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They’re also doing big things. Specifically, they’re doing big things that Washington has failed to do. In a time of federal policy paralysis, when partisanship-on-crack has made compromise almost impossible, when President George W. Bush’s political adviser is a household name but his domestic policy adviser was unknown even in Washington until he was arrested for shoplifting, cities and states are filling the void. Bloomberg and Schwarzenegger happen to be the best examples of this phenomenon as well as the best known. Bloomberg is 65; the Last Action Hero is turning 60; they’ve got better things to do than bicker and posture. “These are two exceptional and forceful guys who don’t need the job at all; they had pretty damn good lives before they got into politics,” says their mutual friend Warren Buffett. “They’re in office to get things done. And they’re doing that a lot better than anyone in D.C.”

Look at global warming. Washington rejected the Kyoto Protocol, but more than 500 U.S. mayors have pledged to meet its emissions-reduction standards, none more aggressively than Bloomberg. His PlaNYC calls for a 30% cut in greenhouse gases by 2030. It will quadruple the city’s bike lanes, convert the city’s taxis to hybrids and impose a controversial congestion fee for driving into Manhattan. And Schwarzenegger signed the U.S.’s first cap on greenhouse gases, including unprecedented fuel-efficiency standards for California cars. (He’s already tricked out two of his five Hummers, one to run on biofuel and another on hydrogen.) The feds have done nothing on fuel efficiency in two decades, but 11 states will follow California’s lead if Bush grants a waiver. After signing a climate deal with Ontario — on the same day as his stem-cell deal — he said he had a message for Detroit: “Get off your butt!” He had a similar message for Washington. “Eventually, the Federal government is going to get on board,” he said. “If not, we’re going to sue.”

But they’re tackling not just the climate. Bloomberg is leading a national crackdown on illegal guns, along with America’s biggest affordable-housing program. He also enacted America’s most draconian smoking ban and the first big-city trans-fat ban. And he’s so concerned about Washington’s neglect of the working poor that he’s raised $50 million in private money, including some of his own millions, to fund a pilot workfare program. Meanwhile, after the Bush Administration rebuffed California’s appeals for help repairing the precarious levees that protect Sacramento, Schwarzenegger pushed through $42 billion worth of bonds to start rebuilding the state’s infrastructure. He’s also pushing a universal health-insurance plan and hopes to negotiate a deal with Democrats this summer. “All the great ideas are coming from state and local governments,” Schwarzenegger told Time. “We’re not going to wait for Big Daddy to take care of us.”

So they’re not exactly playing politics as usual. But their model of crossing party lines to act where Washington won’t is increasingly common. As D.C. politics has become more of a zero-sum partisan game, Mayors and Governors in both parties have taken on predatory lending, obesity, energy, health care and even immigration. “It’s innovation by necessity,” says Stephen Goldsmith, a former Republican mayor of Indianapolis who oversees Harvard’s Innovations in American Government awards. This year hardly any federal programs applied. “Very unusual,” Goldsmith says.

“Nature abhors a vacuum,” says Bruce Katz, director of metropolitan policy at the Brookings Institution. “And the vacuum at the national level is immense.”

After Bloomberg was ousted from Salomon in 1981, he used his $10 million payout to start Bloomberg LP, which now includes Bloomberg News, Bloomberg Radio and Bloomberg Television as well as the ubiquitous Bloomberg terminals that have served as the company’s cash machines since they started appearing on desks everywhere financial information was needed. In his autobiography, he called his name “a synonym for success,” describing his branding strategy thusly: “I was Bloomberg — Bloomberg was money — and money talked.” In 2001, after the lifelong Democrat joined the Republican Party because the Democratic mayoral primary was too crowded, he self-funded his way to city hall. An endorsement from Mayor Rudolph Giuliani helped, but mostly, money talked.

Bloomberg inherited a tough situation. The city was hemorrhaging jobs after the Sept. 11 attacks, and Giuliani’s second-term spending spree had left the city in a financial hole. Bloomberg raised property taxes 18% to attack the deficit, and he made some modest but politically difficult spending cuts, including the closing of several firehouses. He also engineered a hostile takeover of the city’s troubled schools and banned smoking in the city’s restaurants and bars. His approval ratings sagged into the 20s; his constituents booed him at parades. “They’ll come around,” he told aides.

