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01_Arnold Schwarzenegger

The Germinator

Sure, he's had his rough moments over the years (remember the Speedo?), but as governor of the largest state in both population and economy, the former Mr. Universe has developed the legislative equivalent of six-pack abs. Schwarzenegger is focusing the power of the free market on major problems facing California, the nation, even the world: global warming, our dependence on foreign oil, unaffordable health care. "We want to use a market-based system to give businesses incentives," he says. Last fall, Schwarzenegger championed historic legislation that's expected to have an impact worldwide.

Starting in January, the California Global Warming Solutions Act goes further than any previous law, mandating a reduction of CO2 emissions by 25% to 1990 levels. Companies that reduce the greenhouse gas below the state limit could sell carbon credits to those that can't, or won't. "We inspire businesses to make the changes as quickly as possible," he says. The law also primes markets in alternative fuels and clean-tech innovation. Other states and countries, he hopes, will follow.

"I get stories from all over the world," he says. "Whenever they write about the environment, they use California as an example." Schwarzenegger has been bold on other fronts as well: In July, a day after President Bush vetoed expanded funding for stem-cell research, the governor ordered a $150 million loan to finance precisely that. This January, he sent a seismic shiver coast to coast by proposing a universal health-care plan for his state. Naturally, there's no shortage of criticism, from Republicans, environmentalists, and industry alike.

And that may be where Arnold's rule is truly exemplary: In a political era of craven poll-watching, the man is actually tackling problems head-on. That's the definition of leadership—and, often, the seed of innovation. Californians apparently agree. Even after losing four ballot initiatives in 2005, Schwarzenegger won reelection last November in a landslide. "People say, 'You can't get everything done,'" he says. "But the only way to know if you can lift 500 pounds is if you put 500 pounds on the bar."

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