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Governors Press Their Case for Economic Recovery Plan

December 2, 2008 at 6:05 PM EDT
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President-elect Barack Obama met with state leaders at the National Governors Association conference Tuesday to help shape an economic recovery plan. A panel of governors describes how states are handling the financial downturn.

JIM LEHRER: Judy Woodruff has our governors story.

JUDY WOODRUFF: In the historic Philadelphia hall where the Bill of Rights was ratified and the first congresses met, the nation’s governors gathered to discuss the collapsing economy and their own fiscal crises with the incoming president and vice president.

The head of the National Governors Association, Pennsylvania Democrat Ed Rendell, said he and his colleagues were there to ask for help, not handouts.

GOV. ED RENDELL (D), Pennsylvania: And one of the newscasters said, “Today the governors are meeting with the president-elect in Philadelphia to beg for money.” And, Mr. President-elect and Vice President-elect, that is definitely not why we are here.

First of all, all of us realize our responsibility to deal with this financial crisis ourselves in our states.

JUDY WOODRUFF: Nevertheless, the states will be asking for billions, especially to help fund programs like Medicaid that are jointly administered with the federal government. They are also lobbying for unemployment and food stamp assistance.

Vermont’s Republican governor, Jim Douglas, outlined in stark terms how the crisis is affecting the states’ bottom lines.

GOV. JIM DOUGLAS (R), Vermont: It’s estimated that about $30 billion in budget gaps exist currently. And by the end of the fiscal year, which is June 30 for most states, it will be around $60 billion.

Because the states’ fiscal crises generally lag the economic downturn of the country, that will increase during fiscal 2010, probably to the magnitude of another $120 billion. So we’re looking at about $180 billion anticipated problem over a two-fiscal-year period.

JUDY WOODRUFF: Many states are prohibited by law from running budget deficits.

Vice President-elect Joe Biden said the new administration wants to enact a recovery plan that would spend billions in federal dollars on infrastructure projects already under development by the states.

The president-elect made a clear pitch for pragmatism.

BARACK OBAMA, President-elect of the United States: We recognize that change is not going to come from Washington alone. It’s going to come from all of you.

It will come from a White House and state houses all across the country that are working together. And one of the messages that Joe and I want to continually send is that we are not going to be hampered by ideology in trying to get this country back on track.

We want to figure out what works. That doesn’t mean that we’re not going to have some disagreements, but what it does mean is that, if you can show me something you are doing that’s working or if you tell me that this program or this regulation is hampering us from doing smart things that will advance the interests of our state, then you’re going to have a ready ear.

JUDY WOODRUFF: Following the meeting, some of the governors were Washington-bound to press their case for federal assistance.

Effects of the auto industry's woes

Gov. Jennifer Granholm
The auto industry affects one in 10 jobs. Three million people will be out of work if this bridge loan doesn't happen.

JUDY WOODRUFF: And we turn now to three governors who attended today's meeting. Bill Ritter is the Democratic governor of Colorado. Fellow Democrat Jennifer Granholm is the governor of Michigan. And with us from Columbia, South Carolina, is Republican Gov. Mark Sanford.

Thank you, all three, for being with us.

And, Gov. Granholm, to you first, because you were affected by another set of developments in the news today, and that is the big three automakers coming forward with their proposals for restructuring. G.M. is saying, if they don't get another $4 billion from the government this month, they are probably going to collapse. Were you aware they were that close to the edge?

GOV. JENNIFER GRANHOLM (D), Michigan: Well, clearly, their situation, as well as Chrysler and Ford's, has been utterly exacerbated by the financial meltdown. Citizens are not buying cars.

You just had a report that indicated that their sales are down 40 percent, but it's across the industry. Toyota's sales were down 34 percent. People aren't getting access to credit.

Now, this layered upon the middle of the restructuring that were happening, it meant we were facing this collision that is -- you want to take a recession and turn it into a depression? Then the Congress doesn't fund the auto industry.

The auto industry affects one in 10 jobs. Three million people will be out of work if this bridge loan doesn't happen.

JUDY WOODRUFF: Well, that's my question, because Congress was not very sympathetic a few weeks ago. If they say no now, and the industry has to wait until -- and G.M. has to wait until the next of month...

