tv Today in Washington CSPAN January 6, 2012 2:00am-6:00am EST
just coin warfare, that we want to make part of our -- of the future. so when i talked about this -- we're not going to keep the large force structure and being, but the critical skills come in the critical enablers, the novel thing for over the last day kate has taught us, keep included on force structure. you'll see examples of that one in a couple weeks, deliberate ones will rebuild and some of the things you see ads on iraq and see in afghanistan and describing are deciding how they will fit into the force structure in the long run. let me ask anders winnefeld to add to that. >> we learned a lot over the last couple years and they suicides in iraq and afghanistan. it's sometimes important to to keep the between calling and counterterrorism. purdue enough a lot of counterterrorism work using those tools.
an interesting thing for me has been that a lot of what we have learned in the coin business transcends to coin business and is applicable to a lot of other things who could find yourselves doing in the world. by the same token, a lot a lot of the things we've built and added to and it's not just isr platforms and approaches to warfare and the like are applicable to other forms of warfare as well. so we're not going to throw the baby out with the bathwater. we will take the lessons and technologies to develop over the next 10 years and apply to the future. >> my second question on reversibility was strung out there with regards to being able to reverse her forces might be. it also seems to such an industrial base. >> is a couple different dimensions. reversibility means as we make these momentous changes, this $487 billion worth of changes, they are causing us a necessity to have to stop certain things,
paused certain things, slow down certain things. and in each case, to the extent we can do so, preserve the ability to change course. server example in the ground forces, as we reduce ground forces, we will do that in such that in such a way to keep the mid grade officers that would be necessary to support a larger force in the future if we decided to reverse course. now, we can't afford to do that comprehensively, but we can afford to do some of that industrial base, same thing. as we make program changes, we want to make sure that 10 years, 15 years from now we still have an industrial base to support their key weapon systems, even if were not able to abide in this areas that the race or in the volume that we had planned the war we were handed this $487 billion cut. another example, science and
knowledge and innovation because that is the seed corn of the future. i want to make sure we don't eat the seed corn. reversibility is the concept reviews to remind ourselves that we want to act in such a way that to the extent we can with the $487 million cut, preserve options for the future. >> bicolor focus on reversibility, avoiding departmental hubris because it's entirely possible. secretary gates was fond of pointing this out that we could get this wrong. we will remain alert as progressives, as the chairman referred to the four budget cycles going to 2020 and we will be alert to the need to either change course or shift course a little as the world shifts beyond our control in many ways. we have to make very difficult choices of $487 billion of cuts and we think we've got a pretty good pathway forward that would allow us to change course.
>> let me take about two more questions. serve. >> secretary cannot imagine they would need to use innovative matters in latin america and africa. does this mean in any way smaller footprint and could you elaborate about this innovation innovation -- >> if you don't mind, i have a lot to say on that. >> the truth is in the last 10 years we been so focused in iraq and afghanistan, there hasn't been a lot of a lot of forces available in some of these other areas to be available for areas to be available for engagement and so forth. that site, that has forced us to pioneer severely antiquated approaches. the use of small teams to the sof team to build cartner capacity on a rotational basis. a very strategic use standard theater engagement, exercises a foreign military souls, foreign
military assistance and so forth. some of the work that has come out of that we are going to continue to apply the insights and innovative approaches to ensure even as he put an emphasis on asia and the middle east, we are not been in every other reach the world. we are going to stay engaged, keep investing in relationships and keep investing in building the partner capacity in those nations. but we are going to do it in creative and different ways. >> and i would tell on that and we've invested a lot in our special operations forces may be doing remarkable work. the lion share what they've been doing has been contributing to the coin type. the head element than they are very, very tight to that. he's a very agile and flexible forces. small units as michelle pointed out, that are also good at working with partners. and as the waters start to draw
down, afghanistan coming down, we'll retain forces and leverage them into other missions to include the types of things you asked about that could include working with our donations and other comments. i would also point out another example of the innovation. there's this program called the state partnership program that the national guard has. the national guard has. ..
we are obviously will have less modernization than if we had $457 billion more. we figure out where to focus that to best strategic effect. that is the value of asking this document. you see where we invest and how intensively we invest is shaped by this. that just gets back to the same point sandy made earlier, this is not a haircut. we're trying to change the shape and not just the size of each and every piece of our budget activity. with that, let me thank you all for being here. [inaudible]
>> good morning. thank you all for joining us today which officially marks our guests first day on the job. richard cordray is the chief of the consumer financial protection bureau, a new federal agency that began operation about six months ago. the agency was created in the dodd-frank wall street reform and consumer protection act after the recent financial crisis. the bureau's role is to regulate consumer financial products and services including mortgages, credit cards, and the like. in its first six months the bureau has started to take steps to make consumer financial products more transparent, including no before you owe campaign which has focused on improving disclosures, and explaining the costs risks and benefits of financial transactions, easier to understand. in addition to the bureau
launched its bank examiner program with them on the ground at the nation's largest banks. the bureau has been without a head since it was set up in the law what they believe lack of congressional oversight in terms of accountability and funding. director cordray's recess appointment yesterday has ignited controversy with some congressional leaders raising questions about the appointment will stand up in court. prior to the appointment director cordray had been at the bureau serve as head of its enforcement division. prior to this he served as attorney general of ohio where he cover recovered more than $2 billion for retirees, investors and business owners. he take steps to protect consumers from predators. he spent two years at ohio's treasure irand four years as treasurer of franklin county, ohio. earlier in his career
director cordray was adjunct professor at ohio state university of college of law. served as a state representative in ohio, was the first solicitor general in ohio's history and was in private practice. he is a graduate of michigan state university, oxford university and the university of chicago law school. i will leave you with one interesting tidbit that is not on director cordray's official white house bio. he has the distinction undefeated five-time champion on jeopardy. [applause] there you go. with that, please welcome richard cordray. [applause]ok >> that was5a+++fws
to the first question, why does this bureau matter. consumer finance is a big part of other economy. and a place a large role in the daily life of almost every american. whether it is to pay their bills or to finance larger investments in their futures, most people use credit. credit cards give us quick access to money when we need it. student loans help us obtain a college education. mortgages make it possible to buy a home and spread the payments over many years. no doubt about it, consumer
financial products can make our lives better and create opportunities to making is of ourselves. but these same financial products can also make life harder. when i served as treasurer in ohio at both the state and local levels i saw good people with good intentions drowning in debts they could not afford. some people just have tough breaks in life. nobody ever plans on losing their job or being laid up by serious illness or injury but these hard blows can be devastating. sometimes people make the wrong choices and get in over hair heads. others get swindled by scams. i have seen senior citizens defraud of their savings and i have seen families bankrupted by complex mortgages with spiraling interest costs they did not understand and could not afford. these things can happen to anyone. we need to understand that we're not talking about some
impersonal abstraction. not about somebody else. we're talking about each one of us, our mothers and fathers, our sisters and brothers, our sons and daughters. people who simply want to make the right choices for themselves and their families. picture the faces of your own extended family. did any of them ever have money troubles? opportunities they could not pursue because they lacked the means and could not borrow the money? what about our children? what will happen to them when they have to fend for themselves in the financial marketplace? we are rightly concerned about these things because consumer finance clearly has become more complicated and more risky in recent years. hidden fees, and exploding interest rates have infected more products and services. novel and exotic mortgages, battered housing markets triggered the financial crisis that wrecked the economy and hurt millions of people.
aggressive debt collection and wide-ranging credit reporting magnify the money problems people experience which now follow them around for many years. bad credit can bar people from getting a job, cost them more money on car loans and home loans, or even block them from borrowing money at all. with the stakes so high, consumers need better information about the costs and risks of borrowing. and they need to be able to comparison shop for a good deal. consumers also need the peace of mind that comes from knowing that the deal they were promised is the deal they are actually getting, not just tomorrow, but next month, and next year as well. consumers deserve to have someone who will stand on their side, who will protect them against fraud, and who will insure that they're treated fairly in the financial marketplace. the new consumer bureau was created to make sure, see these things are achieved for all americans. the good news is that we've already gotten started.
importantly in our first six months, our team has been answering calls and collecting e-mails from american consumers. their stories illustrate the kinds of issues people are facing around the country. we heard from mary in louisiana who took out a payday loan, a short-term, high-cost loan, that turned into a long-term exorbitantly expensive loan when she was unable to pay it off. mary simply wanted a reasonable chance to repay. instead, the pay day lender told her only option was to file for bankruptcy. we also heard from rebecca in north carolina. she told us she missed a mortgage payment, nine months after her husband lost his job. in the two years since her mortgage servicer has increased her monthly payments even though she believe ad trial modification was supposed to reduce them. she said she was charged for inspections and appraisals she did not asked for and never occurred leaded to increased debts and repeats
of foreclosure. rebecca has been frantically complying with these demands because she is so afraid of losing her home. in just a short time we have heard thousands of these kinds of stories. some are outrage just. the problems are welling up everywhere from small towns to big cities, from coast to coast. these nightmares are happening to people from all walks of life, from people who have fallen on hard times, to people who still consider themselves financially secure. they do not expect any special favors. they just want a fair shake. they want to consumer financial system that actually works for consumers. that is exactly what the consumer bureau is here to do. one of our primary objectives to bring clarity to the financial markets. people have a hard time understanding the terms of a deal when they have to pour over reams of fine print. so we launched our no before you owe campaign to provide consumers with easy to
understand disclosures that make clear the prices and risks of financial products right up front. after all, two basic premises of a well-functioning market are, first, that buyers and sellers understand the terms of the deal and second, that buyers are able to compare possible alternatives. honest businesses want to compete in such a market. and they are satisfied to win market share based on fair competition and excellent customer service, not through deception or fraud. we started our no before you owe campaign by tackling the good faith estimate you get when you apply for a home loan. then together with the department of education we released a financial aid shopping sheet that makes it easy to compare aid packages and understand the payments students will be facing after graduation. last month we released a sample credit card agreement that is short, and written in plain language to explain the key prices and terms. we strongly believe that
financial institutions can speak to their customers more simply and more clearly. this kind of straightforward transparency promotes responsible decision-making by consumers. but transparency alone is not enough. another key objective is making sure that financial institutions are playing by the rules. when we launched in july our bureau inherited the responsibility of supervising the largest banks in the country to make sure they are following the law. in practical materials that means we have examiners on the ground today with broad authority to review loan documents, ask tough questions, and make a bank fix problems that come to light. the consumer bureau will make clear that there are real consequences to breaking the law. we have given informants and whistle-blowers direct access to us. we took over a number of investigations from other agencies in july and we are pursuing some investigations jointly with them.
