- Hi, I'm Marc Rotterman.

Coming up on "Front Row."

Inflation hits a new 40-year high.

Governor Cooper signs the state budget into law.

And CNBC ranks North Carolina the best place in the country to do business.

Next.

- [Announcer] Major funding for "Front Row" with Marc Rotterman is provided by Robert L. Luddy.

Additional funding provided by Patricia and Koo Yuen through the Yuen Foundation, committed to bridging cultural differences in our communities.

And by.

Funding for the Lightning Round provided by Nicholas B. and Lucy Mayo Boddie Foundation, A.E.

Finley Foundation, NC Realtors, Rifenburg Construction, and Stefan Gleason.

A complete list of funders can be found at pbsnc.org/frontrow.

[dramatic music] ♪ - Welcome back.

Joining the conversation, Mitch Kokai, with the John Locke Foundation, Dawn Vaughan, with the Raleigh News Observer, Political Analyst, Joe Stewart, and Donna King with Carolina Journal.

Mitch, inflation is skyrocketing.

Give us the details.

- US Labor Department issued a new report this week and that showed that inflation for the year ending in June, was 9.1%, the highest level that we've seen since 1981.

And it was even higher than expected.

We knew inflation was gonna be high, but people were thinking high eights, 9.1% shocked them.

Inflation has been steadily rising except for occasional blips here and there since May, 2020.

So it's not the Putin price hike.

This is something that's been happening for a while.

Within that 9.1%, that actually masks some much larger increases among particular sectors.

40% increase in energy prices over that year.

10% for food, including 12% for groceries.

Now, this of course has had a ripple effect with problems on the markets.

Also an increased chance that we're gonna see some sort of recession.

And of course, the Fed is looking now at the potential for even larger rate hikes than we've been seeing in the past.

So there could be a lot of implications from this change of 9.1% inflation.

One of the other things to know is that the Fed has a target of an average of 2% inflation.

Well, if we're gonna get to an average of 2%, that means you need to get it much lower than 2% to deal with this 9% that we've had in this past year.

It's gonna be a problem.

- Donna, is this primarily Biden's energy policy driving this?

- Well, we're seeing energy prices are among the highest here.

They're up 41%.

Gasoline prices are up 60.

Groceries are up 10.

But I think we are seeing a lot of blame on that energy prices, on that energy policy, because it's driving up prices of everything else.

Wholesale prices over inflation are now over 11%, which means there's more pressure on producers to pass that cost to consumers, and that's a real indicator that this isn't going away anytime soon.

And even for cities, a Wilmington City Council member was on Capitol Hill this week, telling lawmakers, "Look, we can't even get these capital projects done for our cities, 'cause things are coming in 100% over the original bid."

- Joe, how problematic in the fall are these numbers for the Democrats?

- Oh, they're terrible.

Joe Biden, now at 39% approval.

That's the worst of any president, this term of his presidency, since the Second World War.

And it's even beginning to affect his domestic policy.

Senator Joe Manchin from West Virginia saying, "Not sure an additional spending package is a good idea at this point."

Infusing the economy with a bunch of public money, maybe would be contrary to what we need to do to stem inflation.

But I think, because Americans typically do vote with their pocket books, going into the midterm, this kind of bad economic news is bad for the Democrats and it's bad for President Biden.

- That's a good segue to Dawn.

Are wages keeping up with inflation?

- No, and if you look at the inflation numbers for the South, it's even worse.

It was well high, still in the 9% range, but much higher than than 9.1.

So no, the budget that Cooper just signed into law has raises for state employees, but not very high ones, and raises across the board in the private sector aren't keeping up with inflation either.

So people are looking at how much they make, and even if they get a raise, they may not be so happy with it when you look at how much you have to spend on everything.

- Mitch, should we ramp up domestic production?

The President's headed over to Saudi Arabia to ask them to pump more oil.

- Which is certainly an interesting thing to see happen.

One of the issues is that inflation is always a case of too much money chasing too few goods.

So we need to have more supply of products.

