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SPEAKER PELOSI: Thank you. Thank you. Good afternoon to all of you who are on this call. Thank you, Governor Rendell and Governor Douglas, for your bipartisan leadership of the National Governors' Association, especially at this critical time for our nation and our economy.
Tomorrow, Congress will act on the most critical piece of legislation we will consider this session: the American Recovery and Reinvestment Act. The Recovery and Reinvestment Act will create and save 3 to 4 million jobs, rebuilding America, making us more globally competitive and energy-independent and transforming our economy for the -- long-term growth.
It's about jobs in the near, near future and then a time-release for stability over time. It gives 95 percent of the American workers an immediate tax cut. It invests quickly into the economy: 75 percent in the first 18 months.
The recovery plan has unprecedented accountability measures built in, providing strong oversight, an historic degree of public transparency, and including no earmarks. So it's about jobs, tax cuts and accountability.
A very important part of how that is done is the aid to the states. In addition to the long-term job-creating investments and tax cuts for the middle class, our plan provides targeted aid to the states. You were very much a part of establishing these priorities, and I thank you for your support. Deep cuts in state budgets for education, health care and public safety, as you have told us, would harm both our workers and economic recovery.
That is why, with your encouragement, this legislation includes $91 billion to protect health-care coverage for the working poor and to prevent cuts in education. According to experts, every dollar in state aid creates one-point -- $1.38 in economic activity.
The governors under your leadership have also been on the front lines helping create jobs, the jobs that will sustain our economy, for years to come, jobs making our homes and buildings more energy- efficient, jobs bringing the power of IT to health care, to lowering costs and improving care, and jobs rebuilding and modernizing our transportation infrastructure.
The American Recovery and Reinvestment Act's ability to create and save 3 to 4 million jobs is the change the American people were promised and the pledge the House will make good on this week.
Again I think Governor Rendell, Governor Douglas and the National Governors Association for their strong participation in some of the priorities that are in this legislation. And I now yield to the governors. As you know, on the call is Governor Rendell of Pennsylvania.
Governor Rendell, will you be going first? Or will Governor Douglas?
GOV. RENDELL: I think we're going in order of our offices in the National Governors Association.
SPEAKER PELOSI: Okay.
GOV. RENDELL: I'm the president. Jim is the vice president and he'll take over next year.
Madame Speaker, we thank you for your leadership, number one. And you outlined the goals and objectives of the Recovery and Reinvestment Plan. And they are, the nation's governors believe, they are very sound goals, goals we ought to support. And we believe this is a balanced and effective plan that will work.
We're especially appreciative for the key elements of the bill which are critical to the states. Increased federal support for Medicaid; all of us are going to have a huge increase in our citizens seeking Medicaid help. Increased support for K through 12 and higher education. Investment in the nation's infrastructure. And tax provisions to spur investments.
We also applaud the transparency and accountability provisions in this bill, which I think are unprecedented for a bill this size and really signal a new day for the federal government in its relationship with the public.
I want to talk just a brief moment about why this money to the states. And the speaker has said, yes, they will help create jobs and protect jobs. And certainly infrastructure is going to create jobs. And the money, the education is going to protect jobs and make sure that layoffs don't occur. But there's another reason.
States are cumulatively facing budget deficits of over $200 billion. In Pennsylvania, this fiscal year alone, we're facing a budget deficit of $2.3 billion. I've already made $1.6 billion in cuts to address that.
Next year, without federal aid, that budget would have -- deficit would have gone to $3.5 billion. So without the aid to the states, what would happen? The states would have to raise taxes. And without the aid to education, what would the local school districts have to do? They would have to raise taxes.
Now, Republicans and Democrats both agree that a key component of the recovery and the investment plan are the tax cut provisions. Working families will get a $1,000 tax cut from the federal government. But if nothing -- no aid came to the states and we have to raise taxes and the school districts have to raise taxes, that $1,000 tax cut from the federal government would be virtually wiped away by the tax increases that the states, local governments and school districts would have to make. So, to get the maximum effect of the tax cuts, it was important to give the states the relief. And this is temporary relief, and we know that. Temporary relief for the next two years.
