Hasta La Vista, Arnold!: What California's Budget Mess Means for America

He was the perfect political superhero, sent to rescue California from spend-happy politicians at just the right time. And yet Arnold Schwarzeneggers reign as governor has turned into a disaster flick that could spell catastrophe for the Golden State—and the whole nation.

In 2003's historic recall election, the former Mr. Olympia pummeled dozens of candidates—from incumbent Gray Davis to former child actor Gary Coleman to porn star Mary Carey—on the road to Sacramento. He promised to abolish the odious car tax hike implemented by Davis. And to balance the budget, cut taxes and spending, and make California more business-friendly.

"He promised to stop the crazy deficit spending, cut up the credit cards, live within our means. And he did exactly the opposite. Schwarzenegger increased spending faster than we saw under Gray Davis," says Rep. Tom McClintock (R-Calif.), who was a state senator—and one of Arnold's challengers—six years ago.

Now the Golden State faces yet another spending-induced catastrophe. California could simply go broke by July. Sacramento reacted to the latest crisis by passing a massive tax increase in February, squeezing another $1,100 from the average family. Even the dreaded car tax, the issue that catapulted Arnold to office, is back.

How could it all have gone so horribly wrong, especially after it looked so wonderfully right? Well, it turns out there's a force in California politics that's much more powerful than the Governator: a culture of spending pushed by public-employee unions, money-grubbing corporate-welfare cases, and more.

Sadly, California and Schwarzenegger are hardly alone in spending well beyond their means. As many as 40 states face whopping deficits that are only going to get worse as the recession continues.

If country-wide trends do start in California, Rep. McClintock worries about what's in store for our nation. "As high taxes, high borrowing and high spending destroy Californias economy, Californians are moving to those 49 other states. If we allow the same policies to destroy our country where are we going to go?"

"Hasta La Vista, Arnold" is written and produced by Ted Balaker. Director of Photography is Alex Manning and Associate Producer is Paul Detrick.

For iPod, audio, and HD versions and links to related videos and articles, go to