Press Conference Following a Meeting of the National Governors Association

Press Conference

PRESS CONFERENCE FOLLOWING A MEETING OF THE NATIONAL GOVERNORS ASSOCIATION

PARTICIPANTS: PENNSYLVANIA GOVERNOR ED RENDELL (D); VERMONT GOVERNOR JIM DOUGLAS (R); CALIFORNIA GOVERNOR ARNOLD SCHWARZENEGGER (R); ALASKA GOVERNOR SARAH PALIN (R); IOWA GOVERNOR CHET CULVER (D); SOUTH CAROLINA GOVERNOR MARK SANFORD (R)

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GOV. RENDELL: (In progress) -- and I think there was broad agreement on that.

And the third area was what we call counter-cyclical economic forces, where because of the hard economic times, the safety net programs that the states administer and pay for a lot, those programs have increased pressure. As people lose their jobs, they tend to look towards us for health care -- to the state Medicaid program, for example, where the federal government and the states share the economic burden. And that to help us fund those programs, fund the increased demand for those programs, will make sure that we don't have to cut needed services or increase taxes, both of which could have a very counter-cyclical effect on the economy.

So those were the three areas we discussed. But we also told the president-elect and the vice president-elect that we understood that the first responsibility to making state budgets work, to dealing with the problems that we confront as states and with our own internal budgets, rested with us. And every governor in this room -- almost every governor in this room -- has dealt this year, during this fiscal year has dealt with the effects of the financial crisis.

In Pennsylvania, for example, by the end of the year, we will have cut a half a billion dollars out of our operating budget. You can't do that without a lot of pain. And the stories are equal around the states.

So we didn't come here begging for help. We came here to enter into a discussion, what's the best way for us, as states working with the federal government in a partnership, to help this country turn around its economic dilemma.

We think it was an incredibly productive meeting. There's going to be follow-up. We're going to have input as the -- in the next seven weeks, as the recovery plan is rolled out. But we're going to have continued input in that. And can't say enough about the time given to us by both the president-elect and the vice president-elect.

And with that, I'm going to turn it over to Governor Douglas. And then we'll open it up for questions. And again, let me remind you, if it's a question to your home state governor, if you can hold that till the end, when we break it down, it'll make this a lot easier to get through. A lot of the governors have to make a 1:00 train to Washington.

Jim?

GOV. DOUGLAS: Thanks, Ed.

Well, Governor Rendell, thank you so much for your leadership of our association, for your hospitality in arranging this meeting. It is indeed a historic occasion and a historic site, where all the governors from around the nation have had the chance to interact with the new president and vice president about the issues of importance to our states, particularly the economic and fiscal crisis with which we're dealing.

Governor Rendell outlined the major topics of discussion. We got into several others as well -- health care reform; the home foreclosure crisis that's a problem not only for individual Americans, but also its impact on the collapse of the credit market beyond the individual impact; and a number of other important topics as well.

I think the real significance and importance of this beyond the specifics of the topics that we discussed this morning is the building of a relationship, ensuring that the next administration reaches out to the governors, thinks about us and our responsibilities when they deal with important policy considerations at the federal level, because -- as I suggested at the outset of my remarks -- we are all in this together. The federal officials, the state officials represent the same constituency, and we have to do what we can as partners in the delivery of services to the people of our states to improve the economic and fiscal climate of our nation.

So I want to thank all of my colleagues for taking time out of their busy schedules on very short notice to be here in Philadelphia for this important topic.

GOV. RENDELL: Questions?

Q Governor Rendell, you mentioned a figure of 176 billion (dollars) that's a possibility -- (off mike) -- a stimulus package that the states need. Did you bring up that figure and do you feel that that's close to what --

GOV. RENDELL: Let me correct you. That was the figure of ready- to-go infrastructure projects. And is Governor Schwarzenegger here?

Governor, why don't you address the ready-to-go infrastructure projects? We've heard a lot of talk this morning that it didn't work in Japan; the infrastructure revitalization program didn't help the Japanese economy. There are many reasons for that and many differences for our program. Governor?