We are -- every one of us are not seeking to avoid responsibility as a result of this federal money. We are all making painful cuts. I announce my budget next week, and there will be painful cuts because we have got to prepare for when the federal support is not present three years hence. And we understand we have to be responsible for taking our own destiny in our own hands. But these -- the federal support coming to the states is crucial for the reasons I've outlined.
Madame Speaker, we thank you. We think this is a visionary plan. We thank the president. And we hope it will get truly bipartisan support in the Congress.
SPEAKER PELOSI: I thank you, Governor. And as you indicated, Jim, Governor Douglas, as vice chair of the National Governors Association -- or vice president, do we call him?
GOV. DOUGLAS: Well, vice chair, I think.
SPEAKER PELOSI: Vice chair. (Laughs.)
GOV. DOUGLAS: I think we ought to call ourselves speaker and vice speaker. That seems to be (attractive ?). (Laughter).
Well, I want to thank you, Madame Speaker, for your hard work, your personal attention to this important legislation. Ed has articulated very well the challenges that the states are facing, both in terms of economic stress for the families and workers of our states. One of our largest employers, IBM, announced some layoffs today that affects not only Vermont but some other states as well, and the news continues to compound almost on a daily basis. So, getting our nation working again putting people to work, getting them good jobs, is a key priority, and the stimulative effect of this package will help in that regard.
The other part, as Ed articulated extremely well, is the impact on the fiscal integrity of our states. The sad irony of an economic downturn is that that's when the safety net programs are even more critical. We're seeing an increased caseload in Medicaid and other social services, and a lack of resources at this critical time would make the situation even worse. So it's more important than ever that we have this approach, not only in terms of economic growth, but fiscal assistance to the states as well.
Now, I know it's difficult to craft a piece of legislation that everybody can agree to, and we might not, if we were king rather than a member of Congress or a governor, do it exactly the same way. And we may want to talk with some of your colleagues, Madame Speaker, and others about some tweaks in terms of the dates in the bill and flexibility on the state stabilization fund and things like that.
But overall, we're so grateful to you and your colleagues for advancing this package that will really make a difference to the states and to the people of our great country. So on behalf of all of our colleagues, thanks for your great leadership and partnership as this moves forward.
SPEAKER PELOSI: I appreciate that. Thank you very much, Governor.
The issues like food stamps and unemployment insurance, which affect so many people in the states and are, as you said, necessary at this time when funds are short but the economy is down, actually have the most stimulative effect on the economy: food stamps first, unemployment insurance next, and infrastructure after that. And it goes on from there. Actually, those investments bring a bigger return than the tax cuts, but tax cuts where we have them to the middle class we think will give us our biggest return.
With that, I would be pleased to take questions from our friends on the line.
MODERATOR: Operator, can you open up the call now for questions? Thank you.
OPERATOR: Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press "star-1." Please mute your phone, and record your name clearly when prompted. Your name is required to introduce your question. To withdraw your request, press "star-2." One moment, please, for the first question.
The first question comes from Jim Barnes, with the National Journal. Thank you. Your line is open.
Q Governor Douglas, a lot of Republicans are saying that the party needs to look to its leaders in the state house to define itself.
Do you think the best way for the party to be defining itself is to support this stimulus package?
GOV. DOUGLAS: Well, as I indicated earlier, if we were designing a plan, each of us might do it somewhat differently. And I certainly share the concern that many not only Republicans but others have voiced about the mounting federal debt and the need to bring some fiscal stability to the national budget as well. And I was pleased to hear the president say that that's high on his agenda to get the budget under control.
But economists across the political spectrum say at this point in a serious recession this kind of stimulative legislation is warranted and will help us achieve our goals. As I've told people in Vermont, these are extraordinary times and we have to take extraordinary steps.
So in the long run, I look forward to working with everybody in the federal government to get our federal budget in balance. But for the short term, for the reasons Governor Rendell and others have indicated, we really do need to get this help to the states.
GOV. RENDELL: It's Governor Rendell. I'll jump in quickly on that.
