A discussion with three of America's most distinguished former governors - Jeb Bush (Florida), Jerry Brown (California), and Mitch Daniels (Indiana) - exploring the critical relationship between states and the federal government. Moderated by Michael Boskin, this conversation examines how these innovative leaders managed natural disasters, educational reform, fiscal challenges, and infrastructure development.
The three distinguished former governors share candid insights about dealing with federal regulations, balancing budgets during boom and bust cycles, and implementing effective education reforms. Highlights include Jeb Bush's groundbreaking education initiatives in Florida, Jerry Brown's fiscal management in California, and Mitch Daniels' successful privatization efforts in Indiana.
This timely conversation offers valuable lessons for current policymakers and insights into effective governance at both state and federal levels. Featuring:
- Jeb Bush, Former Governor of Florida (1999-2007)
- Jerry Brown, Former Governor of California (1975-1983, 2011-2019)
- Mitch Daniels, Former Governor of Indiana (2005-2013)
- Moderator: Michael Boskin, Senior Fellow, Hoover Institution
To learn more, read "American Federalism Today" by the Hoover Institution: https://www.hoover.org/research/american-federalism-today
Part of the Tennenbaum Program for Fact-Based Policy at the Hoover Institution: https://www.hoover.org/research-teams/tennenbaum-program-fact-based-policy
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
[MUSIC]
>> Michael J. Boskin (00:06):
Welcome viewers and
listeners to a very special editionof the Tennenbaum Program For
Fact-Based Policy atthe Hoover Institution's podcast.
I'm Michael Boskin,senior fellow at Hoover and
professor of economics at Stanford.
And last year we hosted a conference on
American Federalism Today: The Important Key Cornerstone (00:23):
undefined
of America's Constitutional Republic.
A federal system where thereare differentiated responsibilities
accorded to states and local governmentsversus the federal government and
to the private sector and to the people.
(00:43):
A big part of that was three renownedpractitioners, as governors,
who are in a sense at the linchpinof all of this because
they have the federal governmentwith a bigger pocketbook and above.
And they have, obviously, cities andtowns and counties below, as well as their
own state's responsibilitiesthat they have to deal with.
(01:04):
We know the trust in government has beeneroding substantially for a very long
time, but it's also an interesting andimportant fact, that trust in state and
local government is much, much higherthan it is in the federal government.
So, perhaps our distinguished guestscan give us some perspective on
whether that trust is well placed and whatthey would suggest to their successors.
(01:27):
On how to regain andstrengthen that trust, and
perhaps to the new administration and
Congress in their citizens,how to improve their citizens lives.
So, I'm delighted to introduce threeof the nation's most distinguished,
innovative, and successful formergovernors, who have experience and
wisdom to share,that is relevant today's important issues.
(01:51):
Including by the way, the naturaldisaster problems that are still going
on in North Carolina and certainlyare going on the fires in Los Angeles.
Jeb Bush was a two term governorof Florida from 1999 to 2007,
when it was a swing state electorally.
Jerry Brown was governor of Californiatwice, decades apart, each time for two
(02:14):
terms, once while it was a swing state andonce when it was a reliably blue state.
He was also mayor of Oakland.
Mitch Daniels was governor ofIndiana from 2005 to 2013, and
then president of Purdue Universityfrom 2013 to 2022.
So, let me begin with a fewquestions just in general
(02:37):
to the three of you, andfeel free to interact, etc.
We're trying to be constructive here, but
you come from different experienceson the natural disaster front.
Jeb, you had to deal with hurricanes,Mitch with floods and tornadoes, and
Jerry, you had wildfires andprobably other things as well.
So, looking back on your time in office,what were the most and
(02:58):
least constructive partnerships withthe federal government you experienced?
Obviously, FEMA is extremely relevantright now in the current situation.
Jeb, you wanna lead off?
>> Jeb Bush (03:10):
Sure, I'll start if you like.
Michael, thank you forallowing me to partake with literally,
legitimately distinguished formergovernors, I'm just a former governor.
We had eight hurricanes andfour tropical storms in 14,
15 months, and so,we had to deal with Washington a lot.
(03:31):
And the only problem we had was when,after Katrina,
which hit Florida first andthen hit Louisiana.
Louisiana really, it was a devastatingstorm for Mississippi and
New Orleans, they just were overwhelmedand they didn't really do their job.
Washington was blamed.
(03:52):
Washington came in andtried to fill the void, and
then they felt compelledto do the same in Florida.
And so, the conflict was they weretrying to do more than they should,
which is to provide logistical support,and obviously,
through FEMA reimbursement of bothindividuals and municipalities cost.
(04:14):
They tried to do more,including getting the military involved.
And I had to politely push back andsay, this is our responsibility,
don't assume that we can't do it,provide support for us.
But by and large, we didn't havethe kind of problems that you now see,
there's a lot more finger pointingnow about who's responsible,
(04:35):
who's to blame,that starts immediately on social media.
Back then, it wasn't the case, thankfully.
And so, we had a pretty good relationship.
>> Michael J. Boskin (04:46):
I'm glad to hear that, you had a little more breathing room
without social media bearingdown on everyone as it.
>> Jeb Bush (04:52):
Yeah, I mean today just look at the tragedy in Los Angeles, my gosh,
I mean, within an hour almost,there were people blaming this,
blaming that without having any facts.
And that just makes it harderif you're at the local or
state level to deal with this tragedy.
>> Michael J. Boskin (05:11):
Yeah, no, you've gotta do all the day to day stuff,
obviously, anddealing with the current crisis.
Mitch, what about tornadoes andfloods in Indiana?
>> Mitch Daniels (05:20):
Michael, your question prompted me suddenly to remember that just
about 20 years ago today,right before I was sworn in,
I went to one of these sessions.
I guess the Governors Associationsponsored it to try to train
rookies like me.
And sitting at noon, a few of uswith former governor Zell Miller,
(05:41):
former Democratic governor of Georgia,somebody asked him the obvious question,
G, what's the most important thinga new governor should think of?
Everybody expected him to launch in oneducation or fiscal policy or healthcare.
He said natural disasters.
(06:02):
He said disaster preparedness.
He said it will happen,and if you're not ready,
it'll be all people think about,maybe, remember about you.
It was great advice and I took it.
In fact,I made a point the very first thing I did,
maybe even before the inauguration,
(06:24):
was to gather the people responsible forresponse in one room.
And I remember asking them,
so, if something goes wrong here,which of you is in charge?
Is it the National Guard,
the State police,what they called Homeland Security?
The health commissioner there,probably eight or nine of them there.
(06:46):
And they all said, well,we'd get together and
work on>> Michael J. Boskin: it too.