GOV. SCHWARZENEGGER: Well, thank you very much. And first of all, I just want to say, Governor Rendell, that you've been a great partner, because you and I and Michael Bloomberg formed this partnership of Build(ing) America's Future more than a year ago. And we've been traveling around the country, talking about and putting the spotlight on the importance of rebuilding America and building the infrastructure.

But I was just earlier mentioning that there's $136 billion of infrastructure projects ready to go all over the United States, including in California. We have $28 billion alone of projects that are ready to go, literally putting shovel -- shovels into the dirt within a few months after the administration starts in Washington. So we are ready to go.

We wanted to share our opinion, of course. California has been on the forefront when it comes to infrastructure; that the people of California and also the legislators made a commitment in 2006 for $42 billion of infrastructure to rebuild the roads, on-ramps, off-ramps, tunnels, bridges, schools, levees and all kinds of things. And so we hope that that is an inspiration, to the federal government and to the Obama administration, to do the same thing nationwide.

The people of California just have approved an additional $10 billion in high-speed rail, which I think is another important thing, because I think there's no reason that we in America should be traveling the same speed as we did a hundred years ago. I think other countries all over the world are building the high-speed rail. I think that's what we should do also here in America.

So there's a lot of things. I mean, America has not done anything when it comes to real, serious infrastructure-building in the last four decades. I think it's time that we get our act together and do it. This is a good opportunity, not only because it will build infrastructure but also it creates great jobs and it gets the economy stimulated. So that's exactly what we need.

GOV. RENDELL: And let me just add to that. That's 136 billion (dollars), as Governor Schwarzenegger said, that are ready to go now. We also discussed with the president-elect and the vice-president- elect that if you could cut through some of the federal regulations or speed up permitting and review processes, that we could get more ready-to-go projects off the table more quickly.

They asked us to compile our suggestions of things where the permitting process, the review process could be shortened or changed, and it's our intention to get them that in the next couple of weeks.

Q (Off mike.)

GOV. RENDELL: No. We didn't talk specific figures. We just talked about needs and areas of concern.

Q Governor, given the fact that the auto industries and the banks and so forth were already sort of ("feet in line" and ?) ahead of the states, what kind of a, I don't want to say guarantee, what kind of suggestion (of ?) support did you get that the states -- (off mike)?

GOV. RENDELL: No guarantees. But I think it's fair to say that both the president-elect and the vice-president-elect are committed to the infrastructure program, committed to doing things to help citizens directly, which was one of our areas of concern, and committed -- they understand that if states can't meet the increased demands on our social-service network, that we're left with cutting services or raising taxes, both of which would be deleterious to the economy. And they want to make sure that doesn't happen.

So I think we're fairly confident that we're going to get help. What the amount is and what the final product will look like, I don't think any of us have a clue, but we're going to continue working with the administration, the new administration, to get this done.

Q (Off mike.)

GOV. RENDELL: Sure. Come on up, Governor.

Q (Off mike.)

GOV. RENDELL: (Laughs.)

Q (Off mike) -- I'm wondering what your thoughts are about a partnership with people that you had a lot of unflattering things to say about.

GOV. PALIN: Oh, and that was mutual, of course, but -- (laughter) -- that -- those unflattering comments. But the campaign is over, and I so appreciated this meeting that we had. And you know, I'm quite optimistic about moving forward in a bipartisan manner as we do forge this partnership between states and the federal government. I appreciated that President-elect Obama recognizes -- first, that he recognizes how valuable it is to have governors in his Cabinet. And we assume that all will go well and some of these governors will be in his Cabinet.

In fact, governors do know best, if you will, when you talk about some of these issues that Senator -- that Senator Obama had brought up -- in fact, remember, on the campaign trail I tried to convince a majority of voters that governors knew best. Obviously that didn't work. I'm here and VP-elect Biden is there. But I look very forward to working with him.

And appreciated also that President-elect Obama is asking for specifics from governors, what it would be that we can do, that our states can offer. Of course, in Alaska, we can offer steps towards energy independence with our natural gas pipeline and more oil production and alternative sources of energy being tapped into also. So that was very much appreciated.

