Schwarzenegger sounds populist note as he seeks to reassure GOP

SAN JOSE, Calif. (AP) - Reprising the populist notes of his first campaign, Gov. Arnold Schwarzenegger on Friday said he will continue to push for government reforms but called on skeptical members of his own party to stop fighting and start leading.

Republicans, he said, have a "history of boldness" that they must seek to regain in California.

"We will continue to fight for recovery and for reform - if it is pension reform, education reform, redistricting reform or if it's budget reform," Schwarzenegger said to a packed convention hall at the Fairmont Hotel. "But here is where I believe we Republicans must begin to change our outlook. We cannot just fight; we must build. We cannot just follow; we must lead."

Schwarzenegger's speech to 650 people at the California Republican Party's winter convention came at an important early juncture in his re-election campaign. The governor is trying to unite a divided party and overcome lackluster poll numbers after a year in which voters snubbed his "year of reform" ballot agenda.

In his speech, Schwarzenegger hewed to an optimistic message and conspicuously bypassed several issues that rankled conservatives in recent months, including his plan to raise the minimum wage.

Speaking in broad terms, he urged the party to unite around issues that cut across ideological boundaries - economic prosperity, job growth, education reform. He checked off a list of accomplishments since he took office in November 2003, including workers' compensation reform and the state's economy adding 500,000 new jobs.

The governor angered many conservatives in the aftermath of the 2005 election when he hired a Democratic activist as his chief of staff and proposed a budget that spends more than the state is expected to collect in taxes. They were further inflamed when he outlined a record $222 billion public works spending plan to upgrade highways, levees, schools, prisons and public transit systems.

One faction agreed only recently to drop an effort to rescind the party's early endorsement of his re-election.

Likening California to a worn-out car that needs repairs, Schwarzenegger sought to rally party members to his side by reciting the leadership of past GOP leaders.

"We Republicans have a history of boldness," he said. "Abraham Lincoln struck down slavery. Teddy Roosevelt fathered the environmental movement. Dwight D. Eisenhower built the interstate highways. And Ronald Reagan tore down the wall and defeated communism."

Schwarzenegger appeared to be trying to walk a delicate line in his speech - he needs to shore up their support from the party's right wing without alienating the centrist Democrats and independents he'll need if he is to win a second term in November.

But some of the immediate reaction suggested just how difficult a task he faces between now and the election.

"Does he consolidate his base or conduct a running war with them between now and November?" said former party chairman Michael Schroeder, who said he was disappointed by the speech. "A Republican cannot win unless he has the conservatives and moderates united."

The celebrity governor arrived to a standing ovation and chants of "Arnold, Arnold, Arnold" before delivering his 16-minute address. He briefly recognized state Sen. Tom McClintock, a conservative running for lieutenant governor who has helped tamp down unrest within the party's right wing.

State Republican Party Chairman Duf Sundheim predicted the party would embrace the governor's "big, bold ... vision for the future."

Whether that plan succeeds could be the key to Schwarzenegger's success in November.

The party is likely to argue this weekend over several resolutions that directly challenge Schwarzenegger's proposals, including boosting the minimum wage by $1 an hour over two years.

Over the years, state GOP conventions have exposed divisions within the party on issues as far-ranging as abortion regulation and taxes. In 1991, conservatives furious over a tax increase tarred-and-feathered an effigy of former Gov. Pete Wilson at a state party gathering.

"When (Ronald) Reagan was governor, there was always unrest," Republican analyst Allan Hoffenblum said. "He raised taxes ... he signed one of the most progressive pro-abortion bills in the country at that time."

Speech of Governor Arnold Schwarzenegger

Thank you. Thank you. Please sit down. Thank you very much. Wow. What an exciting crowd. This is terrific. What a great convention we have here. It is wonderful to see all of you here today.

It is great. I want to thank all of the organizers that organized all of this here tonight. It is just really terrific.

I just want to begin by expressing also my gratitude to our party leaders... my very dear friends, Dick Ackerman, Kevin McCarthy and Duf Sundheim. Let's give all three of them a big hand. Dick and Kevin, I am proud to serve with you. And I want to thank you for working with me day in and day out on behalf of the people of California.

