Can everybody love Arnold?

Governor Schwarzenegger swept to office in California as a celebrity. He then faced a budget crisis and had to campaign for survival in a crucial vote. His star power won the day, but at what cost? Andrew Gumbel reports on a political sequel

Arnold Schwarzenegger is on a roll. Last week was by far the best since making his curious transition from muscle-bound movie star to governor of California. He set himself his first big political test, by going to the voters with a controversial budget recovery plan, and came out triumphant as they gave him a resounding thumbs-up.

He found time to act both the populist and the media celebrity, gliding effortlessly from a grassroots vote-stumping effort aboard his trusty campaign bus to an appearance on Jay Leno's late-night chat show alongside his predecessor - and, not so long ago, bitter rival - Gray Davis. Then, having bagged his political victory, he rewarded himself by attending the Hollywood premiere of Spinning Boris, a film about a group of US political consultants who help the post-perestroika Russian leader Boris Yeltsin climb out of approval-rating hell and win re-election. The symbolism of a tale of political triumph against the odds was almost certainly not a coincidence.

To cap it all, he flew to Ohio to attend a bodybuilding convention, the Arnold Fitness Weekend, the first time in a little over 100 days in office that he has allowed himself to be seen in public in a non-political context. To say that he is exuding self-confidence would be a gross understatement; to say he is enjoying himself would be as inadequate as remarking that mice are partial to the occasional nibble of cheese.

"Everything is fantastic!" Schwarzenegger bellowed at his electoral victory party last week, his white, toothy smile stretched the full distance across his impeccably tanned face. With almost the entire political establishment of California - Democrat as well as Republican - behind him, and supporters going wild with enthusiasm at every turn, who could blame him for feeling more than a little pleased with himself?

Just as he was always the undisputed king of his movie sets, Schwarzenegger has shown that in the political arena he will be a patsy for nobody - not even President Bush, who swung through California on a fundraising trip a few days ago but was given only a tepid reception by the Terminator. Schwarzenegger, admittedly a very different breed of Republican from the president, greeted him at a closed-door reception in Los Angeles but then pointedly refused to travel with him.

One week earlier, Schwarzenegger had gone to Washington, hoping to receive a helping of federal largesse to lift California out of its nightmarish budget hole. He gave President Bush every encouragement, saying that the Republicans stood a chance of carrying California in November's presidential election if the White House opened its purse-strings wide enough.

When Bush turned him down, however, he had no hesitation in letting him know that their relationship was a two-way street, with power lines running in both directions. Not only did he not lend his star power to the presidential visit, he also publicly disavowed Bush's proposal for a constitutional amendment to outlaw gay marriage - an act of defiance no other prominent Republican has dared so much as contemplate.

Power is, of course, the ultimate aphrodisiac to a man like Schwarzenegger, but it is worth considering, in observing the undisguised relish he takes in the limelight, whether it hasn't all gone a little dangerously to his head. Leaving aside the spectacle of politics triumphant for a moment and returning to Planet Earth, it is worth pointing out that California is in every bit as much of a mess as it was when Schwarzenegger took office last November.

The recovery package approved by the voters was predicated on a whopping $15 billion bond issue, which ordinary Californians will now have to pay back through sales and payroll taxes - and at less than favourable rates, because of the state's close-to-junk-bond credit rating. One had to wonder, as Schwarzenegger crowed about his giant achievement and exhorted his supporters to "action, action, action", whether he wasn't getting a tad over-enthusiastic about what was effectively putting the bulk of California's accumulated debt on a credit card.

The bond issue won't make this year's budget negotiations any less brutal. It won't do anything to close the continuing budget hole - estimated by the state's non-partisan analyst to be around $5 billion, possibly rising as high as $7 billion next year. And it does nothing to address the fundamental structural problem in California's year-on-year revenue stream, which is that the state is over-reliant on income tax and not nearly reliant enough on property taxes, putting government at the mercy of even relatively modest fluctuations in the overall economy. If times are good, state coffers fill up quickly; if growth slows down even for a quarter, it can force savage cuts on state education, health care and so on.

For the moment, none of that seems to matter. Just a month ago, the bond measure looked destined for defeat at the polls, precisely because of misgivings about its effectiveness and high long-term price tag. Schwarzenegger's achievement was, first, to talk the Democratic Party leadership into backing it and then to stake his incipient political reputation and his star power on selling it to the electorate.

For all the misgivings about having a movie star with no prior experience in charge of the richest, most populous state in the union, it is clear that without the Hollywood cachet Schwarzenegger would not have anything like this kind of pulling power. The celebrity factor remains his single most powerful asset. When he arrived in the chamber of the Sacramento Capitol building in January to deliver his inaugural State of the State speech, it was striking how every head turned as he entered the room - helped by the fact that he towered above everyone, except possibly Jim Brulte, the hulking (but much less trim) Republican state minority leader.

At his offices, tour groups and visiting schoolchildren will lurk for hours by the entrance in the hopes of a glimpse. Everyone from foreign dignitaries to hard-nosed union negotiators wants to meet him. "You would not believe the fascination with this office," says Cassandra Pye, his external liaison. "He shows up, and a crowd of 200 will form at the drop of a hat," echoes Margita Thompson, his press secretary.

Is the warp effect of celebrity entirely beneficial? Certainly, it has made Schwarzenegger popular, lending credence to his election-campaign claims to be a people's champion, someone who would cut through the entrenched partisan divisions and special-interest corruption of state politics and achieve concrete results on behalf of the really important power, the voters.