But overall, great meeting. He having reached out to us is greatly appreciated.

Q (Off mike) -- along with John McCain was this sense of too much of taxpayer dollars being handed out indiscriminately. John called it "redistributionist in chief." You've used the same term many times. Now we hear all of you here talking about hundreds of billions of dollars from taxpayers to governors. And I'm wondering, does this sort of run counter to your philosophy?

GOV. PALIN: No. I and other governors here also -- and I think Mark Sanford will address this also -- we still have great concerns about the -- perhaps the philosophy, even, of -- when much of the economic problem that we are facing today perhaps was caused by too much debt, that solving those problems will not come from incurring more debt. So we do have some concerns about these.

This is going to be a matter of reprioritizing federal dollars, though, and putting them to use in the wisest fashion for taxpayers, for constituents. I think Mark's going to talk about that, but I'll let these guys address that.

GOV. RENDELL: That's actually a good time. One of the questions that was asked to us by Vice President-elect Biden was, "Are you all behind this plan?" And I addressed that in saying that the NGA as an organization has endorsed both infrastructure and an adjustment in the FMAP -- that's the Medicaid formula. We've endorsed it as an organization. But I told him there wasn't unanimity and there was another point of view. And I'm going to let Governor Sanford -- he expressed it well, and I'm going to let him express it, and then I'll tell you what President-elect Obama said in return.

But one thing I want you to be careful about is, you said we're here asking for money for governors. We are not here asking for money for governors. If we're asking for any money at all, it's for the citizens of our state. Not for us, not for our budgets, but the citizens of our state.

Governor Sanford?

GOV. SANFORD: I'll just go back to what I said during the meeting, which was there are a number of -- I -- and I -- let me just as a backdrop say that I think that it was awfully appropriate that we're in this room because if you think about what occurred here in Philadelphia so many years ago, folks came together not as Republicans or Democrats, ultimately not as folks from their own states, but as Americans. And so I think we had a legitimate conversation with, indeed, policy differences on things that we believe important going forward in America.

What I raised -- and I think it's, again, a sentiment shared by any number of Republicans, and I suspect Democrats as well -- is, indeed, what Sarah just got at, which is, can we indeed solve a problem that was ultimately created by too much debt by adding yet more debt? And to give a sense of scale on that front, the world economy now is $67 trillion in size. The American economy is about $14 trillion in size. So when you talk about $150 billion, what you're talking about is adding about one-fifth of 1 percent in stimulus. And will that turn the economy around?

We've been told for a long number of months that this stimulus, that stimulus, this stimulus, that stimulus would turn the economy around, and it hasn't. We were told that with the first issue of tax rebates of about 150 billion (dollars) in size. Then it grew to about 2.3 trillion (dollars) in size. Bloomberg now reports we're about $7 trillion in size in terms of the stimulus.

And so I think that there are very legitimate questions, by any number of different folks, both represented in this group and certainly outside this room, across America, on whether or not this will indeed make the difference.

What I also raised was the importance of other forms of stimulus. The ultimate stimulus package for the United States of America is the entrepreneur with a dream, working on the project of tomorrow.

The ultimate stimulus package is again that market-based economy rather than the political economy we're in. People come as simple plaintiffs to Washington, D.C., for yet more money.

I made the point that one of the most important points, with regard to stimulus, is a stable dollar. And we're getting to that tipping point, if you will, wherein we could look at serious degradation in the dollar, such that we would undermine the very stimulus that people are talking about out of Washington, D.C. That's particularly the case, when you look at the debt levels and the spending levels now versus, for instance, 1930.

I'd make two other quick points. One is, when we talk about stimulus, we cannot include trade. 80 percent of what occurs, in the global economy, occurs outside of America, which makes open trade incredibly important. It also makes this notion of competitiveness important.

Something like card check is important in that larger notion of how well automotive companies -- whether in Greenville, Spartanburg, South Carolina, at the BMW plant, or elsewhere across this country -- are able to compete with counterparts elsewhere in the world. Those were a couple of different points that I brought up. I'm sure there are many others by many other governors.

