberal.”

As of this week, the Schwarzenegger juggernaught appeared to have slowed. The respected California Field Poll showed Democratic Lt. Gov. Cruz Bustamante now led Mr. Schwarzenegger by 25 percent to 22 percent — though the difference between them was well within the poll’s 5-point margin of error.

Mr. Simon and Republican state Sen. Tom McClintock were locked in a tie for third place.

Mr. Schwarzenegger quickly tried to repair the damage from Mr. Buffet’s tax increase remarks by distancing himself from them and by appointing former Secretary of State George Shultz as his second senior adviser. An early Reagan supporter who chaired his economic advisers, Mr. Shultz has been an ardent tax-cutter on national policy and in California.

But Mr. Schwarzenegger’s piecemeal advisory appointment process and mixed economic signals have troubled Mr. Laffer and other tax cutters like Stephen Moore at the Club for Growth.

“Schwarzenegger is a smart businessman. He’s got all the attributes to be a great leader. Now he needs a program” to cut taxes, Mr. Laffer told me.

Mr. Laffer, Mr. Moore and other conservatives want Mr. Schwarzenegger to run on cutting spending, a lower flat rate for individual and corporate taxes, and deregulating the California economy to boost growth and draw new businesses into the state.

Of course, there are many in the GOP’s California base who do not like Mr. Schwarzenegger’s libertarian positions on the social issues. But many conservatives hope that if he spelled out a no-tax, deregulatory platform that would be enough to earn their support, plus a large share of the state’s independent, swing vote.

“Then he would earn a degree of conservative sympathy,” said Rich Lowry, editor of the conservative National Review magazine. “I doubt we would ever be jumping up and down for him, but it would help.”

Meanwhile, Mr. Schwarzenegger has been reaching out to the right people lately: Mr. Shultz for one as well as Hoover Institution economist John Cogan, who helped shape President Bush’s budget and tax cut policies.

Candidates, like most people, are known by the company that they keep. Bring in Mr. Laffer, Jack Kemp, Steve Moore, Larry Kudlow, Steve Forbes and the rest of the supply-side tax terminators, and the entire complexion of Mr. Schwarzenegger’s campaign would change overnight.

Donald Lambro, chief political correspondent for The Washington Times, is a nationally syndicated columnist.



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