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WITH NEW TAXES, WE SOON MAY ALL MISS OLD ARNOLD.

Byline: CHRIS WEINKOPF

CHASTENED and changed, from the wreckage of his special-election route emerges a new Gov. Arnold Schwarzenegger with new ideas.

The new Arnold takes seriously the mandate to cooperate with the state's legislative leaders - the same folks who, only a month ago, he said, were ``taking our country, our state, down almost into bankruptcy'' through ``an insane system of spending, spending, spending, and borrowing and borrowing.'' The new Arnold seems to like spending and borrowing, to the reported tune of $50 billion via a massive bond to overhaul California's crumbling infrastructure.

If you can't beat 'em, join 'em.

While the old Arnold worried about ``creating more debt, which our future generations have to pay off,'' the new Arnold apparently has no such fears. His proposed bond would be more than three times larger than the biggest previous bond in this over-indebted state's history.

And while the old Arnold warned, before the special election, that if his propositions failed, a tax hike could be the tragic result, the new Arnold seems to have made peace with that possibility.

A $50 billion loan would command $3 billion in annual interest and debt payments. It's hard to imagine the state's legislative leaders agreeing to find that money in the existing budget, and Wall Street would want some assurance that the state would be good for the cash. Thus the likelihood of some sort of new, dedicated revenue stream (read: tax hike).

Not that Sacramento should, in theory, have any problem coming up with the money without raising taxes. The economy is growing at a fast clip, so fast that for the first time in a long time, the state legislative analyst predicts no deficit in next year's budget. The housing market alone has provided a windfall in property-tax revenues. The state's sales-tax profits on the high price of gasoline would make Big Oil executives blush.

But the days of partisan budget battles are, for the moment anyway, behind us. And so in the new Arnold, we may be witnessing the making of the full-fledged Republican ``moderate'' - liberal on social issues and, well, liberal on fiscal ones, too.

I miss the old Arnold.

But what's Schwarzenegger to do? Hollywood taught him that you don't make sequels to flops. When the audience rejects the product, you need to reinvent. So the governor took a much-needed vacation from the electorate by going to China, hired a former Gray Davis aide to be his chief of staff, and began floating the new big idea that he hopes will save his political career.

Like President George W. Bush before him, Schwarzenegger seems to think he can beat Democrats at their own big-spending game. Legislative leaders had previously announced their own plans for a $10 billion bond. That's chump change compared to what Arnold may bring to the table.

To his credit, Schwarzenegger is addressing a real, undeniable need. California's roads are falling apart, its highways are clogged, its ports are inadequate, and booming trade and population will only make these deficiencies worse in the years ahead. Given three decades of official neglect, drastic measures are surely needed to quickly bring the decaying infrastructure up to par.

Still, in a state that's seen spending steadily increase two to three times faster than the rates of population growth and inflation, how is it possible that such critical needs still go ignored? How could Sacramento seriously ask for new taxes to pay for infrastructure when it still raids gas-tax revenues - which are supposed to fund transportation projects - to perpetuate its inefficient ways?

Those are questions better suited for the old Arnold, the one who was concerned with curing California's wasteful-spending addiction, not enabling it. The one who was willing to take a close look at how Sacramento spends taxpayers' money, how it finances its operations and whether the state gets a fair return on its contracts with public-employee unions.

But in the special election, voters made it clear that they had had it with the old Arnold. They voted to put him back on the shelf, opting for a more easy-going replacement that wouldn't pick fights or ask uncomfortable questions. Little did they know, or care, that this new Arnold might also come with mountains of debt and higher taxes.

Soon we might all miss the old Arnold.
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Title Annotation:Viewpoint
Publication:Daily News (Los Angeles, CA)
Date:Dec 4, 2005
Words:719
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