They have, because the city has. Bloomberg hasn’t etched his personality into the city’s soul, but major crime has dropped 30% in New York in the Bloomberg era, without the racial antagonisms of the Giuliani era. Test scores and graduation rates are up, unemployment is at a record low, welfare rolls are at a 40-year low, construction is booming, the deficit has become a surplus, and the city’s bond rating just hit an all-time high of double-A.

As a candidate with no political base, no political history and no political debts, Bloomberg came into office beholden to no one. Even when they don’t agree with his decisions, New Yorkers seem to sense that he’s set aside his conglomerate and his four vacation homes for public-minded reasons; his approval rating has hovered around 70% for nearly two years. His administration has made mistakes — an ill-fated stadium plan, a school-bus snafu — but it’s been scandal-free, and every major media outlet endorsed his re-election. Bloomberg likes to think big: as a businessman, he aimed to make financial markets transparent; as a philanthropist, he’s funding research designed to eliminate malaria by building a better mosquito. “I was hired to solve problems,” told Time. “Yes, I’ll fix potholes, but that’s not why I wanted this job.”

There’s a good view of Bloomberg’s problem solving from the roof of the 123-unit building Ken Haron just developed in Harlem. That neighborhood was once a national symbol of urban decay — drugs, violence, all the classic inner-city problems — but now its main problem is that it’s so desirable, its housing is unaffordable. And in recent decades, the feds have stopped building subsidized housing. So Bloomberg has leveraged private money for a $7.5 billion effort to create 165,000 affordable apartments, enough to house the population of Atlanta. It’s already one-third complete. Haron charges some tenants market rents of about $3,000 a month, but he has to reserve 80% of his building for lower-income families that won lotteries to pay as little as $700 for apartments with the same granite countertops. On the roof, Haron points out similar mixed-income projects in every direction: “That one’s in the program. So is that one. That one’s condo; it’s ours too.” Its penthouse is for sale for $1.7 million, but moderate-income families will pay $250,000 to live in the same building. “There’s stagnation at the federal level, so we had to get creative,” says Bloomberg’s housing commissioner, Shaun Donovan.

To Bloomberg, Washington means gridlock, extremism and pettiness. It’s the place where homeland-security funds were “spread out like peanut butter” for political reasons, so that rural states got more per capita than New York. And it’s the place that’s blocking him from cracking down on illegal guns. In 2005, after a rash of shootings, Bloomberg’s aides told him that 90% of the illegal guns used in local crimes came from out of state and that 1% of U.S. gun dealers supplied 60% of its crime guns. And the Bush Administration had stopped tracking the problem; in fact, the G.O.P. Congress had enacted N.R.A.-backed language restricting federal officials from sharing gun-trace information with local police. Bloomberg appealed to Attorney General Alberto Gonzales but got the brush-off. So the mayor hired investigators to run stings in gun shops nationwide and sued 27 of the shadiest dealers; a dozen are now under court supervision. He also started Mayors Against Illegal Guns to fight the information-sharing restrictions; the group has recruited more than 220 mayors in a year, but Congress has not reversed the policy. “Ultimately, you have to blame the public,” Bloomberg says. “They’re not holding Washington accountable.”

Politicians aren’t supposed to blame the public. Or fly their own planes or pepper their autobiographies with sentences like “I dated all the girls.” (He’s now divorced with two daughters; he’s dating New York’s former banking commissioner.) But Bloomberg isn’t typical. He’s a press mogul who seems perpetually annoyed with the press. He broke with 200 years of tradition by rearranging city hall into a bullpen modeled on a trading floor, with his desk in the middle of 50 aides. (Perhaps transparency breeds loyalty, because his senior staff has barely changed in six years.) And now he wants to charge $8 to drive into busy parts of Manhattan on weekdays.

Bloomberg was initially skeptical of congestion fees because he feared the effect on outer-borough New Yorkers. But the data showed that few of them drive into Manhattan, and most who do will be served by the transit improvements the fees will subsidize. “What good is a 70% approval rating if we don’t take risks?” he asked his aides. So far, that rating hasn’t budged, which has given political cover to New York Governor Eliot Spitzer and even the Bush Administration to support his efforts to reduce emissions. “The naysayers who think global warming is too big a problem just don’t have any vision,” he says.

