Tightening California's Belt

This is a partial transcript of Special Report with Brit Hume, December 11, that has been edited for clarity.

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(BEGIN VIDEO CLIP)

GOV. ARNOLD SCHWARZENEGGER (R), CALIFORNIA: This state doesn't have any money right now. And therefore, we are forced into making cuts into programs. And I'm asking everyone in California that we have to tighten our belts, and everyone has to give here, because it is very tough. And like I said there is no money.

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BRIT HUME, HOST: Arnold Schwarzenegger found out something this week that anyone who has been around Washington a while knows for sure. The hardest thing in politics is not to raise tax, but to cut spending. And In California, where levels of spending in some areas are locked into the state constitution, it can be especially hard. So, it has been a tough week for the new governor.

To find out how he is doing, we're pleased to be joined by perhaps the state's savviest, political journalist, Dave Weintraub of the Sacramento Bee.

Hi, Dan.

DAN WEINTRAUB, SACRAMENTO BEE: Thanks, Brit.

HUME: Tell me what happened out there this week. What were the events? What did he present? What happened?

WEINTRAUB: Well, Governor Schwarzenegger is actually closing in on a bipartisan deal with the legislature on some of his preliminary moves to refinance the state's debt and get a new reserve requirement, he called it "a rainy day fund" for the future, to avoid this kind of problem 5 or ten years out. But he's got a short-term problem that is really befuddling ... him. He is trying to cut the budget. He's proposed about $2 billion in cuts so far, which is just a fraction of what he'll need if he is going to do this without a tax increase.

HUME: How have they gone over?

WEINTRAUB: A lot of guff for it. Well, the school lobby is all over him for considering suspending the constitutional requirement for education. The cops and firefighters are marching on the capitol because his rollback of the car tax increase is pinching local government budgets. Advocates of the disabled are calling him cruel and mean, for proposing to suspend the entitlement that allows them to obtain services. So, they're just all over him and he's fending them off.

HUME: Well, so what we have now is these proposals, I assume that he's made are before the legislature, which is going to be a while, I suppose, before they act on them.

WEINTRAUB: Right.

HUME: What is the sense -- any sense of the public sentiment and any sense of the legislature's sentiment?

WEINTRAUB: Well, the -- clearly the Democrats in the legislature have -- who control it by a large margin, have no desire to approve either his mid year cuts, which is asking for immediate approval. Or the first block of cuts he is proposing for the next fiscal year, which doesn't start till next summer. He has got pretty good support among the Republicans so far for that.

It's hard to read the general public. There's certainly been a lot of people marching at the capital and protesting at his events around the state. But it is hard to tell at this point how it is reaching the broader public. There is perhaps a sense that if he alienates or if all these interest groups start rushing at him, maybe the public will say, hey, at least this guy's shaking things up. We elected him to bring fundamental change and he's doing it. But as soon as that starts hitting individual voters' pocket books or services that they depend on, then he risks losing their support.

HUME: But Dan, it sounds a little bit from what you're saying is it may not hit their pocketbooks in the sense that if the Democrats in the legislature, as you know control the place by a considerable margin, will not go along with these budget cuts. He isn't going to get them. And they're not going to get hit. And of course, he will not, in effect, be able to deliver on what he said he will do. Am I wrong about that?

WEINTRAUB: Well, there's going to be a confrontation here early next year because he's clearly going to propose a new budget in January that includes no tax increases. And it is going to have these cuts that he's already proposed and then presumably even more. Higher education is probably going to take a hit. Other services are going to take a hit.

So, it is going to be a contest to see if the Democrats and the legislature can persuade the general public that these services that they value are threatened. Or if Schwarzenegger can say ... hey, we can weather this ... we can tighten our belts for a year. But the alternative is a tax increase, which you've said you don't want.

HUME: If you -- if he lacks the votes to put through his program and to get the Democrats to agree to some of the cuts he wants, what are then his options? I suppose, I guess, he could veto spending bills, correct? But that seems ...

WEINTRAUB: He can veto spending bills, but he probably can't make enough cuts that way to balance the budget because he can't zero out programs completely. And he's limited in what he can use his blue pencil for. He'll just have to try to really marshal public support, public opinion, given his populist appeal and how he got elected. Somehow he's going to have to try to bring pressure on the legislature to vote for these unpleasant cuts.

But you're right. It is actually much easier for him if he were to cave and support a tax increase. It would probably be easier for him to get that vote than it would be to get some of these cuts. So it looks like they're headed for the same old stalemate that we've had here in California for years. And it is going to be interesting, to say the least, of how he is going to guide them in some other direction.

HUME: We've about 30...

WEINTRAUB: It's not clear yet how he's going to do that.

HUME: We've got about 30 seconds left. How much of this spending, say in education, where I gather he's begun to make noises about education cuts, is enshrined in the state constitution because of referendums and really, seriously, untouchable?

WEINTRAUB: Well, it's touchable. You just need two-thirds vote of the legislature to get at it...

HUME: Oh.

WEINTRAUB: ... to suspend. That's what it takes to suspend that provision in the constitution.

HUME: Got you.

WEINTRAUB: Well -- the trouble he is in is -- that provision in the constitution would dictate about a 7 percent increase in education budgets next year.

HUME: Wow.

WEINTRAUB: Which is twice of what they need to keep up with enrollment and inflation. At the same time that he is hacking at the health and welfare programs.

HUME: Dan, thanks a...

WEINTRAUB: That's the confrontation.

HUME: Dan, thanks a million. We have got to take a break here...

WEINTRAUB: Thank you.

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