Yeah, yeah, I said, no, I mean, I want one phone number to call.
So, we reorganized it all sothat we could act in concert
where necessary,one could commandeer the resources of
(07:06):
another department withouta prolonged negotiation.
In terms of relationshipwith the federal government,
I can't resist telling you a quick story.
After one of the worst tornadoes,a lot of people lost their lives, very,
very devastating over a verylarge area in southwest Indiana.
A few days later,I was told that this hit an area with
(07:28):
lots of Amish and Mennonite citizens.
And I got down there as fast asa Black Hawk helicopter could fly,
and they were already atwork cleaning up debris and
even starting to repair things.
And I was told that about four days later,
(07:49):
some fellow from FEMA was down theredoing whatever his job called for.
And he sees this in the track ofthis tornado, where everything.
Everything is gone, right down to theblades of grass, there is one house and
there's not a shingle missing.
And he says, well,we see a lot of that in my job.
Mother Nature, so arbitrary and somehowshe leaves this one house unscathed.
(08:15):
And the Amish guy standingnear him stroked his beard and
said, weren't there three days ago.
Which, to me, apocryphal ornot, and I'm told it's true.
Reflected, I think, the view that mostpeople at the state level have, and
I think Jeb expressed ita little bit already.
(08:36):
And that is, it's our job andwe appreciate all the help you can bring,
but we don't need guidance andwe don't need to stop and
deliberate with you about the rightway to do things, as in so
many other areas that we maydiscuss in this conversation.
(08:58):
Let's talk about results,hold us accountable for results and
not compliance oragreement to do things your way.
>> Michael J. Boskin (09:06):
Gary, what about you're dealing with wildfire and
other disasters?
>> Jerry Brown (09:10):
Yeah, my experience with the federal government,
in terms of FEMA, the federalemergency management is really good.
They were good under Obama,good under Trump.
As a matter of fact,I've served under five presidents,
Ford, Carter, Reagan and Obama and Trump.
(09:33):
And FEMA is really the organizationthat works very carefully,
it's not an ideological.
There's enduring emergencies,
people do rise to a higher levelof collaboration, so that's good.
The only point I'd make is thatthe federal forest, by the way,
the federal government owns halfthe forest land in California and
(09:55):
they don't have the staffing.
They have a huge number of vacancies,they're not competitive to attract people.
So they don't have the staffing,that's a big problem.
They're not putting the moneyinto protecting the forest.
Secondly, the way theyinterpret environmental rules,
Endangered Species Act, they don't dothe forest management that is needed.
(10:20):
California is doing a lot of that, notenough, we're learning more all the time.
But the federal government has beendeficient in terms of managing its
forests, but as far as FEMA goes, better.
We wanna talk about Education Department,Fish and Wildlife and
how they handle water stuff,I got a few objections and problems.
(10:43):
But in terms of FEMA, that's the brightlight in state federal cooperation.
>> Jeb Bush (10:48):
Hey, Jerry, I just noticed that you skipped over the two bushes
when you served,was that by design [LAUGH]?
>> Michael J. Boskin (10:56):
Okay, so that's the federal government,
you also had to deal with local Officials,cities and counties.
And you also had to deal withyour state legislatures.
And I know that each relationship,constitutionally and historically
between the governor, legislatureisn't the same from state to state.
(11:17):
But maybe we could just spenda moment on what were some of
the difficulties you had in gettingsome of your ideas across or
some of your fiscal issues across, oryour reforms, wherever they might be.
How did that go?
>> Jerry Brown (11:32):
Well, let me jump in there.
In terms of legislature, at least inCalifornia, there's way too many laws.
1200 a year they pass,it's a real machine.
And given the number of lobbyists,
hundreds of lobbyists from everyinterest you can think of,
(11:53):
from oil to labor unions to grocerystores to developers, you name it.
They have a very skilled,probably former legislator in Sacramento,
the state capitol, andthey're pushing for stuff and
they get paid by production, by results,and that's called legislation.
And the volume of law is incredible.
(12:16):
The education code In California has10,000 separate rules, separate sections.
I could go on all sorts of things.
>> Michael J. Boskin (12:24):
So That's the education.
>> Jerry Brown (12:26):
The education code is the law affecting all schools in California,
that's what it is.
And of course,the major point is there's too much law.
It's very intrusive andprescriptive and very hard to modify.
So that's at the state level.
It's also at the federal level,no child left behind,
(12:50):
which is a bush idea,I think that was way overdrawn and
that was modified later bythe every student succeeds.
But that wasn't very good either,then we had race to the top of Obama, and
that just compounded the problem as well.
So the federal government can help,but like the state legislators,
(13:12):
they love to pass detailed prescriptionsthat then entail compliance and
lawsuits and the hiring ofadministrators of one kind or
another to deal with allthis legal complexity.
So that would be my main point here,
that like in schools,the key is good teachers, well trained,
(13:32):
well monitored and well encouraged andwell paid, that's what it takes.
We have so many rules, state and federal,
that the teacher becomes marginalizedin the educational enterprise.
>> Michael J. Boskin (13:46):
Mitch, what about you and your legislature and
your local governments and,>> Mitch Daniels: You could break our
eight years into Into two halves,very, very different settings.
We captured a friendly two housemajority in the first two years,
lost one of those houses narrowly forthe next four, and then regained it.
(14:10):
Big majorities for the last two.
So in the first two and the last two,I don't wanna say smooth sailing,
but we were able to act andwe had a lot of ideas we wanted to act on.
I came to office and only ran for officebecause our state had been standing still,
(14:30):
in fact, slipping backwards, it wasbroken, state government was dysfunctional
and a lot of people were very eagerthat somebody try to bring big change.
So we arrived 20 years ago todayliterally was Inauguration Day,
happy anniversary, right after the speech.
(14:51):
I ended the speech in front of thousandsof people, excited people, and said,
if you'll now excuse me,I've got to go to work.
And among the somewhat symbolic actions,executive orders and
things that we did in that firstafternoon, I took a stack of bills
this big personally to the desk wherea clerk logs them in to the house.
(15:13):
And I did the same stunt over atthe Senate, and it was sort of a shock and
awe session, and in fact,apropos our last question,
journalists at the timecalled it Hurricane Mitch.
And we passed a lot of laws,there was a pent up enthusiasm,
and I think we had convincedour party we're gonna be
(15:37):
the party of change here andwe have to deliver.
And there was something similarto that the last two years,
in between it took a completelydifferent approach, of course,
and we had to try to work things out sothat we could keep making progress.
But that involved either finding thingsthat our Democratic friends could
(15:59):
agree with, Examples were health care orhealth insurance for the near poor,
a state version of what the federalgovernment tried to do a little later,
or, I don't know, deregulation of telecom.
