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UPDATE 1-Schwarzenegger: Calif 'nation-state' leading world

(Adds Schwarzenegger, Jerry Brown quotes, details; edits)

SACRAMENTO, Calif., Jan 9 (Reuters) - Calling California a modern-day Athens and Sparta, Gov. Arnold Schwarzenegger said on Tuesday his state should lead the nation and the world by curbing greenhouse gases, requiring health insurance for all and offering other policy innovations.

In his fourth annual state-of-the-state address, Republican Schwarzenegger called for $43.3 billion in new bond spending for schools, prisons and other infrastructure -- on top of a record $42.7 billion approved by voters two months ago.

“We are the modern equivalent of the ancient city-states of Athens and Sparta. California has the ideas of Athens and the power of Sparta,” Schwarzenegger, who played Hercules in his first film role, told legislators. “Not only can we lead California into the future ... we can show the nation and the world how to get there.”

“We can do this because we have the economic strength, the population, the technological force of a nation-state.”

As an Austrian-born American, the former bodybuilder and actor cannot run for U.S. president, but the speech highlighted his impatience with “paralyzed” Washington and desire to influence national and even global public policy.

Last year, he backed pioneering legislation to cut the state’s greenhouse gas emissions 25 percent by 2020 -- even as the administration of Republican President George W. Bush has taken a skeptical view about global warming.

On Tuesday, Schwarzenegger said he would sign an executive order mandating a reduction of the carbon content of transport fuels by 10 percent by 2020.

“One area where we definitely need the climate to change is the national government’s attitude about global warming,” he said. “Let us blaze the way, for the U.S., for China and for the rest of the world.


Calling the health care system a “sick old man,” Schwarzenegger called for mandatory insurance and coverage for the 6.5 million state residents without insurance. Although he has repeatedly ruled out new taxes, his plan foresees a payroll tax for all but the smallest companies not offering health insurance. It would also tax doctors and hospital revenues.

California, home of Hollywood and Silicon Valley, has long had a major impact on American society. Yet in an era where many in Washington are focusing on the war in Iraq, Schwarzenegger is hoping to garner attention on pressing domestic matters.

“Given the stagnation that has been brought to the country by the executive branch in Washington, there is a tremendous opening,” former Gov. Jerry Brown, the state’s new Democratic attorney general, told Reuters. “It’s opening primarily because he is a Republican in an era when Republicans have been recalcitrant and somewhat reactionary.”

“I am particularly interested in the effort to move the president and to move the Congress on restricting greenhouse gases,” said Brown, who thrice ran for president himself. “I think Arnold Schwarzenegger can actually pivot the United States of America based on the push from California.”

After a confrontational state-of-the-state speech in 2005, Schwarzenegger suffered his worst political setback when voters rejected all of his conservative proposals that year. Then in 2006, he embraced a bipartisan tone before a legislature dominated by Democrats.

On Tuesday, the moderate Republican did revive one of his losing 2005 initiatives, calling for changes in how the state draws its political districts. He said the current system does not favor moderates, adding, “There was more turnover in the Hapsburg monarchy than the California legislature.”