03/18/2010 05:12 am ET | Updated May 25, 2011

Arnold Schwarzenegger, Jerry Brown, Bill Clinton and That Crazy California Governorship

Six years ago last night, Arnold Schwarzenegger was elected governor of California in a 17-point landslide. It was the dramatic California recall election, and I spoke with Schwarzenegger in his suite at the Century Plaza Hotel in Los Angeles before he went downstairs to deliver his victory speech in the ballroom below.

The sun was setting, in the rather nice view from the presidential suite, into the Pacific and what proved to be more than capacity crowd was gathering downstairs. Schwarzenegger, naturally excited even when he's not all that excited, told me he intended to do big things for California, and end the gridlock that ground state government to a halt less than a year after the re-election of Gray Davis.

Five years earlier, in 1998, I spoke with Gray Davis in his rather less cinematic election night suite at the Biltmore Hotel in Los Angeles. He had just won a 20-point landslide election as governor of California.

Arnold Schwarzenegger is egged while campaigning for governor in 2003.

Davis, a less excitable fellow than Arnold Schwarzenegger, was nevertheless quite pleased at gaining this goal of a lifetime. He told me that he intended to do big things for California, but wanted to avoid spending commitments that the state's revenue -- then flush from the dot-com boom -- couldn't sustain over time.

Despite all the drama, and landslide election victories for governors of two different political parties -- who are nonetheless friends now notwithstanding Schwarzenegger ousting Davis in the recall election six years ago -- including another 17-point landslide victory for Schwarzenegger in 2006, the state's budget is a mess, its political gridlock seemingly intractable.

Now California is heading into another gubernatorial election. And according to the brand new Field Poll, and everything else I know, the likely next governor is someone who's already won a landslide election as governor, albeit 30 years ago. That's Jerry Brown, who won his latest landslide in 2006 when he was elected California's attorney general, the state's top law enforcement officer. Brown is a former two-term governor, two-term mayor of gritty Oakland, and two-time runner-up for the Democratic presidential nomination.

Brown has huge leads over everyone, from San Francisco Mayor Gavin Newsom, his lone remaining Democratic challenger (who's seen a ballyhooed fundraiser with Bill Clinton come and go to little effect), to all three Republicans. Brown leads ex-eBay CEO Meg Whitman, national co-chair of the McCain campaign, which was wiped out in California by President Barack Obama, 50-29 percent. He leads two other Republican hopefuls, super-rich state Insurance Commissioner Steve Poizner and ex-Congressman Tom Campbell, by similar margins.

Jerry Brown receives a rave introduction from Gavin Newsom, who is now attempting to run against him, at his 2007 inaugural as California's attorney general.

Brown, a 71-year old perpetual livewire who I've known for decades, knows the promise of California. His legendary father, the late Governor Pat Brown, who I found to be a delightful person, is credited for building much of modern California, its infrastructure, schools and universities. Jerry Brown moved California into the post-modern era, bringing unprecedented diversity to government, as well as energy and environmental policies for California that Barack Obama now cites as a model for America.

Brown, first elected governor at 36, also knows the peril of California. The knee-jerk anti-government movement emerged during his time as governor and first time around as a presidential candidate, with Prop 13 passing and Ronald Reagan winning the presidency. (Though Reagan was actually more pragmatic than his idolators imagine, having pushed through a big tax increase as governor.)

As mayor of Oakland, Brown had to keep the unglamorous city's budget afloat admidst the chronic fiscal instability of California state government, first under Davis, Brown's former chief of staff, then under Schwarzenegger.

Arnold Schwarzenegger celebrates his second landslide election as governor of California in 2006.

Last fall, Schwarzenegger thought he might finally be on his way out of the dark woods of California's chronic budget crisis. In another stand-off with the Legislature, he'd gotten some incremental budget changes through and was muddling his way forward. While there were cuts, state spending did not actually go down. It simply didn't go up as fast as automatic escalators would otherwise have it. That doesn't mean there wasn't a deleterious effect on some state programs, as California is a growing state. Schwarzenegger told me he thought he might again be able to spend more time on infrastructure, having gotten through, in 2006, the biggest infrastructure program since Pat Brown.

Then Wall Street melted down, the economy went into a steep global recession, the world lost a third of its wealth, panicked consumers stopped spending, and California's revenues, already very challenged, dropped through the floor.

Schwarzenegger and legislative leaders from both parties took months early this year to hammer out a new compromise state budget, which included big cuts, borrowing, and, for the first time, big tax increases. Hamstrung by California's unique among any major state requirement for a two-thirds legislative vote on budgets and taxes, and with majority Democrats still well short of that mark, the Capitol scene struggled mightily to find a relative handful of Republican votes. Once that was done, with accompanying successful revolts against the conservative Republican leaders who made the compromise possible, much of the package still had to be ratified in a special election.