And Duf, what a champion you are. You have worked so hard to bring all us together. Duf, you are a great leader of our party, and I know when I say that, that I speak for everyone here when I say thank you. Thank you. Thank you for everything that you have done. Thank you.

I also want to take a moment to express my deepest appreciation to our county leaders and to the thousands of volunteers who have been there for me since the beginning. The Republican Party is my home and I'm proud of your support and I'm grateful for your friendship.

I know how hard you've worked on my behalf. I know how many hours you logged at the phone banks and how you were going door to door because you believed in what we were trying to do.

Last November we fought the good fight for reform. We fought with all of our heart. And I want to say thank you to you for that.

During that election, I remember when all of those commercials were playing, one of my kids, got very upset and went to Maria and said, `Mom, what happens if Daddy loses? Daddy always wins, but what if he loses? It will be embarrassing.`

And Maria said, "My son, there is no shame in losing. The shame is in not trying."

So today I want to say to all of you here. Thank you for trying with me. Thank you very much.

And while I know that we may not agree on every single issue, I hope that you know that I have your family's best interests in my heart as I govern this state. My goal is to work as hard as humanly possible to keep California growing, and to improve our quality of life, to protect our values, and to prepare our people for a global future.

I want you to know that I approach this job with an immigrant's optimism, and a businessman's commitment to fiscal discipline and a father's desire to keep our children safe and healthy. I can honestly say to you tonight that it has been such a joy, such a privilege for me to serve the people of California.

That's why I am humbled and so grateful to you for your support in the upcoming election.

It is an honor for me to be on the ballot with men like Bruce McPherson, our Secretary of State, and with my friend Tom McClintock, our next Lieutenant Governor. I want to say to both of these men, I am proud to be running with you.

And I want to thank you for your graciousness to me and for all of your support. My fellow Republicans, we have so much to be proud of.

Over these past two years, we have accomplished extraordinary things together. Just think about where we were two years ago - where we were and where we are now.

California was on the brink of bankruptcy.

Our credit rating was worse than Croatia.

Our budget deficit was so large that no one knew exactly how big it actually was.

Our worker's comp was the highest in the nation.

And in a reverse gold rush, businesses were fleeing our state and taking jobs with them. In one month alone I remember, July 2003, we lost 23,000 jobs. People were struggling just to comprehend, let alone pay for, the outrageous tripling of the car tax.

Think how far we have come.

I am proud that together we saved this state from bankruptcy.

We reduced our structural deficit by nearly 75 percent.

We're paying down our debt and we're putting money into the rainy day fund. We rescinded the increase in the car tax. And we repealed the drivers licenses for undocumented immigrants. And we fully funded transportation and education. And we became the only state in the union to ban junk food and sodas from our schools. We created the Sierra Nevada Conservancy, the largest preservation of land in our state's history. And we have record revenues flowing into our treasury.

We have done all of this while abiding by a basic Republican principle: we did not raise taxes.

Does anyone here doubt what will happen to our taxes if the other party reclaims the governorship? Think about that for a second. Republicans are the last line of defense against higher taxes, and I stand with my fellow Republicans.

Now, another bold thing we did was we fixed the worker's comp system and rates are already down by one third.

Now, let me put a face on that progress. Because we have with us here tonight Sal Acosta, who owns Acosta Manufacturing here in San Jose. And Sal's company saved 250,000 dollars last year from worker's comp reform. And As a result, he took that money and he expanded his business. He bought new equipment and he hired 15 new employees. That is the way Republican economics work.

Where is Sal? Is Sal here with us? Right over here. Sal, stand up. Give him a big hand. Thank you very much for making California's economy stronger and for providing jobs for our people. Thank you very much Sal. Thank you.

With economic growth and worker's comp reform, California has gone from losing jobs to gaining jobs. We now have more Californians working than ever in our history, with nearly 500,000 new jobs created since I came into office.

Ladies and gentlemen, we have a record that we can be proud of, a record we can run on, and a record we can win on.