we have also started our own investigations. some may be resolved through cooperative efforts to correct problems. others may require enforcement actions to stop illegal behavior. my last question is, now that we have a director, how will we use our full authorities to protect consumers? one of the difficulties we faced up to now without a director, we were unable to address all the problems that we were created to tackle. the twin promises of the dodd-frank act, which establish the us that the bureau will have singular focus on protecting consume. >> in the financial marketplace and we will make sure large bank and none banks are held to the same standards. in the run up to the financial crisis many unsupervised first led a race to the bottom and pushed aside responsible businesses including community banks and credit unions and greatly harmed consume. >>. now for the first time we can exercise the full authorities granted to us under the new law.
that is a specific difference to having a director makes. today we are launching the bureau's program for supervising nonbanks. we will begin dealing face-to-face with payday lenders, mortgage servicers, mortgage originators, private student lenders and other firms that often compete with banks but have largely escaped any meaningful federal oversight. these are important markets. many provide valuable services to customers who lack access to other forms of credit and they are big markets. nearly 20 million american households use payday lenders and they pay roughly $7.4 billion in fees every year. many subprime loans during the housing bubble were made by non-bank mortgage brokers. since most of these businesses are not used to any federal oversight, our new supervision program may be a challenge for them but we must establish clear standards of conduct so that all financial providers play by the rules. with our full authorities in
of tools toi] address the problems facing consumers. we will spuk seed in our job if financial markets become more fair, more transparent, and more competitive. to make that happen, we need to cult the best data and information we can to really understand what is happening in the market and how consumers and businesses are faring. we are building a direct relationship with the american consumer. tell your story function on our website let's people tell us about your personal experiences. that is how we heard the stories of mary, rebecca and others. our team is taking complaints about credit cards and mortgages with other products to be added as we move forward. we deeply believe that we must hear from americans about their experiences in the marketplace because as john dewey once observed the man who wears the shoe knows best that it pinches and where it pinches even if the expert shoemaker is the best judge of how the trouble is
to be remedied. we are determined to deliver positive results for american consumers. we want people to know what we are doing. our work will support the honest businesses and financial markets against those who deceive customers or otherwise break the law. we are confident that if the public understands our job, they will help us play an important role of safeguarding consumers as well as the broader american economy. we have been extremely fortunate to have strong leadership at the bureau, beginning with my friend and colleague elizabeth warren who conceived of the bureau and began building it from scratch. for the past six months the dynamic energy spurring our efforts has come from my friend and colleague raj data now the deputy director of the bureau whose thoughtful leadership set a strong guide for our approach. because of the strong qualities each of them brought to our team we will
be fashion gnat and caring about the real life problems of consumers even as we're analytical and data driven in our approach to deal with consumer financial markets. as the new director of the consumer financial protection bureau and having been part of this effort for about a year now i know what an extraordinary privilege it is to work with such a talented and dedicated team. i have to run very hard to keep up with them. they inspire me deeply and as you get to know them and their work, they will inspire you also. think back again to the faces of your own family members, the ones you pictured earlier. like all of us they want to be able to use consumer credit to make their lives better, not worse. that is our goal as well. the financial marketplace can be a potent arena that helps people find and seize opportunity. it should not condemn them to bewildering failure. by working every day to protect consumers we will do our part to help fashion a more resilient economy and a
stronger country. join us, work with us, help us make it so. thank you. [applause] >> thank you, richard. i'm going to ask you questions both about your appointment and also about your work with the bureau. >> okay. >> so i'm going to start with the big one that i think is on everyone's minds which is, how would you answer your critics who say your appointment is illegal? >> i have been appointed as the director of the bureau. it is a valid appointment but i will leave those details to others. this is a big job to protect consumers across this country and i will be focused on doing that job. >> the mic. if you speak up a little bit. >> okay. is this on?
okay. as i said the appointment is valid of i'm now the director of the bureau. the important thing for us without me trying to delve into details of that we now have the ability to protect consumers across this country on both bank and non-bank issues and we are going to be 100% focused, i personally, on doing so. >> great. being able to work effectively with the congress seems critical to fulfilling the bureau's mission. how will you be able to work with the congress that doesn't seem to like particularly the structure or powers of the bureau, not to mention your appointment? >> i've always had success at the state and local levels working across the aisle with leaders from both parties on some hard issues, some financial issues, some difficult issues. so i expect i will be able to do that here. our bureau intends to do that. i personally committed to legislative leaders in both parties and both chambers we
will give them the information and input that they need to help us do our work and i'm committed to doing that. >> let me now turn to the work of the agency. i thought your discussion of know before you owe campaign was really interesting. to what extent do you believe that the agency should alter the design of products offered by financial institutions as opposed to efforts like the know before you owe campaign where you're making sure that their characteristics are properly understandably disclosed? >> i think we begin with a financial marketplace we believe was flawed in various respects and it helped lead to a financial crisis that harmed this country greatly. we begin from an instinct we want to make prices and risks clearer for consumers so they can make better decisions for themselves, better of informed decisions
and take greater responsibility for preparing for their future. that is our initial focus but as we go we will deal with situations as they arise. we will carefully analyze the facts and circumstances. we have a entire research and markets team committed to not only assessing problems in the long run but looking at market trends in the long run. that is how we approach our work. >> you do think there is a role for altering the design of products as opposed to just making consumers better informed? >> i think consumers need to be better informed. there are some practices that occurred in the market that are unacceptable and need to be fixed and we will deal with those as they arise. >> good. opposition from small banks to your appointment was reportedly mitigated by the belief your efforts would be targeted towards larger financial institutions. i think the number i saw in the press was something like 50 billion. i was wondering if you could comment a little bit on that? is that right?
if it is not right, you know, is there some number that you're looking at in terms of who you are targeting? and more generally, how should one think about the relationship between the size of an institution and the need to regulate and supervise that institution? >> i can speak best, karen, from my own experience, and that experience was financial officer as state treasurer in local levels in the run up to the crisis. in my view it was not our community banks, not our credit unions that created problems that led to that crisis. they tend to have community-based business model. they know their customers. they bjork with them in a long-term, repeat basis. it's the best, best understanding of what a customer is, someone who silling with to give you their customer and come and back and back again to do big with you. the problems were created elsewhere they were created significantly by non-bank institutions not subject to any meaningful regulation and not subject to any
meaningful standards and led to a race in the bottom. that was true in the mortgage market and other markets as well. in my view it was not community banks and credit unions that created the crisis. in many ways it was them being pushed aside by many non-banks that created problems. going forward we will be mindful of that going forward. >> did you -- [inaudible] >> still having trouble hearing? [inaudible] >> we're trying to address that problem and for now, probably just speak up. so do you care to comment on the 50 billion number, whether there is like a line in terms of, you know, what financial institutions you're going to be focusing your efforts on? >> well, dodd-frank drew some lines. drew a line we will only be supervising and enforcing the law on banks and financial institutions with
assets of 10 billion or more. so that's a line that the law draws. we're not looking to draw additional lines. although we will tailor our program to needs of particular institutions. particularly as we start our non-bank institution program there will be different exigencies and different demands than there were in the bank sector. this is very important step forward for us and i think that level playing field we can attain between banks an nonbanks, that was a central problem mills of the statute. it has been thwarted until now. now we can move forward and fulfill that. >> great. i'm going to turn to issue near and dear to my heart. some analysts are very concerned that limited access to credit is holding back the economy right now. so for example, the federal reserve released a report yesterday saying the effectiveness of monetary policy had been blunted by limited access to housing credit.