Schwarzenegger turned out to be a very good politician. He considered running for Governor in 2002, even though his only prior public service had been chairing President George H.W. Bush’s fitness council. Instead, he decided to sponsor a wildly popular ballot initiative to fund after-school programs. The next year, when a fiscal crisis and an electricity crisis fueled an effort to recall Democratic Governor Gray Davis, Schwarzenegger jumped into the chaotic race to replace him. After a two-month campaign too quick to get deep into policy specifics, he had a new job in Sacramento.

If Bloomberg is a technocrat, Schwarzenegger is a populist; he’s never stopped trying to give people what they want. In fact, he’s never really left the campaign trail, spending much of his time pushing ballot initiatives. The most prominent was the stem-cell measure. The $3 billion referendum was a clear rebuke to President George W. Bush, and some Schwarzenegger advisers warned him that supporting it would alienate his Republican base. But he adopted the initiative as his own, named the Democrat who wrote it to be his top stem-cell adviser and became a global spokesman for California’s medical-research industry.

“I like to do everything big,” Schwarzenegger says. But he’s not a superhero anymore. He’s still got that incredible jaw, but he looks almost life-size, and he seems to have inherited Strom Thurmond’s hair dye. He’s still an enthusiastic salesman — everything is “fantastic” or “terrific” or “greatgreat” — but his constituents didn’t want what he was selling in 2005, rejecting all four of his initiatives. He recovered in time to get re-elected by apologizing and reaching out to the Democrats who run the legislature. If the Bloomberg administration’s symbol is the bullpen where the mayor manages, the Schwarzenegger administration’s symbol is the smoking tent outside the state capitol where the Governor schmoozes while he lights up his cigar. “Our Founding Fathers would still be meeting at the Holiday Inn in Philadelphia if they wouldn’t have compromised,” he said in a blistering anti-Washington speech in February. “Why can’t our political leaders?” He suggested that Bush should get himself a smoking tent.

Schwarzenegger made his most important compromise last September, when he signed a Democratic bill capping greenhouse-gas emissions. With his Hummers, his private plane and his conspicuous delight in conspicuous consumption, Schwarzenegger is an unlikely environmentalist, but he’s become a global salesman for the war on carbon. His message, as usual, is that the naysayers are wrong: you can clean up the environment and still have a growing economy with big houses and big cars. He talks about green technology as California’s next gold rush, its next Internet boom: “One plus one can make three!” He scoffs at environmental buzzkills who want Americans to drive wimpy cars and live like Buddhist monks. “Guilt doesn’t work,” he says. He sees the future in the Tesla, a hot new electric car that goes from 0 to 60 in 4 sec. His model cost a mere $100,000.

It’s not exactly the Sierra Club message, but he’s a powerful messenger. He was in Vancouver to sign another climate deal when news broke that Bush would reject Europe’s push for climate caps at the G-8 summit and would propose a meeting instead. “We don’t need another meeting on global warming,” Schwarzenegger told a crowd of reporters. “We need action.” Action, of course, is Schwarzenegger’s thing. He was never much for dialogue. In an interview, he marveled at Bush’s notion that America shouldn’t cap its own emissions until China and India agree to do so. “That’s not what leadership is about,” he said. “We don’t care if Arizona is going to do the right thing; we take action ourselves.”

That love of action is the real link between Schwarzenegger and Bloomberg, and the real source of the recent Bloomberg-for-President buzz. There’s no obvious niche for a candidate who supports gay marriage and gun control while opposing the death penalty and deadlines for withdrawing troops from Iraq. But there is an obvious appeal to a businessman who can work across party lines to get things done — and could drop $500 million on a campaign without even noticing it was gone. Buffett thinks it’s a great idea, and when he first heard it, he turned to the Constitution. “I wanted to see if Schwarzenegger could be his Vice President,” Buffett said. “I think he could.” It states that the President must be native born, but it’s silent on the Vice President. “That would be one hell of a team, wouldn’t it?”