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Schwarzenegger Has No Backup Plan If Bond Fails
Fox Reno ^ | December 2, 2003 | Associated Press

Posted on 12/02/2003 11:09:58 AM PST by yonif

SACRAMENTO -- Gov. Arnold Schwarzenegger doesn't have a backup plan if the Legislature or voters reject his proposal to sell $15 billion worth of bonds to pay off the state's existing deficit.

"Failure is no option. It just doesn't exist," the Republican governor said Monday. Without a backup, he said, "That means it has to happen."

To push the plan, which must be approved by the Legislature by midnight Friday, the new governor said he's ready to take his budget proposal to the voters in recalcitrant lawmakers' districts and he will invite legislators to join him in pushing the bond deal.

He pledged to "make sure that everyone in this state knows that this is absolutely essential."

Schwarzenegger's bond plan would replace a $10.7 billion bond issuance by former Gov. Gray Davis that's being contested in court, and would shore up the state's spending plan through June 2005. His finance director, Donna Arduin, told state lawmakers last week that Schwarzenegger's $15 billion plan and the $10.7 billion in legally questionable debt back each other up: one or the other is necessary, but if both fail the state will run out of money by the end of the fiscal year in June.

The $15 billion deal is vital to Schwarzenegger's budget plans, which also includes $3.8 billion of cuts in the budgets for this and next year and a spending cap.

"If we don't have that, and the $10.7 billion bond falls through in court, then we have no money and then we have to make cuts that are disastrous," Schwarzenegger said.

Schwarzenegger said he wouldn't consider raising taxes to fill the current budget shortfall.

Just because he's visiting legislative districts to push the plan doesn't mean "I'm trying to put the squeeze on legislators," Schwarzenegger said Monday in a meeting with reporters. He said lawmakers were welcome to join him in talking to voters about the budget plans.

Senate President Pro Tem John Burton said he wanted to see a shorter bond period, and a temporary spending cap, not a permanent one, and that it was based on a fiscal year that didn't harm education and other programs.

"I think it makes sense to live within your means when you can, but sometimes when revenues are down, the necessity for programs go up," he said. "When there's high unemployment, when revenues go down ... that's when kids have to go on the Healthy Families programs."

While he proposed $3.8 billion in spending cuts, Schwarzenegger said he was willing to listen to lawmakers' and others' concerns about where those cuts are.

On Monday, children health advocates said a plan to freeze enrollment in the state's Healthy Families program could put tens of thousands of low-income children on a waiting list for health insurance.

That cap would save the state $77 million in the next two budgets, the Schwarzenegger administration estimated, but the cuts also seemingly contradict Schwarzenegger's statements during the campaign, in which he criticized Davis for not doing enough to enroll children in the low-cost health insurance program.

About 650,000 children are insured through the program, which provides low-cost medical, dental and vision health coverage to children in low-income families.

But, there are about 300,000 children who are eligible but aren't yet enrolled in Healthy Families, said advocates with the 100 Percent Campaign, a coalition of three children health groups.

Advocates from Children Now, the Children Partnership and the Children's Defense Fund said they were alarmed to hear that one of the new governor's first proposals targeted the low-cost health insurance program.

"We're very disappointed because during the governor's campaign, he shared our goal of making sure that all the children in the state have health insurance," said Deena Lahn of the Children's Defense Fund.

The enrollment level expected on Jan. 1, which would be the cap level, is 20,300 for immigrants and 712,000 for non-immigrants, said H.D. Palmer, spokesman for Schwarzenegger's Finance Department. "This is a cap on enrollment as opposed to a freeze," Palmer said, which means others can join the programs as vacancies occur. With a freeze, Palmer said, the openings would remain vacant.

In this situation, more than 17,000 children go off the rolls naturally each month because of change in age or income status, he said, so those vacancies would be filled by newcomers.

"This is one of the short-term decisions that the governor had to make in order to ensure the longevity of important programs like Healthy Families," Palmer said. He said Schwarzenegger's goal is to protect the core program while letting others join as openings become available.

During his only debate appearance before the Oct. 7 recall election, Schwarzenegger criticized Davis for not getting more children enrolled in Healthy Families.