GOV. JENNIFER GRANHOLM: That's the problem. Yes, it won't last.

JUDY WOODRUFF: ... what does that mean for your state?

GOV. JENNIFER GRANHOLM: Well, it's not just my state. It is across the country. When you think of -- it's not just the people who work directly for the auto industry.

I mean, you probably don't have any auto plants necessarily, but I bet you've got suppliers in your state, I bet there are advertisers, people who work in technology, not just the dealers, but all the way across the board, this will have a huge detrimental impact on the nation's economy.

And plus, going forward, and that's why these plans that they put in place today are so important. I hope people get to chance to read them, because it leads the nation to a different automotive future, a green automotive future. They understand the importance of that for our nation's energy future and our national security.

JUDY WOODRUFF: Well, let me turn to Gov. Mark Sanford in South Carolina, because, Governor, you were on the program a little over two weeks ago and you said at the time you thought, if the auto industry couldn't help itself, it should be allowed to just be let go. Do you agree that they should get no help from the federal government?

GOV. MARK SANFORD (R), South Carolina: Unfortunately, I do. And I say that because our system has always worked based on wins and losses. And losses in this case mean bankruptcy.

But, for instance, Circuit City went bankrupt a couple weeks ago. The stores are still up and running and people are still buying products there in those stores.

What bankruptcy allows is people to go in and clean the slate on in making changes that they couldn't make in an environment otherwise.

So, unfortunately, yes, that's my prescription, because there are a lot of other automotive companies across this country that are doing much better because they don't have the cost structure, they don't have the entitlement structure that the big three have, whether that's BMW in Spartanburg or whether a Toyota plant across the line.

Expectations for the stimulus

Gov. Bill Ritter
Most states are looking at serious problems as we go forward into the next fiscal year and even in the present fiscal year. We have to balance our budgets in the present year, meaning we have to make present-year cuts.

JUDY WOODRUFF: Well, there's much more to say about the auto story, but we are going to move on, because I do want to ask all three of you about your meeting today with President-elect Obama.

Gov. Ritter, this meeting today, what did you go into that meeting with the president-elect expecting, wanting to hear, in the way of what he and the federal government can do?

GOV. BILL RITTER (D), Colorado: Well, I think what we wanted most of all was to have a person who -- the president-elect of the United States listen to governors' input about what we would like to see go into a stimulus package.

Most states are looking at serious problems as we go forward into the next fiscal year and even in the present fiscal year. We have to balance our budgets in the present year, meaning we have to make present-year cuts. And so we were hoping for an ear.

And he did. He listened to us, Judy. He asked us what we would like to see go into it. We had conversations about infrastructure, how we could build out infrastructure and do it fairly quickly, get shovels in the ground, put money into the economy, create jobs that way.

We talked about the safety net and the state's responsibility, along with the federal government, to maintain the safety net. We talked about renewable energy.

JUDY WOODRUFF: Safety net, meaning food stamps?

GOV. BILL RITTER: Food stamps, Medicaid, unemployment insurance benefits, and extending those benefits, so we talked about the safety net. We talked about the ways, also, while we're putting in place infrastructure spending, to do some things with energy development, for instance, that creates this different energy economy, what we call in Colorado and I think what the president-elect calls a new energy economy, renewable energy jobs, energy efficiency, even the transmission grid.

JUDY WOODRUFF: But you also heard, Gov. Granholm, the president-elect say, "We can't keep printing money. There isn't enough money to do everything." So where are the priorities in all of this?

GOV. JENNIFER GRANHOLM: Well, the whole priority -- the first priority is get this economy in order. Clearly, it's important to start to attack the deficit issue.

But the first thing that's most important is getting people back to work and getting this economy managed, because if we don't do that, then things will be by far much, much worse. In fact, you know, the idea that the governors came today and said, "How can we help in your plans, Sen. Obama, President-elect Obama, in making sure that we do put people to work?"

Well, that's what infrastructure projects do. In Michigan, we have 270 infrastructure projects that are ready to go, that could put thousands and thousands of people to work right now. Believe me, we need that.

So there are some governors -- and I'm sure you're going to be talking to one in just a moment -- who don't think that this stimulus package is the way to go.