Their unions, the communications workersunions actually saw that there would be
a lot more investment if that happened.
(16:20):
In a couple cases, they didn't wanna help,we cornered them into it.
Enormously popular ideas like capping
property taxes at a very low level.
I didn't always do this, butI can remember having one of those signing
ceremonies with the speaker ofthe House who really didn't like
(16:42):
anything we were trying to do, buthe couldn't put his members in
the position of being against whatwe were doing on that occasion.
He managed to smile as I handedhim the pen, that sort of thing.
So really depended on the politicalsituation on the ground.
But we felt that we were never gonna let ayear go by without doing some big things.
(17:07):
There were way too many needed doing.
Yeah, what about you in Florida?
>> Jeb Bush (17:10):
Well, I had a similar situation as Mitch did.
I think when I got elected in 99,it was the first time in Florida's
history a Republican governor workedwith a Republican legislature.
There were many Republican governors andthere certainly there never was
(17:30):
a Republican controlled legislatureuntil two years before I got in.
So there was high expectations.
And in the 98 campaign,
I kind of said what I wantedto do in a very detailed way.
Seems obsolete these days.
Campaigns are not run ondetailed plans anymore.
But I was nerdy enough to doa detailed plan across the,
(17:52):
you know, spectrum of policy.
And the legislature wassupportive of the first two years
in a way that we developeda really good relationship.
I learned how to dealwith the legislature.
As I went along, I got smarter.
But the first two years, thankfully,
they kind of let the rookiegovernor have what he wanted and
(18:16):
it set in place eight years ofpretty significant reforms.
And I'd say the one thing that weaccomplished that doesn't get much
attention was westrengthened the executive.
The legislature agreed to it,which was very kind of them.
Judicial appointments basically were,the governor controls
(18:36):
the judiciary now in terms ofthe appointments, we shrunk the number
of elected officials from seven tofour statewide elected officials.
The governor took on more responsibilitiesas it relates to environmental policy,
really across the board the legislaturegave me the chance to strengthen
(18:57):
the executive.
We reformed career civil serviceprotections to the point where we tried
to replicate what exists in the privatesector, portability for pensions,
as well as being able to fire peopleat will, basically for incompetence.
Which Washington probably could,maybe doge should focus on that or
(19:19):
anything else to improveproductivity in the workforce.
So we had a chance to, because of the goodrelationship I have with the legislature,
to become an Article 2 state,if you will, which is helpful.
And at the local level, I mean, the truthbe told, I'm sure that local mayors and
county commissioners felt the sameway that I felt about Washington.
(19:44):
I think that's the constanttension is that they think there's
too many preemptive efforts bythe state legislature and the governor,
too many mandates.
And they might have been right,I don't know.
I had a different view when we were therecipient of the mandate mandates that I
did when, I guess when we were given them.
But that natural tension is part ofour democracy, and it helps create
(20:08):
a little bit of tension that makesbetter policy over the long haul.
>> Michael J. Boskin (20:13):
Yeah, let me stick with you as I turn to some specific
things the three of youaccomplished during your tenure.
Education, particularly K-12 education,also higher education, is one of the most
important responsibilities of state andlocal governments in combination.
If we look at the broad outline ofwhere the funding comes from in
the United States, obviously it'snot the same in every state, and
(20:37):
your three states are somewhat different.
But it's about 45% from the state,state coffers,
45% from local,around 10% from the federal government.
So there's a big partnershipgoing on in various ways.
And there have been legal issuesabout who gets to have what and
whether you can lose local property taxes.
That was a big issue in California andsome other states.
(21:00):
But your education reforms, I think,justifiably been lauded as a national
model andwere adopted in many other places.
I remember Joel Klein,when he was commissioner in New York City,
said that he was trying to model hisreforms and what you had done in Florida.
Maybe you could explain briefly what youtried to do and how you're able to get
that through both the legislature andbureaucracy to actually generate results,
(21:25):
as Mitch was saying, because thoseresults on test scores, especially for
minority students, forexample, look really good.
So let's start with one ofyour signature achievements.
And what was it?
How you achieved it?
>> Jeb Bush (21:38):
Well, I'd say just to start with,
it wasn't a check the box kind of thing.
It was a comprehensivesuite of reforms and
the success at the beginning allowed formore reforms going forward.
And to this day Florida continuesto move in that direction.
So we created the first state that gradedschools A-F based on learning gains and
(22:00):
based on how,how students did to the standard.
We eliminated social promotion in thirdgrade and created a pre-K to 3 strategy so
that more and more kids were grade levelreaders by the end of third grade.
We had the largest program forthe College Board.
We expanded the number of APclasses taken particularly for
(22:24):
low income kids,exponentially greater than most states.
And now other states have modeled some oftheir efforts there because it's the best
indicator of how you can getlower income kids into college.
We did a ton of stuff and it startedwith a really cooperative legislature.
And know I was praying the rosary whenthe first test scores came out because
(22:47):
the only way for meaningful reform tosustain itself is to have meaningful
results that people understand.
And we had rising student achievements.
So we went on the NAEP test, the nation'sso-called nation's report card.
We were 29th out of 31 in 1997 onthe fourth grade reading test.
And in 2003, I think,
(23:10):
2002 maybe we were fourth.
I think, yeah, 4th out of 50 states.
Right after No Child Left Behindrequired every state to take the test.
And low income kids in Floridaare in the top three or
four every year from there on out.
Kids with learning disabilities,top four or
(23:30):
five, Hispanic kids, they're just,it's always top ten.
So these reforms have helped particularlywith lower income and kids of color.
And it's thanks to the Floridalegislatures after I've been long gone and
governor support of this stuff,Florida continues to lead the way.
So I think the lesson is that if you'regovernor and you have a chance and
(23:55):
I know Governor Brown did the same andcertainly Mitch did.
Seize the moment, fill the space and thenmake sure that the people that oppose it,
maybe in some cases you'reasking them to implement it,
you've just gotta bang heads.
You can't let people at the local level,we have 67 school districts,
they hated these ideas to begin with.
(24:17):
You have to just hold them to account andwork really,
have to be all in over the long haul.
You just can't pass a law andsay you've done it.
>> Michael J. Boskin (24:26):
Well, you're raising two really important generic issues.
One having long term impact because as agovernor you had to deal with all the day
to day issues which are voluminous.
You had to deal with these naturaldisasters we spoke about earlier.
And you also are trying toinstitute some longer run reforms.
And so there's also this long standingview, I think it traces to Mr.
(24:47):
Justice Brandeis, that the stateshould be laboratories of democracy.
That innovations that work in onestate can be emulated by others and
things that don't work can beeliminated or avoided by other states.
