Instead of reminiscing on the golden years of the Arnold Schwarzenegger administration, I find myself asking, what could have been?

In the 80’s, 90’s and even early 2000’s, Arnold professed a sincere appreciation for the American Dream that guarantees nothing more than the opportunity to participate in free enterprise.

And yet, as governor of the largest state and the world’s eighth largest economy – at a time when it mattered most – Arnold lost his way.  As a consequence, California will pay the ultimate price – its future.

In this year’s Chief Executive, over 600 CEO’s were asked which states had the best and worst business climate. Not surprisingly, California owned the dubious honor of being the most difficult place to do business.

Bill Dormandy, CEO of San Francisco based company ITC, summed it up nicely, “California has a good living environment but is unfavorable to business and the state taxes are not survivable.”

How did a governor who once filmed a testimonial for Dr. Milton Friedman let the state of California get to this point?

Admittedly, Arnold inherited a budgetary mess from his predecessor, Gray Davis, and California voters historically vote themselves benefits from the public treasury. But the buck still stops with Arnold.

In the first five years of the Schwarzenegger administration, spending increased by over $40 billion. Today, California has a $25 billion budget shortfall and last month lost 63,000 jobs (almost a million since 2008), putting their unemployment rate at 12.2%.

In addition to massive spending increases, Arnold has passed costly environmental regulations such as AB 32 and a Renewable Portfolio Standard (RPS) that mandates 33% of energy consumed must be from expensive renewable sources like wind and solar.

To help pay for these massive increases in spending, Arnold has increased the state’s sales tax by 1.5% and (ironically) even considered an increase in the vehicle license fee to the very level Gray Davis envisioned.

Learning from his life experiences, Arnold started as a champion of free markets.

For example, in 2007 Arnold signed a proclamation making January 29th Milton Friedman Day. The proclamation reads in part: “[Dr. Milton Friedman] restore our faith in the freedom of the individual to choose in every sense of the word – political, economic and social…” But as Greg Passantino of the Reason Foundation noted:

How sad, if not utterly confusing then, that even as he honors Friedman’s contributions to a free society, Schwarzenegger is busy peddling a $12 billion nanny-state healthcare proposal that relies on coercion, new regulations, higher taxes, and social engineering.

Arnold will ride into the political sunset as one of the most aggressive successful central planners in the state’s history.

It didn’t have to be this way. California enjoys abundant natural resources and is home to some of the most entrepreneurial companies of the past decade.  But with Arnold leaving office soon, his legacy of increased government intervention in the California economy, budget shortfalls and excessive job-killing regulations will unfortunately live on.

Hasta la vista, Arnold.  Can’t say we’ll miss ya.

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