i was wondering whether you're worried that some of the bureau's up coming actions could restrain credit supply in a way that harms the economic recovery and slows the speed at which unemployed american workers are put back to work? >> my experience gives me a different worry. i think that thes7 single event that has limited credit most substantially for americans in2íñ my lifetime was the financial crisis of 2008, 2009. and a lot of the community banks and credit unions we're talking about were hurt badly by that. a lot of businesses and individuals have been hurt by the restricted access to credit. that was caused by the financial meltdown. that melt down was caused in turn by some of these problems and failing to regulate parts of markets and therefore the bad drove out the good. and so it is my view if we do our job well we will i'm prove these financial markets. they will work better. we will help to prevent that kind of catastrophe from
occurring again. that will be better for the economy and better for individuals and businesses as well. >> do you have, do you have procedures in place such that you can assess whether a given rule that you're thinking about making is going to be restricting credit in a way that you don't intend? >> well there's two things about that. number one, we inherited a number of regulations from other agencies and one of the projects we're committed to reassessing those regulations. some may have not been thought about for years. what is their cumulative effect? where can we streamline regulations to deliver as good or better value for consumers with less burden to institutions? we think there is opportunity to do that. as we engage in rule-making over the years ahead and decades ahead there is regular provision in our statute for us to review the effective rules after five years or perhaps sooner in some cases. we will do that. we are very committed to a dialogue with the people that we work with, not just consumers but also the businesses, to understand
the real life effects the practical effects of what we do. we've hired a number of people at the bureau who have that kind of real-life practical experience of working within industry and understand how these rules have an effect. it is not an abstract thing. that will help guide us so we deliver the best value for the least cost. >> okay. so, this raises another issue i want to ask you about. there has been concerned expressed about overlap between the work of the bureau and work of other federal agencies. people are worried about redundancy. they're worried about turf wars. they worry about whether bureau investigations will get in the way of investigations, done by primary regulators. so i was curious as to whether, what degree of overlap do you think there is and how do you plan to deal with it? >> well i think bureau represents a significant step forward in a positive way on that. we have consolidated the consumer protection
sense of teamwork with the federal trade commission, the nonbank factory. that's another reason we're able to move forward so we can carry weight with them. but the best of limited resources. there's a lot of problems to address out there, so we'll be quickening closely at rtr. we hope that we'll be a model in this respect. the night before i turn thanks to the yacht dance. one more question that gets back to something you said earlier as well about engaging your stakeholders. he talked in your remarks about engaging the public at least a year from the public about what challenges they're facing in the credit area. you just spoke a little bit about ways to engage the financial and dictations. i think that's terrific. it is a lesson from the last few years that the world is a five are complicated place and i text the theories tell us they are. some of the disappointing performances and closer prevention programs reflect that the fact that people didn't
understand, that people designing policies didn't understand the constraints these were facing. so i think another group of stakeholders that she didn't talk about is consumer groups. you know, that is another group that you probably need to hear from when you're trying to design your reliance. so i think there's also a reasons why you need to have contact with people. people worry about capture by israeli stakeholders. could you talk about that. >> it is clear that has a big job ahead of them. i view it as a very important job in improving life for american people. the kind of people i talk about, which are other people that we know and on the people across this country. everybody is a consumer. we will do our job better. and a chat is better when you have input from people who see
it from a different angle than you. that includes in our case both financial firms in the trade associations. and abbas can present the records. but to me, the thing that helps avoid regulatory capture in the long run or any kind of capture is having a direct pipeline to the individual consumer who feels free to talk to us about the problems they face of at the individual proper mix. today with the speaker does not nhl asked what the problem is, how it affected them and then we think about whether there's something they can do to help that. i think as long as we can maintain that direct link that we are building now, altogether links are important, but also provides the correct day so we don't end up this cute view of how are actually doing. >> thank you. we are going to open things up now to some questions. just to get things started, let me say if he would stand up and say your name and where you are
from after a call from you. also we have a limited amount of time, make sure you get your questions? late, that would be terrific. so, let's see. that? on the blue shirt in the fourth row on the left. >> hi, my name is carter dougherty with limburg news. a devoted follower of your agency and work since he joined in. [inaudible] >> deana, last november i guess it was. as a private enforcement, one of the striking thing since you've been enforcer for much of her public career and yet this is one thing that you haven't yet gone public with. if i were a betting man, i bet their things called strategic mansour enforcement by most that outline where you're going with this. could you get a smart sense of how you see that shaping up here during michigan take out any go
after people from ann arbor. what are your feelings? lesser categories do you think in? >> you might want to dramatize that. we have done as you know, building the bureau. that is something we've been doing actively over the past year, both choosing staff, training staff and moving forward. at this point we are still close to the cradle. we have not issued a sensitive girl. you've not read a single enforcement action or issued a single examination report. but we have lots of work on the pipeline which would be toured in the rate of their production of product. so i'm not going to try to make news on any of those things today. those will be reported publicly when we are ready to report them in the work is like putting a cake in the admin. you put it in and it takes time before it's based.
but we are actively moving forward on all fronts and will have more to say as these things right then. >> if i could take a third parade here. >> thank you. i'm john taylor with the national community coalition. thank you, mr. carteret and congratulations on your appointment. i want to get back to a question karen asked anew in. about this bipartisan issue and how you had good success in working across the aisle with different parties. i'm trying to understand. i'm really trying to understand given what has happened to the american economy rooted now this malfeasant pantomiming that got a lot of people in trouble, i don't understand the lack that official standing in the way of a public agency that's going to clean up so the good act of the good plays in the financial services that will prevail and
not those who are cajoling are trying to produce product that is unsustainable. could you help me understand not? >> well, what i said it was and it's very much the case that i have had good success over the years and working across the aisle. it doesn't mean i always had success on every issue, though we always maintain a good working relationship and i fully expect to be able to do that with the leaders in congress of both parties. they after all represent the same constituents we are serving. they are hearing today in a day at the same stories from constituents asking him for help because they are losing their home returning intact or have other problems they don't understand or think weren't adequately explain to them. some are referring issues over to us. so we really have the same interests i believe that her. i am not someone who impedes people's motives. i don't think that's helpful. i tend to assume that people are
always trying to do what they think is right. they may disagree at times somewhat that is. so i'm going to work forward and build that relationship with congress. they will disagree in some sensitive issues. that's to be made. within the bureau, my friends or colleagues disagree all the time. we work through those things and go forward and not the way we show destinations the developer independent relationship with the congress and i am personally that. >> yeah, that could get the second row right here. >> hi, i am joe plans with "politico." congratulations. not to belabor the point, but i do want to go back it that because you have a congress that is right now talking about legally challenging your ability to take power. it is talking about we don't even think this is a legitimate agency.
we're going to court and try to sue. nothing personal of course, that they are like really opposed to doing this. what is your strategy for that? building relationships is one thing, that combating people who are dead set against his bureau even taking flight is another. i'd like to hear talk a little more about that. >> as you know and somewhat surprisingly perhaps, the issues about my nomination has not become personal and i've never taken any of them personal. it is a process and that's what it is. but let me just say that the most important thing we can do this the bureau is keep our nose to the grindstone and keep doing our work. i think the work we are doing is so important can make such a difference for people in this country as we attack this problem, as we offer a solution or improvement to that problem, we will prove our own case, both to the people who represent the public and to the public at large. i think there's already
tremendous support among the public at large for consumer walk jog. they get it and understand the stated good many have examples from their life they are very familiar with. a family member or friend that they can see where this is important and necessary. the leaders in congress, even those who may have disagreed with some premise is that the statute or authorities that the bureau will begin to see that over time if we do our work well. so to me, the only issue here is doing our work, doing it as well as possible, making sure people understand what we're doing and they can appreciate it in overtime at will will on its way. >> okay, let's see, go to the two in the back of the room on the left back row. >> victoria mcray and what "the wall street journal." i just wanted to ask, given that
everyone is predicting there'll be some sort of legal challenge and there is those out there who disagree with the legal reasoning this way, this way, this way, hesitate or curb or perceived moorhouse satirically than you might otherwise get in that there could he challenges in the future quite >> the answer to that question is no. i don't say that in many militants are challenging away, but the luck of the land gives a certain responsibilities. they matter to the people of this country that we carry them out. with the director in place, we now have our full authorities to move forward. we will do that. and i think as we do our work and focus on during our work which is what i will do with 100% of my energy and time enough for, we will begin to
demonstrate to people further if they think we've heard he begun to demonstrate already why this work is important and what is to be done. congressional leaders will see. again, they represent the same people we do. they speak to and hear from the same people talking to us about their problems. and as we can do better on those problems that help improve things, i think again we will win our way forward. >> right behind you. >> bruce smith from brookings institute. do you have a state regulatory background? that concerns me we have substituted weak federal regulation for potentially much more effect to state regulation. i think something like the countrywide mortgage could handle it to california's level have we not preempted state regulation by the financial glass-steagall legislation in
the late 90s. could you speak to that previously? and secondly, i used to teach public administration. perhaps i'm not correctly informed, but he used to be axiomatic to you to not run an operating function not of the executive office of the president. if you are an agency of government, you should be out away from the executive office of the president, have your relationships with the congress, present your budget to the congress, interact without being enmeshed in the central function of the executive office. could you speak briefly to that, to please? >> sure, as they think you know, the thing that prevented us as an independent agency up until now was that we were blocked from having a direct care. without a director we reported to the department of treasury. we have worked on establishing our relationship over the last
six months, but as of today we are now free of that. so we are independent agency and we'll build that relationship with congress, which is how all of the independent agencies to overtime. at the same time will work with officials on different issues. we work with members of congress and will continue to do so. we work the president and the station, justice department and others where that's appropriate and helpful. but we now have our own mission to charge that we will do that. as to the federal state relationship and cooperation, i actually know something about that. i was about the state attorney general and state treasurer. i strongly believe the states have a meaningful role to play in first and a lot to protect consumers. at the same time i can tell you at the state level i often felt frustrated and the contours of my dority often block me from doing things that could have been helpful to the citizens i
represented. and so, have any authority we now how does the federal bureau to address these issues they think is meaningful. i think he was lacking before. there is not a focus on the tumor protection at the federal level in the financial site. in such focus as there was a soft constraint they very limited resources. so we'll have a partnership with state and local officials. we are already doing in their supervision. we will do it with their nonbank supervision program as well. we are working well and effectively with state attorneys general. sometimes they'll take the lead on some things can sometimes we take the lead on some things. sometimes they may jostle a bit. it'll be in a friendly week has we'll have the same goal in mind, which is what helps the american consumer? what helps the american financial place if we serve out that the things that will serve the american economy and make this country better as i said in a speech and i firmly believe
that. >> it's a sad time -- we have time for just one more quick question. a day to take a firmer right here. >> hi, my name is kelley dupont with northern trust. i just want to add to the following question kerry raised earlier about the intersection between the cf bb and other regulatory agencies. we are worried about regulators and the safety sadness issues about growth to come out of the occ and the fed, et cetera and how that will overlap with the rule making of the transcendent. >> it's a new relationship. her new agency with a new kid on the blocks were all to find her own way and insert the other agencies are as concerned about us to develop this relationship. the best answer for us to build this good communication back and forth and learning to work together so we work through the