But of course, it's harder to supply the products when it's much more expensive to make those products.

So it's a vicious cycle.

People who remember the last time we had inflation this high, in 1981, what ended up happening is we had much higher interest rates and we ended up with a very tough recession at the beginning of the Reagan presidency.

- Donna, wrap this up in about 30 seconds.

Are kitchen table issues gonna drive this election?

- For sure, no question about it.

I mean, I think that we have seen a lot of big issues that have sparked passion in folks, Supreme Court, other things.

But at the end of the day they still have to go fill their gas tank every day, figure out what they're gonna do with their kids' education, some people are deciding private school may not be on the table so maybe they're gonna go to homeschooling.

These are everyday dilemmas that folks are having difficulty with.

Particularly, if they're in a field, in an industry, where they have to go fill a delivery truck or work on the road.

This is a really, really big voter's issue.

- I wanna change gears, go to Dawn.

The governor signed a budget into law and he also had his veto pin out this week.

- Yes, he vetoed the ICE bill, which was totally expected, it's a partisan issue.

And he also vetoed a bill that changes control of appointing of oversight boards for the School for Deaf and Blind.

And this isn't the first time that the legislator has tried to take some control and give it to the legislature, so Cooper generally is against that.

Anything that takes it away from him.

Although a lot of Democrats voted for that bill.

- Let me ask you this, Mitch, what was the rationale in vetoing the bill that asked sheriffs to cooperate with ICE?

- Basically, if you read the veto message, it says that Governor Cooper believes the legislators are just trying to score political points and that they're trying to create fear by dividing people.

So he's basically saying this is entirely a political argument, I'm not gonna go along with it.

Of course, the people who are in favor of this bill have said, look, all we're talking about is for violent criminals who are in your jails and you're not sure about their immigration status, make sure that you find out whether they're legal or illegal, and if they are illegal then the folks from ICE can come in and take care of it.

Cooper's response is, "Look, if they're in jail under a charge of something that's very serious, they're gonna be in jail anyway.

Why should we even bother with that?"

I think that's one of the reasons why this ended up being a party line vote.

When it came through the Senate the last time, Democratic senators knew that it was gonna be vetoed, they didn't even say anything.

As soon as the bill was discussed for about two minutes, they all voted no, knowing that Cooper was gonna veto it.

- Catherine Truitt is questioning and wants a veto override on the schools for the blind, correct?

- Yes, she penned a letter to lawmakers this week urging them to override that veto because she's, Catherine Truitt being the superintendent of public instruction for North Carolina, she said that this was a grave error on the part of Governor Cooper, that she really wants them to override this, that this isn't the place where we should be trying to retain power, that these schools for deaf and the blind really need more oversight.

And she's urging the- - Does that have a shot for an override, do you think?

- I think everything does.

We'll see, it depends on how many Democrats will be willing to break with Cooper and vote to override.

We see this with the state budget, a few voted in favor of it, even though originally the Democrats were gonna vote against it and then Cooper ended up signing it.

I think everybody's looking at what's right for their districts.

- Joe, put this in context.

- Well, I think a lot of people believe that the governor would allow the budget just to go into law without signing it at all.

And a little surprised that he went ahead and signed it, but it passed by wide bipartisan margins.

And I think the governor's observation that there was more good than bad and the budget was part of the- - A lot people wanted to get outta town and campaign, correct?

- I think that's right.

And the appropriations in the budget that are back into the districts of legislators, it gives them something to talk about and go back into their district and champion the cause of why they're a good representative of that part of the state of North Carolina because they're able to deliver the bacon back home.

I'm sort of curious if the governor's decision to go ahead and sign this is as much as anything to try to begin to get along with a legislature that he's gonna have to deal with for the next two years in the final two years of his final administration with possibly super majorities.

And so he needs a little bit of goodwill with the legislature, perhaps- - So in other words, you're thinking he might be a lame duck, right?

- Could be.

Plus we haven't mentioned the big M word, Medicaid expansion.

One of the things that Cooper said in signing the budget was he believes that Medicaid expansion's still gonna happen.