The government, Schwarzenegger said during the debate, "not done a good job in reaching out and finding the people and letting them know to sign up and find easy ways for them to sign up, (so) two-thirds of the people that are eligible do not have the child care. It is really terrible.

"If I become governor I would immediately go out there ... and get it out so everyone knows about it and every one signs up because we must insure our families, the low-income families, especially the children," he said at the September debate.

Medi-Cal provides free or low-cost health services to children in low-income families. Healthy Families offers low-cost insurance to children in families that make too much to qualify for Medi-Cal, but less than 250 percent of the federal poverty level -- currently approximately $38,000 for a family of three.

For every dollar California spends on Healthy Families, the federal government pays two. This year, California's share is about $294 million.

Enrollees pay a monthly premium and $5 copayments for prescriptions and doctor visits.

Florida, where Arduin was budget director before she was hired by Schwarzenegger, adopted caps on a similar program in July. By the end of September, the waiting list had grown to almost 60,000 children.

Also Monday, Democratic state Treasurer Phil Angelides, a possible Schwarzenegger challenger in 2006, said he will launch a statewide drive opposing the new governor's $15 billion borrowing plan. Angelides plans a formal announcement Tuesday at a Sacramento school yard, with school children, college students and teachers who fear a school bond measure also on the March ballot will be imperiled by Schwarzenegger's proposal.


TOPICS: Business/Economy; Culture/Society; Front Page News; Government; News/Current Events; US: California
KEYWORDS: bonds; calgov2002; california; catrans; gopbigspender; mcclintocklost; schwarzenegger
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1 posted on 12/02/2003 11:09:59 AM PST by yonif
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To: yonif
What did they expect him to do, pull a rabbit made of money out of his butt?
2 posted on 12/02/2003 11:13:35 AM PST by FormerLib
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To: yonif
Gov. Shwarzenegger is scheduled to have a rally around noontime here in downtown San Diego.

-Regards, T.
3 posted on 12/02/2003 11:17:56 AM PST by T Lady (Who Let the 'RATS Out?!!)
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To: yonif
"When there's high unemployment, when revenues go down ... that's when kids have to go on the Healthy Families programs."

Or go home to Guadalajara.

4 posted on 12/02/2003 11:23:13 AM PST by Mr. Jeeves
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To: yonif
His "back-up" plan, IMO, is to lay off State employees.
5 posted on 12/02/2003 11:23:29 AM PST by BenLurkin (Socialism is Slavery)
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To: yonif
There is a backup plan: borrow from the Feds, layoff state employees, and campaign like hell for Republicans in '04. Hopefully he'll do the last two anyway.
6 posted on 12/02/2003 11:26:15 AM PST by Recovering_Democrat (I'm so glad to no longer be associated with the Party of Dependence on Government!)
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To: BenLurkin
lay off State employees.

as many and as fast as possible. And then cut the retirement of the rest of them. Clean sweep.

7 posted on 12/02/2003 11:27:13 AM PST by EggsAckley (..................."Dean's got Tom McClintock Eyes".........................)
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To: BenLurkin
Said Arnold: "Ja, dat iss vat I vill do. I swear by Odin dat I vill shut down da whole damned State."
8 posted on 12/02/2003 11:33:22 AM PST by Enterprise
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To: yonif
"Failure is no option. It just doesn't exist," the Republican governor said Monday

Bottom line.

9 posted on 12/02/2003 11:44:25 AM PST by FairOpinion
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To: yonif
My guess is that Ahnold will pull it off. He has been a winner all his life because he never gives up!
10 posted on 12/02/2003 11:57:33 AM PST by international american
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To: international american
My Money is on Schwarzenegger.
11 posted on 12/02/2003 11:59:59 AM PST by blackie
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To: yonif
"Schwarzenegger's bond plan would replace a $10.7 billion bond issuance by former Gov. Gray Davis that's being contested in court, and would shore up the state's spending plan through June 2005. His finance director, Donna Arduin, told state lawmakers last week that Schwarzenegger's $15 billion plan and the $10.7 billion in legally questionable debt back each other up: one or the other is necessary, but if both fail the state will run out of money by the end of the fiscal year in June.