awkwardness or newness of this is a cooperative relationship that has our eye on the right ball, which we can do to fulfill our mission and serve the public we'll represent together. i am not saying that is entirely uncomplicated. there are difficulties and not. but if we communicate well, we'll avoid duplication, avoid overlap and we will avoid disagreements that can be ameliorated. that's important for us to do. i think everybody should expect that at this. i think we expected of ourselves. but it will take time to develop the relationship so everyone is comfortable with one another. >> grade. proud of time. richard, i'd like to thank you so much for taking the time to speak to us. [applause] i want to issue really the best of luck with your new rule that
this event is 90 minute. >> good morning, everyone. thank you for joining us at the american enterprise institute. i am mitchells, at aei and also editor of america.com. we are honored today to have wisconsin governor scott walker with us. over the last year, wisconsin has emerged as a crucial battleground in the fight over the future of the free enterprise system. specifically the battle and privileges by public employee unions. let me give you a bit on governor walker's background. walker began his political clear in wisconsin in the state
assembly in 1993, where he earned a reputation as a fiscal hawk in the armor. after a stint as milwaukee county executive, he ran for governor and a platform of eliminating the state's budget deficit, creating jobs and cutting taxes. this week marks -- i think is this week marks the first anniversary of scott walker's inauguration in what year it is then. [laughter] in march of 2011, governor walker signed what is known nationally famous legislation to reform public employee bargaining as well as other reforms with an eye towards putting wisconsin on a solid fiscal path. public employee unions five bitterly and unsuccessfully to block reforms. now they are spearheading an effort. but that is done all he did in 2011. the milwaukee journal sentinel, which issued out to pose governor walker's reforms and criticized recently wrote, quote, governor to announce the
budget. he did reduce structural budget differently and did put a lid on property tax increases. he did give schools and municipalities more control over budgets than they've had in years and his efforts at economic development for corporate tax rates and a revamped congress to permit was promising. so that's a lot of accomplishment in a single year. the conversation today with governor walker's designed to shed light on what's happened over the past year was happening now, but also what it might mean for others dates who face similar issues and for the country as a whole. joining governor walker is my colleague andrew biggs, a resident scholar here at aei and prior to joining the principal deputy commissioner of the social security administration. over the last two years, and are as good doing an extraordinary amount of research on employee comp patient, benefits and pensions and revealing than a foot can only be described as
unsustainable as his entrance at work dates across the country. the thank you for being here, governor. >> great to be with you. >> maybe would be useful to take time and tell us what the context was when he came into office and go into some detail about the reforms you propose that were ultimately people and why he decided to do this. >> well, i'll start with that. when you think about it, a year ago governor faced a deficit. governors to public incumbent democrat, independent come you name it. nearly everyone of us faced a deficit in the 90s by five different ways you can balance the budget using all or a combination of those different ideas. one is you can raise taxes. my neighbors to the south have shown just how the attempt to do that and risk taxes on the 67%. six months later they still have
a big budget problem. but that doesn't necessarily work in these tough economic times. another option is you can relax public employees, which is what they're talking about in illinois and connecticut talked about this year, which is what other states talked about. i thought that doesn't make a lot of sense. i don't want any massive numbers in the public or private area. the third option is you can cut coursers is like medicaid. and our state come a lot of people would be surprised, i actually added $1.2 billion to nine medicaid program in wisconsin, one of the largest increases in the country because i thought the growing needs of seniors, needy families in my state come although i did put an reforms so it wasn't a permanent entitlement, but a way of providing a safety net, one of the largest per capita, so i visited make a choice of cutting that either. and a fourth option is you can
use the citrix. my state have been done previous times in the past and was part of the reason why we have such a large deficit to begin with. we look back and restored some of those -- we stopped the raid on the patient compensation and repay the state of minnesota to tax reciprocity payments so they can put money because we knew that was not a good long-term strategy. so you look at those first four options. none of those in my opinion were options, even though other states chose to answer budget. instead we picked up the option, long-term structural reform. i like to say we pick them out chin to talk more about the next generation and the next election. i've got two sons, matt and alex, junior and senior and i wanted to make the state i passed onto them is greater than the one i inherited from the past and for us, that's the real key. in our case on every state is like this, but in wisconsin case, the biggest single portion
of our budget overwhelmingly is the local government. having been a county executive, and if you just pass by a cut from local governments that would foresee their higher property taxes, which i didn't want her devastating cuts there as well. so the only way to offset that and give local governments to assist various state government was reform one of the biggest portions of our budgets, which is compensation. what we did was eliminate click bargaining from the state and local government employees for everything except a salary. we kept it so times are tough. like now was there and sacrifice times are good. public employees got the benefit is the rest of the taxpayers did. so do respect for the taxpayers of wisconsin. in doing so we are powered not only local government does well to ask for things like a master of pension contribution, which nearly everybody in america does for their retirement and to make a very modest contribution for
health insurance premium. in our case 12.6%. the average taxpayer in my state pays 20 to 25% outside of government. so we did all those things, but more importantly without our school districts to do things like that out there health insurance, which is to say tens of millions of dollars. school districts in particular had to buy health insurance from a company owned by the teachers union a bidding that out and hope in the that to our reforms. school districts have saved millions and millions of dollars just by changing where they bought their help insurance from. were able to rein in abuses at them like over time other access without they are by no longer having opportunities were some other state employees could literally call in sick on their ship and come back and work the next shift. bus drivers in places like madison made $150,000 summer because of overtime.
those things about change and now the powers back in the hands of local officials ultimately the taxpayers of our state. so that's ultimately what we did. seems pretty reasonable when you hear us talk about it. probably the biggest reason i think i am a target is in addition to all of that, we allowed nearly 300 public service we have in our state. third out all of this, despite what the others have said, i've repeatedly talked about my respect for the men and women who dedicate their life to public service, both my kids go to public schools to whether a tradition as well. but we allowed them to do was to ultimately choose. they have the right to choose now in wisconsin. they can choose whether they want to be part of a public employee or not can no longer can they do us but taken from payroll. in the end, that's about the focus from out here in washington in terms of the national unions were focused on and it really comes down to is i took away the gravy train come
in the free money they had before and gave that right back to the workers to make that decision. not something mandatory and that's really the focus is. >> thanks. i want to talk about some of the specific sonoita creek entering here. andrew, maybe you can give some of the broader trends that have been going on at the lit matches just in wisconsin other states, too. >> thinks a much, governor for coming today. the background of social security in an assertive federal programs. in a way i see it as is trying to fix state and local governments without public. compensation might ask in the budget without thinking about entitlements. it's technically possible to do, but very difficult to do. what strikes me about wisconsin in a done a lot of work working with different states.
what strikes me as one senses how remarkable it is in this sense that it is not in illinois, not at california, not a rhode island. so the egregious problems are a gracious overpayment drew up in conversation at a good employees. i spent a little time running a few numbers to show how compensation for unemployed wisconsin could compare to a private set her work repair my cat. wisconsin state and local employees choose salaries a little bit below the private sector is a similar education and experience to get. maybe 5% were the difference comes in the same benefits, in terms of the health care or a payless them. at the local retiree benefits that can often be generous.
i look inside and the wisconsin state after the full career of 30 years, which is considered a full career would receive a pension of $32,000 a year from their retirement system, plus around $13,000 per year from social security peers about the $45,000 a retirement income based on an average final earning around $54,000. but instead of 401(k) plan, they get $88,000 in guaranteed benefits say that they work or the same salary he'll end up with $21,000 if they wanted to get guaranteed stable retirement income than employees in
wisconsin retirement system get. you get the same contributions in this requiring on the employees contribute to the pension system, even after that the benefits are more generous than what people in a private or get. so there is a comparability issue that is very tough to get out because at the benefits are very difficult to figure out. salaries are easy to look at. additional benefit that many public employees get its retiree health benefits. this is a big difference between state and local governments and wisconsin, where the state-level retiree health benefit or not all that generous compared to california or ohio. the local level, benefits can be extremely generous. the milwaukee retirement system in the hot coverage you get after you've retired i believe
is one of the most generous in the country. according to their accounting reports, it's the equivalent of getting an extra 17% of pay each year. not something a private set her work are almost never get these days. so is hidden benefits that we really have to account for coming even if salaries are a little bit lower, i called at the benefits more then make up that difference. what that tells you is there is an issue of fairness. you want public employees to be compensated comparably to private set workers. you want to account for how much experience and how much education you havecome up to my thing is roughly comparable between the public sector employees getting paid the compensation and taxpayers who are providing that. in a lot of cases that's got a little bit out of whack. i think one of the poinsettias come up in terms of his bargaining is this disparity between the benefits of the
retiree at the state and local levels is really interesting. part of it comes that essentially the bargaining power , the buyer can experience of local government relative to large public sector unions is difficult. the state government is bigger. even in many states they have difficulty partnering effectively. local government has a hard time because the public to unions are large and well organized in a school date should my go at this every year. i think even more tools to negotiate a little bit more effectively can bring this back in line and give a more stable and more fair level of conversation, some in that will keep in expenditures and things other than cost if you think about schools are being squeezed in terms of things like that. probably that can come because compensation costs are racing.
i think you want to have a greater comparability between public and private sector conversation in the burgeoning girls in particular to tools that you don't know what the outcome is going to be. it allows a process that can produce over time. >> just a couple thoughts. one on your analysis of private public dirt, one of the interesting points i made a net privacy today, say it again now as i said throughout this process my respect for people who go into public service. i said at last year no say it again and i understand people go for different reasons and it's 99 out of 100 not because of the benefits or their components. but there is a disparity. but will be dead by then about trying to address unevenness between private sector. it was about addressing the long-term budget issues. looking now to the future both
the state and particularly local governors. if i tried to come in enough day came in and tried to specs that, i would try making modest adjustment to employee payroll contributions not the benefits themselves, but the retirement system or things like health care. one year we went to the option of saying instead of that, let's do for four months one week a month to 35 hour work week all in an attempt to lay project people's jobs and at the same time as jobs ultimately provide to the public. in nearly every instance, largest unions at the county said forget it. but rather had before 500 people laid out because essentially their message was to be gone in a couple years. our employees will come back from my often don't have given
up anything in terms of our benefits. what we did was not take benefits away. it was to make realistic opportunities for contributions to pay for those and the irony is wisconsin's case now is matching their pension contribution. engine for state employees is 100% funding. we are not taking benefits away from people. get illinois where they proclaimed in springfield they were going to make reforms, and they have a pension system that lets how to find it and they've got the speaker democrat down there in the past talking about reducing the pension benefit itself for retirees. he don't make structural changes in the finance interface with the horrible decisions on the tail end. by doing this, we get ahead of the curve, so were better off on that is called us credit positive, but it's also about protecting not only the taxpayer, but ultimately their career in public service and
then at a certain expectation when they require that they will be benefit they are in states that don't make those changes that will be a problem. one other interesting thing is to put this in comparison with the public or, i've got a younger brother a few years younger in this debate was happening last year, he would point out to me. he and his wife and family are typical metaclass family from wisconsin. my brother is a minister at a local hotel and works part-time as a bartender. wife works at a department store. they've got two beautiful daughters, my nieces. you're the epitome of a middle-class family in wisconsin. he said to me shaking his head, i pay more than $800 a month for the health insurance premium and a little bit i set aside for 401(k). you're asking for a fraction of that and people are upset about it. to me that was the disconnect a lot of folks have who had worked outside of government that will be scored is not radical.