That has been such a goal of his that I think he's willing to go along with anything in the budget if he can also get Medicaid expansion.

- I think everybody knew that he was gonna run the clock out.

I honestly thought he wouldn't sign it.

He would've just let it become law.

I think Republicans did too and said as much.

Nobody thought he was gonna veto it, 'cause there's not a whole lot in the budget this year, but that Medicaid expansion, what Berger said, what Moore said, what Cooper said, that's pretty much why- - [Donna] And they may be coming back the 26th, to- - We gotta move on.

We got a shout out North Carolina this week from CNBC.

Talk to us about it.

Well deserved shoutout by the way.

- Yeah, CNBC does a 15th year.

It's done this now, the top states for business North Carolina, number one.

Interestingly enough, we've been in the top 10 13 of the last 14 years.

So it's not as though we're a late arrival to this designation.

CNBC looks at a number of factors that the state possesses to make this determination.

They said North Carolina, its robust job growth, solid public finance, and healthy housing markets scored at high.

A few areas where we didn't score as well.

The fact that there's no statewide anti-discrimination law by CNBC's calculation made us the 28th of the 50 states for life health and inclusion and 26th in the cost of doing business.

We have some places to work, but in the same way that Martha Washington said to George, "You won the war, but now you gotta run the nation."

We've got this designation.

What are we gonna do with it?

What do we have to make a commitment to, to continue to be a strong place for businesses to come and grow?

- Mitch, tax reform and regulatory reform are a big part of this, wasn't it?

- Certainly, the tax reform, regulatory reforms, spending restraint that we've seen over the past decade, that's why North Carolina has been near the top.

If not at the top, as it was with this time.

To me, the most interesting thing about this was that CNBC really emphasized bipartisan cooperation as a reason for the number one ranking.

But I found that a bit odd because one, it was about incentives deals.

There has always been bipartisan cooperation on incentives deals much to the chagrin of groups like the John Locke Foundation that don't like 'em.

But the other thing was they talked about the agreement on the budget and I think it was less the agreement on the budget and more what was in the budget, which was more tax cuts and more spending restraint.

I think that's what the business is like.

Not as much the fact that the governor and the legislative leaders are singing kumbaya.

- Dawn, let me ask you a question.

Is divided government working for North Carolina, you think?

- It seems to.

I wrote about, last year, before the long drawn out budget process, which was still even shorter than the last budget process, that Berger, Moore, and Cooper all decided that we're all still here.

What are we gonna do?

And it was a long hard slog to get to the budget last fall, but they did it.

And this one didn't have any new tax cuts.

That's what I was saying about it being last year that yes, the corporate income tax and then individual income tax cuts are still in play because of the two year spending plan.

But not this year, they didn't cut taxes at all.

Which I was surprised about that.

I wasn't in there.

- Now, the governor went on camera with CNBC.

- Oh, for sure.

He definitely was the, "Thank you very much," took a bow.

Definitely took credit for it.

Who wouldn't?

- Never miss an opportunity.

- Yeah, right.

Who wouldn't try and take our credit for this, of course- - Is he auditioning for another job?

- No doubt, no doubt about it.

I think trying to raise his profile there for down the road but I think one of the things that's important, that we elected a Republican general assembly in 2010, which really shifted the focus, the goals of public policy from what was spending more than we're taking in to focusing on rainy day funds and cutting taxes, and as a result, taxes are half of what they were for corporations, personal income tax is down 4.99 from 7.25 or something like that.

But one of the things that, well, it's also important to note that we have an amazing workforce.

We have a phenomenal community college system, good university system, and that's attractive.

One of the things that has not come up that I think is important to note about why we have such a strong economy is that treasurer Folwell paid off the unemployment insurance to the federal government.

And what that means is that states that did not decide to to pay that off- - The great credit rating, right?

- Is our credit rating.

The states, California, New York, that did not decide to pay that off, the federal government is charging corporations in those states more because of that debt still there.

