The Terminator will cut where he can: He will roll back the soaring cost of workers-compensation premiums that has driven job-creating small businesses out of state. He will roll back the car tax. He will oppose drivers licenses for illegal immigrants. Spiraling budget costs for illegals are a major cause of California's out-of-control spending and massive deficits. Schwarzenegger is all over it.

The Terminator also made it clear that he is running against the special-interest sway in Sacramento -- and few may sway more than his incumbent rival. Thirty-five percent of Davis' campaign contributions come from government employee unions and trial lawyers. This is why Davis passed an incredible three-year, budget-busting, 34 percent salary hike for state prison guards -- a hike that Schwarzenegger intends to roll back.

Behind the Terminator's public conversion to Reaganomics is the magisterial figure of George Shultz, the co-chair of Schwarzenegger's economic-recovery council. The crusty ex-Marine served in top posts for Presidents Nixon and Reagan, and tutored George W. Bush in the early days of his first presidential campaign. It's little surprise that Shultz quickly turned off Warren Buffett's high-tax water.

Shultz also boasts a team of high-powered economic colleagues in Michael Boskin (a former economic advisor to Reagan and Bush the Elder), Martin Anderson (a longtime Reagan hand) and John Cogan (a former Reagan budget expert and campaign advisor to Bush the Younger).

Schwarzenegger's fiscal conservatism enables a big-tent under which the badly splintered California GOP can unite and capture the statehouse. Of course, such an outcome will give Bush a tremendous leg up in the 2004 campaign.

If bolstered by a rising, job-creating economy -- one that the stock market is now predicting -- at the very least Bush will be competitive in California. This will force his Democratic opponents to spend considerable time and resources in the Golden State rather than other toss-up states on the campaign trail. And should Bush conceivably carry California, the Texan could win a second term by more than 40 states.

Bush's top advisor Karl Rove has long sought a transformational shift in U.S. politics. A Gov. Schwarzenegger-led California Republican Party would move the ball in that direction. Putting California in the GOP column creates a truly national governing coalition. Both President Bush and the nation will be better for it.