Public employee unions naturally hated the state spending limit Schwarzenegger included -- backed, ironically, by former Governor Gray Davis -- and campaigned against it, with TV advertising saying the spending limit wouldn't be tough enough! Anti-tax/anti-government groups hated an extension of the tax increases. Not surprisingly, voters weren't pleased with increases in their taxes during a recession. The package went down, and as a result the state budget, which is better now than it was, albeit with terrible cuts, will get worse again.

Former Governor Gray Davis discussed Arnold Schwarzenegger, Jerry Brown, and the state of the state of California last year.

As Gray Davis told me a few months ago, "California may be at a tipping point." On the other hand, as Davis has said on many occasions, California is "about the business cycle." There is a history of boom and relative bust in the tarnished Golden State, with attendant changes in budgetary fortunes.

As Schwarzenegger told me, most California governors in the post-war era, no matter the party, have ended up having to raise taxes. One who didn't was Jerry Brown. One who tried was Gray Davis. But he couldn't get it through.

California acquired what's called its "structural budget deficit" when Davis was governor. Though he told me the night he was elected that he wanted to do big things but didn't want to go beyond the existing revenue structure in the exuberance of the dot-com boom, and said much the same thing during his first year as governor, Davis did approve programs that were in part based on dot-com revenues. Good programs, worthy programs that helped people. And Republicans got some tax cuts. One of the usually unmentioned causes of California's budget problems is a massive system of tax loopholes.

So, with dot-com revenue drying up, it was time to cut some programs and raise some taxes. The chair of the Assembly budget committee told me she was sure that Republicans would go along. I told her that I really doubted it. They, of course, did not. Which left Davis with the option of raising the state's car tax, or vehicle license fee, which Davis's administration had the power to do as a ministerial matter.

Davis told me he was reluctant to raise the car tax, because he expected a big populist backlash. After mulling it over for months, Davis pulled the trigger on the car tax. And got the backlash he had expected, much of it stirred up by a far right legislator named Tom McClintock, who vowed an initiative to repeal the car tax.

Instead he ran for governor in the swiftly burgeoning recall of Davis.

Davis is a very intelligent guy, highly accomplished, but not a natural public commentator. By the middle of 2003, he was skating on the edge of the abyss. The car tax gave him an extra push. But it wasn't just the budget crisis, it was an air of bad feeling from a hardball political operation that made his 2002 re-election over a not terribly impressive right-wing Republican a lot closer than expected. And, of course, it was the famous electric power crisis.

Davis's popularity, once so high that he was touted for the vice presidency, never really recovered from the power crisis, which I covered intensively for the LA Weekly. There's no question that it was caused primarily by power companies like Enron manipulating an idiotic set-up emanating from Davis's Republican predecesor, Pete Wilson, who championed a complex partial deregulation scheme that left California at the mercy of unscrupulous players.

When mysterious outages and market manipulations cropped up in 1999 and especially 2000, Davis looked to the Clinton Administration's Federal Energy Regulatory Commission for help. He didn't get it. The Clinton Administration was then in its own deregulationist fervor, as we've seen with Wall Street, and that extended to electric power in California.

Getting no help from his fellow Democrats in Washington, Davis could have pushed for long-term power contracts to cut down on the daily gaming of the system. That would raise electric rates, making for some short-term unpopularity, but it would also stave off potentially ruinous price hikes down the line. Davis could also have seized a power plant or two, exercising eminent domain to dramatically inform market manipulators that there were bad consequences for their greed. That would have gotten yelps from the right, and rumblings on Wall Street, but such is life. It would also have been popular and scared the hell out of the perpetrators.

But Davis exercised caution, perhaps hoping that President Al Gore would be more helpful than Clinton. We know what happened there.

The closing ad for Schwarzenegger's 2003 campaign, by consultant Don Sipple.

So Davis's margin for error was at the vanishing point when Arnold Schwarzenegger parachuted into the race on The Tonight Show. Among other things, he seized on the car tax hike. His first official act as governor was to cut the car tax, which ironically had barely gone into effect.

Talking with Schwarzenegger after, I pointed out that that meant he had a big hole in his budget. He could tide over the situation in the short term by getting voter approval of massive deficit bonds that Davis had already enacted, but what he really had to do was cut spending, raise other taxes, or both.

In the campaign that led to his election six years ago last night, Schwarzenegger was armed by private polling showing that most California voters believed that one-third of state spending amounted to "waste, fraud, and abuse." Which, of course, is nonsense.

Schwarzenegger didn't believe that, either, but he did believe there was inefficiency, so throughout his campaign he promised an "audit" to find it. Once in office, the audit melded into something called the California Performance Review, which Meg Whitman claimed in February -- quite inaccurately -- would have eliminated the state's budget deficit. (More recently, Whitman claimed she has a plan to cut another $15 billion. But she won't say what it is until after she's elected.) Yet the performance review faded away amidst Schwarzenegger Administration infighting.