Managing the state's credit rating and lowering taxes and in addition to great weather and community colleges and universities and all that, it creates this formula that really drives businesses here.

- Joe, wrap this up in about 30 seconds.

- Well, as President Kennedy, once famously said, "Success has a thousand parents and failures and orphans," so of course everybody's taking credit for this designation.

I think the thing that's important to remember is we've been an attractive destination for businesses.

Christopher Chang who runs the Economic Development Partnership, the nonprofit entity that was created in the McCrory administration to help the deal flow into North Carolina, deserves a significant amount of the credit for what we've experienced in the last few years in terms of landing big deals in North Carolina.

I think we're gonna see this continue in the near term but we've gotta make investments to make sure that the infrastructure's sufficient to sustain this kind of economic prosperity.

- Dawn, I've gotta move on.

I want to talk to you about a Gallup poll.

I think faith in our institutions is really dramatically declining.

- Yeah, I think this is really interesting.

So a Gallup poll looked at, polled Americans and looked at 16 different institutions of them.

11 Americans had less confidence than they did a year ago in 11 of those institutions.

Now these are institutions like the military, the presidency, the Supreme Court, the media.

- [Mitch] The military fared well, though.

- I'm sorry?

- The military fared well.

- The military fared well, very well.

There was actually only two institutions that had more than half of Americans supporting it, that was small business and the military.

But both of those were in the 60s, so it really is, it really is interesting.

But on average, they found that just 27% of Americans had faith in our institutions in general, across the board, these 16.

The highest, of course, was small business, 68.

Only 16% of Americans had faith in newspapers.

And I think that's an interesting thing because you know, we're all in the business of making sure we get out information.

The lowest confidence rating out of all of these institutions was Congress.

7% of Americans have confidence in Congress and that's really alarming.

- Yeah, but Supreme Court, Mitch, and the Office of the Presidency didn't fare well, and neither did establishment media.

- That's right, Both of those organizations that you mentioned had big drops.

They were still sort of in the middle of the pack with Congress, TV news, and big business at the very bottom of the list.

But yes, there are some hits, I think, for the presidency.

It's because of what we've seen from the Biden administration.

- Is it the person that's in the office or is it the Office of the Presidency right now?

- I think it's both in the-- - I mean, you've had two presidents that are not very well liked.

- Right, I think both in the sense that it is the office, but it's because of the people who've been in the office.

A lot of people didn't like what Donald Trump was about when he was in the presidency, and now on the other side, a lot of people really don't like what Joe Biden's about in the presidency.

And in the Supreme Court, I think a lot of that is a carryover from what we saw on the abortion case.

- Joe, are we self-segregating when it comes to the media, going to our respective corners?

People who are conservative go to Fox, people who are moderate or liberal go to CNN, MSNBC.

- I think that's absolutely what's happened.

We thought the internet would be this incredible force for good in our world, that people would have an unlimited access to all of the information they needed to make informed choices and decisions about public policy matters.

What's happened is people are able to make a very small pipeline of very specific information that substantiates a conclusion they've already drawn.

And unfortunately, broad-based conversation and discussion has been sacrificed as a result of people's ability to not listen to anything other than what they feel reinforces what they've already decided.

- So it's making for a more polarized nation.

- It is, and there's a book written over 20 years ago, "The Big Sort" by a journalist named Bill Bishop who talked about this phenomena of Americans choosing only to live and be among people they agree with politically.

Dr. Michael Bitzer from Catawba College talks about 2,600 precincts in North Carolina.

Only a handful are competitive.

A precinct is a community of voters who live in close proximity to each other.

And so people are just choosing not to have any experiences with anybody other than the people they already agree with.

And it's making for a greater sense of divisiveness in our culture.

- Dawn, jump in here, wrap it up in about 40 seconds.

- Yeah, I think when you mentioned the small business and military still having those gains, a lot of people have a connection to the military and small business.

And of course, how many people know a member of Congress?

So it's easy to blame Congress and to just keep that.

But this has been a decline over several years in just institutions, anyway, so I think that this year it's looking at taking a temperature of people in general and coming out of COVID.