But I can tell you that, even in South Carolina, you know, he's got 700,000 people who are uninsured. I'm sure that he doesn't want to cut them off of health care to be able to make sure that the state goes forward.

JUDY WOODRUFF: Gov. Sanford, I'll give you a chance to comment there. We know you did make a presentation at the meeting today. You and the president-elect, I guess, had a discussion about that. Tell us about that and why you think the recovery program is misguided, if you do.

GOV. MARK SANFORD: Again, I don't think my colleagues on the show are misguided. They are colleagues, and I respect them tremendously.

But I think that, in this particular instance, it's misguided from two standpoints. One is simply from the standpoint of scale. This thing has grown to be well beyond what's happening within our borders to what is, frankly, a global problem.

The entire global economy is about $67 trillion in size. And now we're saying let's add another $150 billion worth of stimulus. This is, mind you, after a whole round of different stimuluses over the last year.

First, the checks were cut to different individuals across the country. Then we got to $2.3 trillion in stimulus. Now Bloomberg argues we're over $7 trillion in stimulus.

And what we've done is the equivalent of backing up a couple of big dump-trucks to the local lake, unloaded sugar, hoping it will sweeten the lake. It hadn't worked. And now we say, "If we throw this one Twinkie in, it will make the difference in sweetening the lake or, in our case, stimulating the economy."

I think that, in terms of scale, we're talking about 0.5 percent is what this stimulus package represents relative to the rest of the world economy. So I think, in terms of scale, it doesn't make sense. I think there are a number of other problems, but you were about to interject.

A need to jolt the economy

Gov. Mark Sanford
I'd just say that I think stimulus is well beyond simply printing money and spending money out of Washington, D.C. What we're talking about is borrowing money to, in essence, solve a problem that was created by too much debt.

JUDY WOODRUFF: Yes, I want to ask Gov. Ritter how you respond to those comments and what you think the right solution is?

GOV. BILL RITTER: Well, we need a stimulus that creates jobs. If you look at the $700 billion-plus bailout that happened, I don't think that it had as its main target how you create jobs.

And I don't think there's a better way to do that than transportation infrastructure, other kinds of infrastructure, building that out, and doing it in a way that addresses this unemployment problem, because the unemployment problem is creating a real problem as it relates to states being able to fund the safety net and provide other government services.

It's very interconnected. And if you don't create jobs, then all the other stimuli that we've provided are going to be, I think, not as meaningful as if we actually changed the unemployment rate and turned the job creation into a net positive over the next couple of years.

JUDY WOODRUFF: Gov. Sanford, a quick response to that?

GOV. MARK SANFORD: Well, I'd just say that I think stimulus is well beyond simply printing money and spending money out of Washington, D.C. What we're talking about is borrowing money to, in essence, solve a problem that was created by too much debt.

And what we're looking at here is, frankly, stacking up so much debt that I begin to worry about the value of the dollar. If we trash the value of the dollar, it doesn't matter how many checks we send out of Washington, D.C. We're going to have a much bigger problem with regard to stimulating the overall economy.

JUDY WOODRUFF: Is that a problem, Gov. Granholm?

GOV. JENNIFER GRANHOLM: Well, it's safe to say that the Nobel Prize economists that have come out and weighed in on this have said the most important thing right now is to jolt the economy. And you have to jolt the economy with a robust stimulus.

The National Governors Association today, in presenting our case for a stimulus package that is a broad-based package, I think there were probably 48, 47 governors who were in favor of it. And, you know, our respected colleague on the other side there was not one of them.

But the bottom line is that we believe that it is most important, the first thing out of the box for this new president to do, is to stoke this economy.

I can tell you, as the poster child state, Michigan, of -- who have seen the ramifications of an economy that has been in complete upheaval because of the loss of automotive jobs, you don't want to grow people on the public safety net system. You want to train people, and you want to put them to work. And that's exactly what this stimulus would do.

A focus on infrastructure

Gov. Bill Ritter
We have not spent money on infrastructure like we needed to over the last eight years. This is the chance to do that. And it's that kind of an historic time that I think argues against the Gov. Sanford argument.

