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Last Updated: Thursday, 9 October, 2003, 10:50 GMT 11:50 UK
Arnold's next big role

By Stephen Evans
BBC North America business correspondent

Arnold Schwarzenegger
Schwarzenegger may face more criticism if he wins

Between the two of them, they make the perfect governor: Gray Davis has mountains of gravitas and Arnold Schwarzenegger has enough charisma to outshine the California sun.

The snag is that they both lack the other's essential ingredient. The professional politician seems conspicuously awkward as a public performer while the actor seems conspicuously loathe to say how he'll terminate the state's budget deficit.

The difficulty is that both skills are needed. Mr Davis worked hard at the detail of finance but didn't have the leadership skill to convince Californians that hard choices had to be made.

Mr Schwarzenegger, on the other hand, has all the oratorical skills but may need a little more to tackle the budget deficit.

He has been astute in not promising very much of anything. Since his election he has, though, formally ruled out tax rises.

All the same many in the state wonder if he may yet follow Ronald Reagan, who raised taxes twice when he was governor of California.

Nobody doubted his inclination to cut them - as they don't with Mr Schwarzenegger - so any rise might still be politically acceptable in a way that they wouldn't have been had they come from a Democrat.

Bumps in the road?

Mr Schwarzenegger, however, does not have two assets that Mr Reagan had. He is not a seasoned politician as his predecessor was after years of activism in the movie industry, and he doesn't have time.

California's Democrat Governor Gray Davis
The outgoing Gray Davis may not be much help
There is normally a smooth transition between governors, with the out-going post-holder co-operating with the incomer. Nobody would blame Gray Davis if he dispenses with the pleasantries and headed straight for a deck-chair in Hawaii, leaving an ungrateful electorate to ponder the mess.

During any transition, there is a big change-over in officials and advisers. Nearly 4,000 appointments have to be made, and this transition would have to be made within barely a month - and with an obligation to present the new state budget to the state's legislature by 10 January.

And Mr Schwarzenegger would face severe political difficulties, both from right and left.

Conservative Republicans might take the view that Governor Schwarzenegger was too far from them on a range of issues from abortion to (possibly) taxes.

And Democrats might harbour bitterness after having the governorship snatched from them with three years to run.

"Let's let Arnie stew a bit," might be the kind of view whispered privately in Sacramento.


Mr Schwarzenegger has made one concrete proposal, saying he would repeal the recent hike in car tax.

The average licence for a family car has just jumped three-fold to about $210 as part of Gray Davis' effort to plug the gap in the budget, and in a flamboyant piece of showmanship, Mr Schwarzenegger - or at least his people - wrecked an Oldsmobile sprayed with the slogan "Davis Car Tax".

Woman walking a dog near San Francisco's Golden Gate Bridge
California is known as America's idyll
That may be the easy bit. In practice, the tax rise may be locked in.

Under California's labyrinthine constitution, the tax could probably not be undone until an alternative source of funds was found.

And therein lies the real problem. The arithmetic is unavoidable.

Mr Schwarzenegger has said he won't touch education but that accounts for nearly half the state budget. He's said he'll look again at employees' contracts - but there won't be easy give there either.

At the end of it all, Governor Arnold Schwarzenegger may follow a path from Hollywood to Sacramento trodden before by Ronald Reagan.

Mr Schwarzenegger is seeking extra funds from Washington and will carry out an audit of California's finances.

But if the answers from either direction don't add up to an easy solution, the Reagan route might also be Mr Schwarzenegger's only feasible direction.

The anti-tax Ronald Reagan had the political charisma and charm to carry off tax rises. Might Arnold do the same?

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