The $15 billion deal is vital to Schwarzenegger's budget plans, which also includes $3.8 billion of cuts in the budgets for this and next year and a spending cap.

"If we don't have that, and the $10.7 billion bond falls through in court, then we have no money and then we have to make cuts that are disastrous," Schwarzenegger said.

Schwarzenegger said he wouldn't consider raising taxes to fill the current budget shortfall."

Gov. Schwarzenegger says bonds are only option

12 posted on 12/02/2003 12:03:20 PM PST by FairOpinion
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To: blackie
"My Money is on Schwarzenegger."

I don't think he'll be able to pull it off, being a winner or not in his previous life. He's already taking shots from conservatives (McClintock) and now the dems (state treas.). I don't think he had a very good handle on what he was getting into during the campaign - note how fast he's already broken campaign promises (talking points).
13 posted on 12/02/2003 12:10:49 PM PST by familyofman
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To: yonif
Schwarzenegger Has No Backup Plan If Bond Fails

Bond never fails...


14 posted on 12/02/2003 12:12:15 PM PST by Ichneumon
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To: familyofman
I left CA in '90 and will never go back ~ not even to visit relatives and friends ~ when they want to see the old curmudgeon they come to Oregon. :)

I just had to post something when I saw the header. :)
15 posted on 12/02/2003 12:26:32 PM PST by blackie
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To: yonif; All
Gov. Arnold Schwarzenegger doesn't have a backup plan if the Legislature or voters reject his proposal to sell $15 billion worth of bonds to pay off the state's existing deficit.

Sure he does--

UNLEASH TOM MCCLINTOCK!

(Sorry, it was just too tempting to resist...;-)

16 posted on 12/02/2003 12:38:02 PM PST by SteveH
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To: yonif
What did Grey-out have?
17 posted on 12/02/2003 12:53:10 PM PST by demlosers
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To: yonif
Here's the backup plan. In fact this is the real answer to the budget woes.

"Have you ever had to make serious cuts -- 15% or more -- in your family budget because of an unexpected job -- loss or unforeseen expense? It's not pleasant, but it's not impossible. And it's also not permanent. As long as you're willing to face your financial problems squarely, you can be sure that the hard times won't last forever and things will improve.

But if you're not willing to face those problems -- if you paper over your debt by borrowing and continue to spend as if that debt didn't exist -- those hard times will follow you far into the future.

State government is no different. And as the new administration decides which road it will take, it is important to understand the simple math of the state's finances.

California's current budget deficit is caused by two actions Gray Davis took last year to paper over his mismanagement: He illegally tripled the car tax and he attempted to borrow $12.6 billion unconstitutionally.

Gov. Schwarzenegger rescinded the illegal tax increase on his first day in office. It's important to note the word "illegal." Not one of the conditions required to raise the car tax had been met, and it was only a matter of time before the courts ordered the money to be returned to taxpayers with interest. By acting now, he saved California from having a multi-billion dollar hole blown in a future budget by court order.

But repairing this problem requires that local governments be reimbursed for their losses. In addition, the courts have already invalidated $1.9 billion of Mr. Davis' borrowing plan, further deepening the deficit. According to the Legislative Analyst's Office, these developments mean that the state will end up spending $76.9 billion this year, with only $74.2 billion in revenue.

It gets worse. The courts are also poised to strike down the additional $10.7 billion of borrowing in Mr. Davis' last budget. It is not a pleasant financial situation. But it is also not impossible. If the current rate of state spending were reduced 13.4% on Jan. 1 and frozen through Gov. Schwarzenegger's first budget, the state would be back in the black, free and clear of external debt, and able to start the governor's second year in 2005 with a clean slate.

A 13.4% reduction would mean cutting $5.2 billion from this year's budget before Jan. 1 and setting next year's budget at $66.6 billion. That's a big cut -- and it means giving up billions of dollars of programmed spending increases next year. But it's still 15.2% more than California was spending when Mr. Davis took office. And after 18 months of austerity, Gov. Schwarzenegger would be able to plan his second budget with $12 billion of breathing room in 2005 when revenues are projected to reach $78.6 billion. Like a family that has faced its finances squarely and tightened its belt, California would be solidly back on its feet and looking toward a sunny future.

