Retirement Roulette

Don't Gamble With My Pension

They've All Stepped on Schwarzenegger's Lines

Nurses, firefighters -- even widows -- have put him on the defensive and his agenda in disarray.

By Mark Z. Barabak and Robert Salladay

Demonstrators outside St. Monica’s Church in Santa Monica protest benefit cuts proposed by Gov. Arnold Schwarzenegger.SACRAMENTO — In the weeks after Gov. Arnold Schwarzenegger unveiled his sweeping plan to transform California, he complained repeatedly that lawmakers were just "hanging" and refusing to negotiate.

But while the governor was waiting fruitlessly for Democrats to come to the bargaining table, his opponents were hardly idle.

Working furiously behind the scenes, they mapped a brazen strategy to undermine the governor's agenda and beat Schwarzenegger at what he does best: reaching beyond Sacramento to mold public opinion and bring voters to his side.

Their multipart plan seized on sympathetic figures — nurses, teachers, firefighters and, most heart-tugging of all, widows and orphans — to portray the governor as cruel and put a human face on the "special interests" he promised to rout from the Capitol. One memo, prepared for Los Angeles union officials and echoed by other groups, advised Schwarzenegger's opponents to use widows of police officers to testify that one of the governor's proposals would drive them into "the gutter."

The effort worked far better than either side anticipated, according to dozens of interviews reconstructing the turn of events. In just a few months, Schwarzenegger has gone from seeming invincibility to a politically precarious state, his approval ratings sagging and his staff plagued by internal scuffles. He has abandoned key parts of his reform agenda and signaled his eagerness to bargain on others.

"He picked too many fights on the wrong issues with the wrong people," said Darry Sragow, one of many California Democratic strategists who are as surprised as they are delighted by the governor's plight.

When Schwarzenegger announced his overhaul agenda in January, he predicted it would prompt protests. He was, after all, striking at the heart of some powerful groups: public employees, teachers, entrenched politicians in Sacramento and Washington, D.C.

"The special interests will run TV ads calling me cruel and heartless," Schwarzenegger told lawmakers gathered in the Assembly chamber for the governor's annual speech to the Legislature. "They will organize protests out in front of the Capitol."

Schwarzenegger demanded that lawmakers pass his ambitious agenda — or he would go directly to voters, as he did last year in a successful bipartisan effort to deal with the state budget and workers' compensation.

If enacted, his plan would overhaul the state's pension system, cap state spending, change the pay scale for teachers and revolutionize the drawing of district lines for members of Congress and legislators.

Democratic lawmakers who were loath to confront the governor during his first year in office, fearing they would be labeled obstructionists, were roused to action by the combative State of the State speech, which they took as a declaration of political war. Eager to avenge the recall of Gov. Gray Davis — and soften up Schwarzenegger in advance of the 2006 elections — legislators appeared conciliatory in public but privately spurned the governor's appeals to work together.

Boosting the Democrats were their political allies, particularly the well-funded public employee unions.

The unusually cohesive opposition would run millions of dollars in attack advertising that approached election-season intensity. They would pick apart Schwarzenegger's vague and hastily drawn proposals to dramatic benefit, challenge the governor in the courts and dog him at his appearances — with teachers, firefighters and nurses in uniform spoiling his carefully staged public events.

Their objective: to beat the governor "at his own game," as Bob Baker, president of the Los Angeles Police Protective League, put it.

Although outside forces played an important part in Schwarzenegger's slump, even those sympathetic to the governor say many of his problems are self-inflicted, a result of overreaching, hubris, poor staff work and serious miscalculations.

The governor's penchant for improvisation, which many find refreshing, has often confounded his aides, forcing them to scramble to keep up with — and clean up after — their boss. His lack of follow-through — unveiling his agenda with a flourish, then abruptly turning to other matters — has undermined his salesmanship.

Above all, Schwarzenegger's friends and enemies agree, the governor miscalculated by trying to accomplish too much in too short a time, without laying the necessary groundwork.

It is still early in the political season. Schwarzenegger has yet to determine whether to call a special election for November and what measures would be on the ballot. Even the most buoyant Democrat concedes that Schwarzenegger remains a strong favorite if he chooses to run for reelection next year.

"The fact mere mortals like Jerry Brown and Pete Wilson were able to overcome even bigger challenges and be reelected makes it difficult to see Arnold Schwarzenegger getting defeated," said Republican campaign strategist Kevin Spillane, referring to earlier governors who coasted to second terms after political upheavals.

Still, the sight of Schwarzenegger stumbling badly has energized his foes and frustrated Republicans, not to mention the governor's influential wife, Maria Shriver, who has begun looking outside the administration for help. For one of the few times in his long and varied public career, the famously disciplined Schwarzenegger has appeared uncertain and unfocused.

"What spending cap is he talking about? What redistricting plan is he talking about?" asked Allan Hoffenblum, another GOP strategist and one of many Republicans eager for the governor to succeed but frustrated by his seeming lack of direction. "Right now, what are we supposed to rally behind?"

If there is a precise moment when the governor began his political descent, it may have been the morning of Dec. 7. Schwarzenegger stood inside a cavernous convention hall in Long Beach, his wife at his side, as he addressed the Governor's Conference on Women. In the middle of the governor's speech, a half-dozen protesters stood up and began chanting.