So I think that's an important theme and
I think on the education frontthere have been a lot of efforts.
(25:10):
Governor Brown, maybe we'll turn to you,I know you had some education reforms and
then I have another question about dealingwith the fiscal volatility California
experience.
But maybe you could chime in a bit hereabout what you try to do in education.
>> Jerry Brown (25:26):
Mike, the very significant was the local funding control
formula which eliminated statemandated programs like 40 of them.
I think there was 50, 55,we got that down quite a lot.
And that came by the way, from a guythat I first met when I met you,
(25:47):
Mike Curse, way back in 1974 andhe became the chair chairman
of the State Board of Education forall 16 years that I was governor.
So anyway, the local control fundingformula gave local discretion and
I emphasize the term subsidiarity.
The closer to the problem,the best solution will be found.
(26:11):
Now that that has demonstratedthrough research improvement with
lower income kids,particularly real improvement.
>> Mitch Daniels (26:19):
[INAUDIBLE] by the way.
>> Jerry Brown (26:22):
What's that?
Subsidiary is a papal term which I used.
I did get it from the Catholic Church,said the family is the first institution,
then you get to the state and all that.
So anyway, still a good idea.
The people who have the biggest stake andthe most immediate reach.
But I will wanna say two things aboutthis local control funding formula.
(26:47):
Number one, the gap is still rather great.
Latinos and Blacks are like 22,25% on grade level,
Whites and Asians, Caucasians andAsians are probably almost 60%.
So a gap is still there eventhough the lower income kids have
(27:08):
significantly improved.
But as it happens,the more advantaged kids are improving
as well at about the same rate,that's the first problem.
Second, that's a more generic thing.
Secondly, that the elimination of socalled mandates didn't
totally survive, because everyyear the same interest groups
(27:31):
wanna get back these programsthat fund specific activities.
So the original purity, if you will,
of subsidiarity is being erodedby the same old interest group.
So it's a bit about whack a mole andit's government is not just mechanics.
(27:51):
Government is human beings, and
human beings wanna do thingsthe way they wanna do do it.
And the more powerful get donewhat they wanna get done.
>> Michael J. Boskin (28:00):
I couldn't agree more,
from my own personal experience inthe federal government, I sometimes said I
spent half my day wielding a machetetrying to knock down some of this stuff.
It's not an easy thing to do, butthey're all the interest groups and
they're not going away.
Mitch, what about you on education?
And then we can turn to some more specificthings that you and Jerry were known for.
>> Mitch Daniels (28:23):
Well, pretty simple in our case.
We went to school on Jeb Bush,so to speak.
And when we got our chance,we were in a state heavily dominated
until we got there by the same unionsthat have done so much to damage
the public education system in thiscountry over the last half century.
(28:45):
But we broke through andover time, first bit by bit, and
then in that last two years I talkedabout, we captured big majorities,
in fact a super majority in each house andran the table.
So by that time we had foundways to do the very same
things that came out ofthe playbook of governors
(29:10):
like Governor Brown and Governor Bush.
In the last two years we were able to pusha little further forward than some had.
We passed universal voucher program,took all the wraps off charter schools.
Maybe one of the more interestingthings about our system in Indiana,
(29:34):
we backed in frankly toa total public school choice.
And so now far more students takeadvantage of the opportunity to move
across public school lines actuallythan go to a charter school or
use a voucher at a non government school.
We got there because we took overpublic funding of education,
(29:57):
operational funding at the state levelas a means of lowering property taxes,
which it did dramatically, andthen we put a cap on those.
So in our state, unlike most, propertytaxes only go now to capital projects and
I guess maybe transportation and
capital projects have to bepassed through a referendum.
(30:20):
So in the process of doing that,
we took out the last reason thata school could deny a student
who would like to transfer infrom another public district.
And so it had the very effectthat it has had elsewhere.
And it was predicted forthat is greater competition,
(30:44):
not only of the public system withits charter and private competitors,
but with its own traditionalpublic school competitors.
>> Michael J. Boskin (30:56):
Governor Brown, you already alluded to the fact that
the federal governmentimposes lots of rules and
restrictions and made someremarks about no child left fine.
Anybody wanna weigh in any additionalissues with the federal government's role
in K-12 education and how it helps orhurts or supplements or
conflicts with what you'retrying to do as governor and.
(31:17):
And with the localitiesfollowing [INAUDIBLE].
>> Jerry Brown (31:21):
Well, let me add a point.
I started two charter schoolsin Oakland are still going.
The one I'm now currently chairmanof the Oakland Military Institute.
It's a military framework type of school,6th grade through 12.
I started in 2001, andI still keep it going.
And I can tell you the regulations,the intrusion,
(31:45):
we're spending too muchmoney on compliance,
not enough on improving teacher quality,skill and performance.
And I have to say that I didn't like that.
Bush's no Child Left Behind,I didn't like Obama's Race to the Top.
I didn't like the every school succeedsbecause they're too intrusive into
(32:09):
the local level.
Even the state government can't reallyaffect what goes on in the classroom.
When you shut that door,it's the teacher and the kids.
And the most important thing isthe quality of that teacher and
how you get the bestteaching more of the time.
So a lot of these rules,the legislation is frustrated,
they want to do something, butall they can do is pass a rule.
(32:32):
And I like what Montaigne said about law,
if you got to have it,it should be infrequent.
And law should be very abstract,not concrete, specific, and
very do this precisely, don't do that,because you can't govern
from a state capital or from Washingtonwhen it comes to a kid learning math or
(32:56):
English or science,that's got to be very local, very human.
>> Michael J. Boskin (33:01):
Yeah, Mitch, you want to weigh in?
>> Mitch Daniels (33:03):
I'd say that in the ideal situation, whatever money is spent
in Washington or appropriated inWashington, there should be freedom for
states that wanna try somethingdifferent to do it with federal money.
So if the federal government spends,
call it $30 billion on 12 to 15different early childhood literacy,
(33:27):
early childhood programs,why not block grant all of that and
then hold the states to accountwith meaningful outcomes.
The main outcome for that would beare kids, particularly low income kids,
are they kindergartner ready?
Are they ready to beginthe journey of learning?
There's there, there's ways toassess this in a non intrusive way.
(33:51):
And Florida would do it significantlybetter than the bureaucratic,
mandated, heavily regulatedprograms that come in that are not
the major part of our earlychildhood literacy efforts.
By the way, the state andlocal government spend more, but
the rules in Washington make itharder to achieve the objective.
(34:13):
They, they need to let go and focuson outcomes being the primary driver.
You could do the same with title one,you could do the same with the IDEA money,
the money that goes forkids with learning disabilities.