GOV. RENDELL: Thank you, Governor. Let me just quickly tell you the president-elect's response.

Number one, he agreed with Governor Sanford that we have to do something about debt. And he pointed out that that debt problem has been eight years in the making and that he is, in the long run, he is committed to reducing the federal deficit significantly.

But he also noted that the near unanimity among economists including Mr. Feldstein, who was the economist for the McCain-Palin campaign, that right now concerns about debt, concerns about deflation, those concerns are secondary to the need to generate growth and to protect this economy.

And even Mr. Feldstein has said, he believes, there should be a stimulus plan now in the hundreds of billions of dollars. And the president-elect noted that.

He also agreed that we have to have open trade and that that was something that would be good for the country. He also made the point that the reason that we are going to give temporary relief to the states, on things like Medicaid, is because in a bad economy, the demands on Medicaid go up.

When the economy improves, those demands will go back down. And we won't need that money. So that's why the temporary countercyclical funding is a good thing.

Q Small businesses in this country cannot get funding. Liquidity has dried up. Was there any discussion about repealing the payroll tax?

(Off mike.)

GOV. RENDELL: We didn't have that discussion today.

Q Are there any governors here who would be willing to forgo federal money, for infrastructure or Medicaid, in the interest of the federal budget deficit?

GOV. RENDELL: Well, that's a good question.

I don't know if anybody has made that decision yet because, I think, in fairness, we'd like to see what the final product is.

And Governor Palin, I know, is an advocate of infrastructure in not only her state -- I mean, one of the things we need to do, and we made this clear to the -- Governor Culver made this clear, and I don't know if Chet's here.

Chet, why don't you talk about the grid problem that you addressed to President (sic) Obama? Because that's a huge problem that affects all of us.

GOV. CULVER: One of the topics that we touched on was securing our energy future and taking steps that will allow us to maximize our potential. One of the real challenges in the Midwest and in other parts of the country right now is -- is transmitting or moving the power that we generate.

And so one of the things we're focusing on is building our grid. And right now, it's not efficient. It's very tough to get new projects onto the grid. And Iowa, in the Midwest, we have an opportunity to do billions of dollars worth of projects within a 500- mile radius, but we need that infrastructure to be built out and we need to cut through the bureaucratic hurdles that are now standing in our way in terms of making those projects -- getting those projects on line. It's not only wind power, but it's solar, as well. And the president(-elect) and vice president-elect were very responsive to including taking a hard look at the infrastructure related to rail, road and grid.

GOV. RENDELL: I don't know, is there any governor here who wants to respond and take the pledge? I don't think anybody does, because we don't know what the final package is going to look like.

Q What kinds of regulations are you talking about that have to be rolled back? Are you talking environmental regulations?

GOV. RENDELL: It's a whole host of regulations. And we're not saying that the regulations themselves have to be rolled back, but we're saying that the permitting process, the review process, can and should be speeded up dramatically. There's a big difference between eradicating a regulation and just making sure that it's speeded up to cut the time lag dramatically.

Q Governor Rendell, was there any discussion about the liability that all the governors have with public pension plans, which I know are on your minds?

GOV. RENDELL: No. Governor --

Q Governor Schwarzenegger -- (off mike)?

GOV. SCHWARZENEGGER: Well, I think I made that very clear, that I will not ask the federal government for help until we get our act together in California. We have to live within our means, which means that we have to make cuts and we have to raise taxes. That's as simple as that. When we have done that, then we can go to the federal government. But right now, we got to get our own fiscal house in order.

Thank you.

Q What are your prospects -- (off mike)?

GOV. SCHWARZENEGGER: Always good. I'm an optimist. (Laughter.)

Q Governor Rendell?

GOV. RENDELL: All right, we'll take one more question. Right -- right down there.

Q (Off mike) -- on the public transportation projects versus road projects?

GOV. RENDELL: No, the only criteria was, ready to go, shovel in the ground as fast and as quickly as possible.

Thank you all very, very much.

GOV. SCHWARZENEGGER: Thank you. Great job.

GOV. RENDELL: See you. Take care.

END.

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