it's actually still pretty generous compared to what most people are outside of government. it is a very reasonable expectation to make sure we can pay for the benefits we ultimately offer. >> i did a quick calculation where i showed that to match the pension benefit that a full career wisconsin state employee with good and to get a guaranteed benefit in retirement as they do come a private sector work with the same salary would invest somewhere close to a third of their salary for 401(k). so one of the things you focus on the main contributions the same when one of the defenses is benefit productions and making contributions based on a formula in the background. that formula is generous. almost nobody today can put a third of their income into a 401(k). that's really a disparity there would be to do more to boost private savings, no question about that. getting the comparability there really does make sense. these things are just very, very difficult on people because
around the country, particularly when ellicott pensions with a contribution to state pensions and medical pensions has gone up because the are dropped and that the costs borne by taxpayers. i think it makes sense to try to smooth that out going forward. it's going to be a tricky situation, this certainly wisconsin is a much better situation than in illinois or things are pretty dire. >> some of the reforms are in place. but it's been the effect across theater at the local level on budgets? are using dynamic effects to anticipated? >> it's tremendous. in fact, early on throughout this process we did a website i'd wia.gov come up with a map of all 72 counties from every different county, from other jurisdictions about school districts to pass budgets for the property tax levy didn't go up or they pointed out because
the reforms they were able to -- the great example is to convert it took a $400,000 deficit and turned it into a million hot dollar surplus. the is set to hire more teachers and ultimately said about $300,000 aside for merit pay. we have seen one of the great example as i get a kick out of is the mayor of milwaukee, tom barrett ran against me for governor in march nursery debated this effect but we were proposing would devastate the city. on august 8, the comptroller reported to the city council that are reforms will save net -- net savings from the city of milwaukee somewhere between 11 and $19. of course he was asked by reporter at the time if he thought as to the judgment of the city that had but a governor deserves the credit with response that it's a false question. i don't know how false that is.
but it's pretty simply the facts. i mean, i'm a great believer in the truth. if you repeat the truth over and over again no matter how many attack at, no matter how many distortions out there come sooner or later they believed people gravitate towards the truth. for us in wisconsin are two key benchmark but i think to find the truth in her state. one was september 1st in my two sons, matt and alex and every other state goes back to school and in nearly every school district across the state, families saw their schools for the same or better. they sought in many cases the reforms not only didn't cause damage, they actually empowered local school districts to make financial decisions and not the budget in some cases hire more teachers. but also, the reforms are just about finance his peer up a free work worlds and other changes,
now schools and local governments can hire and fire based on merit. we can pay based on performance. the music and that the best and brightest in our classrooms and government positions across the state. i was doing a q&a in northern wisconsin a couple weeks back and at the end one of the superintendents of the small school districts cut up and made a statement intact about how reforms save the money and it's good to keep their staff in place. he said something almost as an afterthought as he went down. i heard and admitted him up and repeated. he said the best part isn't just the finances. the best part is i go back to my office and spend my time worrying about curriculum and not just about grievances. and he said for a specific request rates. change the dynamic in our state. you're not going to predecessor was the governor with total democrat-controlled account hundreds of millions of dollars in public education. the difference was they didn't get this schools anyway to
respond to that. milwaukee -- it's interesting there is a situation where young woman with india in a new teacher of the year by the english teachers council in wisconsin. she got this great award a week later because of these cuts she was laid off. why is that? because the old collective bargaining contracts, last in, first out. and for the best teachers in wisconsin over some of the first one played out. but that's changed now. the process has changed other than a handful of school districts to ever not been in contract before reforms and into effect. for everybody else is wide open. in indiana was damaged in most any data for state employees can mistake out better. get a big difference was a couple of weeks ago when i got property tax bills and for the first time takes years, the tax levey went on wisconsin. our local efforts in schools or better. the reforms are working.
>> one of the points they've seen me make is that you very cute this publicly that the reforms will be better for public employees, will be better for teachers. they've been in politics a long time to know that it's very difficult to convince somebody that you know their best interests better than they do themselves. so you make these arguments to teachers and you have some good examples, but they are still opposed to it. how do you breakthrough that? had he convinced them it actually is your best interest? >> again you keep pushing it over and over again. i got a reading initiative just to announce the details of their superintendent public instruction, but i like to read a elementary schools and meet with teachers afterwards. you can imagine a wide spectrum of people who hate and people who are open-minded and somewhere in between. i pointed out that if you look at other states around the country, where they didn't do
the forms we can accommodate to cut back on aids to schools and higher education and not force laos. so other places there's a lot less public employees and teachers were. we were able to avoid that. the handful of playoffs are in the districts are ranter contracts before reforms went into effect. in total there's about 1200 more that patterson is wisconsin and layoffs overall statewide. like i said, layoffs themselves are concentrated in districts that can take advantage and instead put contracts through. on turn one of the great things in august about a month out those teachers in their state come back and they're getting classroom study. it is amazing how many teachers would come out and say i'm really excited about what he did because i went back to school in a ruinous here because they want to be here. they're pumped up comment do's. convert directly with my principal. i'd have to worry about grievances and other issues.
i can talk to her superintendent and principal and others out there. i just think there's a whole mother dynamic in place. long-term will reward the best and brightest and be able to keep those great teachers in the classroom and were ultimately going to be able to have a system set up not only save a only save a bit in each of the rewards not only let dollars, but another raise the confidence do they have an excellent c. they provide for students. the biggest winner in matters tuning because students will win because most people i know, my wife and i and our close friends or elementary school teachers. the people i've known, including the kids to teach my kids went into teaching for other great reasons. they want to inspire kids, help them. most say thanks to want to do that. but along the way, somebody got tied up in the bureaucracy of not only the union collective bargaining, that education itself and what we did also be allowed us to breakthrough that it empowers teacher to do what they got in the profession for
the first place. >> one of the things that's a little frustrating but have wisconsin stories per trade if it's portrayed as your administration on the one hand and the unions on the other. but their other stakeholders stakeholders involved in interest parties. you mention that there's an positive feedback from bond rating agencies. but it's been feedback from other stakeholders in the business community? >> welcome a look at our reforms with collective bargaining as well as with the other things we did. we passed tax relief, nature tort reform, regulatory reform, repeal the estate tax agency and adult things to create a better business. in 2010 the last of my predecessor was in office come to see the statewide chamber does a survey to estimate players that may say whether today that wisconsin was heading the right direction or not. 2010, 10% of our employers were
sent to the right direction. a couple weeks ago they did the survey came in wisconsin. the number is now 94%. the majority of employers say they're going to hire more players. now, we understand confidence and certainty in the marketplace and ultimately job creation, so we need to do more of that. the three years we lost 150,000 jobs in the dirt. in the first 11 months of last year, numbers flagged by a month and we can just over 16,000 net new jobs in a private set to appear it was subtle way to go when there's a lot more but to do in in the future. that's a tremendous turnaround from heaven not the hundred 50,000 jobs in the past insert only turnaround in terms of the dealing not only within the state, but even nationally. msnbc, ford, survival index come even chief executive magazine annually puts a ranking from one to 50. two years occur where a 43 come a year ago we ranked 41 after
taking office about six months and tell her form started taking effect. we went from 41 at 224. a jump of 17 spots, fastest increase in the country because people realized that only have we created a better business climate, but when you tackle structural problems and fiscal problems that were the band-aids , but she makes structural reforms that both the state and local level, you make it better stay to invest in. not just for big investors, the small business owners. thinking about adding the five or six or seven more employees who are worried that the future may hold. everything you can do to provide more certainty and stability makes it easier and i think in the coming year, 2012 comments a tremendous job growth in wisconsin because of that stability. >> and or, do you see that when you look at different states? what are the effect when states have pursued reforms as opposed to those who haven't?
>> well, one of the interesting things is the states and laboratories of democracy we have a lot of different things happening in states across the country. it's interesting to see how things are playing now. you have in california governor brown has hardly seen as a conservative has proposed to significant changes to the pension system for public employees bayard instead of having an traditional pension to have a mix of social security for a smaller td plan. even in new york ran from, governor cuomo has been proposing changes. it's interesting to see how this played out. illinois is in pretty dire straits is really having trouble getting on top of this. i think the real advantage is doing it. 1.8 added in terms of the changes to compensation is the economist or theoretical standpoint on this. the test of whether these cuts were too large for the increased
contribution is to pensions or health care were too big for the workers and state employees are quitting her of her unable to hire people as the state or local governor still able to reattach and retrain employees? >> particularly in a tough economy, with 7.3% unemployment down from 7.6% a year ago, certainly better than 10% in illinois and better than the national average. i think it was a large part driven by some scare type except the public employee unions to try to claim we were going to take and if it's away. i still get that today. i get questions all the time that people think particularly pensions. we are not. for making a payroll match to match that. but it is interesting, not only the employment site, illinois a great example because other states and why a man under
tremendous pressure is because it is not just republican circus there it is. he mentioned cuomo in new york. you think about paul patrick signing legislation in massachusetts, largely driven by the legislature there, but that was the broken reform for local governments. you think about rahm emanuel and muddy sewage of the city of chicago tackling those challenges. who would have thought when occupied chicago protesters would mention my name in the press, but that is largely because once you're an executive position if you are honest and look at the facts, for a republican or democrat or conservative standpoint, savings or may choose different ways. i take to save money and put it back in the hands of entrepreneurs who feel the economy through entrepreneurial spirit. liberals may want to put it in the hands of more government spending. but either case is increasingly come at least a month executives
, understanding it or have the option either way if you don't tackle the virus, which is like a speaker and out of control. illinois is a prime example is satisfies in california to a certain extent. but illinois has a pension system that's only about half done. they have a bond trading above their fiscal agents this year talked essentially advised bond buyers not to buy their bonds and raised the question, what is the bottom with the bond ratings out there. and mention that with chief executive magazine. we went up 17 spots not. illinois the last tigers failed to tackle this challenge has dropped five years, 45. "the wall street journal" editorial earlier this year or early last year cause a death spiral. if it wasn't for chicago being one of the 12 or 13 megacities at the world, the failure to act
on things in springfield would be devastating. for other tax increases this year and in wisconsin saying they didn't do we get coming out there about carving out companies like sears and caterpillar in others because those companies threaten to leave because excessively high tax burdens and failure to take on burdens. they push more of that up to taxpayers in the state. to me, tackling their foreign comic even though it's brought -- i didn't seek national attention. i just look at the second small business owner. the site problem and solution on local government and what to fix it. in retrospect it would've been nice to spend more time talking about details in january and february, building a better foundation. i talked about the tens of millions of dollars wasted by school districts not been able to bid out health insurance for the excesses, not successes in overtime for state and local governments have. i'm talking about that now.
