The NewStandard ceased publishing on April 27, 2007.

Grassroots Fight Ensues as Schwarzenegger Favors Business Interests

by Brendan Coyne

Growing concern over what activists see as the governor’s symbiotic relationship with big business is driving more Californians to protest policies that tighten belts of state programs and please corporations.

Apr. 29, 2005 – Facing a deficit estimated in the billions for the upcoming year, California governor Arnold Schwarzenegger has adopted an aggressive strategy to roll back state spending. His campaign to control the budget has touched off a battle with the state’s labor and grassroots organizations, some of which are suggesting the actor-turned-politician is proving incapable of standing independently from the business interests that helped fuel his campaign for office.

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Since March, state workers, led by a fledgling collection of labor unions called the Alliance for a Better California, have been organizing rallies to express concern over the potential impact of Schwarzenegger’s policies on their jobs. Robin Swanson, spokesperson for the Alliance, said that through these gatherings, thousands of workers were uniting against "an attack" on labor and on the people of California.

State workers appear outraged over many of Schwarzenegger’s proposed ballot initiatives. The California Nurses Association, for instance, began protesting the governor’s plan to undo a six-year-old law mandating lower patient-to-nurse ratios in the state’s hospitals last November. Earlier this month, nurses and teachers turned out - in the thousands, according to the San Jose Mercury News - to protest a campaign fundraiser held at the San Francisco Ritz-Carlton Hotel.

Protests from public employees also arose over the governor’s plan to switch state workers’ guaranteed pension plan to 401(k)-style individual investment accounts. In the face of rising protests and media scrutiny, Schwarzenegger shelved his original proposal, but has stated his intention to pursue another version, possibly by placing a similar measure before state voters this fall along with other ballot initiatives.

Campaigning on a diversity of issues, from consumer rights to industrial regulation, the Alliance for a Better California focuses its outreach on exposing the failures of Schwarzenegger’s administration.

As the main catalyst for the Alliance, Swanson cited Schwarzenegger’s January State of the State address, in which he declared an offensive on the deficit with the phrase, "last year we stopped the bleeding, this year we must heal the patient." In Swanson’s analysis: "He launched an attack on teachers. He launched an attack on firefighters. He launched an attack on nurses. People came together and said, ‘wait a minute, here’s a governor who came in saying… that he’d work with all parties - and he broke his promises."

The Alliance claims a membership of approximately 2.5 million people and continues to grow through its public advocacy. Campaigning on a diversity of issues, from consumer rights to industrial regulation, the three-month-old coalition focuses its outreach on exposing the failures of Schwarzenegger’s administration.

The Alliance has pointed to education funding as one area where Schwarzenegger has betrayed the public. According to the California Budget Project, a nonprofit policy analysis clearinghouse, one of the biggest swipes at education comes from a business-sponsored bill called the "Live Within Our Means Act." As Schwarzenegger’s long-term proposal for budget austerity, the Act would alter the constitutionally mandated funding formula for education, and at full implementation, would remove about $4 billion a year a year in obligatory state education spending. Schwarzenegger is now backing plans to bring the Act before voters in a special ballot this coming fall.

Beyond the immediate conflicts over education and public employee policies, Alliance members consider the business interests driving the state’s legislative agenda to be the underlying barrier inhibiting the functioning of state government.

"Under the current school spending guarantee, the state had a constitutional obligation to spend a certain amount of money based on a complicated formula of revenues, enrollment and resident income," explained Jean Ross, executive director of the Budget Project, a nonprofit policy analysis clearinghouse. Instead of restoring money from temporary cuts as promised, Ross said, California will continue to under-fund education.

Ross maintains that Schwarzenegger’s education policies demonstrate blatant disregard for the wishes of California’s voters, who approved the school funding rules seventeen years ago in a ballot initiative called Proposition 98. Critics consider the governor’s stance on overriding that popular 1988 legislation an odd juxtaposition for a politician who has campaigned in vocal support of the ballot initiative process and has repeatedly said he will take his proposals to the people of California.

According to a report published by the EdSource, an organization that provides information and analysis of education-related issues, California public schools are receiving $46 billion this year, already about $2 billion less than required by the 1988 initiative.

