Schwarzenegger Makes No Apology for Reversal on Tax Increases

Feb. 22, 2009 — -- On the heels of negotiating the California budget crisis, Gov. Arnold Schwarzenegger, R-Calif., made no apologies this morning for going against his campaign promise not to raise taxes.

"I made it very clear that I'm against raising taxes, and even today I hate tax increases," Schwarzenegger told ABC News' George Stephanopoulos in a "This Week" interview.

"I also made it very clear that I will never sign a pledge that I will not raise taxes. Why? Because I said, if there's an emergency, I want to have the options to raise taxes if there's an emergency. Right now, you have to admit, we have a fiscal emergency."

No Apologies for Going Back on Campaign Anti-Tax Pledge

Schwarzenegger was unequivocal that he would not raise taxes in his 2003 recall campaign against former Governor Gray Davis. But Schwarzenegger told Stephanopoulos that it was "absolutely not" wrong to make that promise. Pushed further and asked if he should apologize to Davis, the governor reiterated "no, absolutely not."

"There's quite a difference, because remember one thing: When the last time they had the crisis in 2003, nothing was accomplished. Now we have this crisis, we got the legislators together, the Democrats and the Republicans."

The governor went on to explain that "you do the kind of things that are right for the people, that are right for the state, rather than what is right for your party. It was not right for my party. The Republicans, the party itself hates it, even though I had other Republicans vote right along on that budget."

Asked if the Republican party should re-think its absolute opposition to tax increases, Schwarzenegger said, "I think that the Republican Party or any party has to always think, then you make a decision, 'Do I want to make a decision that's...best for the party? Or am I a public servant and have to serve the people, what is best for the people?' And in this particular case, in order to solve a $42 billion deficit, the only way you can do that is a combination of making severe cuts and also having some revenue increases."

Get George Stephanopoulos' latest tweets and reporting by following him on Twitter, Facebook, and George's Bottom Line blog.

Schwarzenegger at Odds With GOP on Taxes

To solve the $42 billion deficit the Governor brokered a deal based on severe cuts and revenue increases. Overall the governor said that it "could take years from now to get back to where we were."

Schwarzenegger also stands at odds with many in the Republican party for his support of President Obama's stimulus package. Several Republican governors have said they do not want to take the money, including Gov. Mark Sanford, R-S.C., chair of the Republican Governors Association. Schwarzenegger, however, said he would be happy to take any state aid that they turn down, a position that has raised eyebrows with many of his colleagues.

"Governor Sanford says that he does not want to take the money, the federal stimulus package money. And I want to say to him: 'I'll take it.' I'm more than happy to take his money or any other governor in this country that doesn't want to take this money, I take it, because we in California need it," Schwarzenegger said.

The governor went on to say that Republicans in Washington should put aside their ideology and work with the president to solve the economic crisis. "I think that they should make an effort to work together and to find what is best for the people, because by derailing everything, it's not going to help anybody, and it creates instability and insecurity," he said. "You've got to go beyond just the principles. You've got to go and say, 'What is right for the country right now?'"

The governor was asked by Stephanopoulos why -- given that he supports the stimulus, backs the president's budget plans and his policies on energy and the environment, and agrees with Democrats on gay rights and abortion -- is he still a Republican.

"I still believe in the Republican principles," Schwarzenegger said. "But remember one thing... it doesn't really matter if you're a Republican or Democrat. I think that so many people get caught up with this whole thing. We are elected to be public servants. So what does it matter if you're a Democrat or a Republican?...We should go beyond all this. Is it a Republican idea or is it a Democratic idea? Which philosophy does it fall under? It doesn't matter."

California is also facing one of the worse foreclosure crises in the country. Critics have responded to Obama's plan, laid out last week, saying it creates a moral hazard by bailing out people who are unable to pay their mortgages while offering no government help to those who were responsible with their mortgages.

Asked if this is fair, the governor explained "every situation is different... I think that people just need a little bit of help. What does the bank do when they get stuck with a house that is 40 percent -- has 40 percent less value? I mean, that has been a huge problem in this country in general, because eventually they think that the banks have to -- and the lending institutions have to figure out what to do withthat asset. You know, should it be written off, those trillions of dollars of assets?"

On the banking crisis, Schwarzenegger said he may be open to the prospect of nationalizing some of the nation's struggling banks. "Well, with some banks, that's maybe necessary," he said. "I think the most important thing is, how do we create stability in this country? And I think this is why it is very important that the administration has a very clear message and not change it. I think that what America has really gone through, a huge challenge just this last year, because we have had a different administration. They have a different way of thinking. No -- no one here is right or wrong, but a different way of thinking."

Get George Stephanopoulos' latest tweets and reporting by following him on Twitter, Facebook, and George's Bottom Line blog.