Arnold Schwarzenegger
Interview: Daniel Tom
>> welcome back. you may have stayed up late to see the tonight show appearance with jay leno last night or read about this this morning. what it comes down to is what does arnold schwarzenegger running for governor mean for the state of california for its business and its economy? shaking his hand. we’ve been following the california recall election and the budget crisis there. more importantly bloomberg’s daniel tom has been covering the story. he was at the tonight show last night and joins us from our los angeles bur umpt gentlemen, both welcome.
>> hello.
>> first of all, dale, let me start with you. you were there. give me a sense. what was it like there in that press room that they threwing the at that location when the world went out when schwarzenegger went from talking about it to actually saying he was going to do it?
>> well, i mean the common wisdom before the announcement yesterday was that he was not going to run, so that was the expectation in the press room. that’s what everybody assumed. that’s what the advisors have been telling us. so when he did announce, it was sort of bed lem in the press room, everybody rushing to call their editors as we were here, sorting dealing with the fact that he was actually a governor candidate, not just a person talking about it.
>> that’s the key. he is actually a candidate. he’s going to start talking about policy at some point beyond the sound bites, or is he?
>> let’s talk about this and what he stands for behind this, behind the problems in california. bill, what can arnold schwarzenegger do for the bond situation, for the borrowing and the deficits of california?
>> the state has been dealing with a budget deficit $38 billion large. it’s about the size of the economy of ecuador. state lawmakers have been busy trying to plug the gap. one of the things they relied on was borrowing $14 billion in bonds this year, using accounting tricks to push some of the spending out into the next fiscal year. arnold schwarzenegger said so far everyone has been talking about two ways to deal with the crisis, either raise taxes or cut back on social programs. the third alternative he says is to attract businesses to the state and therefore fill the hole.
>> isn’t that oozier said than done? the whole country is trying to attract business. with all the problems california has, now very highly publicized, how does he attract business to california?
>> that’s a good question. the state has a very high cost of living, a lot of the tech firms that are based there have been outsourcing their businesses to cheaper places such as india to try to cut costs. it’s a good question how he would deal with problems that are that large. at a press conference today when asked specifically how he would do that, he said he’ll have a plan very soon.
>> daniel taub, why was he doing this at the tonight show? this seems kind of like an odd place to announce your candidacy. perhaps it could be used against him if he used an entertainment venue to make his announcement, some people could say maybe he’s not all that serious.
>> well, it’s definitely one of the first questions he was asked at the press conference following the appearance yesterday. his answer was pretty much, you know, he’s a friend of jay leno’s. he’s been a friend of his for a long time and that the tonight show has been part of his career and, you know, for his whole career. so he―and he also thought it was a way to reach several mass audience all at once. so that was his explanation yesterday.
>> he definitely got a mass audience. the question is is the wall street audience keeping an eye on this, the people that have to make the bond ratings and decide whether they are going to buy municipal bonds and support the california economy overall. do you get a sense they are paying attention to this in a positive way or is this just a freak show?
>> they are certainly paying attention to it. when standard & poor’s knocked its credit rating down on california’s debt they cite today recall as one of the things that would probably exaggerate the state’s budget problems. it needed to resolve the state’s problems in a meaningful way until it was behind the state. whether or not they’d be more likely to change the credit rating based on the candidacy of arnold schwarzenegger remains to be seen.
>> or the candidacy of all the many other people that are in this race at this point.
>> that’s right.
>> dan, you are in l.a.. the news today was that darrell isa, the man who apparently from his role in congress financed this whole effort to have a recall election, decides he’s not going to run. how does that work into this?
>> well, it’s the general feeling that, you know, schwarzenegger is the 800-pound gorilla here. once he entered the race it the of took some of the other bigger names down a notch in terms of their prominence. so that may be behind this. you know, he’s on the tonight show. he’s, you know, anywhere he goes cnn is all over it. it’s sort of, you know, he’s the one that people are watching.
>> everybody is all over it much everybody you can think of. from entertainment to news to business news, everybody is talking about it.
>> what does this mean ultimately as far as the focus that’s going to be put on the deficit? give us a sense. obviously california has the fifth largest economy. if it were its own country, it would have the fifth largest economy in the world.
>> right. if it had its own country, it’s own occurrence si and more means at its disposal to fix the problem. arnold schwarzenegger or whoever becomes governor will have to figure out how to cut spending or attract businesses.
>> daniel taub in los angeles. we appreciate your time as well.
