| SAN FRANCISCO
SAN FRANCISCO Arnold Schwarzenegger became governor of California with a bang, toppling Governor Gray Davis in 2003 in a historic recall election seizing on voter anger over the state government's finances.
Now the Hollywood icon and former body builder is preparing to leave office bruised and battered by the state government's ongoing financial woes and warfare with lawmakers he bashed with gusto and famously called "girlie men."
But they're getting the last laugh.
Lawmakers may be unpopular with voters but they have focused their disappointment on Schwarzenegger, a cautionary tale for incoming Governor Jerry Brown, a Democrat elected last month over Republican and former eBay Inc Chief Executive Meg Whitman. Schwarzenegger could not run again for governor due to term limits.
Brown takes office on January 3 and already is busy addressing the ugly state fiscal situation that helped slash Schwarzenegger's standing with voters to about the same dismal level as that of Davis before they gave him his pink slip.
It's a sharp contrast with the goodwill Schwarzenegger had when he strutted into the state capital in Sacramento vowing to take down its special interests and blow up its bureaucracies.
A Republican who had never held public office before becoming governor of the most populous U.S. state, Schwarzenegger also pressed for the state government to rein in spending, putting the Democrat-led legislature on its heels.
A fan of the late economist Milton Friedman, he called for California to cut up its credit cards. But instead, its government has -- with his blessing -- borrowed tens of billions of dollars for public works, as well as to plug a budget gap, bankroll stem-cell research and build a high-speed rail network.
The momentum of Schwarzenegger's offensive did not last long because like Davis, he did not appreciate how much he would need lawmakers as partners in hard times like the recent years and over the long haul.
"He thought the legislature would do just what he told it to do," said Larry Gerston, a political scientist at San Jose State University.
"Schwarzenegger's arrogance was remarkably parallel to the arrogance of Davis. At one point Davis said the job of the legislature was to implement the vision of the governor," Gerston said. "People often fail to appreciate political office requires a specific skill set ... Schwarzenegger came into office with none of the tools."
BLOWBACK AND BUDGET BLUES
In 2005 Democratic lawmakers rallied alongside public employee unions and dealt Schwarzenegger a blow with successful campaigns against unabashedly conservative measures he put to voters to force a fundamental shift in the state's politics.
One ballot measure would have imposed a spending cap, reflecting his stock line that California's government had become addicted to spending beyond its means.
After that defeat he embraced "post-partisanship" and drew close to Democrats, culminating in 2006 with his signature on a landmark bill to roll back greenhouse gas emissions. Buoyed by a healthy economy, he won reelection that year against a weak opponent.
But any hope he had of restructuring the state's finances to prevent deficits each year faded in 2008 as California's housing market tumbled, the recession took hold and Lehman Brothers filed for bankruptcy, sending financial markets into turmoil.
That hit hard at California's government, which relies heavily on personal income taxes from the wealthy for revenue -- so hard that Schwarzenegger would dismay anti-tax Republican lawmakers by joining Democrats to temporarily raise more than $12 billion in taxes in 2009 to bolster the state's finances.
"California got clobbered," said Steven Frates, research director at the Davenport Institute at Pepperdine University's School of Public Policy.
"Schwarzenegger was kind of like the fellow who sits down to a game of poker and is dealt a hand with no pairs, no three-of-a-kind, no straights, no flushes," Frates added.
He was subsequently dealt weak budget hands and tacked back to spending cuts to balance the state's books, enraging Democrats. This year he signed a record-late budget in October filled with cuts to close a $19 billion gap.
The plan held for only a few weeks, and earlier this month Schwarzenegger urged more cuts to tackle a near-term budget gap of $6 billion.
Democrats said they would wait for Brown's budget plan next month. Brown has said the state budget gap may top $28 billion over the next 18 months, and like Schwarzenegger, has been speaking of the need for more cuts. At the same time, according to media reports on Thursday, the former two-term governor will call a special election to ask voters to extend temporary tax increases.
Analysts say he would do well to avoid Schwarzenegger's early combativeness and make nice with lawmakers to win their help for a special election. Its result could definitively guide long-term plans for stabilizing the state's finances with existing or more revenue.
"Arnold did talk about the problem but it ultimately got lost in a political, partisan blur," said Bill Whalen, a Hoover Institution fellow and former aide to former California Governor Pete Wilson.
(Editing by Leslie Adler and Dan Grebler)