People are tired and they're really not happy with anybody and so they wanna just stay in where they're comfortable and that-- - Great wrap, great conversation, I wanna move on.

What's the most under reported story of the week, Mitch?

- It's hard to& imagine anything about the Leandro school funding case could be under reported 'cause it's been reported so much for so many years.

- [Moderator] Well, you've never talked about that.

- Yeah, never at all.

[panelists chuckling] The case is going back to the State Supreme Court for oral arguments on August 31st.

And the latest interesting developments that is somewhat under report is legislative leaders have asked Justice Anita Earls to recuse herself from this case.

This case has been going on so long that Anita Earls was actually a lawyer for one of the parties in the case back in 2005.

And then 10 years ago in 2012, she wrote a friend of the court brief in this case, so this case has been going on very long.

Anita Earls hasn't been directly involved with it for a long time, but she certainly was in the past.

- Well, what are the odds she recuses herself really?

- I would think they'd be very low, but you know, the guidelines from the state courts and from the US Supreme Court are, if you have been a lawyer for a party in a case, you're supposed to recuse.

- Dawn, under reported, please.

- It starts with actually something I did see reported but I think there needs to be more of it.

The "LA Times" had a really good story about this office worker who only just worked in his apartment who was hired remote and just clocked in and out every day.

And that's what his coworker said about him, that he did a good job of sending the email, that he came to work and left work, although he just never left his apartment.

Well, he died and they didn't find him for days.

And the "LA Times" reporter did a fantastic example of looking at this specific person and his family, and his colleagues, but also what it's like to be a white collar remote office worker now.

- So no interaction with people, is that it?

- In that way, and really just having someone, you know, check up on you and you know, are you okay, what are you doing day-to-day.

And I think it also shows just the disconnect between the workforce and the type of jobs people have are gonna get, even it's gonna be even whiter the more this continues, I think.

- Joe.

- Goodness.

[Joe chuckles] I'm glad to go into the office every day.

[panelists laughing] Would y'all notice if this chair was empty?

[panelists chuckling] - I'll meet you for coffee.

- Moody Analytics under reported, I think.

46 million Americans between February of 2021 and February of 2022, moved to a different zip code from where they lived.

North Carolina, the third largest beneficiary behind only Texas and Florida of in-migration, principally people coming out of the Pacific Northwest and Western parts of the United States and the Northeast.

The challenge for North Carolina is the way this will impact our political landscape.

These are people moving from principally blue states into what is ostensibly a purplish state.

But we may see this continued growth pattern.

Given that we're number one in business we're gonna continue to attract people here.

It may change our political landscape in a way that we're not quite yet prepared for.

- You know, here's a little factoid for you.

3,000 people a day are moving to Florida.

Donna.

- I can see that.

So my under is that North Carolina State Health Plan will now cover gender reassignment procedures, treatments, and surgeries.

Treasurer Dale Folwell said that the State Health Plan is going to honor that ruling from a judge.

There was a lawsuit over it.

There had been based on a rule in the 90s that there would be an exclusion in the State Health Plan coverage for gender reassignment to treat gender dysmorphia... Dysphoria.

- Dysphoria.

- Dysphoria, thank you.

So that exclusion though is no longer gonna be recognized according to a lawsuit and a judge ruling.

Now the State Health Plan does say that they are going to appeal that ruling, and they filed it with the Federal court.

- Any other pushback?

- Not so far.

I think that it depends on the results of the appeal, and what will happen with that.

There's about 750,000 North Carolinians who are state employees or retirees, they're dependents who are treated under the State Health Plan.

- Okay, let's go to Lightning Round, Mitch, who's up, and who's down this week?

- What's up?

Jail deaths in North Carolina, 68 of them last year, which was up 42% from the prior year.

If you talk to the folks who represent the sheriff, they say the numbers are very small, and they still really don't know why, but the people who are sort of advocates for people in jails are saying that the sheriffs are falling down on the job on checking on these people as much as they should, when they're in their jail cells.