from my standpoint i said hey, i was allowed to fix that. i spent 18 months in a job interview talking about the fiscal and economic challenges may state is. once i got alike did, which is essentially hired i said i'm not going away. you've got to tackle it right away. so we may be one of the first, certainly not one of the last certainly not republicans doing that. a lot of democratic executives who recognize if your office with the public he got it fixed it. >> i want to talk about the recall and then it, but i want to mention one thing that struck me in doing some reading before this event. you're presented sometimes says rick in the union, union buster, but one question that is interesting to a lot of people is this question how to think about: the bargaining. i want to read you a couple quotes i came across. here is one.
meticulous attention should be paid to relations of public service to the public itself into the government, the process of collective bargaining is usually understood and cannot be transplanted into public service. i was surprised that was franklin roosevelt in 1937, hardly an antiunion guy. how should the fair-minded citizen to give up what to bargaining? collective bargaining rights take right away, which most fair-minded people say there's something wrong with that. he can't take somebody's rights away. how should the average citizen and about collective bargaining? >> some of the national union support millions of dollars in february march feistier collection is successful. collective bargaining in the public sector is it right. it's a sense of entitlement. the reality is non-ascii art in the court yet pointed out, last february that president when i
was in madison because i didn't figure he could safely travel to come and do their job, so i stayed put, the chris christie called me because annual luncheon the president has with all the governors, the president took a shot at by saying we were with public employees. so i could have consulted with people may say they got asked about that. i remember i was drawn in the public service by president reagan signed on at the office even if i don't agree with the first amendment. i am sure the president of the united states knows the federal employees don't have wages and benefits. the president of the united states knows that on average is 20% of health care premiums, about double what i am not getting because i'm sure the
president of the united states is not good at talking points from the national union leaders. the reality is that's what it was. it was a political push to train green beret, which is not inherently fair. i mean, the difference between the public and are is there is no one standing on on behalf of the taxpayers. you ultimately have a cycle that put the taxpayers at a disadvantage. so what we did is say the tax year should be paramount. i respect the hard working people at the local jurisdictions as well. if they elect people on the county boards and city councils and state office is, those individuals should be able to make those decisions. it's quite unlike the dirt where there is a union and an arrangement, there's ability to union can strike. the employer can move at all sorts of options that you don't have in the private air.
from the union standpoint, the private sector union is parsed in wisconsin are my partners and economic development. they've been great allies for us. you look at the rate my predecessor put on the transportation fund, we restore that. people like operating engineers and they say about overdoing because their people are back to work again. we stop shifting funds. reduce funds for what they were meant to be for. so people overcome the private sector largely benefit. the other interesting thing which is the side of that, this mantra not only better right,, but the middle class. let's be clear, who pays for the expansive government? who historically in this country and state-by-state pays for the excessive expansive government? it is fundamentally the middle-class taxpayers and our states and in. but we did is fundamentally about standing up amherst tackiness middle-class taxpayers in pain once and for all three are going to let you be the ones
i did it in front of the state constitution and the reason i did, and moved it because i wanted to revoke the part of the constitution that is never been altered and never been amended. it talks about spending and talks about how moderation, legality and spending leads to freedom and prosperity for our people. that came for more than 163 years ago. over our time in our state and i think it's a similar tradition to our founders more than 200 years ago in this country was at their sense of a limited
government, certainly a government that put the power back in the hands of the state but in turn the states ultimately in the hands of the people was about a limited government, one that excels in certain areas, but one that shouldn't be expansive so our tradition, you know, we have had like a lot of midwestern states we have had folks who advance the cause on the left in the right and everywhere in between. certainly more play. tommy thompson with welfare reform and school choice and other reforms like that. in our regard we didn't look to do this and i didn't set out in my mind to say i want to -- i just said fix the problem and make your stay great again. but i think other states did that. we took a page out of what mitch daniels did in 2005 in indiana when he to an executive order, a lot easier than a statutory change but an executive order was able to change collective bargaining and turn his state more efficient and more
effective taxpayers. i think that is paid off over time are going to do what other governors did that i think others can agree. chris was out talking about this but it was really this year to his credit with the legislature that was controlled by democrats, he was able to convince enough folks of both parties that this had to be done. i think other states can and should do that because if they don't, again whether you are liberal or conservative, there's going to be less and less resources either to get back to the people from whence he came or to spend on their programs out there. i think it can be done elsewhere. >> i think that is precisely why you are going to see the tens of millions of dollars coming in from outside of the state into wisconsin, because there are some interest here in washington that don't want this to happen. and they don't want to happen in republican areas but whether it is lincoln chaffee up in rhode island or some of the other
states we mentioned or others down the way, they want people to think twice about that because they want people to think there will be retributions if they consider those changes. i think they are impaired or. i think what happens now or if you do years down the road it's going to happen. >> that tease us up nicely. we are going to have quite -- open up questions the audience but i wanted to ask about the recall and what is going on and i that i think our audience would like to know how this this got off the ground and breaking standard where you see it going and just your take on it generally. >> it started officially on november 15 although state democrats and the union supporting them talk about it before then. november 15 they kicked off the recall efforts. they have 60 days by wisconsin law to collect 540,208 signatures. for a while, they were talking about collecting 1 million. i don't know if they will get to that but i assume they will get well into the 540,000. our state, that is equivalent to
25% of the votes cast for governor in november 2010. i say equivalent because you don't have to be a voter to sign the recall petition. all you have to be is eligible to vote, which means 18 years of age or older, not a felon, on paper and lived in the state for at least 28 days. so it's not an extremely high standard but it is what it is. and, the burden to ensure that people have only signed at once and they are legal residents although not in the state but in the incumbents campaign to challenge so we will look through those and obviously if there are excessive examples of multiple signatures and things of that nature we will challenge that. in the end i will imagine they will probably get that. in all likelihood after they do they will probably force an election sometime i would imagine now and june, early in june. unlike some states where it is up and down with the incumbent this forces a new election so
the minute a people under the law can ultimately force a new election. from oaks folks in our state even those that aren't particularly political one way or the other, most folks are tired of all of the elections. collectively there were more than $40 million spent by all groups and candidates in the summer on the state senate recall elections. put that in perspective, i spent $13 million running for governor over 18 months. they spent more than $40 million in the summer on the senate recall elections. i think those people are just tired of all the attack ads. our ad started november 15 and we were involved in positive testimonials from people, teachers and school board members talking about how the reforms are working for them and their families and communities and we will continue down that path. people asked me who my opponent is going to be. the person doesn't matter. it will be the big government union bosses in washington who will pour limitless amounts of money into our stadium will try
and influence our vote and we are going to have to be ready to get the truth out encounter that. also i think elections are about the future and not just about the past. do we want to go back to the days of record job losses, double-digit tax increases in huge deficits or do we want to move our state forward? i think we have taken our state forward and i think we can move aggressively forward even more so together in our state but we have to get past these recalls. >> if i could ask, are there any reforms on public employee compensation passed in ohio last year? i know they were repealed or a referendum. are there any lessons you take from the failure of the reforms in ohio? do you think that you avoided through the way you went about things -- >> did biggest fundamental difference between ohio and wisconsin and as much as we have a weird quirk with the recall law we have a weird quirk with
the recall. ohio's case once they got enough signatures to get f5 on the ballot in the render and questioned and deal law in ohio says it no longer goes into effect so in ohio's case the voters never got to see the benefits of those reforms. if i had a vote last march, i think it would be much more difficult to win because all people would have heard was the scare stories and the attacks and data nothing to counter that with. in my case i mentioned earlier those two benchmarks, september 1 in the second week of december. those two things alone are a tremendous counter to any attack ads running against me because people say hey the kids went back to school and my school is in good shape in my school had a teacher. that sounds pretty good and they say i got my property tax bill and i'm in pretty good shape. one of my biggest hits on twitter and facebook for the
past few weeks have been people responding to me asking how many of the site are property taxes go down or stay the same but people responded to that. so i think the biggest challenge that kasich another said there was all people heard for the negatives and were outspent by 10 to one or 11 to one or something like that. i think we can win as long as we have enough to get our message out. >> one more question before we open it up to the audience. if i may reform minded governor and i said scott did a great job at pierces big backlash in the recall. is there anything after you going through this he would do differently? i know you would push for the reform because -- structural reforms would what if you learned in how this has unfolded? >> clearly we laid the
groundwork earlier in january to every every and i mean that not just me speaking about. think we would have run an aggressive ad campaign because that is the biggest mistake i made. iges uses as a fix it. you are elected to fix things, going to. the. i had no idea of the national mind that would attack us early on and distort the facts of the truth. again i said before but if people had known how many tens of millions of dollars and school districts wasted in the past by being forced to buy their health insurance from a sole provider without being vetted outcome if they saw the millions of dollars wasted on the abuses of overtime, if they had seen examples of local officials like myself before i was governor across the state who are trying to do innovative things, not just to balance the budget to make our governor work better but if they heard those stories, for a lot of people who weren't involved in local government prior to this all coming up, a lot of people came out of the blue. one of the retained -- routine
things i hear from people i think it's a legitimate critique, they say you know what? umar look at it to make sense and i'm glad the way to sort out but i'm still frustrated because i think you could've done a better job explaining it up front. >> i'd don't shy away from that. i say in retrospect, hindsight is 2020 but if i could change it, or any other governor for he or she i would say you know, have an effective communication plan. build your case early. break it out early and upfront. made the case for why reform is needed and then not just do it but then repeated. once we got engaged, we got -- authentications but you have to find ways to talk directly to your constituents. not just her press conferences. we have town hall meetings and brownbag lines -- lunches and things like that. we criss-crossed the state. is also very engaging. for all the talk you see the national media and all the attacks in this and that of the
protesters, for every protester i get there are five or six people that will come up to you when you hold a listening session or you were touring a factory. they will come up and slip you a note and tell you to persevere and people will give you the thumbs up. there are people who aren't holding a sign up and don't have enough time left on their vacation scheduled to take off of work for couple weeks at a time but there are fashion at -- passionate. they are just not angry about it and so they do that as well. that's everything i would tell governors, fewer going to do it don't go halfway. people say could you have done this? in the end i knew from being a local elected official for all those years, if we had gone halfway, we would have fixed the problem for year or two and it would have only gotten bigger a couple years down the road. to me that would have been completely unacceptable and i've got to tell you i don't plan on losing but i'm not afraid of
losing because in the end if you do something for the right reasons, those things, i was in this town paul ryan and i love to point out there are two kinds of people. they're not liberal or conservative. there are people who get elected either to do something great or be somebody gray. iris kids if you try to -- be the latter. that is what we tried to do. we tried to fix a a problem and a way that made sure that we weren't just fixing it with a band-aid. we were fixing it so that the next generation, not to get too nostalgic here but i remember back in september i was at the governors association conference and i got up real early and ran over to constitution hall. constitution hall is as big as this room right now and i remember, i love history and as a kid i used to think of our finders finder's -- founders of superheroes. a hall like that, you look at the chair in the back and there's a rising sun and if you
look at those chairs, these were ordinary people who just did something extraordinary. and as much as it took political courage in their case it took more than now. was her franklin is said if we don't hang together we will hang separately? they were risking their lives. not just their political lives but their lives but get for 200 years what has made our country great, whether it was economic, fiscal or spiritual or whatever has been that we have had leaders men and women of courage in this country who in those moments were willing to stand up and think more about their children and their grandchildren than they thought about their political futures. that is really not just wisconsin but across the country, state-by-state. i hope it's as we have these ongoing discussion several he more people willing to think about the next generation more than they do about the next election. >> we want to open it up to folks in the audience for
questions. just a couple of ground rules. we have microphones that will be going around so please wait for the microphone. identify yourselves and please make or question the form of a question. we would appreciate that. >> max rosenthal from the hub and impose. he spoke about the national money they came that came in over the recall process. you have been critical of unions and money sources coming from out of state but obviously you receive a fund-raiser today in a significant chunk of your money come almost have it comes from sources outside of wisconsin. why are you comfortable with taking out-of-state money and not what it comes to their side and are you concerned about how it is going to play in the upcoming. >> the people from around the country who are helping us at the grassroots level are trying to match the amazing levels of money coming from the unions and washington and throughout the country so they think is a legitimate question.
