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Inside Politics

Schwarzenegger's balanced budget plan

Governor faces unprecedented fiscal crisis

California Gov. Arnold Schwarzenegger focused his first major address Tuesday on a financial crisis he said would entail painful budget cuts.
California Gov. Arnold Schwarzenegger focused his first major address Tuesday on a financial crisis he said would entail painful budget cuts.

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Gov. Arnold Schwarzenegger urges Californians to embrace radical spending cuts and a record $15 billion bond issue.
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Arnold Schwarzenegger
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Los Angeles, California (CNN) -- Arnold Schwarzenegger has faced important reviews before, but his performance delivering his first "State of the State" address Tuesday could prove the most critical in his new career as governor.

Even more important to the success of the Schwarzenegger administration is the reaction to the governor's budget blueprint to be unveiled this Friday. The new governor faces an unprecedented fiscal crisis. His speech and his budget include the details on how he plans to close a record $14 billion budget deficit.

While spreading the pain of budget cuts across a variety of programs including education, a program he vowed to protect in the recall campaign, Schwarzenegger will also lobby for the authority to borrow to keep the state in business going forward.

He's expected to appeal to voters to approve a $15 billion bond and spending cap plan that will be on a March ballot, arguing that he won't need to raise taxes or make deeper cuts. Gov. Schwarzenegger is also emphasizing the need to reform the state's workers' compensation system as the way to keep businesses from leaving the state.

Carla Marinucci, a reporter for the San Francisco Chronicle told me on CNN's "Inside Politics" that the governor will be held accountable. "California's budget crisis is job one for Arnold Schwarzenegger. And today the sound you hear is the rubber hitting the road. He's got to come up with the goods," she said.

Dan Walters, a veteran political reporter for the Sacramento Bee says Schwarzenegger came into office with a good understanding of what he faced, but he might have under estimated how to get the job done.

"I think he understood the dollars and cents part of the problem in the depth of the deficit," Walters said. "I don't think he really understood the complexity of the politics and the capital where interest groups, thousands of interest groups, really, employing hundreds and hundreds of lobbyists, can kind of tie each other up in knots and prevent anything from happening. I think that's the thing that he's finding to be the most difficult."

Walters notes that Schwarzenegger already learned the hard way when he proposed some cuts to a popular program for disabled children last month. This move ignited a backlash, forcing the governor to withdraw his proposal.

One prominent Democrat told me that Schwarzenegger faces many tough decisions now, but that the new governor enjoys a 2-1 "good will advantage" -- just the opposite of what then Gov. Gray Davis had at this time last year.

This Democrat said Schwarzenegger's willingness to reach out to people on both sides of the aisle and deliver bad news to Republicans as well as Democrats has been impressive and may prove to be a key to getting what he wants.

Marinucci agrees that right now Schwarzenegger has some things on his side. "This guy has got the stage, the legislators up there know it and they know the kind of focus that he commands," she said. "That gives him enormous clout right now."

But Marinucci adds, "This actual hero may turn into a villain to a lot of people in California when actual cuts are made."

Judy Woodruff is CNN's prime anchor and senior correspondent. She also anchors "Judy Woodruff's Inside Politics," weekdays at 3:30 pm ET.

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