Now, are things perfect? Of course not. You will never find the words `perfection` and `politics` in the same sentence. We still need to put the pressure the federal government to do its job securing our borders. We still need to continue our economic growth, and we need to pass Jessica's Law.

But the fact is we are making huge progress. And we can do even bolder things in the future.

After all, we Republicans have a history of boldness. I love that.

Abraham Lincoln struck down slavery.

Teddy Roosevelt fathered the environmental movement.

Dwight D. Eisenhower built the interstate highway.

And Ronald Reagan tore down the wall and defeated communism.

This is a time in California's history that calls for similar boldness, a time when our solutions must be as big as our problems. I believe in boldness not in band-aids.

Now here's the situation that we face.

California was once like a fine automobile, a first-class engine. But it was not maintained. And today its motor is knocking; its tires are nearly bald; and its seats are frayed. The people know it needs repair.

They are tired of sitting on the gridlocked roads.

They are fed up with their kids trying to learn in overcrowded classrooms.

And after Katrina, they are rightly worried that we are one huge storm, or one big earthquake away from a major Katrina-type disaster.

California has huge needs that have been neglected for years. And I am not going to allow those needs to be passed on to our next generation.

My fellow Republicans, my fellow Republicans, we cannot be infrastructure isolationists and say that if we don't build it they won't come. As Senator McClintock says California stopped building three decades ago but the people came anyway. And he's absolutely right. He's absolutely right. Half a million people move to California every single year.

Now, what is the future of the Republican Party in this state if we ignore the needs of California and its people? I can tell you what it is: it is a dead end.

We desperately need to renew and expand our infrastructure.

Take our ports for instance. When I was in Japan recently on a trade mission, the first thing out of Prime Minister Koizumi's mouth was, `Governor, please unload our ships. Our ships have been waiting too long.` Ladies and gentlemen, the ships will be unloaded. The question is just where? Will it be right here in California or will it be in some other country like Mexico or Canada?

I say let's fix our infrastructure problems. I want those ships unloaded right here in our state in the great state of California.

That's why I proposed a growth plan that is smart, strategic and fiscally responsible. We are not just going to throw money at those problems. No. We will build in restraints, such as the 6 percent debt limit so that our credit rating does not slide backwards. And We will build in reforms, so that the money is spent in a fiscally responsible way.

You see, when I ran for governor I said that I believed California could recover; that it could reform; and it could rebuild. That was my goal then and that is my goal now.

We will continue to fight for recovery and for reform. If it is pension reform, education reform, redistricting reform or if it is budget reform - we will fight for all of those reforms.

But here is where I believe we Republicans must begin to change our outlook. We cannot just fight; we must build. We cannot just follow; we must lead.

Two years ago when I ran for governor, no one in this state could define a vision for California. I know because I asked. I asked politicians. I asked business leaders. I asked educators. I asked experts in think tanks. I asked everybody. No one knew California's plan for the future because we didn't have one.

Now, the whole state is talking about it. There is a sizzle up there in Sacramento. Democrats and Republicans are debating over California's future for the first time in decades and that is fantastic. I love it.

When I immigrated here in 1968, California without any doubt was the greatest state in the nation. We had the best universities, the best highways, the best future. And As I have said before, I believe in the future of California every bit as much today as the day when I first moved here.

And you would not be involved in politics if you didn't have the same optimism as I do. You understand better than most that the future is not something that you wait on; it is something you achieve. It is something that you make happen.

These years let me say, I tell you, these years at the beginning of the 21st Century are absolutely critical for California. These years will determine whether we maintain our greatness, our strength, our vitality or let it pass just from us.

I say, let us renew our party by renewing our state.

Let us be known as the party that believes in building California; the party that has the boldness to take the people forward; the party that returns the Golden State to its golden era.

Now, I am not a historian, but if you look at the sweep of history, you will see that those civilizations that side on the side - that err on the side of caution decline and those that err on the side of boldness go forward.

California is ready to go forward. It is waiting for our leadership.

My fellow Republicans, let us boldly go forward together for the sake of our party, for the sake of our state and for the sake of our future.

Thank you very much and God bless all of you. Thank you very much.

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