for me i wouldn't be raising a penny right now if it weren't for these recalls that occurred largely by the national unions. just so it's clear you're right and terms of total of hours but in terms of all my contributions in this last report we had nearly $47,000. 79% of the donors were people getting $50 or less so money coming in from outside of wisconsin in many cases is coming from people giving us 10, 15, $20 saying we want to help you counter the money coming from washington. a legitimate question but we are just countering the excessive amounts coming in from outside of wisconsin. >> hi governor walker. andrew ackerman with dow jones. are the private sector's jobs each month since june including two of 12,000 november, disaster just may be your -- or not
working especially when the rest of the countries adding jobs? pinellas pinellas survey i just mentioned where we went to 94% in wisconsin is headed in the right direction, in that same release one of the things i talked about when they ask a random question to open and question about feelings people had about the future one of the things that group in the chamber identified was the concern and in place had about recalls. they write -- like the reforms that they were concerned somehow that might stop and somehow -- so i think the sooner we get back to that the groundwork has been played and we saw the net increase in jobs at the beginning of 2011 but anything that adds uncertainty it will continue to be a factor for us. >> just one other quick question. when you're talking about fairness to taxpayers, concerning reforms, one of the things i have never quite
understood is why emergency responders works glued it from the pension reforms yet they have the most expensive pensions. >> great question that's one of the things in ohio where they did include, was politically was one of the reasons the referendum went down. it was simply, i had in january and february be looked at this, the budget and what our options were. we want to make sure we didn't do this in a vacuum and we had a strategic plan should there be work shortages or walk offs anywhere the state or federal level. so we had plans that could cover my correctional facilities in the state, my mental health facilities and 24/7 type operations but in wisconsin i have 1700 municipalities and 72 counties and my concern was i did have a way to cover all of those jurisdiction should there be a work shortage amongst fire or police officers in the state
of wisconsin. they're professionals and i would imagine the vast majority would consider a work -- but if one jurisdiction did that in someone's life is at risk because of that, i thought i had a higher responsibility to do that. people say, how can he do that? the teachers in the madison school district walked off the job for three days and left parents out in the cold. that didn't cause anyone's life to be at risk but made a lot of parents upset he didn't have provisions for childcare and after a couple of days teachers went back because the parents were acting very negatively politically to that frustration. in that case it was an inconvenience. in the case of public safety, the fact that someone's life could be endangered was too high for risk so that is why we did it. it's a simple practical consideration but a very legitimate question.
>> tom curry with nbc politics.com. governor you said earlier that in the coming year you expect tremendous job growth in wisconsin. if good times and prosperity returned to this day, what is the likelihood that the legislature or perhaps the future governor, what is the likelihood of reforms that you have enacted in collective bargaining will be rescinded because after all it was the session that created the situation you face when you came into office. >> remember we didn't do this just -- the reasoning was we had to balance a budget and those five choices i became at the beginning were the best of all the other options and other states and governors have picked. but if we were to resend that we have added deficit at the local governance. conservative or liberal and like like you would be hard-pressed to find many local officials who would he out there even right
now arguing to resend the collective bargaining. why? because they benefit from those. the gentleman who ran for me for governor balances budget on my reforms. if that isn't -- doesn't make a case i don't know what does. so long-term, while i think some in the recall movement to make the false pretense or present this as a choice between yes or no on these issues, the reality is if somebody is going to campaign, nobody ran for common in the people ran in the recall election as state senators ran on a platform of repealing collective bargaining. a couple of races they actually ran on medicare. which you all know has nothing to do with the state and has everything to do with the federal government. they round on anything but that issue so it's clear to me that people like the reforms. whether they like the process is more debatable but local governments certainly like it in the public has benefited from it
and if someone were to run in the argument that they could repeal it i think politically that is a pretty negative outcome because people think about it. that means you have this huge budget hole and you have got a structural hole in the local governance as well that would have to be filled either by having massive layoffs, cutting things like medicaid or raising taxes and that would be crippling the state's economy. >> governor, josh calling with a pr. on your inauguration day before you were sworn and there were unions organizing at the swearing in talking about a recall before you had signed a bill or evening governor. how much of this recall is about public policy and how much of it is just a forgone political
conclusion? >> taking a step back, the recall web sites was registered november 2, 2010. they didn't come up with it until february but you don't register a domain on november 2 because you know, remember on the tonight show they had johnny carson and the guy that would hold the envelope up to his head. it wasn't because somebody knew in advance that this was going to happen. i think a lot of these left to center groups were looking for an opportunity, the unions in particular jumped at this chance. i find it interesting because if you fundamentally take the case, why are they going on a recall against paul patrick, the speaker of the legislature in massachusetts or doing similar things in other states? well, it's because there is a political alliance there and i remember think it was the "boston globe" errata column months ago where they looked at
some documents connected to the white house were they told folks in massachusetts to quiet it down a little bit so they get more aggressively go after me and kasich and not make the public realized this wasn't just a republican issue. a lot of elected officials are looking at this so i think it's about power. i think it's unfortunate for the people in my state because people my state are going to probably have to go through tens of millions of dollars more worth of negative ads largely funded by groups from outside of our state. i am going to seemingly silly -- seemingly endless -- a swing state that has two key house seats up up and opened u.s. and so my voters in wisconsin won't get much every reprieve after the recall elections. i think most people in state matter where they stand politically are actually tired of it that we have a handful of people, it's ultimately about power. they don't like the fact that we gave public workers of the state
a choice. for schoolteacher in milwaukee who pays almost $1400 when their contract is up, he or she said the choice whether they want the $1400 roughly to go to union dues or whether they want to keep that for their family or health insurance premiums or whatever they might want to use it for and that is really what is at stake. to give them a choice, there's a fear that those public employees will choose to keep that money and that is ultimately what this is about. it is about as clear of the contrast as you can get. it will be someone hand-picked by the union and they will want someone to go back to what we had in the past, someone who will go down the same path that i believe illinois going backwards on where they will have record job losses as we had in the past, massive deficits and double-digit tax increases which we saw a few years ago or we can go forward with a much more optimistic approach that we will expand on in the future.