It is unclear whether Schwarzenegger heard what they were saying. But his off-the-cuff response has resonated widely ever since. "Pay no attention to those voices over there," the governor said. "They are the special interests, and you know what I mean. The special interests don't like me in Sacramento because I am always kicking their butts."

The demonstrators turned out to be nurses, upset that the governor had signed an executive order overturning a state law requiring more nurses in hospital rooms. The stated reason for Schwarzenegger's action — his concern over a chronic nursing shortage — was soon lost in the symbolism of an irresistible story line: the Terminator bullying nurses.

The California Nurses Assn., one of the state's most assertive unions, began dogging the governor at public appearances, from a stop at a fitness convention in Ohio to a fundraiser at the Ritz-Carlton in San Francisco. Others joined in.

"They did something we could never have done," said state Senate Leader Don Perata, an Oakland Democrat. "They brought together groups that rarely work together — teachers, nurses, firefighters. By attacking so boldly and labeling them special-interest groups, he declared war on constituencies as popular, or more popular, than he was."

The result, frustrated Schwarzenegger aides concede, was a redefining of the political debate over the governor's "year of reform" agenda.

"It's very easy when the governor campaigns against 'special interests,' " said one Schwarzenegger strategist, demanding anonymity to avoid embarrassing the governor. "When you're facing a bunch of nurses, cops and teachers, it makes it much, much more difficult."

Nurses are a sympathetic group, but widows and orphans wield even more emotional clout. Survivors of government employees — including police officers and firefighters — were quickly drawn to the opposition by Schwarzenegger's proposed pension overhaul, which would move new state employees and teachers into 401(k)-type plans.

The initiative says nothing about eliminating death and disability benefits for state employees or local law enforcement officers who belong to the state retirement system. Still, some legal experts early on predicted a problem with its language; Schwarzenegger's top lawyer, Peter Siggins, raised concerns in January.

The governor endorsed the initiative anyway, including it in his speech that month to the Legislature. Some of his aides thought the problem could be handled through separate legislation or through the courts.

But on Jan. 31, little more than three weeks after Schwarzenegger's speech, a Los Angeles public relations firm circulated a memo to the local police union.

The advice from Weber Shandwick Worldwide to the Los Angeles Police Protective League: Exploit the potential flaw in the pension reform ballot measure to make Schwarzenegger seem hard-hearted. The governor's foes "must humanize the issue … A simple way to accomplish this is to engage the widows of officers killed in the line of duty." The memo recommended having widows appear in public and "testify to their pension being the only barrier between them and the gutter."

The governor's supporters said Democrats and their union allies created a false issue. They note that Atty. Gen. Bill Lockyer, a Democrat and possible candidate for governor, wrote an influential ballot "title and summary" that prominently proclaims that the initiative would end death benefits.

"There is no question in my mind he coordinated with the public employees unions," said Assemblyman Keith Richman, a Northridge Republican and the author of the pension reform measure. "The attorney general's actions were all politically motivated … and his title and summary are simply false."

Lockyer vehemently denied slanting the ballot summary to undermine Schwarzenegger, saying his staff attorneys — nonpartisan civil servants — routinely handle the job of drafting title and summary information.

Given the opening, the Los Angeles police union seized on the issue of a benefits cutoff, acting on the Weber Shandwick memo. The detailed plan included courting local politicians, organizing thousands of law enforcement officers and targeting Schwarzenegger's Wall Street donors. A much larger group, composed of dozens of Democrats, public employee unions, firefighters and police, would repeat the same message, according to confidential e-mails obtained by The Times.

In mid-February, Dave Low of the California School Employees Assn. sent an e-mail to dozens of labor leaders, Democrats and others outlining a strategy. Included was a sample letter to be sent to newspapers highlighting the police benefits issue. Low's group, California Families Against Privatized Retirement, also laid out a three-month protest agenda, including a week starting Feb. 21 when they would launch "death and disability message" events, followed by meetings with newspaper editorial boards.

Widows of slain law officers testified before the Legislature and participated in a statewide radio ad campaign.

Other groups — teachers and prison guards — stepped up their efforts to undercut Schwarzenegger and his agenda, working through their unions to spend millions on advertisements.

Democrats in the Legislature started picking apart the governor too. Aides to Assembly Speaker Fabian Nuñez (D-Los Angeles) sent out missives to reporters, taunting Schwarzenegger. When the governor began doing a weekly radio address, Nuñez started his own, often bashing Schwarzenegger.

The governor fought back with high-profile appearances. He rode in a military Humvee dubbed Reform 1, crushed a car at a wrecking yard to highlight an environmental program, and touted his budget plan by shutting off a mock valve spewing "red ink." The governor and his allies launched radio and TV advertisements attacking critics.

But they were hampered by a court ruling that limited contact between Schwarzenegger and the group — Citizens to Save California — that he set up to promote his initiatives. Under the law, if he wanted to control the group, it would have to abide by strict fundraising limits. So Schwarzenegger allowed the group to pick the initiatives it would promote, even though they were supposedly working for the governor.

Schwarzenegger eventually sued over the issue of controlling the group and raising unlimited amounts of money, and won a court ruling in March. But by then, the pension issue — and the images of orphans and widows — had exploded in the media.

Schwarzenegger backed off his endorsement of the pension initiative just a few days after meeting privately with some of the widows.

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