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Schwarzenegger Warns of Economic 'Chaos' - 2004-01-07

California governor Arnold Schwarzenegger warns of economic chaos in his state unless voters approve his economic recovery plan. He outlined his strategy in his first "state of the state" address to California legislators.

The celebrity politician, best known as an action star, first joked that he had made an important decision. "OK. I changed my mind. I want to go back to acting," he said.

Assuring listeners he relishes the challenge of his new political role, Governor Schwarzenegger delivered an upbeat address, coupled with a warning. He says California risks bankruptcy if voters fail to approve an economic recovery plan that will appear on the state ballot March 2.

The plan includes $15 billion in short term borrowing to pay $14 billion in debt that comes due in June. The plan also includes a spending cap and a requirement that the state maintain a surplus fund to ensure it avoids future fiscal crises. He appealed to voters for help in getting the measures enacted.

"Now I ask you to join me in getting out the message that a "yes" vote on these measures on the March ballot is absolutely critical to our financial future," he said. "The alternative is economic chaos."

Californians elected Mr. Schwarzenegger, a Republican, when they recalled their former governor, Democrat Gray Davis, last October. They blamed Mr. Davis for not improving the state's troubled finances.

Outlining his agenda for the coming year, the new governor promised to trim bureaucracy, revamp an expensive system of worker's compensation insurance, and improve the business climate, attracting jobs. "Jobs provide a solid foundation for families. Jobs add revenues to the state budget. Jobs give stability to our society," he said. "Jobs, jobs, jobs. The more jobs, the better."

The former actor came to the state capital, Sacramento, with a promise to break the partisan gridlock and stop excessive spending. In his speech Tuesday evening, he said his proposed spending cuts will be detailed in a budget plan that he will release on Friday.

The cuts are expected to come primarily in health and welfare programs, and Democrats, who hold a majority in the state legislature, are likely to oppose them.