States are better positioned to createpolicies and local school districts or
schools are better situated inimproving student outcomes,
(34:37):
which ultimately is the onlything that matters.
But Washington hadn't been much, muchgiving up power these days over the last
generation of time in D.C. and maybethis is the chance to begin to do that.
California would have verydifferent approaches than Florida,
I think the Florida approachprobably is a better one.
But the best way to measure that is byoutcomes and let the best ideas work and
(35:01):
then those ideas become models forother states and
other municipalities to emulate,that's how it should work.
We've lost that laboratory ofdemocracy kind of approach,
bottom up approach in our politicalsystem, and we need to restore it.
>> Jerry Brown (35:19):
Mike, let me just inject one point, very hard for
the politics to accept diversity,for example.
Florida has one approach,California has another.
Having those two different approachescoexist becomes difficult.
The ideology becomes strong and uniformityis a real pressure as I've seen it.
>> Michael J. Boskin (35:45):
Absolutely, the federal government likes to impose it, and
I remember many people havecomplained over the decades,
especially about unfunded mandates.
Mitch, you wanna weigh in on that andwe'll move on to some other.
>> Mitch Daniels (35:59):
No, I can't say it a whole lot better,
the federal distrust of states runs back,
I don't know, at least to Wilson,if not before.
And there was a reason to distruststates in a long ago racist past and
(36:20):
so forth, but not these days,especially not when
demonstrably states deliverservices more effectively.
That's why those polls you citedare always so lopsided and
people expressing greater confidence ingovernment, the closer to home it gets.
>> Michael J. Boskin (36:40):
We all seem to agree that there's ample opportunity for
the incoming administration.
Maybe Doge will see this as an importantopportunity, they have it at
times they think responsibility should bereturned to state and local government.
But how that's done,if it's done how it's done,
(37:01):
if it's streamlining regulations and
rules rather than just decidingthey're gonna impose more or
shift responsibilities withouttheir cognizant funding,
I assume there'll besome sort of necessary.
>> Jeb Bush (37:19):
Hey, Michael, here's a place to start.
It shouldn't take 10 years to geta permit to build a refinery or
if we're going to electrify the economy,
to be able to have a rareearth refining process or
build anything, for crying out loud,to get a bridge built.
I mean, we've so clogged this down and
(37:41):
Washington's is the primary reason forthis and they ought to let it go.
We can build a bridgepretty good in Florida and
I know they can do it in California,we don't need all the stupid rules that
basically create a series of lawsuitsbefore you can start at enormous cost.
Just look at the semiconductorplant being built in Arizona,
(38:02):
it's apparently double the costthan the same plant, actually,
it's not the same plant becausethe technology is higher in Taiwan.
I mean, if this is a national priority,maybe we should make it a priority and
learn how to build quickerat a lower cost and
trust the people ultimatelyresponsible for it to do the job.
>> Mitch Daniels (38:25):
Michael, let me document what Jeb just said.
Years ago, because of an unusualtransaction, we were sitting on billions
of dollars Indiana,all to be committed to infrastructure,
road building, bridge repair,all those sorts of things.
It was our money we hadsecured it through a lease of
(38:46):
an existing toll road andas more or less a laboratory test,
I said to our folks,I say, go build something.
Most projects, there's a federal share,
which then brings the federalrule book into play.
I said, just go buildsomething just with our money,
don't even tell them we're doing it.
(39:08):
I just wanna see how it works,what they built was miles and
miles of trails which is supposed to bepart of your federal highway expenditure.
And they build them at one thirdthe cost and half the time,
if that tells you anything.
>> Jeb Bush (39:26):
It tells me something.
>> Michael J. Boskin (39:28):
Yeah, we see now, I think we see now, we've seen in the past,
I know that previous governors ofCalifornia, probably including you,
Jerry, have waived some contractingrules and various rules and regulations.
Governor Newsom mentioned yesterday thathe was in the process of doing some of
(39:49):
that with California's EnvironmentalQuality act and the Coastal Commission.
We have to balance the environment andthese important issues as well but
But I think many people believethe pendulum has swung too far and
it's become too ossified andit needs cleaning up for sure.
Governor Brown,you governed California twice, and
(40:12):
both times you came in indifficult economic times.
And you governed California throughsome troughs in revenue and
some years when revenuegrew much more rapidly.
How did you deal with this volatility, and
how did you deal withthe legislature through lean times,
(40:34):
when you're gonna have to cut andnot expand various things?
And maybe, especially something Icertainly appreciated you're doing was
resisting the temptation to overspend whenrevenue started flowing in at a high rate.
I know the second time around especially,you had a legislature, I think
it would be fair to say, was somewhat toyour left on fiscal and other issues.
(40:59):
And you had to operate as something ofa break on some of their spending desires.
So, how did you navigate that, andany lessons for the federal government,
which sometimes goesthrough similar things?
And Mitch and Jeb,weigh in about any fiscal ups and
downs you guys had to deal with?
>> Jerry Brown (41:17):
Well, first thing I did was I vetoed the entire budget,
which had never been done before.
And that sent some shock waves,particularly since there was a rule
that said if they don't have the budget,they don't get paid.
And that was the big,super motivator to get a real budget.
(41:37):
That's one.
Secondly, I would notethat between the first and
second time I was governor,there are 8,000 more rules.
The third thing I'd note is thatthe budget went up about 9 or
10, times from 22 billionto over 200 billion.
So it got a lot.
(41:57):
Now, California relies over halfthe income tax of very wealthy people.
You literally can identify a few thousandpeople that pay for half the budget.
So if they ever move out of California,it's in big trouble.
Now, how do we manage all that?
(42:17):
Very difficult.
You either have too much money orway too little.
So how we manage too little,which is easier, you cut.
And I cut a lot of things andI impose pension.
I got a pension reform bill that wouldnever happen except for the fiscal crisis.
Arnold Schwarzenegger lefta $27-billion deficit.
(42:38):
Kind of indicate how things got worse,when I left, I left a little one and
a half billion dollar budget deficit,and then Arnold left 27.
Anyway, we cut, we use that.
We cut our pensions back by a third.
And that's, I think that's significant.
But I also got voted the peopleto increase taxes and
(43:02):
that gave us some money, butwe did cut a lot, and it was real.
And the thing that people don't understandis government does a lot of good stuff.
If you wanna cut it, you gotta cut good.
And what I like to say is,too many goods make a bad.
They're all good, buthow many goods can you have?
If you look forward, there's unlimitedmisery and need that government,
(43:27):
if you want to, could come in andspend a lot of money on.
So you're always holding back some idea,a proposal to spend on
something that is actually okay,but government can't do all that.
It's gotta be done in some other way, why?
How did I handle that?
Well, my own instinctwas not to spend a lot.
