Panel on Obama and the Governors

Panel on Obama and the Governors

FOX News Special Report With Brit Hume - December 2, 2008


ED RENDELL, (D) PENNSYLVANIA GOVERNOR: 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.

ARNOLD SCHWARZENEGGER, (R) CALIFORNIA GOVERNOR: I think I made it very clear that I will not ask the federal government for help until we get our act together in California.

SEN. BARACK OBAMA, (D-IL) PRESIDENT-ELECT: We are not, as a nation, going to be able to just keep on printing money. So at point we are also going to have to make some long-term decisions in terms of fiscal responsibility.


BAIER: There you see Pennsylvania Governor Ed Rendell, California Governor Arnold Schwarzenegger, and the President-elect meeting today in Philadelphia, where the governors had a message--they need help; maybe not for themselves, but for their states.

We're back with our panel. Mort, this is another instance where these states are hurting and these budgets are not adding up.

KONDRAKE: Well, as President-elect Obama observed, 51 states face budget crises. That means there are nine that don't face budget crises. And perhaps what the National Governors Association should have a school where the nine governors teach the other a 51 how they manage--

BAIER: Wait--41.

KONDRAKE: Whatever, 41; 41, yes, right.

BAIER: We added one there.

KONDRAKE: You got it. My math is always bad.

KRAUTHAMMER: It's the new math.

KONDRAKE: Anyway, so that's my idea, a school of National Governors' Association school of budget balancing.

But, look, the new administration is going to help the states with infrastructure spending, with Medicare, Medicaid costs. The new Congress will pass an S-chip children's health initiative extension and expansion. So there is going to be help for the states.

It seems to me that one option here would be for the--on these infrastructure programs, which Governor Rendell said should cost $136 billion, that you might suspend Davis-Bacon's requirements, law requirements, that where every worker has to be paid a union level wage.

I mean, if we're going to have all these projects that we're going to do, and people need jobs, you could spread the jobs around more and employ more people if you didn't have to pay them so much.

BAIER: Fred, there are a handful of governors who are saying hold on, let's not ask for too much. But it's only a handful.

BARNES: It is only a handful. And, look, I went back and did the math on increases in state spending over the last few years, and it's been going up five percent or more, 5 1/2 percent in the last year, higher than the rate of inflation, which has been around three percent. And spending goes up.

It is not as though these governors and these state legislatures didn't know that occasionally we come into hard times. And in good times it looks great and we can spend this money, but then the hard times come, and then they go begging to the federal government.

And contrary to what President-elect Obama said--he said they need to make some long-term decisions in terms of fiscal responsibility. They need short-term decisions in favor of fiscal responsibility, like going back and cutting spending a lot.

And Arnold Schwarzenegger was right as well, saying look, we don't want any money from the federal government until we get our act together. And at least 41 of these states do not have their act together, including California.

BAIER: Charles, the president elect and the vice president elect were all ears at this meeting today, and seemed to be receptive to the requests.

KRAUTHAMMER: He was. And he was sympathetic, and he said, for example, that the states now have to face a choice between cutting spending and raising taxes. And we have to do something about that.


KRAUTHAMMER: States ought to cut spending and raise taxes, if necessary, and balance the budget.

Now, I think his problem is he has to make a distinction between stimulus and bailout. There is a case, if you want to make a case, in a recession you want a lot of public works. Yes, states and localities have projects ready to go, and that's a good way to stimulate an economy.

But you do it on the basis of merit, on the basis of whether the project will give a return, an economic return, like a sewer system, or something of that sort. You do it on the basis of whether it's ready to go, but not on the bas basis of how much that state is hurting. That's a bailout.

And if is a stimulus package, which is going to be huge, ends up with the wrong criteria, it will be a disaster.

BAIER: What is the number for the stimulus package when we get to the next administration?

KRAUTHAMMER: What happened is Paulson invented a number--$700 billion. Everyone now uses it as a starting number. So that's where it starts.

BAIER: Mort?

KONDRAKE: I would say over a trillion.

BAIER: Really? Fred?

BARNES: I don't know, but it's going to be a lot.

I would differ with Charles on one thing. The problem with infrastructure--when you spend more on it, you reduce joblessness, but you do not stimulate the economy, however.

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FOX News Special Report With Brit Hume


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