Last week, Governor Arnold Schwarzenegger released a surprising new budget plan packed with significant permanent increases in spending, financed with no comparable tax increases but rather on dubious projections of robust revenue from various unpredictable sources.

Arnold's staggering $97.9 billion budget proposal depends on considerable deficit spending, with only $91.5 billion in expected revenue — and this assumes the economy is as strong as he predicts it will continue to be.

All in all, the governor plans to spend $125.6 billion, hoping that the public will accept $25 billion in bonds later this year to allow him these incredible spending increases without raising taxes.

The Republican proposed a 10 percent increase in education spending from $36.3 billion to $40.5 billion, a $2.9 billion boost in transportation, and a steady rise in spending for prisons and social programs. Later in the week he revealed his plan for a 20-year massive overhaul of transportation infrastructure at a cost of $222 billion, which would be funded by the largest bond sale in Californian history.

The governor's skeptics and supporters — from the left and right — have not known what to make of this. Some commentators are focusing on his suggested cuts of a few hundred million dollars in a few specific programs, but they pale in comparison to the proposed $7 billion spending increase over the last budget.

After his predecessor Gray Davis lost in the recall election in 2003, Schwarzenegger arrived at Sacramento promising fundamental reform in the state's politics, including in its out-of-control spending. For years, as both entertainer and politician, the man has been talking up the virtues of the free market and fiscal restraint, even frequently crediting his love of liberty and limited government to the ideas of Nobel Laureate free-market economist Milton Friedman.

What happened? Unlike the big-government Democrats that run up the state budgets and conduct business as usual in Sacramento, wasn't Arnold supposed to be a Reagan Republican?

Yes, and he is.

Economist and scholar Murray N. Rothbard pointed out in 1980 that, contrary to popular wisdom, Governor Ronald Reagan expanded California's government enormously during his eight years in office. Between 1967 and 1975, he oversaw a 122 percent rise in the budget, a 22 percent increase in the number of state government employees, no real cuts in overall social spending, the creation of 23 new councils and commissions, including the California Energy Commission, and the largest tax increase in California history. State income taxes almost tripled under Reagan, and were only reined in under Reagan's successor, Democratic governor Jerry Brown.

Arnold has simply followed in the footsteps of the other actor-turned-Californian-governor whom he admires so much, and indeed has only carried out the typical Republican legacy vivified in national politics since the mid-1990s: He has bashed the Democrats for spending too much, only to outspend them once having the opportunity — doing so laughably in the name of "fiscal responsibility." As Democratic state Senate leader Don Perata said, "The governor is proposing a lot more spending than we are. It's unclear how he plans to pay for it."

Arnold's Republican budget has been typical, suggesting minor symbolic cuts in a handful of specific social programs, much to the anger of leftist critics, all the while continuing to inflate the overall social spending budget, beefing up the bureaucracy, and financing it all with borrowing and deficit spending. Arnold, like President Bush, avoids overt tax increases, but what really matters is not how the government gets its money, but rather how much it spends. One way or another, the money will have to be extracted from the private sector, destroying wealth and injuring the productive free economy. The governor's reliance on bonds, seen over the last couple years, is especially troubling, since bonds are a lien on future generations who will have to pay for programs they never had a chance to approve. But every dollar spent by the state today, even if it racks up interest against the future, is a dollar presently unavailable for private saving and investment.

Arnold likely will be accused of talking like a Republican but governing like a Democrat. In truth, he is much like other politicians in his party who use free-market rhetoric to cloud their outrageous spending. In other words, he is talking, and governing just like a Republican.