(43:50):
My parents were born,got married in the Depression.
I grew up, born in 1938, it was a lot,World War II, we had rationing.
It was a much more limitedkind of experience.
We didn't have credit cards.
My instinct is to be suspicious ofspending, and sometimes that's wrong.
(44:13):
I admitted some things I should have done.
But in general, you have to havean appetite to curb spending, and
that takes a particular kindof sensibility, and it's hard.
So other than that, I'd say,California has a very
crazy financing system andyou get huge deficit.
(44:34):
You got to cut, cut, cut,cut, and then pretty soon,
four or five years, you have moredarn money you know what to do with.
And then you spend it, andthen you don't have any more.
So we're gonna see that at this round,
another couple of years gonna seethat very problem writ very large.
>> Mitch Daniels (44:50):
Michael, far from the first time, I find myself thinking how
much America could have useda Democratic president like Jerry Brown,
someone from his party,speaking the language he just spoke.
Would have, andstill would be enormously valuable to,
if we're gonna get some forwardmotion on these actions.
(45:12):
Let me just mention two things atthe state level that bear on this,
and one of them is suddenly, current.
For many, many years, I thought I wasthe only person around who thought
impoundment would be it was a good ideaand should be restored to our presidents.
And it's being discussed right now,
sometimes as though it'ssome sort of radical notion.
(45:35):
No presidents had thisauthority until 1974, and
the Watergate reforms took it away,but we had it at the state level.
But Jeb and Jerry may have, I don't know.
In other words, the ability of thegovernor to withhold spending just because
the legislature voted forit didn't mean it had to be spent.
(45:55):
Maybe the job had already been done,there was money left over,
maybe it wasn't working, didn't matter.
We asserted at least that we had it.
It was ambiguous, to be honest, underIndiana law, but we were not challenged.
And we cut hundreds of millions ofdollars by essentially executive action.
Let me tell you the politicaldynamic that I saw,
(46:18):
it was ideal froma legislator's standpoint.
They could raise Cainabout what I was doing,
and tell the client groups and
the interest groups thatthey shared their distress.
Meanwhile, the blame, if there was any,came to me and not to them.
(46:40):
So we used it very aggressively foreight years, and
it was a major reason thatwe made the change we did,
from literal bankruptcy to one of the fewAAA credit ratings among the 50 states.
The second thing, andyour question remind me of this,
(47:01):
how do you avoid overspendingwhen times are good?
And so I ran the second time,
among the other ideas I ran on the ideaof an automatic taxpayer refund.
Which says simply that,when the state's books were balanced and
reserves were beyond a certain point,
(47:22):
x percent of those 12,we settled on of next year's budget.
A savings account that everyonecould agree was ample.
Anything above that had to go backto the taxpayers automatically.
I know when I pitched the idea I said,better the money stays in your pocket than
(47:45):
burns a hole in the pocket of government,which is what it tends to do.
And that's happened nowseveral times in Indiana.
So, Indiana has a balanced budget, has alot of money in reserve, but not too much,
because that Becomes a temptationto legislators and governors alike.
(48:05):
One last little detail, I found ingovernment there's a simplicity premium.
If you really want something to work,sometimes the second or third best policy
answer, if it's simple to implement andfor people to understand is better.
So in that case,I told everybody, per capita,
the money will mean a little more to thelow-income person, that's a good thing.
(48:30):
But very, very simple,everybody gets the same refund check, and
that's the way it works.
>> Michael J. Boskin (48:36):
If you wanna quickly comment, we're getting going and
I promised I was gonnagive you [INAUDIBLE].
>> Jeb Bush (48:39):
Yeah, I wish I ware in government when Mitch did that,
it was a brilliant idea.
I would have stole it from him,that's for sure.
We created limitations on overall spending
by putting caps on non-recurring revenues
being spent on recurring obligations.
(49:00):
Put it in the constitution, which,as long as there's no cheating,
is a huge constraint that dealswith the volatility of revenue.
And then we had reserving requirementsthat were, I think we had 25,
when I left, 25% of the generalrevenue was reserved for a rainy day.
And the rainy day happened withthe great financial crisis and
(49:24):
there was no raising of taxes.
And we did all this without an income tax.
And as was the case in Indiana,
Florida went from AA to AAA bond rating.
I used to go up to New York and say, look,you don't have to have a excuse me for
living tax,a tax of everything that walks and
(49:46):
breathes to be able to have a revenuestream that is worthy of AAA rating.
And they finally got convinced of it,that a dynamic economy and a growing
economy is probably a better way ofcreating fiscal restraint than otherwise.
And I just give credit to a successivegovernor, Governor Scott,
who during his tenure, eight years, cutthe debt in half, nominal debt in half.
(50:12):
Florida has the lowest debt per capita,I think, of any state in the country now.
I couldn't claim that when I was governor,but
you got to give credit where credit's due.
It's a smart thing to do cuzthe bonding capacity now for
the state is ginormous, if it ever isneeded to build infrastructure again.
>> Michael J. Boskin (50:32):
Let's turn to infrastructure real briefly then I wanna
save a few minutes at the end fora quick lightning round of questions,
which I think everyone will enjoy.
In turning to infrastructure,we had this huge infrastructure bill,
more or less double the run rateof previous infrastructure bills.
$1.2 trillion that's beensent out rather slowly, but
a large slug of it of course goesto states, and through states,
(50:57):
the local governments and the like.
And so how that's spent,if we can do that as wisely as possible,
the Trump administration may make somemodifications, change some things around.
It came with a lot of regulations andrules about things,
about how the money had to be spent.
But Mitch, you were lauded,deservedly so, for
(51:17):
some of your privatization initiatives.
Maybe you could quickly tell us,for a minute or two,
just tell us about that andhow you got that part.
>> Mitch Daniels (51:25):
Well, first of all,
I think we covered pretty well what theyshould do about the infrastructure money,
which is set the rule book aside and keeptrack of who does the best job with it.
It'd be the best way toencourage its efficient use.
Prioritization, generally,pretty simple concept to me.
(51:47):
We were simply looking for
the best way, get the job donethe best at the lowest price.
So often that is throughthe traditional agencies of government,
and where it is, we added money,like child protection.
But there's so many things.
Back when there was such a thing,
I used to talk aboutthe Yellow Pages presumption.
(52:08):
If it's in the yellow pages,somebody's doing it all day,
every day to make a living,maybe they can do it better than we can,
putting up a building,filling it up with government employees.
So we were very selective about it andwe weren't ideological,
and we always tried to help,by the way, help the incumbent
(52:32):
government employees put upa competing bid of their own.
Usually, what they wanted to dois get rid of middle management.
And they were right.
