The announcement of the appointment of Susan Kennedy to become Governor Schwarzenegger's chief of staff sent shock waves through the Sacramento elite. And it may portend an opportunity to continue work on California's workers' compensation system.

Ideologues from both the right and left decried the appointment, which in and of itself is a ringing endorsement. Republicans in the legislature are nervous, and the far-right base of that party is downright angry. Democrats in the legislature, stunned for a moment with the prospect of actually having to do something other than bash the governor for his ill-conceived initiatives, spouted some anemic platitudes about working together, peppered with a few quips about still needing to oust him in November. The far-left base of that party reminded everyone that Ms. Kennedy was not a communist and had failed at her moral obligation to turn the state's utilities into state-run monopolies while on the Public Utilities Commission.  All in all, not a bad start.

One of the more intriguing aspects of this appointment is that everyone has an opinion about what this means for 2006. You would think that by now the cognoscenti would have learned that the only predictable aspect of this governor is his lack of predictability. Let's examine the background and see how the stage is set to help workers' comp.

This "Year of Reform," which by the way was this year in case anyone missed it, will go down as one of the least remarkable political years in California's history, unless of course you are a political consultant, most of whom right now are on islands in the Mediterranean smoking cigars from an unnamed Caribbean country, counting their newfound wealth, dividing up the prospective spoils from the upcoming primaries, and proclaiming that life is good.

Given postmortem comments by the governor and the legislative leadership following the special election—actually postmortem is a poor term, suggesting as it does that at some point the governor's initiatives were alive—2006 likely will become the Year of the Bond. No, not James. "Bond," as in debt obligations, whereby future generations of Californians are put in bondage as multibillion-dollar bonds are paid off by tax revenues. Given the November election results and the likely fallout, it would appear that the Terminator has become the Terminatrix.

If, on the other hand, labor decides to stay joined at the hip with applicants' attorneys and chiropractors, they and their Democrat allies will be perceived as trying to roll back the one bright shining moment in Schwarzenegger's term—and that ain't going to happen.

The tragedy that befell New Orleans when hurricane Katrina struck has become a wake-up call for those who have ignored the pleas of the San Joaquin delta for decades. Now that it is en vogue to talk about infrastructure, not only has Republican Congressman John Doolittle's plan to build the Auburn dam started looking almost prescient, most of the 120 Pavlovian dogs also known as the California legislature salivate at the opportunity to do massive public works projects to shore up the decaying levee system that protects millions of Californians and millions of acres of some of the most important agricultural land in the world. Between that and improving woefully inadequate road systems throughout the state, policymakers in Sacramento are going to be very busy. And, Publius must ask, what better thing to do in an election year than spread out billions of dollars in legislative largesse to virtually every community in the state?

So what does this have to do with California workers' compensation? Plenty. The Democrats in control of the legislature are in a unique position. In 2006, they have an opportunity to stop playing wedge politics and actually do some good for California. Come to think of it, so does the governor. From labor's perspective, the bond program suddenly leaps to the top of the charts. Why? Can you say prevailing wage? Labor cannot afford to let this opportunity go by, for the simple fact that delivering billions in new state construction to its membership will do more for them than anything that could ever be accomplished in workers' compensation changes next year. This puts the governor in a remarkably strong position, even given the election outcome.

That puts labor in a unique position. Labor actually can do fairly well next year if it decides to address basic problems arising out of reform laws, while pushing to get bonds passed. If, on the other hand, labor decides to stay joined at the hip with applicants' attorneys and chiropractors, they and their Democrat allies will be perceived as trying to roll back the one bright shining moment in Schwarzenegger's term—and that ain't going to happen. 

Not only is that not going to happen, but they run the risk of jeopardizing everything on the table—something they cannot afford. Hence the governor's real power.

So the rubber has hit the road. Labor is not in the driver's seat, but it can be a relief driver  if it wants to act nice. The challenge is up to labor. Regardless of antipathy generated by the initiatives and irrational positions staked out by labor representatives in 2005, labor also has very subtly indicated that, with the appointment of Susan Kennedy as Schwarzenegger's chief of staff, there may be an opportunity for dialogue.

Labor gets jobs at prevailing wage for the next 20 years, the state is stuck with billions in bonds to pay for it, but the jobs theoretically create tax revenues enough to pay them off, and workers' comp and a few other business issues are resolved. And everyone in politics thinks it's about the 2006 elections.

Susan Kennedy very well may be in the driver's seat. Let's hope she understands well how to use her license.