And what of other taxes, temporary or otherwise, which would have the virtue of not applying to everyone who drives in car-crazy California? Perhaps an oil severance tax (California is the only big oil-producing state without one), a temporary surcharge on the rich, an expansion of the sales tax to selected services, a surcharge on some forms of commercial property (which enjoy the same relief as homeowners under Prop 13), an end to some corporate tax breaks?

On the Friday before his landslide election as Attorney General of California, Jerry Brown shares some family memorabilia and blue-chip art in his Oakland loft.

Contrary to myth, Schwarzenegger hadn't actually said in his 2003 campaign that he wouldn't raise taxes. But he told me in 2004 that he'd decided to rely on economic expansion to grow more state revenues. Had he gone in another direction, he'd have had a big struggle on his hands with legislative Republicans, dominated by anti-government ideologies, elected from gerrymandered districts.

None of this is new for Jerry Brown. Though one wonders why he wants to be in the center ring of the clown show of politics in the great circus that is California.

He loves being California attorney general, a post his father held before him. Grounded in a marriage to his witty wife, Anne Gust Brown, he enjoys hiking in the Sierra.

Unless Dianne Feinstein suddenly decides two virtually impossible things: That she wants to run in a messy campaign, something she hates, and that she wants to abandon her successful years-long quest to be at the center of geopolitics as chair of the Senate Intelligence Committee, Brown's path to the Democratic nomination, and a likely general election victory, is clearcut.

All the other Democrats who want to be governor -- Los Angeles Mayor Antonio Villaraigosa, Lieutenant Governor John Garamendi, state Treasurer Bill Lockyer, super-rich former state Controller and big-time Obama backer Steve Westly among them -- have concluded they can't beat Brown. And it turns out that they like Brown. Only Gavin Newsom is sticking it out, at least so far, though he's not doing at all well.

Things got heated in a 1992 presidential debate between Bill Clinton and Jerry Brown.

There was a burst of badly-informed excitement around Newsom's candidacy when Bill Clinton said he'd appear at a fundraiser for him, which occurred on Monday night in LA. Much of California's much-diminished political press corps went for the spin that Clinton was "a game-changer" for Newsom And since Clinton and Brown ran acrimoniously against each other for president in 1992, maybe there was even a big feud between the two.

The reality, which I reported last month, and which is now very apparent, is quite different. Bill Clinton is on a long loyalty tour, repaying politicians who were very helpful to Hillary Clinton's campaign last year with fundraising appearances. Newsom, who has styled himself a California version of Obama, was actually a national co-chair of Hillary's campaign. He campaigned extensively for her, and also attacked Obama.

And Newsom's backing was very useful to the Clintons. As the man who legalized same-sex marriage in San Francisco, though not for long, in 2004, Newsom is an icon in gay rights circles where Clinton himself was a problem. As president, Bill Clinton was responsible for the controversial "don't ask/don't tell" policy with regard to gays in the military and signed the so-called Defense of Marriage Act. And Newsom, though he emerged last fall as the inadvertent TV star of the successful campaign to repeal same-sex marriage in California, had major backstop credibility for the Clintons in the human rights community.

In any event, Clinton is doing events like this with politicians all over the country. After appearing with Newsom in LA, where he issued a very tepid endorsement and appeared at a low-key fundraising event, the former president was in San Francisco for the next two days. But did no fundraiser for Newsom in his own city.

As for the big Clinton-Brown feud, it was pretty heated at times back in the day. But there are no quotes from this century and Brown and Clinton actually had an amiable meeting last year. The two have known each other for a long time; there was even some serious talk of Clinton, after he was defeated for re-election as governor of Arkansas in 1980, moving to California to become Brown's chief of staff. When I met Clinton in this period, he joked, accurately, that he was "the youngest ex-governor in American history."

Clinton, of course, decided to give it another go in Arkansas. After Brown's longtime advisor, Mickey Kantor, got Clinton a gig with the Democratic National Committee in order to keep a high-profile and move around the country, the future president got himself elected again in Arkansas.

The 1992 Democratic presidential campaign got nasty at times, sometimes even nastier than was publicly apparent. Clinton and Brown are two very smart, tough politicians. But after beating Clinton in a half-dozen primaries, but losing in pivotal New York, Brown knew Clinton had the upper hand. He stayed in the race but took his foot off the gas.

Clinton was well aware of this, as my old friend Warren Beatty and Clinton's main man in California, John Emerson, who was the best man at my wedding, served as emissaries between the two camps. Brown stayed in the race to guarantee he'd have the second highest number of delegates at the Democratic national convention in New York. But in more backed-off mode, running no TV advertising in the California primary to avoid a possible late embarrassment for Clinton, who ran all-out and finished first here.

I talked with Emerson about the California governorship the night of Clinton's LA fundraiser for Newsom. He was headed for an event, but not for Newsom. Now an investment banker and chairman of the LA Music Center, Emerson -- who was a national finance co-chair for Hillary and headed up Clinton's California delegation to the Democratic national convention last year in Denver, in addition to having run both of Bill Clinton's California campaigns -- is helping Brown.