And some of my best occasions,when we went and gave an award and
more money to governmentemployees who had organized and
made a winning bid, butthe fruit hangs very low.
(52:57):
There were so many things thatcan be done more effectively,
at a lower price by the private sector.
And we did it, as I say,selectively and surgically.
But where it works,it works very, very well.
I hadn't been on the job very,very long when the bright young man who
(53:21):
came in to clean up our prisonsystem called me and said,
did you know you're paying,I think it was 72 cents a meal for food?
And I said, well, no, is that a lot?
He said, well, where I came from it was 39cents, and I think the food was better.
You mind if I compete this out?
And we did, he brought it in forless than 39 cents.
(53:42):
And the nutritional requirements thatwent with it meant that people were
eating better.
So, I could give you lots of examples, but
it's not a matter of ideology,it's purely practical.
How can government deliver itsservices more effectively?
And when it does,
(54:03):
that leads to that greater publicconfidence that you mentioned.
And if there's anything we could use moreof in this country right now, it's greater
confidence in our institutions,starting with the public ones.
>> Michael J. Boskin (54:15):
Well, I'm into that.
And let's hope that DOGE andthe incoming administration,
working with Congress, hopefully there'llbe some bipartisan desire to make
the federal government more efficient.
And let's hope that part of thatis trimming some of the rules and
requirements that states and
localities have to follow to enablethem to become more efficient.
I want to do a quick lightninground of a few simple questions.
(54:38):
They're sort of yes, no, at most onesentence answer, a sentence answer.
I do not mean to insult your intelligencewith this, but we're almost out of time.
So just some [INAUDIBLE] apparentlyis very popular on social media.
So, a real quick lightning round.
What's more important,reducing regulations or
improving their implementation?
>> Jeb Bush (54:57):
Reduce.
>> Jerry Brown (54:58):
Both.
>> Michael J. Boskin (54:59):
Both, reducing.
>> Mitch Daniels (55:02):
Reducing regulation,
you can't abuse a regulationthat's not on the books anymore.
>> Jeb Bush (55:07):
Exactly.
>> Michael J. Boskin (55:08):
Gary, what about you?
>> Jerry Brown (55:10):
Yeah, both, you got to reduce and you got a lot of regulation of
dominant should be gotten rid of,but you can also manage better.
And so,I suppose you'd call that improving.
Well, maybe that's an oxymoron forsome people.
>> Michael J. Boskin (55:25):
Who is more influential on state policy because their
lobbying power, business groups orpublic sector unions?
>> Jeb Bush (55:32):
In Florida, business groups.
>> Mitch Daniels (55:33):
Depends on the state, but across the country,
I would say the unionshave had more effect.
>> Jerry Brown (55:43):
Second time around, unions are much more powerful,
particularly public sector,much more powerful.
But the private sector can bevery powerful too, oil companies,
banks, insurance companies,particularly developers,
who Who are very adept atinfluencing government.
(56:03):
So it's unions have become much stronger,
even though they've become morediminished in the population.
But other interest groups are powerful.
Government is very much a partof a vast array of pressures
represented by interest groups andthey're lobbyists and
(56:23):
the money and the campaign contributions.
So we're talking billions.
A presidential campaign, I remember 1976,Jimmy Carter lived on matching funds.
We're talking about a couple of million,now we're talking over 10 billion or
something number like that.
So yeah,it's becoming more difficult to manage and
(56:46):
I would say that may be one ofthe reasons why Trump did win.
He only won by 1.5%.
But there's an effort there that wantsbigger changes than we've seen before.
>> Michael J. Boskin (56:58):
Term limits become common.
Some argue that they can get ridof some unocified structures and
people being entrenched.
Other that you lose expertise,some institutional memory and
ability to shape legislation.
Do term limits help orhurt legislative effectiveness,
including dealing with the governor?
>> Jeb Bush (57:16):
If you believe in limited government, term limits are wonderful.
>> Mitch Daniels (57:20):
I haven't lived with them, so except in my own case, but
non legislative term limits.
So I can't say for sure.
I will observe that in many places,specifically the US Congress,
without term limits, we've hada heck of a lot of turnover and so
it may be happeningthrough natural forces.
>> Jerry Brown (57:40):
I would say you have to make a choice between ignorance and
arrogance.
If you have strong turmoils, yeah, peopledon't know what the hell they're doing.
If you have unlimited tenure in office,you have people who get very arrogant and
act like they own the place.
>> Michael J. Boskin (57:56):
What's the best description, the better description of
the relationship between the federalgovernment and the states?
Partnership or adversarial?
>> Mitch Daniels (58:06):
Adversarial.
>> Jeb Bush (58:07):
Yeah, I agree.
>> Jerry Brown (58:08):
I don't know if it's adversary, it's both.
I mean it's adversarial in some ways cuzdifferent entities have different goals.
But there's a lot of partnership can be.
But it's a pretty complexsmothering embrace in many cases.
>> Mitch Daniels (58:25):
You should have included a third option, Michael,
which is dependency.
>> Michael J. Boskin (58:30):
Absolutely.
Well, there's dependency andthere's codependency as well.
Well, I can't thank Jeb,Jerry and Mitch enough for
sharing their wisdom andexperience with us today.
That's a lot to digest and a lot ofuseful information and perspective for
their successors.
And I think for the incomingadministration and Congress and Doge in
(58:53):
particular, since we spent so much time onprescriptive and overbearing regulation.
That can be done to sort of freeup innovation at the state and
local level and to make the governmentmore efficient at all three levels.
So thank you very much.
You can find more aboutthe Tennenbaum Program For
Fact-Based Policy at hoover.orgwhere we post informative essays,
(59:15):
books and podcasts aboutimportant public policy issues.
If there are any topics you wish we hadcovered and didn't have time to today,
please let us know and we'll see if wecan deal with them in a future podcast.
Once again, Jeb, Jerry, Mitch,thank you so much and take care.
>> Jeb Bush (59:32):
Thanks Michael.
[MUSIC]
[MUSIC]
>> Michael J. Boskin (00:06):
Welcome viewers and
listeners to a very special editionof the Tennenbaum Program For
Fact-Based Policy atthe Hoover Institution's podcast.
I'm Michael Boskin,senior fellow at Hoover and
professor of economics at Stanford.
And last year we hosted a conference on
American Federalism Today: The Important Key Cornerstone (00:23):
undefined
of America's Constitutional Republic.
A federal system where thereare differentiated responsibilities
accorded to states and local governmentsversus the federal government and
to the private sector and to the people.
(00:43):
A big part of that was three renownedpractitioners, as governors,
who are in a sense at the linchpinof all of this because
they have the federal governmentwith a bigger pocketbook and above.