"People can see for themselves the reaction he’s receiving," Swanson said. "When they come to rallies or see the picture in the news they see nurses in their scrubs at the events. They see their local teachers. They see firefighters in their uniforms. The fight is universal, it cuts across all lines. We are the people of California."

Beyond the immediate conflicts over education and public employee policies, Alliance members consider the business interests driving the state’s legislative agenda to be the underlying barrier inhibiting the functioning of state government.

Swanson pointed to a popular bill designed to decrease prescription drug costs, which the governor recently vetoed, as an example of Schwarzenegger’s flouting of the public interest in favor of corporate profits. In blocking SB 1333, which would have allowed for the importation of cheaper prescription drugs from Canada, Schwarzenegger told reporters the legislation would "oversimplify the complex safety, trade, supply and pricing issues involved in this [pharmaceutical] marketplace."

The veto was quickly followed by a rush of donations from groups affiliated with the Pharmaceutical Research and Manufacturers of America Alliance (PhRMA), a powerful industry lobby, amounting to a total influx of more than $300,00 for Schwarzenegger’s political action committees, according to the Foundation for Taxpayer and Consumer Rights (FTCR), a California-based nonprofit consumer advocacy organization.

The labor-based Alliance for a Better California was not the only network to form around the governor’s declaration of drastic measures in handling the budget deficit. Citizens to Save California (CSC), a coalition of business groups, also came together shortly after this year’s State of the State address. Chaired by Allan Zaremberg and Joel Fox, the heads of the California Chamber of Commerce and the Small Business Action Committee, respectively, the CSC has worked closely with the governor to raise money and generate support for this fall’s ballot initiatives, according to a variety of regional media reports.

Citizens to Save California also counts among its leaders Jerrold Perenchio, chairman of the board and chief executive of Univision, the Spanish language broadcast outfit highly influential with the state’s burgeoning Latino population; Jon Coupal, president of the Howard Jarvis Taxpayers Association; Bill Hauck, who heads up the California Business Roundtable; Rex Hime, president of the California Business Properties Association; Janet Lamkin, president of the California Bankers Association; and Larry McCarthy, president of the California Taxpayers' Association. The seven have sponsored several fundraising events for Schwarzenegger this year and have enlisted paid signature gatherers in an effort to secure places for preferred measures on the planned referendum ballot later this year, according to the Inland Valley Daily Bulletin, an Ontario, CA newspaper.

According to Ned Wigglesworth, an analyst with, a group formed just over a year ago to advocate for increased government accountability, the CSC is little more than a front allowing Schwarzenegger to bypass state campaign finance laws. Alleging just that, filed a complaint last February with the California Fair Political Practice Commission, a state government agency responsible for enforcing campaign finance regulations.

As evidence of illicit collusion, Wigglesworth pointed out that Fox served as Schwarzenegger’s chief policy consultant during the recall election. Noting that Zaremberg’s Chamber of Commerce endorsed Schwarzenegger’s controversial recall election campaign, Wigglesworth told TNS, "Schwarzenegger and the Citizens to Save California are, practically speaking, the same thing."

For his part, the governor has moved to stonewall accusations of campaign finance violations. Shortly after Wigglesworth’s group filed its complaint, Citizens to Save California and Schwarzenegger himself filed lawsuits against the California Fair Political Practice Commission, arguing that the campaign finance laws themselves were an unconstitutional restriction on free speech. The court ruled in Schwarzenegger’s favor. Wigglesworth said has filed a counter-suit.

Several calls to CSC spokespeople seeking comment for this article were not returned.

Daniel J.B. Mitchell, a former US Department of Labor consultant and a current chair of the Anderson School of Management at UCLA, questions Schwarzenegger’s political and ethical aptitude.

"In general terms, the problem is that Schwarzenegger does not seem to prioritize, pick his fights carefully, or rely on the people he should to advise him," Mitchell told TNS. "What seems to have happened is that the [CSC] writes up initiatives that are on its agenda, but don't match the governor's [stated] priorities or the political realities of the state."

Mitchell reflected that as political unrest grows and the governor finds himself increasingly isolated, he needs to begin cultivating "allies - not enemies - to get the budget fixed on a permanent basis."

He continued, "Going out of his way to upset nurses, teachers, police, firefighters is not the way to get to a budget solution in the legislature."

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The NewStandard ceased publishing on April 27, 2007.

Brendan Coyne is a contributing journalist.

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