Jim's right, these are extraordinary times. And it's not the time to be redefining the party or staking out political ground. It's time to rally round the needs of the country. And Jim's also absolutely right that Ronald Reagan's economic -- chief economic adviser has actually indicated that he thinks the stimulus package may be too small.
SPEAKER PELOSI: And as to that Mark Zandi, economic advisor to John McCain, that these investments that are in the package will create jobs and if we don't do this we will lose -- we will add two percentage points to the unemployment rate as we go forward. And every -- for every month that goes by that we don't have this package, 500,000 Americans will lose their jobs.
Any other questions?
OPERATOR: Next question comes from Tom Barnes with the Pittsburgh Post-Gazette. Thank you. Your line is open.
SPEAKER PELOSI: Is this the "Barnes" day?
Q (Laughs.) I guess it is. Madame Speaker, tomorrow the House or the House and the Senate are going to vote on this package. And what's the bottom line nationally for, you know, how many dollars you're talking about?
SPEAKER PELOSI: Today we begin the debate on the bill in the -- (audio break) -- and then tomorrow we'll take up the amendments and have final passage on the legislation. The bill that has come out of -- we sent the bill forward that was $825 billion. Two thirds of that are for investments, for the creation of jobs, one third for tax cuts, again for the creation of jobs. And then included in both of those are aid -- initiatives that will aid the states.
But we will finish -- now the Senate is taking it up in committee today, but it won't come to the Senate floor until next week.
OPERATOR: Next question comes from Marie Cocco with The Washington Post. Thank you. Your line is open.
Q Hi. Thank you. This is for either of the governors. There has been a lot of discussion about how fast these many infrastructure projects can get under way and that money be spent on the actual creation of public works projects and creation of jobs through them. Could you each give me some kind of estimate on how fast you think you can actually get your infrastructure money flowing through the pipeline in your state?
GOV. DOUGLAS: Well, I'll take a crack at that first. (Inaudible) -- exactly what (I heard ?) from the Congress. I -- (audio break) --
SPEAKER PELOSI: Governor Douglas told us earlier he might have some cell phone issues, but he would get back on --
GOV. RENDELL: I'll jump in and -- I'll jump in and fill the breach.
SPEAKER PELOSI: -- and he would get back on the line.
GOV. RENDELL: Yeah. I've met with my PennDOT officials and DEP officials, et cetera. First, number one, the "use it or lose it" provision in this is a wonderful provision for us, because it allows us, in dealing with our contractors and companies, and even our own bureaucracies, to cut the timelines that are involved significantly. We believe that all of our bridge and road projects -- and that will be the majority of projects in infrastructure -- we're not counting building out the grid or the broadband -- with the majority of projects, we can get any one of them let, meaning the contract's signed and (ready ?) within six months, and we can get work on virtually 95 percent of the $1.2 billion that's scheduled to come to Pennsylvania in nine months. People will be hired, orders will go out, to hopefully Pennsylvania companies, and work will begin in nine months.
There's also a big hunk of Army Corps of Engineer projects, particularly in the Pittsburgh waterways -- some $523 million of need. And I am told by everyone that those projects are ready to go; as soon as the Army Corps gets the okay for the funding, that they'll proceed, contractors will be hired, and the work on the dams and locks will begin almost immediately.
SPEAKER PELOSI: Thank you, Governor.
I think we have time for one more question, and hope that Governor Douglass will be back on the line to respond to Maria Coco's (ph) question and this next question as well.
OPERATOR: The last question comes from John Meisek (sp) with Allentown Morning -- news. Thank you.
Q Hi, Madame Speaker.
SPEAKER PELOSI: Good morning.
Q It's -- (name inaudible) -- with the Allentown Morning Call in Pennsylvania. It's for -- either for you or for Governor Rendell. Just wondering if you have any insight on how the money will be driven out -- I know the money will be driven out to the states, but from there, how it might be driven out to local or county governments.
SPEAKER PELOSI: Well, that was an issue -- Ed, do you want to go first on that? And then I'll wrap up.
