Thursday, July 14, 2005
Steroids won him fame in America. Celluloid won him fortune and public office. But it is a private employment contract with a tabloid company that may give the Governor political hemorrhoids.
Gary Delsohn of the Sacramento Bee and Peter Nicholas and Bob Salladay of the Los Angeles Times broke the story in their respective papers this morning that Governor Arnold Schwarzenegger stands to earn $5-8 million from his contract with Muscle & Fitness and Flex magazines, both owned by American Media, Inc., the same company that owns the National Enquirer and Star tabloids.
Is this what he meant by bringing more jobs to California?
Governor Schwarzenegger had previously disclosed the contract, but not the financial arrangements, which were revealed in filings with the Security and Exchange Commission, according to the stories. Back in March 2004, when the contract was first revealed, Schwarzenegger spkesman Rob Stutzman described the money to be awarded as "petty compared to the movies" and that Schwarzenegger's involvement as Executive Editor of the magazines was little more than a "hobby".
Where to start?
1) Fiddling while California burns: When Californians voted Schwarzenegger into office, they hired him to do a job. The public did not demand that Arnold forsake his sizeable fortune or that he completely divorce himself from the private spectrum - California law allows elected officials to receive income other than their public salary. (Assembly Speaker Nuñez earns some $35,000 a year as a consultant for a nonprofit group that works on labor issues, for example.)
But, possessing independent financial holdings is a different beast than actively seeking and earning additional income, especially when that involves regular column-writing responsibilities and whatever additional responsibilities being an "executive editor" of two magazines entails. California is facing a huge budget shortfall, among a host of other problems that Schwarzenegger promised to tackle during his candidacy. There is no shortage of issues to tackle, new ideas to explore, and discussions about California to be had, and yet the Governor signs over some of his time to pursue his own private financial gain.
2) Secrecy: When the existence of the contract was revealed, the Governor and his spokeslackeys refused to divulge the terms of the contract, instead choosing to describe the money due Schwarzenegger in misleading and woefully inadequate terms. Why they would choose this path is fairly obvious, but most people would grant the Guv the political sophistication to realize that the information was bound to come out, and come out bad.
Perhaps Schwarzenegger didn't realize that the terms of his contract would be revealed in American Media's SEC filings, and believed that his multi-million dollar private contract would only be described as it was on his Statement of Economic Interest - as one of a series of investments whose total income was something over $100,000. Regardless, Schwarzenegger's secrecy and obfuscation severely undermines his credibility with the people of California, making it very difficult to lead the state through its current financial difficulties.
We have a right to know the financial interests of our elected officials. Schwarzenegger should not only have realized that, but believed it as well.
3) Conflict of Interest: Schwarzenegger's salary is dependent upon his employer's revenue. In this case, that largely means the money the magazines pull in from advertisements. Far and away the greatest number of advertisements in both magazines are for dietary supplements of various kinds. Last year, Schwarzenegger vetoed SB 1630, a bill that would have regulated supplements. It doesn't get much more conflicted than that.
Even if he hadn't vetoed that bill, and even if that bill hadn't been introduced last year, Schwarzenegger's financial ties to the magazines still would present a serious conflict of interest problem because a similar law affecting his employer's main moneymaker could have come up. One of the things government does is try to protect its citizens from harm, including harmful prodcuts. The jury on the safety of supplements may be yet divided, but it is part of Schwarzenegger's duties to protect Californians. Any healthy democracy requires that the person making decisions about how to protect the citizenry be a neutral arbiter. Schwarzenegger can no longer make that claim.
Any time you have a public official taking money from companies with business at the capital, you’ve got a serious conflict of interest. It doesn’t matter whether it is a big campaign contribution or a fat executive contract, when money pours into politicians’ pockets from private interests, the public’s interest is jeopardized. If California law doesn't reflect that, it should.
4) Mammon: When he ran for office, Schwarzenegger assured Californians that he was too rich to be influenced by special interest money. Then he went on to break fundraising records like twigs, receiving contributions in the millions from, well, rich people. Who else can afford to make political contributions even in the thousands?
He is an experienced and extremely successful businessman. Nothing wrong with that. We all aspire to financial security, if not considerable wealth. But the Governor and his team do not seem to understand the perspective of regular Californians, who after years of having a governor so far in the pocket of campaign contributors that his silver hair was the only thing showing were desperate to the point of Recall for a governor that represented them, not the fatcats and special interests.
At first, Schwarzenegger made all the right noises about understanding this voter frustration. But then he showed his complete detachment from the viewpoint of regular folks by raking in cash from wealthy interests. His coterie of political specialists and fundraisers didn't seem to get it either.
The contract and Stutzman's comments about the contract only highlight how blind the Governor is to how the rest of us value a dollar. If he can't get that $8 million seems like an enormous sum to the 99% of Californians that won't earn even half that over the course of their lifetime, it is unclear why he thinks that he can understand the problems that many ordinary Californians face.
1) The Governor should extract himself from the contract and get back to the job the people of California hired him to do.
2) California law conspires with wealthy interests who make huge political contributions to give us candidates (and thus elected officials) like Schwarzenegger and former Governor Davis. To put this to the test, you need only look as far as the two candidates currently in line to be Schwarzenegger's opponent in 2006: one is raising huge chunks of cash all around the country, accepting money from contributors of questionable ethics and from some of the same corporate interests as Schwarzenegger; the other is a multi-millionaire whose campaign kickoff involved writing a $10 million check to his own campaign.
Schwarzenegger is just the latest incarnation of the problem which is California's shoddy campaign finance laws. What Californians need, and what Schwarzenegger should be fighting for, is what he promised us in the first place: to clean the special interests out of Sacramento.
Some may call this effort quixotic, but it is what Californians have demanded over and over through ballot initiatives and through the recall election. If today's revelation of Schwarzenegger's plump contract is any indication, he may be his own worst windmill.