An opinion poll taken before passage of the bond measure gave him a 56 per cent popularity rating, with 26 per cent coming out against him. Interestingly, the numbers for the state legislature, which Schwarzenegger has accused of ignoring the public interest, are almost exactly reversed.

Celebrity has also lent him considerable affability, making legislators feel he is in touch in a way that the stiff Gray Davis never was. He listens to Democrats as well as Republicans, has made refreshingly bipartisan appointments (in contrast to President Bush, who merely promised to do so), and takes full advantage of the fact that people relish spending time with him one-on-one. Indeed, Schwarzenegger has shared so many cigars with so many people that a story went round recently (entirely apocryphal) that he was planning to punch a hole in the roof of the Capitol building for the smoke to escape through.

"The thing he has that Davis never had is a true sense of self," comments Sherry Bebitch Jeffe, one of the state's most prominent political analysts. "He has tremendous confidence in himself, in his rectitude and his decisions. He's unafraid to admit mistakes and change his mind. He's also quite intelligent. He may not have much experience, but he's a quick study."

All of this goes only so far, however. Scratch the surface of the Schwarzenegger message and you suddenly find that things are not nearly as straightforward as he makes them appear. He was elected promising to end the special-interest lobbying and non-stop fundraising perceived to have blinded his predecessor to political reality. He still claims to be beholden to nobody, but in truth he has been fundraising so fast he has made Gray Davis look more like a slouch than the human cash register he was reputed to be. In the first six weeks of this year alone, he raised more than $5 million, compared with Governor Davis's already stunning average of $1 million a month.

On his most recent campaign trail, he turned the bond issue into a stark choice between salvation and financial "Armageddon", making no mention of the continuing deficit or the fact that the budget-balancing provisions he also campaigned for had, in the words of one generally supportive political columnist, Daniel Weintraub of the Sacramento Bee, "enough loopholes to drive a Hummer-sized deficit through". He also successfully squelched debate about possible alternatives, which would have entailed troubling the richest Californians to pay something closer to their fair share of taxes (they currently pay a significantly smaller percentage of their income than the middle class and the poor). As a Republican with a viscerally tax-averse voting base, Schwarzenegger did not, as the saying goes, want to go anywhere near there.

And he didn't have to. One has to credit Schwarzenegger with a certain strategic brilliance to have kept his critics on the very margins of public debate. Getting the Democrats to go along with him was a particularly inspired manoeuvre. The Democrats made their support conditional on a few favours of their own, notably a pledge from Schwarzenegger not to campaign against another ballot initiative that would make it easier for the state legislature to approve budgets and tax increases. They ended up royally screwed, though. While popular support for the bond measure jumped by 30 percentage points in a month, guaranteeing its passage, the Democrats' initiative, which Schwarzenegger made little secret of disliking, went down to a crushing defeat.

Anyone who saw the 1970s documentary Pumping Iron knows Schwarzenegger has a long history of employing tricks and psychological manipulations to get the better of his rivals and emerging triumphant. He launched his campaign for governor with just such a piece of attention-grabbing legerdemain last summer, announcing his candidacy just when he had convinced everyone, including his own press secretary, that he was not going to run. When his campaign ran into late-breaking trouble over a flurry of allegations of sexual misconduct towards women, he squirmed his way out in ingenious fashion. First, he promised to address the allegations in detail once the election was out of the way. Then, after his election, he told reporters the issue was settled and he wasn't going to address it again.

The pattern has been repeated since. In February, the courts ruled that, contrary to his beholden-to-nobody rhetoric, he had in fact broken California's campaign financing laws by taking out a large loan to himself and then attempting to repay it by persuading corporations and other special-interest groups to cough up post-electoral donations. Far from admitting defeat, Schwarzenegger described the court ruling as "fantastic" - his favourite word - and portrayed it as a vindication of his populist message, not the slap in the face that it was. Political columnists grumbled about the obvious duplicity, but it worked; chatter on the subject dried up almost immediately.

Those inclined to mistrust Schwarzenegger for his Machiavellian machinations - and there are many in the state legislature, for a start - are also at a loss to know what to do about them. Part of the reason the Democrats caved in so easily on the bond measure is that they were terrified he would take the issue to the people anyway and win without them. Some have even muttered that if they don't toe the line, Schwarzenegger will reduce them to a part-time legislature and shrink their influence even further.

Does all this make Arnold a good politician, or a sinister one? It is, perhaps, a little too soon to tell. His egomania, which he freely admits to, is already running rampant, never more so than in a television interview last month in which he advocated allowing foreign-born citizens to run for president. Not that he was thinking of himself, of course; he is too "busy" for the moment to even think of such a thing.

Schwarzenegger has always been a consummate salesman, never more so than when he is touting the commodity closest to his heart: himself. He has an instinctive understanding of the power of images, even when they contradict reality. (He has been known to walk into half-empty rooms and pay tribute to the "incredible" turnout, knowing full well the television cameras will be trained on him and the cluster of people directly in front of him.) Perhaps most importantly, he exudes an unflagging positivity which, taken together with his movie-star aura, makes him near-irresistible to all but the most sceptical audiences.

Shortly before the election on the bond measure, he was asked what he would do if it failed. His answer could not have been more characteristic: "We are only thinking about victory. Failure is not an option."