GOV. RENDELL: Sure. The federal money comes out in so many ways. Most of the -- (inaudible) -- on the education side in Pennsylvania, John (sp), most of that money is going to go directly to school districts. The stabilization money, the Title I money and the special ed money. That will go directly to the school districts, and it'll go by the existing formulas. That's number one. So we won't slow that down at all. It won't go through state bureaucrats. I mean, the (PBE ?) will keep records of it, but it'll go directly to the districts.
For the infrastructure money, of course that will go to us, and we'll work with local governments to take their greatest concerns and work with the legislature -- (inaudible) -- fair and balanced plan. And then in terms of local governments, by saving us money on Medicaid, by helping us deal with the increase in Medicaid expenditures, that's going to allow us not to make a lot of the cuts that we had previously ticketed for county and local government. We'll still do some cuts, John (sp), but those cuts will be significantly reduced. And I will spell that out in next week's budget. But it'll be the best news for the local and county governments. Because of what Speaker Pelosi and the president are doing, assuming it gets passed, the county governments and the city governments will be in much better shape in terms of the money they get from the states.
Secondly, there's money earmarked -- specific money earmarked for some of the cities' projects. There are some -- increase in CDBG. They're saving some of the cities problems going into the municipal bond market. So there's a lot of good stuff in here for cities as well that doesn't even go to the states.
SPEAKER PELOSI: If I may say -- that this was an issue of great concern to our members. They just did not want everything to go through the governors' offices, because of time -- not out of any lack of respect for the governors' offices, but just in the interest of time. And so, as the governor indicated, a good deal of it comes out by formula, and some -- (inaudible) -- comes from the governor's office and (comes ?) through some programmatic -- like CDBG -- approach.
But it has -- it has the standards of, how can it create jobs the fastest; how can it reach right down into the states as quickly as possible? And members were very, very concerned about that.
We are very pleased with the equilibrium that has been created, in that regard, in this bill; also the balance that is there, on the investments and taxes; also again the large commitment to helping states meet their fiscal demand and how that translates into the lives of the people of our country.
We are grateful to President Obama for the suggestions he has made, that he has met with the governors, that he's met with the Republicans. Now today, he'll be meeting with the House and Senate Republicans. But he's met with the Republican leadership before he was president and then first meeting after he -- the week after he was president, became president.
So we're trying to get as much balance in it as possible. But it has to meet a standard. Does it create jobs? Does it turn the economy around? Does it lead to long-term stabilization of the economy? Does it do so in a transparent way and with great accountability to the American people?
We think it does. Our bill tomorrow, when it comes to the floor, will be the first legislative step. The Senate will act next week, as I mentioned. We will go to conference. The opportunity for comment is there all along the way.
But as I promised, we will have this legislation on the president's desk and signed by the Presidents Day recess, which is the middle of February. Or else there will be no Presidents Day recess. But I feel confident that it will happen. And confident is the word about this.
We want -- as Governor Rendell was talking about, the timetable for the infrastructure and the rest and how this goes out and how it is spent and how it produces jobs, we have to remember that even though it may not -- in some cases, it will produce a job immediately. In other cases, it starts the process rolling.
In every case, it's meant to instill confidence, confidence in the lives of the American people but their confidence in the future.
And that word is the -- you know, heralds our actions. We want to come out of this with a much more hopeful view of what's going on for the American people.
So we, again, thank President Obama for using his considerable platform to present many of the priorities in this legislation to the American people, to the governors for their valuable input. As you know, the president met with the governors on a bipartisan way as well.
And so I'll let the legislation begin. And today we will go to the floor; tomorrow we'll pass it and send it on to the Senate.
I thank you all for your participation.
Thank you, Governor Rendell, again for your tremendous leadership.
Thank you to Governor Douglas. Are you back, Governor Douglas? (Pause.) No. So we'll have to catch him another time for other questions.
But thank you all for participating today. I have to go to the floor now. Thank you. Bye-bye.
OPERATOR: Thank you. At this time, that concludes today's conference call. We would like to thank you for your participation. You may disconnect at this time.