Boomerang_ Travels in the New Third World - Michael D. Lewis [76]
The odd circumstances were the never-ending financial crises. He’d come to power in the bust after the Internet bubble; he’d left in the bust after the housing bubble. Before and after our bike ride, I had sat down with him to get his view of this second event. It was in the middle of 2007, he said, when he first noticed something was not quite right in the California economy. He’d been finishing up budget negotiations and arrived at a number, however phony, where the budget could be declared balanced. An aide walked into his office to give him a heads-up: the tax receipts for that month were less than expected. “We were all of a sudden short three hundred million dollars in revenue for the month,” says Schwarzenegger. “I somehow felt, Uh-oh. Because there was something in the air.” Soon after that he visited the George W. Bush White House, where he gave a talk that was, as ever, upbeat. “At the end of it this guy—he was the guy who was in charge of housing, I forgot the name. Great guy. For some reason or other he was very honest with me. I don’t know why. He probably didn’t think I’d go out and blab, which I didn’t. He says, ‘That was a great speech you gave, but we’re heading to a major problem.’ I said, ‘What do you mean?’ He said, ‘I looked at some of the numbers, and it’s going to be ugly.’ That’s all he said. He wouldn’t elaborate.” A housing price decline in the United States meant a housing price collapse in California; and a housing price collapse in California meant an economic collapse, and a decline in tax revenues. “The next month our revenues came in short six hundred million dollars. By December we were short a billion.”
The hope that California would generate the tax revenues needed to pay for even newly reduced services vanished. “This crisis consumed the last three years,” says Schwarzenegger. “All of a sudden you are pissing off everyone. The parks don’t get money and all of a sudden everyone is in love with parks. People pay attention so much to how does it affect them immediately: that’s just the way the human mind works.”
How the further degradation of public services affected people immediately would not have been immediately obvious to a governor sitting in Sacramento. As Meredith Whitney had pointed out, the state has great ability to paper over its financial problems by pushing them down to cities. In May 2011, to take just the most cinematic of countless examples, the U.S. Supreme Court upheld a ruling that California’s prison conditions constituted cruel and unusual punishment and violated the Eighth Amendment. The ruling ordered the state either to build more prisons or to release thirty thousand inmates. The state—still overpaying its prison guards—has chosen to release the prisoners and, with them, their social cost. There will probably be more crime, and heavier dependency on local public services, but it must be paid for by local communities. At some point in our talks I had asked Schwarzenegger how much time he had spent, as governor, grappling with the on-the-ground local implications of the big state crisis. The question pretty clearly bored him. “I’m not into the local stuff,” he’d said. “I was born for the world.”
ABOUT AN HOUR into the weekly meeting of the San Jose City Council I find myself wishing that I, too, was born for the world. A hundred citizens yawn and text as the council honors National Farmer’s Market Week; the few people who seemed to be paying attention get up and leave after the honor is bestowed. The council commemorates August 7 as Assyrian Martyrs Day, “honoring the massacre of three thousand people in August 1933, and recognizing 2,000 years of persecution of Assyrian Christians.” Maybe thirty people turn their attention from their cell phones to the ceremony but then they, too, rise and exit the chamber.