My what's down, gas tax revenue.

Gas tax raised $1.8 billion in 2020, which is a lot of a lot of money, but that money is not keeping up with the demand for what needs to be done to keep up with our roads, and largely that's because of more fuel efficient vehicles.

When you drive a more fuel efficient vehicle, you're not paying as much gas tax.

That's less money to keep up the roads.

- Dawn, who's up, and who's down this week?

- Up, is the chance of Medicaid expansion.

You know, I think everyone's been surprised, and continuing to be, but it looks like it's actually going to happen, maybe this year, the way that burger-- - [Marc] Definitely in 2023, you think?

Come on, come on.

All right, down?

- Down is the press and the public's access to these meetings between the governor and the head of the legislature, because we try to get in and it's a secret meeting.

So we don't find out until they're until they're done.

So that's-- - Joe, who's up and who's down this week?

- Who's up, the population of the Earth is now over 8 billion people in a UN population study saying that India may eclipse China as the world's most populous nation by 2023. Who's down?

New York times pull out saying half of GOP voters want someone other than Donald Trump to run in 2024 for president.

It looks like Trump's angling for an announcement, officially that he's running perhaps in September.

If it comes before the midterms, we may see some impact on that election as a result of the president's announcement.

- Do you think he'll try to get ahead of the curve there, and what is the impact on the midterms, if he does that?

- Well, I think in Trump World, there's two things that they're thinking, that the president making an official announcement that he plans to seek office again gives him a better platform to defend the January 6th committee to allegations that are being leveled, and the second is I think he wants to position himself to be able to take credit a little bit for whatever games Republicans make in this election.

- Donna, Donna.

- Yes, sure.

My up is actually the North Carolina Green Party.

It doesn't seem like they would be up right now, but they've had a tremendous amount of publicity, much more than they probably would have.

Of course the Green Party submitted signatures on a petition to be admitted onto the 2022 ballot.

- It was a lawsuit now, right?

- And it was rejected by the State Board of Elections, who says they're investigating what they say... What, what... Well, actually the Democratic Party says are illegal signatures.

The Green Party says, "No, they were harassing "the people who signed it."

So now there's a lawsuit.

The Green Party is suing the State Board of Elections.

So we're gonna be watching that very closely, and see what happens.

My down is Duke Energy.

They've had two meetings so far this week.

There's three more scheduled about a plan to reduce carbon emissions by 2030, and go carbon neutral by 2050.

They're really getting push back on both sides of the aisle over this, and it says it just does not meet the state law.

- Mitch, headline next week?

- Us Senate's Homeland Security group looks at weapons of mass destruction and health security threats.

- Dawn, headline next week?

- Gas prices may be dropping, but they're still too high.

- I think that's gonna be a demand issue, don't you?

That's why they're dropping.

- We'll find out.

[laughing] - Headline next week?

- As we look at the 2022 midterm elections, the big question after this is who emerges as the front runner Republican candidate for Lieutenant Governor Mark Robinson or State Treasurer Dale Folwell.

- Sure, interesting.

- Donna.

- So I'm, I'm gonna go out on a limb on this one.

Russia is, I think, going to, probably cut natural gas to Germany.

So right now Russia has a natural gas line that runs into Germany.

They shut it off saying it needs "maintenance."

Well, they're supposed to turn it back on the 22nd.

So a lot of people are sort of watching this very closely to see if they cut off natural gas supply to the rest of Europe.

- Okay, thanks for joining us.

See you next week on "Front Row."

Have a great weekend!

[upbeat music] ♪ - Major funding for "Front Row with Marc Rotterman" is provided by Robert L Luddy, additional funding provided by Patricia and Koo Yuen through the Yuen Foundation, committed to bridging cultural differences in our communities, and by... Funding for the Lightning Round provided by Nicholas B and Lucy Mayo Body Foundation, AE Finley Foundation, NC Realtors, Rifenburg Construction, and Stefan Gleason.

A complete list of funders can be found at pbsnc.org/frontrow.

[upbeat music] ♪