Master salesman Schwarzenegger warns of bankruptcy (UPDATE 3)

reuters ^ | January 6, 2004 | Adam Tanner and Michael Kahn

[calcowgirl]

SACRAMENTO, Calif, Jan 6 (Reuters) - Boasting in his most important speech to date that he could sell almost anything, Gov. Arnold Schwarzenegger urged Californians to embrace radical spending cuts and a record $15 billion bond to keep the nation's richest state from bankruptcy by June.

The actor-turned-politician, swept into office last October vowing to fix the state's battered finances, used his first State of the State Address to warn voters to expect deep budget cuts, but ruled out raising taxes, saying that would be the "final nail in California's economic coffin."

In a speech interrupted 36 times by applause in the state assembly, the star of the "Terminator" films vowed to use his his incredible salesmanship to help California emerge from rough economic waters.

"I am a salesman by nature. And now most of my energies will go to selling California," he said before an aside mentioning two of his least loved films. "If I can sell tickets to 'Red Sonja' and 'The Last Action Hero' I can sell almost anything."

The Austrian-born actor's sales pitch on Tuesday urged voters to back the $15 billion in bonds or face ruin. California needs the money to pay the bills when $14 billion of short-term notes come due in June.

"Together, we put measures on the March ballot that, if passed by the people, will save our state from a June bankruptcy," he said. "June is the month when billions of dollars in past loans come due and the financial house of cards built over the last half of the decade is set to collapse."

"A 'yes' vote on these measures on the March ballot is absolutely critical to our financial future."

State Controller Steve Westly, who earlier in the day announced that California is taking in more tax revenue than originally expected, told Reuters Schwarzenegger was perhaps overselling the economic dangers.

"The use of the word 'bankruptcy' is probably not the right word, but we will run out of money unless we pass this initiative," he said. "When people think of bankruptcy they think of companies that no longer have money coming in. In fact there is always money coming in. This is one of the great economies of the world."

Westly said internal polls showed the public now leaning against the $15 billion bond, and an aide to the governor said he would have to campaign actively to win backing on the March 2 measure.

DEEP CUTS AND HOLLYWOOD ASIDES

Schwarzenegger said Californians face "challenging" cuts expected to hit most state programs, and he repeated his vow to not increase taxes. As he paved the way for the hard details of the 2004-5 budget to be unveiled on Friday, Schwarzenegger also made several references to his Hollywood past.

"OK, I changed my mind, I want to go back to acting," he said in the opening words of his speech that were not part of his prepared remarks.

Then saying he was joking, he returned to the speech's script: "I love working for the people of California. It is better than being a movie star."

The film star also spoke of dodging financial bullets, bleeding red ink, wanting to blow up organizational boxes, and seeking new ideas, the more radical the better.

And the man who has already held the titles of Mr. Universe and Last Action hero proclaimed himself California's Job Czar, vowing to travel the world to bring business to the state. Previous

[calcowgirl]

"The use of the word 'bankruptcy' is probably not the right word, but we will run out of money unless we pass this initiative," he said. "When people think of bankruptcy they think of companies that no longer have money coming in. In fact there is always money coming in. This is one of the great economies of the world."

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[CounterCounterCulture]

vowing to travel the world to bring business to the state.

I would worry the minute Arnold set foot outside of California, Cruz BustaMove would sneak into his office as acting-Goober.

[concentric circles]

"...These huge budget deficits are aftershocks of past financial recklessness... Over the last five years, the state's income has increased 25 percent, but spending increased by 43 percent. This was irresponsible. The fact of the matter is that we do not have a tax crisis; we do not have a budget crisis; we have a spending crisis. We cannot tax our way out of this problem..."

"...A tax increase would be the final nail in California's financial coffin. The people of California did not elect me to destroy jobs and businesses by raising taxes. I will not make matters worse. We have no choice but to cut spending, which is what caused this crisis in the first place."

Kudos to Arnold and his distinguished tutor.

[Ronin]

LOL. I am not worried.

If Bust-a-gut tried anything strange when he was "acting" governor, Ahnold would teach him new and exciting ways to hurt when he got back.

[calcowgirl]

Cruz was acting Goober during the holidays, while Arnold vacationed in Sun Valley.
I wonder what damage he did.

[CounterCounterCulture]

Cruz was acting Goober during the holidays, while Arnold vacationed in Sun Valley.
I wonder what damage he did.

Other than Spanish being the official language of California, not much damage.

(kidding...ay carumba)

[Amerigomag]

From my perspective it is obvious that the Democrats are not going to easily capitulate on their "core" values.

Given that belief I think bankruptcy is the only alternative to solving the state's spending spree.

And no, a state in "receivership", any state, isn't going to ruin the US economy, let alone the world economy.

[calcowgirl]

I agree. Based on comments by democrat legislators, their #1 core value (spending) hasn't changed. Until it does, no action that places more money in their hands will solve anything.

It is encouraging that this article says the polls show more opposition for the bonds than support.

[goldstategop]

Yes and I don't think the bonds have a prayer of passing unless Sacramento takes a big whack at spending. I'd feel more comfortable borrowing all that money IF the state capitol demonstrated it put California's fiscal house in order first.

[William Tell]

goldstategop said: "Yes and I don't think the bonds have a prayer of passing unless Sacramento takes a big whack at spending. I'd feel more comfortable borrowing all that money IF the state capitol demonstrated it put California's fiscal house in order first."

Imagine that you have a cousin who has been spending far above his income for years and wasting the money on stuff you wouldn't even want to own. He promises that he is going to spend less "real soon now" but has not decreased his spending one bit.

Your cousin has borrowed two full months of income from a loan company who appears to be willing to lend to anyone despite their obvious over-spending.

Now your cousin cannot make the payments to the loan company and the loan payments will be overdue soon. Your cousin wants you to lend him the amount of the loan, despite the fact that his spending continues to exceed his income. In fact, your cousin wants you to lend him an amount greater than his prior loan.

Do you loan your cousin the money or do you simply congratulate him on his daring in asking you? Remember, now, he has promised to cut back his spending.

I know what I intend to do when "cousin" Arnold comes knocking.