Democrats Prepare for Budget War

By Evan Halper and Nancy Vogel

Jan. 21, 2005 12 AM PT

Times Staff Writers

SACRAMENTO — Democrats began an aggressive attack Thursday against Gov. Arnold Schwarzenegger’s plan to cut billions of dollars from education, healthcare and social services, branding him as a puppet of national right-wing think tanks.

Legislators mapped out their strategy to resist Schwarzenegger, putting him on notice that they will be presenting their own budget plan after a series of hearings with middle-class taxpayers across the state. The offensive began after several days of inertia from the Democrats, who seemed to be caught flat-footed by the ambitious agenda Schwarzenegger laid out early last week to close California’s $8.6-billion budget gap.

But Democratic leaders say they were stirred to act after the governor’s remarks this week that state government is a monster that needs to be starved.

Assembly Speaker Fabian Nunez (D-Los Angeles) seized on the comments to raise doubts about whether the governor’s policies reflect the values of California voters.

He said the administration is pushing for a spending plan “crafted in backrooms with the fingerprints of ideologues and corporate interests all over it.”

“I am disappointed about the shortsightedness of a budget that slights our future prosperity and attacks middle-class values,” he said, calling it “a budget built on ideas from right-wing think tanks in Washington, D.C., rather than one that reflects the priorities of California families.”

Administration officials scoffed at the comments.

“It doesn’t take a think tank to come up with the idea that you can’t spend more than you take in,” said Schwarzenegger spokesman Rob Stutzman.

The governor is proposing constitutional spending controls that would force across-the-board cuts in government services whenever state expenses outpace revenues, or in the event legislators and the governor cannot agree on a budget by the July 1 start of the new fiscal year.

In a meeting Tuesday with the editorial board of the Sacramento Bee, Schwarzenegger said the spending controls are intended to “starve the public sector,” adding that: “We don’t want to feed the monster.”

Some of Washington’s most conservative voices, who believe that government needs to be smaller, had been calling on the governor to make such a proposal. His plan has won their praise. “This is called good government,” said Grover Norquist, president of Americans for Tax Reform, who once said he would like to reduce government “to the size where I can drag it into the bathroom and drown it in the bathtub.”

He is also credited with creating the “starve the beast” strategy, which is echoed in Schwarzenegger’s starve-the-monster comment.

Norquist, however, says he has not personally advised the governor. He says he doesn’t need to because Schwarzenegger’s reforms are simply common sense.

“He isn’t recommending anything that hasn’t been done successfully somewhere else before,” Norquist said. “What he’s done is a survey of what works and what doesn’t and he’s chosen the things that work.”

Among those ideas, Norquist said, are the governor’s proposal to overhaul the pension system for government workers. Under the governor’s plan, workers would no longer be guaranteed a payment of as much as 90% of their highest annual salary upon retirement. They would instead be given a 401(k)-style plan. Under such a plan, a worker and the state would contribute to an account and the worker would invest those funds in the financial markets.

Norquist, a key Bush administration ally, said the Democrats’ complaints of interference from outsiders are silly and parochial. He compared it to Southerners after the Civil War complaining of carpetbaggers from the North.

But Democratic strategists continued to remind the media of Schwarzenegger’s right-wing links throughout the day.

They sent out a release with a list of all the hard-line conservatives who have been advising the administration.

The list includes Stephen Moore, the former president of the Club for Growth, an anti-tax group that raises money to defeat Republican politicians who stray too far to the left. Schwarzenegger named Moore last year to a state committee on which he was charged with overseeing an audit of the budget. He was also on the governor’s transition team as an economic advisor.

Tony Strickland, president of the club’s California office, said: “Gov. Schwarzenegger is doing some of the things we’re pushing for at the Club for Growth, no doubt about it.

“The governor’s reform package is exactly what we are looking to do,” he said.

But administration officials downplayed connections to conservative groups. They said Schwarzenegger calls on advisors from across the political spectrum.

A case in point, they said, is the governor’s budget chief, Tom Campbell, a Republican former congressman who was ostracized by the party for not supporting the right-wing agenda of former House Speaker Newt Gingrich.

Department of Finance spokesman H.D. Palmer said: “I don’t think Tom Campbell is synonymous with right-wing think tanks.”