Stimulus on the state level with Minnesota Gov. Tim Pawlenty

JOHN HOCKENBERRY: Joining us now is Gov. Tim Pawlenty. Is there anything you can do to help homeowners even given the program announced from the Obama administration this week?
GOV. PAWLENTY: There’s a lot that can be done. In Minnesota we’ve done a lot including creating one of the most aggressive mortgage counseling programs in the country. We find that we can save some, but not all the folks, facing foreclosure by getting the owner and the lender together to work it out. One disappointing and discouraging statistic is this: Our lenders in Minnesota are saying of the counseling that takes place, even if they get their mortgage re-worked 60 percent of the folks who get their mortgage re-worked still default later. So it’s not a panacea.
JOHN HOCKENBERRY: No, and we were talking about that statistic yesterday. Take a drink of water while I ask you this question: It’s said that governors and mayors are the only people outside of the president that actually run anything in the United States politically. With the discretion you have as governor, what do you make the stimulus package? Some of your colleagues have suggested that they’re not going to take stimulus money because they’re so opposed to it, you’ve expressed some frustration and reluctance. What are you feeling now?
GOV. PAWLENTY: Most Republican governors and most Republicans are concerned or opposed, or concerned for these reasons: The federal government is spending money it doesn’t have. They are deeply in debt and getting deeper in debt by the hour. They’re borrowing money to do that, mostly from the Chinese. And it’s money we don’t have. Number two, I support, and most Republicans support, a stimulus bill, we just think this one was a missed opportunity and misguided in the sense that it should have focused on bread-and-butter things that have proven to be stimulative, like tax cuts that put money in people’s pockets right away. Or bread-and-butter infrastructure projects like roads and bridges. This thing has wandered into a meandering financial buffet of spending across all kinds of categories, many of which are not stimulative. Lastly it was a missed opportunity to be bipartisan. President Obama said he was going to be bipartisan, bring in a new era. And I think with some reasonable changes it could have been bipartisan, but it clearly was not.
JOHN HOCKENBERRY: Like what reasonable changes?
GOV. PAWLENTY: More focus on the two categories I just described. If you look at this bill for example, of nearly $800 billion in money, only 50, actually $46 billion of it went to roads and bridges.
JOHN HOCKENBERRY: But it’s not all roads and bridges that stimulate. Even Republicans say tax cuts are stimulative and they go to all kinds of pockets in all kinds of communities. When you say the main critique that Republicans have of the stimulus is we’re spending money we don’t have, for heaven’s sake, there’s nothing new about that in Washington.
GOV. PAWLENTY: That’s a concern, but I wouldn’t say the overriding concern. But of the total infrastructure in the bill, including roads and bridges, it’s only $150 billion. We’ve got fish hatchery money in there, there’s art endowment money in there, there’s spending on every kind of government program. We’re going to get more money for programs in our state than we would’ve spent on the programs even in good times. The bill clearly has meandered and that was the tipping point for many Republicans to say, this is not a good enough stimulus bill. But only four Republican governors supported it, the rest were either concerned or opposed. Most are going to end up taking the money. In Minnesota’s case, we’re going to take the money, because we’re a major subsidizer of the federal government. For every dollar we send in, we only get 72 cents back, so we’re going to accept the money, because we’re paying the bill.
JOHN HOCKENBERRY: But when you pay those bills, doesn’t it save jobs? Doesn’t it have the affect of keeping people in positions when they would otherwise be laid off?
GOV. PAWLENTY: Absolutely. Again, I support a stimulus bill, I just think this one should have done better. So I’m not arguing the general premise of can we benefit from a stimulus bill and should we have had a stimulus bill. I say to those questions, yes, I just am disappointed in this one.
JOHN HOCKENBERRY: Some Democrats in the house have suggested that the actions of some of your colleagues, Jim Clyburn of South Carolina who said he might refuse the money or might not accept some of the money from the stimulus package, is a slap in the face to African Americans. How do you respond to that?
GOV. PAWLENTY: I think it was Clyburn talking about South Carolina Governor Mark Sanford. I think I heard that Gov. Sanford is going to accept the money, but I don’t know where Congressman Clyburn is coming from. I don’t know why he would put this debate in racial terms. That seems something that’s an odd statement to me, but you’ll have to ask Congressmen Clyburn about that.
JOHN HOCKENBERRY: Can I ask you something about the tax cuts that many Republicans said is the lead mechanism of economic stimulus. This package, as large as it is, I think $300 billion in tax cuts, only puts about $400 in a middle class family’s pocket. Why didn’t the tax cuts during the Bush years prevent us from getting into this mess to begin with?
GOV. PAWLENTY: I think you had massive greed, massive fraud, and complete deviation from basic principles and common sense. When you have a whole sector of the economy that’s doing things like writing mortgages for 125 percent of the appraised value of the home; not requiring much documentation to issue the mortgages, issuing mortgages to people who couldn’t afford them; not requiring, and this was approved by Fannie[Mae] and Freddie [Mac] not requiring any sort of equity in the value of the home so if the value turned down a little bit you wouldn’t be upside down in the mortgage; and on down the list. The whole thing was a house of cards and a pyramid. And that was a linchpin that started the unraveling in this economy. And obviously, that spread beyond housing. Those issues go well beyond tax policy. That goes right to the heart of a greedy, sloppy, hyper-activated housing market that was just full of speculation and as Alan Greenspan would say, irrational exuberance.
JOHN HOCKENBERRY: Is there any expectation that tax cuts this time around wouldn’t lead to greed as opposed to focused spending that might actually preserve jobs.
GOV. PAWLENTY: This time tax cuts are targeted at moderate income people and below an the effect of them is $13 a week per household, so I don’t think I would describe that as greed.
JOHN HOCKENBERRY: Lets talk about the meeting that’s coming up this weekend. Saturday, as many as 50 governors are going to participate. I’m assuming the stimulus package is going to be on the agenda. In terms of Democratic vs. Republican governors, and I don’t mean versus in some sort of active sense but there are two categories of governors. Are Republicans trying to position themselves as hands-off the Obama administration in this early going for some political, tactical reason?
GOV. PAWLENTY: No, I don’t think so. As a country, the election is over. We have a President, he’s our President, regardless of whether you’re a Republican or Democrat. In order for the country to succeed we need him to succeed. I think it’s okay for people to offer suggestions or concerns, and express their opinions if they disagree. But wherever possible we should try to work together. And I think that’s why this bill is disappointing. It was an opportunity for that to happen but it seems like the Obama administration wanted to plow in all this spending in other categories that wasn’t something that needed to be in an emergency stimulus bill. It could have been debated in a separate bill. And as to the argument that Republican governors are supposed to have it both ways, they’re opposed to stimulus but taking the money. In addition to what I said about states like Minnesota paying the bill, what is the rule that you can’t participate in federal legislation if you’re concerned about it? If you’re a liberal governor and you’re opposed to military spending, does that mean you don’t take the National Guard money? If you’re opposed to No Child Left Behind, do you not take that money?
JOHN HOCKENBERRY: It’s a principle on the table, we’re going to leave it there. Good luck at the meeting this weekend. Thank you, governor.