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California Governor Schwarzenegger Says Economy OK Despite Challenges


Governor Arnold Schwarzenegger says California's financial problems call for fiscal discipline and cross-party cooperation. Mike O'Sullivan reports, the governor says the state's economy is sound, in spite of its problems.

The governor says despite a housing crisis and record home foreclosures, his state is doing fine because of its diversified economy.

"We have so many d erent economies. If you think about Florida, you say oranges. If you think about Iowa, you say corn. If you think about Texas, you say oil. But look in California what we have here," he said.

Addressing the civic group Town Hall Los Angeles, he pointed to the state's booming high tech region of Silicon Valley, its agriculturally rich central valley, the entertainment industry in Los Angeles and biotechnology sector in San Diego. He blames the news media for exaggerating the state's problems.

A financial crisis brought Schwarzenegger to power. A former body builder and Hollywood star, he won a special election in 2003 when voters recalled former governor Gray Davis, unpopular because of a soaring budget deficit, electrical power outages and partisan gridlock.

Schwarzenegger, a Republican, was reelected in 2006, and has had successes and failures. After early fights with Democrats, who dominate the legislature, he worked with Democrats on landmark environmental legislation, and declared his vision of cross-party

cooperation, which he called post-partisanship.

But California again faces a budget deficit of $16 billion dollars, and Democrats are criticizing the governor's proposal for across-the-board cuts,including a cut of $4.8 billion for education.

The state's non-partisan legislative analyst has also criticized him for failing to identify priorities in his budget.

Schwarzenegger says he is ready to negotiate with Democratic critics, and with critics from his own Republican party.

He jokes about his bipartisan family. His wife is Maria Shriver, who is part of the prominent clan of Democrats, the Kennedys.

"I said always that the number one challenge I would have is to bring Democrats and Republicans together so they can sit together at the table and understand each others' problems, not just their own problem but the other person's problem. I said to myself, I can do that. I sleep with a Democrat every night. Why shouldn't I be able to do that?," he said.

He says that closing two-and-a-half billion dollars in loopholes in the tax code is one way to save money.