The alternative is to borrow the difference at heavy rates of interest over the next generation. Like a family that can't bear to change its ways, it would end up dragging its financial difficulties into future years as it struggles to meet its current expenses and pay down a crushing credit-card debt as well.

These are the two roads diverging in the budget woods and the choice that is made in coming weeks may well determine whether California has the fresh financial start it deserves, or whether the ghost of Mr. Davis' excesses stalks a generation to come."

Tom McClintock
12/1/2003 Wall Street Journal

18 posted on 12/02/2003 12:58:36 PM PST by kellynla ("C" 1/5 1st Mar Div. Viet Nam 69 &70 USMC Semper Fi!)
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To: yonif
Gotta love this man. He's really turning up the heat on the libs.
19 posted on 12/02/2003 1:08:43 PM PST by ClintonBeGone
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To: SteveH
UNLEASH TOM MCCLINTOCK!

LOL The mother of all SKUDS duds.

20 posted on 12/02/2003 1:14:13 PM PST by ClintonBeGone
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To: yonif
Once California runs out of money..The War of The Machines will commence
21 posted on 12/02/2003 1:18:20 PM PST by PBRSTREETGANG
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To: Ichneumon
"Bond never fails... "

===

Cute! :)
22 posted on 12/02/2003 1:18:57 PM PST by FairOpinion
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To: familyofman
I don't think he'll be able to pull it off, being a winner or not in his previous life. He's already taking shots from conservatives (McClintock)

He's takin' shots from the whackjobs only, and that includes the mentally unstable McClintock. The people still are excited about him and the scumbag democraps know it. This is the New Republican face and you outta get used to it. It ain't your daddy's party. You just watch what California does. Its going to retake its rightful place as the greatest state in the nation. All you from the other 49 outta get used to that, too.

23 posted on 12/02/2003 1:20:56 PM PST by 68 grunt (3/1 India, 3rd, 68-69, 0311)
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To: kellynla
"The $15 billion deal is vital to Schwarzenegger's budget plans, which also includes $3.8 billion of cuts in the budgets for this and next year and a spending cap. "

From article I posted in my post #12.

===

Arnold has REAL and REALISTIC solutions, not like McClintock, who still seems to be working to undermine the Republican governor by writing articles in the WSJ, which you just posted -- attacking Arnold's solution, which IS the only realistic one.

24 posted on 12/02/2003 1:24:57 PM PST by FairOpinion
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To: FairOpinion
McClintock! Whadda fruitcake! Let him fade to obscurity.
25 posted on 12/02/2003 1:30:27 PM PST by 68 grunt (3/1 India, 3rd, 68-69, 0311)
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To: 68 grunt
He's takin' shots from the whackjobs only, and that includes the mentally unstable McClintock. The people still are excited about him and the scumbag democraps know it. This is the New Republican face and you outta get used to it. It ain't your daddy's party. You just watch what California does. Its going to retake its rightful place as the greatest state in the nation. All you from the other 49 outta get used to that, too.

Here Here! Hopefully we've heard the last squeek from TM.

26 posted on 12/02/2003 1:32:50 PM PST by ClintonBeGone
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To: ClintonBeGone
LOL The mother of all SKUDS duds.

OK, your turn for a constructive suggestion ;-)

27 posted on 12/02/2003 1:34:43 PM PST by SteveH
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To: All
Goes for the other Arnold bots too. You're all defending a guy who publicly states he has no plan B. So what's *your* plan B? Dissing a competing point of view is not constructive.
28 posted on 12/02/2003 1:40:02 PM PST by SteveH
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To: SteveH
"You're all defending a guy who publicly states he has no plan B."

===

You seem to be missing his "strategery".

"Failure is no option. It just doesn't exist," the Republican governor said Monday. Without a backup, he said, "That means it has to happen."

29 posted on 12/02/2003 1:46:56 PM PST by FairOpinion
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To: FairOpinion
"realism?"...you think floating bond issues is "realistic?"...I don't know what you're smoking but your concept of reality is laughable...NY is still paying on 1970 bond issues!!! Those of us who actually pay taxes in CA would rather suck it up for a year than pay for it down the road for the next 30 years! And if you and Arnold can't handle some constructive advice then maybe you should retire to an old folks home and Arnold should stick to reading scripts and let the adults who actually pay the bills around here solve the budget problems.
30 posted on 12/02/2003 1:49:44 PM PST by kellynla ("C" 1/5 1st Mar Div. Viet Nam 69 &70 USMC Semper Fi!)
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To: SteveH
what's *your* plan B? Dissing a competing point of view is not constructive.

