Even with Arnold's recent political problems, I believe that he still has a better than even chance to win re-election. But I don't think he will be re-elected by acclamation either. He's made too many rookie mistakes throughout his entire time there. Starting out with a broadly popular agenda (repeal of an unpopular vehicle license fee which impacted lower and middle class citizens highly, limiting state spending, and a balanced budget), his poll numbers in 2004 were among the highest ever recorded for a California Governor. But when the going got tough, Arnold's support began to crumble. At first, most of his proposals passed easily, primarily because the Democratic-controlled state legislature feared that Arnold would put his agenda to the ballot and win overwhelmingly.
But that changed when Arnold took on a controversial fight regarding pension reform for state nurses, teachers and firefighters. While he was correct to acknowledge that pension reform was needed in order to balance the budget, the political methods he used to get it through completely backfired. He expected that the voters would support him in his proposals, but in a fall 2005 referendum, they overwhelmingly voted down his agenda. The Democrats managed to effectively call his bluff, while making the Governor look very bad by opposing nurses and teachers. Pension reform is the new fourth rail of politics--Arnold discovered that you can get really burned by touching it. Nonetheless, it is something that most Western and industrialized nations will eventually have to face. Outlays for these programs exceed the amount of money available to fund them.
Arnold's main problem is that he was elected with a mandate to pursue a reform agenda in California, yet political reality has forced him to re-examine what he can do. The public realized that he wasn't a political superman, and his numbers have dropped. He has schizophrenic poll numbers, two years ago he recorded the highest approval numbers ever recorded for a CA governor; a few months ago, he recorded the lowest numbers ever recorded!! His problems began primarily because he overestimated his mandate. He needs to develop his political instincts a little better if he expects to have success. He can turn it around, and it's clear that he's trying, but it won't be easy...