>> governor sean paul with "national journal." i want to ask you about your read of the mood of the electorate and what was on the 2011 recalls, credibly divided electorate irked almost nobody was in the middle and there was no opinion. they were with you all the way are really against you. do you see a similar divide if there is a recall election triggered this year, and secondly, you have spoken about the effect of negative ads on the mood of voters in wisconsin. are you willing to say that if and when a recall is triggered that your campaign will not need running any negative ads against a potential democratic opponent? >> two parts to that. to put this in context, not only in wisconsin but other states. in 2,002,004 wisconsin was the closest blue state in america so there's nothing to that happened to happen unless it is suddenly made wisconsin have different political views in different parts of the state.
that's our tradition. we have had great debates for generations. anybody who comes and looks at the state before 2011 would say milwaukee and madison are overwhelmingly democratic and the suburbs of milwaukee or republican. the rest of the status of pasta. that is why normally includes competitive races weather was ron johnson or others are others out there, was kind of a 40/40/20 split. about 20% that is kind of up for grabs in the middle. that number shrank a little bit as there has been so much debate and discussion. i think, we really haven't been a concentrated campaign giving our side of the story throughout all this those debates so i'm optimistic that the more the facts get out the more people hear the truth and the more they see the benefits of the local governance not only financially but long-term, i think you will
see a shift but i don't think it is going to be a tremendous shift but i think you will see a shift in our direction. i think there will be battles just like in 2012 in the u.s. senate race in presidential race in our state. it will be a close competitive race because wisconsin like a lot of other midwestern states are evenly balanced. in terms of the ads, we have run positive ads up until now. i can tell you we will run ads to find the differences. we are not going to take cheap shots. i think people don't want that but i also think people want to know what the difference is. if i point out my record versus whomever, the union decides to run against me will clearly define the difference. i don't do that as a negative. i think it's a legitimate comparison the voters want but that would be our expectations. we will talk about our vision for the future and talk about how that contrasts with who the unions into putting their money behind. there are a number of
private-sector unions that have endorsed in the past and have not been involved in these recall efforts. >> tom buell with state tax magazine. allotted of this is about the legislation put in place but some democrats have been critical of tax breaks for corporations that spurred the economy and tap -- capital gains tax cuts. i was wondering first off what is your sponsor that? do you think that will be an issue in the recall election and if it might spread into tax issues and other parts of the economy and since the senate is so close i could possibly shift towards democrats depending on how these races go how do you think your administration will fare with his policies if the democrats regain control of the senate in the future? >> a couple of good questions there. on the text part, i think all the elections more or less are about the future not just about the past so there'll be some
discussion but if you look at the earned income tax credit, not as much money is going to offset people don't who don't pay taxes and give them, other taxpayers money. that is just a matter of how much of a subsidy is out there and on the other side, on the tax reductions, they were all tied into jobs. in fact these are the things we proposed. all the bills that i've signed into law, more than 90% of them have had bipartisan votes. out of all the legislation i passed in the past year, more than 90% of them have had those from republicans and democrats. including some of the tax. why? because we didn't give blanket tax cuts. are tax cuts are tied into job creation. you create more jobs in wisconsin, and send us whether small business or any other size
business out there, the ultimately capital gains we exempted all capital gains, 100% exemption for investments made in wisconsin-based companies. why? i want people to take their's and sand dumped them into companies that are in wisconsin that will create more jobs. i was elected to fix the economic and fiscal crisis in the state and those were things that we believed over time would have a tremendous impact in putting people to work. to the biggest things we have had so far were direct credits, tracks tax relief for agricultural-based industries in our state. those are the two largest industries manufacturing and agriculture. those are things that row over time and our tremendous incentive so anybody watching who is in agriculture should come to wisconsin because you'll have one of the best tax burdens in the country and it will only get better over time because the tax bills into this budget. we didn't give it out to corporations and we didn't give
it out to individuals. we targeted areas that would have a direct impact on economic growth and prosperity and i think that's part of the debate. someone wants to run against lien say they are to make it harder for manufacturers and others to create jobs in our state, that's a debate i would love to have because i think people understand that for the small businesses and others in our state that create jobs we need every ability to create more jobs and move in that direction. you had one other part of your question. >> yes, the recall elections and the putting -- in the senate back into democratic control. how do you see that affecting the fiscal policy debate? >> again like i said more than 90% of the bills passed passed with bipartisan support that i signed into law. i still think somehow, i think republicans will retain the majority but it will flip a
17-16. i think there there is enough discerning democrats including a number of whom voted for almost all of our major jobs initiatives that will continue to work with us on the state issues. i would imagine even coming up in the next month or two, we have got some issues to further create incentives for venture capital investment in our state, to look at reasonable opportunities in our state. i've talked to a number of democratic senators who want to vote for those measures as well as republicans. those are things that as long as we can get done no matter what the layout is of the legislature i think it's better for us long-term if the majority continues but if not, either way. >> my name is jane norman. i'm a reporter for congressional quarterly and i want to ask you about the health care law which is a major issue for your state
in terms of budget policy. i understand you recently said that you were going to put off implementation of the state exchanges until after the supreme court case is resolved on whether not the law is constitutional. i'm curious about your thinking on that and if if you are concerned the state is going to have problems catching up if the law is found constitutional? secondly i wondered if you plan to return any of the money for the health longbow mentation? >> well, on the first day i took office, january 3 i authorized our attorney general join the federal lawsuit. i just wanted the federal government should not ever rolled. does not clearly have a role defined by the constitution and in health care mandated not only by the state but also i don't particularly care -- i think that is the decision that individual families and employers should be make you not dictated by the government in
and of itself but i predict or you believe in reading the 10th amendment that is the right inherently in the hands of not only the state but of the people and so i think we have a very good convincing case in that argument. the supreme court is going to take an unprecedented mount of oral arguments in that regard. i think for any state, the move forward on that without knowing what the impact will be, probably sometime by midyear is particularly in in the state involved in a lawsuit is a poor decision and no i don't think long-term, i think certainly i oppose the mandate. with testified before that the president's mandate in wisconsin's case cause the majority people to pay more for less health care. in our state, that is a negative for the vast majority of people in our state. we are the one of the highest percentage of states that cover
people with insurance. 96% of our people are covered so for us to fix -- to 4% to throw upside down the current health care system even though it needs some improvements, seems like a poor decision for the vast majority people in our state. we would prefer better alternatives to that with federal health care mainly. so for us we are going to push both legally and politically any and all apprentice to that and it doesn't make any sense now. in the end after exhausting all legal and all political alternatives, we will re-examine that. but until that time, we are still holding out hope that power can rest in the hands of people and not the federal mandate. in terms of funding that the state has acquired under my predecessor, it is not in our hands to begin with. we are just not drawing any of that money down.
>> thanks audrey of in her. eric lawson from "the hill" newspaper for your. i was wondering what you are seeing as far as the enthusiasm for fiscal reform nationally. there seems to be a narrative emerging here that the tea party for example may end up having. do you see it a more difficult to push through reforms and you think your you're bold move has played a role at all in the backlash that we may be seeing? >> on the latter part i don't know and i will leave it back to the pundits to decide but i do think, and is not a popular discussion to have ongoing. people like to move bond, both the media and the public in general likes to move on from one hot topic to the next. anyone who looks at what happened in august when our bond rating was dropped, all those governors and executives at the local level, we know how incredibly important it is to guard our bond rating and what that means not just to bond investors but investors in general. what is says about stability in
our governments government so that for the federal government to have that dropped i think is a really, it's a warning sign we should not take lightly. we have a limited amount of time to deal with that. whether or not that is continued or not, anybody who looks at that, i go back to thinking not so much because it's a hot topic of the day that when i think about my sons nat and alex in a couple of years heading to college and a couple years after that getting into the workforce it scares the dickens out of me that they will come into a world where state-by-state and particularly in this country, we are not just generations or even a decade away. we are years away or manager crisis, and you know we need to look across the ocean to greece and increasingly others to see except what happens when you don't tackle this tough issues. it may not be a fun topic to talk about but long-term -- a
lot of times in politics like -- people like to shy away from these issues and understandably but as long as you are constant it you don't -- one of the lessons i used to give lawmakers when i was in office and i would mention the numbers, never personalize your differences. your opponent made be your ally tomorrow. as long as we don't personalize the disagreements on this but really keep repeatedly over and over and over again talking about these great fiscal challenges we face at the state level and similarly if the federal level i think we have no choice but to do that no matter -- no matter whether it's at the top of people's list or not. it should unit will be in a few years. >> time for one more question. >> heiko on her. i am at work but right from the comments. i'm just wondering about the element of the reforms that capped base pay increases.
it strikes me that you know, that is an element that isn't mimicking the private sector. it would be dispiriting to know that your salary would never increase in real terms ever by law and that seems to me to be the effect of that. can you just talk about the logic behind that? >> basically as a group, a group that previously was in a collective bargaining unit couldn't automatically have a whole days salary for that entire group go up as a wage beyond the cpi. but, state government, local government in the past week or two have given out on this is for example. they can put in performance incentives and do all sorts of things that the private sector doesn't do. they can build and to that but the idea being we want to empower local governments to make those decisions to tie into performance, not just providing
away without regard to merit or reforms. >> you would have to be, right? >> as the economy improves that can go up, but it will allow distinction between those who hit performance benchmarks and those who do not. that may be one of the issues that we come back and examine. that was one of those we debated and whether we change that entirely or not and that which is one of those remnants left that would have some rolled over time we may find the will change all that and have a wide-open debate as -- about sellers as well. said let's get to the final question i want to ask you please at elections are about the future. are there other reforms that you are hoping to pursue this year? obviously you're going to be very busy for the first half of the year with some political fights you have an anticipated
or you have done what you wanted to do to get the structural reforms. >> on the structural financial side part of it is the implementation. one of the things i stress to my cabinet cabinet and the reference before is now its, we have been given these tools and it's our charge to make sure the areas we are logically to be involved and we will do well. a number of our agencies have been taking on principles like manufacture and techniques that haven't been used. amazingly many of our -- haven't had real training of madison -- managers for years if at all. anyone running a business knows that not just your top topic your whole management structure has got to have measurements and guidelines. we like to say you can't measure if you can't manage so we have tried to become much more effective. while we don't have a profit margin, we do have a performance measure, so those aren't
legislative reforms would reforms we are going going to do internally. the other part is for us to grow our biggest challenge is in fact in many cases we have employers particularly in manufacturing that have jobs available now. we have a 7.3% unemployment rate yet i have a web site in one of my state agencies that has more than 30,000 job vacancies right now. and in many cases particularly in manufacturing, they don't have enough people with the skill sets they need to fill those job openings. part of what we are going to do is put a greater emphasis on helping the private sector partner with the public sector to find more skilled job positions and education reform. yesterday we came up with a major initiative that we did with the state superintendent of public instruction. a position traditionally elected
with the help of the teachers union. 3% i have our differences and some issues but on this we are jointly together and the other big one is we may end up, and we will see how it works out, may end up been part of a national discussion in wisconsin's cases we are looking at an alternative to no child left behind that we have been spending months together on with various different interests of school and school district accountability where we would have a much more confident way of measuring the success of our individual schools and our districts and then provide that information not only to educators but ultimately to parent, community business leaders and others. we think we can do it better than the federal mandate on no child left behind so that is another major reform press. we think it's imperative not just for our schools and parents world smiley for our employers to know that the skill set we are providing in our k-12 system are matching the job openings we have in the state of wisconsin. >> that is all we have time for.
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