Plan A = defeat the liberals. Plan B = See Plan A. Enough said?

31 posted on 12/02/2003 1:59:58 PM PST by ClintonBeGone
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To: kellynla; FairOpinion
"And if you and Arnold can't handle some constructive advice then maybe you should retire to an old folks home and Arnold should stick to reading scripts and let the adults who actually pay the bills around here solve the budget problems."
 

BLAH BLAH BLAH

Click Above For SORE-LOSERMAN language translation

 

32 posted on 12/02/2003 2:11:28 PM PST by ClintonBeGone
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To: kellynla
"Those of us who actually pay taxes in CA would rather suck it up for a year than pay for it down the road for the next 30 years! "

===

So now you think YOU personally, and YOU ALONE, speak for ALL Taxpayers in California.

As I said, reality is clearly not in your or McClintock's dictionary.
33 posted on 12/02/2003 2:15:51 PM PST by FairOpinion
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To: ClintonBeGone
Cute picture and accurate. We might as well post it right here. :)

What is sad to see, is that, as usual, McClintock and his kool-aid drinkers really want to see Arnold fail, and California get destroyed, because they still think that somehow that will give a better chance to McC the next time.

If McC really wanted reforms, he would be working with the other Republicans to help cut the budget, instead of writing articles publicly denouncing Arnold's plan and offering nothing, but unworkable, unrealistic ideas.

34 posted on 12/02/2003 2:19:37 PM PST by FairOpinion
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To: blackie
My Money is on Schwarzenegger.

You bet it is. While your wallet is open you might want to bend over. Less painful that way.

35 posted on 12/02/2003 2:20:58 PM PST by Amerigomag
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To: FairOpinion
What is sad to see, is that, as usual, McClintock and his kool-aid drinkers really want to see Arnold fail, and California get destroyed, because they still think that somehow that will give a better chance to McC the next time.

Those people are of more danger and threat than the liberals because they can get much closer to the house. I say they can't be trusted and are more dangerous than the latter. I have no doubt that Arnold will destroy their aspirations as he brings hope to the people that matter in California - people like you and me.

36 posted on 12/02/2003 2:27:38 PM PST by ClintonBeGone
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To: yonif
"Failure is no option. It just doesn't exist," the Republican governor said Monday. Without a backup, he said, "That means it has to happen."

Well, that's a nice attitude, but have fun trying to sell a $15 BILLION tax to the people who are already saddled with billions in bond indebtedness. A LOT of people will just not support it.

So cut spending MORE and deport the ilegals that are causing social spending to be so damn high in the first place!

37 posted on 12/02/2003 2:32:33 PM PST by StoneColdGOP (McClintock - In Your Heart, You Know He's Right)
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To: ClintonBeGone
"Those people are of more danger and threat than the liberals because they can get much closer to the house. I say they can't be trusted and are more dangerous than the latter. I have no doubt that Arnold will destroy their aspirations as he brings hope to the people that matter in California - people like you and me."

==

I totally agree. They were and are the best allies the Dems could have -- succeeded in keeping Republicans out of state wide offices for years, but NO MORE!
38 posted on 12/02/2003 2:40:21 PM PST by FairOpinion
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To: 68 grunt
>> McClintock! Whadda fruitcake! Let him fade to obscurity. <<

I'm so glad are you RINO-lovers are stuck with Arnold. I can't WAIT until he raises your taxes and signs some kooky gun laws. More proof than ever you that you "Republicans" DESERVE him!!

Please, take George Ryan too!! He can WIN!!!

39 posted on 12/02/2003 2:44:04 PM PST by BillyBoy (George Ryan deserves a long term...without parole.)
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To: BillyBoy
"Schwarzenegger said he wouldn't consider raising taxes to fill the current budget shortfall."