JUDY WOODRUFF: But for people who hear the word "infrastructure," Governor Ritter, and they just -- maybe eyes glaze over, what do you mean "infrastructure"? How exactly would the dollars that go into those jobs end up helping the economy?

GOV. BILL RITTER: Think in a state like Colorado, it's got 5 million people, but we have, again, 100-plus projects that we could have shovels in the ground in 90 days. And if you infuse our economy with, let's say, $500 million worth of transportation projects in 30 to 180 days, that puts people to work in a sector that has suffered.

And think about that nationwide. Gov. Schwarzenegger today said there are $136 billion worth of highway projects that are on the shelf that we could immediately change around, right, we could put shovels in the ground in 90 to 120 days.

Add to that clean-energy jobs. Think about wind farms and solar farms. The manufacturing end of that, you can create jobs on the manufacturing end of that in a whole new industry by investing in that industry and by really doing things with the stimulus package that don't cost money, other than through tax credit and ways to incentivize people to get into the industry.

JUDY WOODRUFF: Just very quick.

GOV. JENNIFER GRANHOLM: Just very quickly, you need people to know how to build the turbines. You have to have people install the turbines. And turbines have to be connected to the grids. Those are all jobs that can be created if we make a smart investment right now.

JUDY WOODRUFF: Gov. Sanford, setting aside what you were discussing a minute ago, clearly there's a disagreement there. What do you look for from Washington or can you make it on your own in South Carolina?

GOV. MARK SANFORD: Ultimately, I think we can make it on our own in South Carolina, but I think that the biggest thing that I look for from Washington is stimulus well beyond the confines of simply writing checks out of Washington, D.C.

And so I think stimulus is tied to trade policy. Are we open or closed in that fashion? I think that stimulus is tied to, for instance, the idea of looking at -- I mean, we -- I'm trying to think of the simplest example.

I guess the simplest example would be this. What has driven the economy for the last 200 years of this country's existence is people waking up every morning and, in entrepreneurial fashion or in working for somebody else, believing that if they played by the rules, if they work hard, if they made the right decisions, they'd be rewarded. We have a market-based economy.

And what we're now moving toward with bailout after bailout after bailout is a political-based economy, wherein if you've got the right lobbyist in Washington or if you make enough noise as a state, then you'll be rewarded.

And I think instructive on this front is, you know, for instance, California has grown its government by 95 percent over the last 10 years, which is well beyond the growth rate of even the federal government. Why should taxpayers across this country go and bail out a state that has grown at a far faster rate and provided much more in the way of benefits than even the federal government?

What it means is, next go-round, people in South Carolina say, "I shouldn't try and hold the line or be circumspect in spending, because the government will bail us out."

JUDY WOODRUFF: I am going to interrupt, because I want to let both Gov. Ritter and Gov. Granholm come back.

GOV. BILL RITTER: I think it's an historic time. And, I mean, it's not unlike -- it is not as bad as yet and hopefully won't get as bad as 1930, '32, and Roosevelt's elected in '32, and, in the first 100 days, puts in place a lot of government programs that needed to stimulate the economy.

They did so. They built an infrastructure as part of stimulating the economy. And it was an important thing for us as a nation.

I think we're in that kind of a time. And that's why this response has to be bold and really has to be well-thought-out, but has to spend that money in a way that creates jobs, but also does something that is beneficial to us as a country.

We have not spent money on infrastructure like we needed to over the last eight years. This is the chance to do that. And it's that kind of an historic time that I think argues against the Gov. Sanford argument.

JUDY WOODRUFF: And final argument?

GOV. JENNIFER GRANHOLM: And the last thing I would say is that a piece of this money ought to be retraining people for the jobs of the 21st century. We in Michigan and across the country have got people who've had the rug pulled out from under them because their jobs have gone to India or Mexico or China.

We ought to give them the dignity of a second career by providing them an opportunity to be retrained in one of these innovative areas, like in building wind turbines, renewable energy, et cetera. To just slash and to not give people a chance to rebuild, that, I think, is not American.

JUDY WOODRUFF: All right. We are going to leave it there. We thank all three of you, Gov. Mark Sanford joining us from South Carolina, Gov. Granholm from Michigan, here in Washington, Gov. Bill Ritter. Thank you, all three. We appreciate it.