See article in my post #12.
40 posted on 12/02/2003 2:49:48 PM PST by FairOpinion
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To: yonif
IMO a real Republican would be salivating at the thought of making the necessary cuts to California's budget.
41 posted on 12/02/2003 4:22:33 PM PST by thoughtomator (Real Americans have no reason to hyphenate!)
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To: StoneColdGOP
On top of that, imagine negotiating with lenders now that the desperate straits and lack of option of refusal on the part of the borrower are public knowledge. Junk bond rating, here we come!
42 posted on 12/02/2003 4:27:07 PM PST by thoughtomator (Real Americans have no reason to hyphenate!)
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To: Amerigomag
Pssssssssssst ~ I moved from CA in '90 and will not be returning ~ even for a visit.

Not my money ~ it's all tied up in survival equipment. :)
43 posted on 12/02/2003 4:28:23 PM PST by blackie
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To: demlosers
What did Grey-out have? MORE LIES!!

Davis and Angelides wanted to float a bond deal for between $13 and 15 Billion dollars without any voter input, which is how they "Balanced" the budget. (along with some other smoke and mirrors) The state constitution will NOT allow that. Anything over $300,000 MUST be voted on by voters at large.

Angelides is talking out of all sides of his mouth. He is running for Gov in 3 years, and he is already campaigning. He is lying about anything he and Davis planned because they didn't have any other ideas or plans, either.
Davis has lied to the voters all of his life. Phil Angelides is a clone of Davis, and about 8% as attractive.

The Republicans have to get the message out that the Davis/Angelides plan of borrowing was the same, only illegally structured, leaving out the voters. Arnold is doing it legally-taking it to the voters.
In any case, there has to be wholesale layoffs of the duplications within Calif employment structure.
The bonds that have to be floated will need as good an interest rate as we can get, and we will NOT get a good rate with a bloated amount of employees sucking at the state teat. JMO
44 posted on 12/02/2003 4:40:38 PM PST by ridesthemiles (ridesthemiles)
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To: BillyBoy
... I'm so glad are you RINO-lovers are stuck with Arnold. I can't WAIT until he raises your taxes and signs some kooky gun laws. More proof than ever you that you "Republicans" DESERVE him!!

Well BillyBoy, when your boogeymen come out from under your bed, you be sure and ping me, okay?

45 posted on 12/02/2003 5:33:19 PM PST by 68 grunt (3/1 India, 3rd, 68-69, 0311)
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To: FairOpinion
You seem to be missing his "strategery".

No, I don't think so. My take on his talk about "Failure is no option" is that it is just a pose. Given uncertainty, and the stakes involved, he is sure to have scoped out the alternatives. I don't take political statements at face value these days from any politicians... as the saying goes, your mileage may vary...

46 posted on 12/02/2003 9:33:26 PM PST by SteveH
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To: FairOpinion
Actually, here is the alternative in your #12:

"If we don't have that, and the $10.7 billion bond falls through in court, then we have no money and then we have to make cuts that are disastrous," Schwarzenegger said.

I'm not sure how that's much different from unleashing Tom. Again, your mileage may vary...

47 posted on 12/02/2003 9:36:36 PM PST by SteveH
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To: ClintonBeGone
Plan A = defeat the liberals. Plan B = See Plan A. Enough said?

Hmm, as long as it's accurate, I guess. Let's hope it does not evolve to another boiling-frog paradigm...

As folks often say, the devil is in the details...

48 posted on 12/02/2003 10:28:34 PM PST by SteveH
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To: blackie
I left CA in '90 and will never go back ~ not even to visit relatives and friends ~ when they want to see the old curmudgeon they come to Oregon.

See, that's what happens when you move to a dark, cold, gloomy, rainy place like Oregon. You turn into an old curmudgeon.

The greatest state of the greatest country on earth!


49 posted on 12/02/2003 10:38:46 PM PST by Joe Hadenuf (I failed anger management class, they decided to give me a passing grade anyway)
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To: SteveH
Hmm, as long as it's accurate, I guess. Let's hope it does not evolve to another boiling-frog paradigm...

Have faith my friend. Arnold won't let us down.

50 posted on 12/03/2003 6:31:20 AM PST by ClintonBeGone
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