And they have, obviously, cities andtowns and counties below, as well as their
own state's responsibilitiesthat they have to deal with.
(01:04):
We know the trust in government has beeneroding substantially for a very long
time, but it's also an interesting andimportant fact, that trust in state and
local government is much, much higherthan it is in the federal government.
So, perhaps our distinguished guestscan give us some perspective on
whether that trust is well placed and whatthey would suggest to their successors.
(01:27):
On how to regain andstrengthen that trust, and
perhaps to the new administration and
Congress in their citizens,how to improve their citizens lives.
So, I'm delighted to introduce threeof the nation's most distinguished,
innovative, and successful formergovernors, who have experience and
wisdom to share,that is relevant today's important issues.
(01:51):
Including by the way, the naturaldisaster problems that are still going
on in North Carolina and certainlyare going on the fires in Los Angeles.
Jeb Bush was a two term governorof Florida from 1999 to 2007,
when it was a swing state electorally.
Jerry Brown was governor of Californiatwice, decades apart, each time for two
(02:14):
terms, once while it was a swing state andonce when it was a reliably blue state.
He was also mayor of Oakland.
Mitch Daniels was governor ofIndiana from 2005 to 2013, and
then president of Purdue Universityfrom 2013 to 2022.
So, let me begin with a fewquestions just in general
(02:37):
to the three of you, andfeel free to interact, etc.
We're trying to be constructive here, but
you come from different experienceson the natural disaster front.
Jeb, you had to deal with hurricanes,Mitch with floods and tornadoes, and
Jerry, you had wildfires andprobably other things as well.
So, looking back on your time in office,what were the most and
(02:58):
least constructive partnerships withthe federal government you experienced?
Obviously, FEMA is extremely relevantright now in the current situation.
Jeb, you wanna lead off?
>> Jeb Bush (03:10):
Sure, I'll start if you like.
Michael, thank you forallowing me to partake with literally,
legitimately distinguished formergovernors, I'm just a former governor.
We had eight hurricanes andfour tropical storms in 14,
15 months, and so,we had to deal with Washington a lot.
(03:31):
And the only problem we had was when,after Katrina,
which hit Florida first andthen hit Louisiana.
Louisiana really, it was a devastatingstorm for Mississippi and
New Orleans, they just were overwhelmedand they didn't really do their job.
Washington was blamed.
(03:52):
Washington came in andtried to fill the void, and
then they felt compelledto do the same in Florida.
And so, the conflict was they weretrying to do more than they should,
which is to provide logistical support,and obviously,
through FEMA reimbursement of bothindividuals and municipalities cost.
(04:14):
They tried to do more,including getting the military involved.
And I had to politely push back andsay, this is our responsibility,
don't assume that we can't do it,provide support for us.
But by and large, we didn't havethe kind of problems that you now see,
there's a lot more finger pointingnow about who's responsible,
(04:35):
who's to blame,that starts immediately on social media.
Back then, it wasn't the case, thankfully.
And so, we had a pretty good relationship.
>> Michael J. Boskin (04:46):
I'm glad to hear that, you had a little more breathing room
without social media bearingdown on everyone as it.
>> Jeb Bush (04:52):
Yeah, I mean today just look at the tragedy in Los Angeles, my gosh,
I mean, within an hour almost,there were people blaming this,
blaming that without having any facts.
And that just makes it harderif you're at the local or
state level to deal with this tragedy.
>> Michael J. Boskin (05:11):
Yeah, no, you've gotta do all the day to day stuff,
obviously, anddealing with the current crisis.
Mitch, what about tornadoes andfloods in Indiana?
>> Mitch Daniels (05:20):
Michael, your question prompted me suddenly to remember that just
about 20 years ago today,right before I was sworn in,
I went to one of these sessions.
I guess the Governors Associationsponsored it to try to train
rookies like me.
And sitting at noon, a few of uswith former governor Zell Miller,
(05:41):
former Democratic governor of Georgia,somebody asked him the obvious question,
G, what's the most important thinga new governor should think of?
Everybody expected him to launch in oneducation or fiscal policy or healthcare.
He said natural disasters.
(06:02):
He said disaster preparedness.
He said it will happen,and if you're not ready,
it'll be all people think about,maybe, remember about you.
It was great advice and I took it.
In fact,I made a point the very first thing I did,
maybe even before the inauguration,
(06:24):
was to gather the people responsible forresponse in one room.
And I remember asking them,
so, if something goes wrong here,which of you is in charge?
Is it the National Guard,
the State police,what they called Homeland Security?
The health commissioner there,probably eight or nine of them there.
(06:46):
And they all said, well,we'd get together and
work on>> Michael J. Boskin: it too.
Yeah, yeah, I said, no, I mean, I want one phone number to call.
So, we reorganized it all sothat we could act in concert
where necessary,one could commandeer the resources of
(07:06):
another department withouta prolonged negotiation.
In terms of relationshipwith the federal government,
I can't resist telling you a quick story.
After one of the worst tornadoes,a lot of people lost their lives, very,
very devastating over a verylarge area in southwest Indiana.
A few days later,I was told that this hit an area with
(07:28):
lots of Amish and Mennonite citizens.
And I got down there as fast asa Black Hawk helicopter could fly,
and they were already atwork cleaning up debris and
even starting to repair things.
And I was told that about four days later,
(07:49):
some fellow from FEMA was down theredoing whatever his job called for.
And he sees this in the track ofthis tornado, where everything.
Everything is gone, right down to theblades of grass, there is one house and
there's not a shingle missing.
And he says, well,we see a lot of that in my job.
Mother Nature, so arbitrary and somehowshe leaves this one house unscathed.
(08:15):
And the Amish guy standingnear him stroked his beard and
said, weren't there three days ago.
Which, to me, apocryphal ornot, and I'm told it's true.
Reflected, I think, the view that mostpeople at the state level have, and
I think Jeb expressed ita little bit already.
(08:36):
And that is, it's our job andwe appreciate all the help you can bring,
but we don't need guidance andwe don't need to stop and
deliberate with you about the rightway to do things, as in so
many other areas that we maydiscuss in this conversation.
(08:58):
Let's talk about results,hold us accountable for results and
not compliance oragreement to do things your way.
>> Michael J. Boskin (09:06):
Gary, what about you're dealing with wildfire and
other disasters?
>> Jerry Brown (09:10):
Yeah, my experience with the federal government,
in terms of FEMA, the federalemergency management is really good.
They were good under Obama,good under Trump.
As a matter of fact,I've served under five presidents,
Ford, Carter, Reagan and Obama and Trump.
(09:33):
And FEMA is really the organizationthat works very carefully,
it's not an ideological.
There's enduring emergencies,
people do rise to a higher levelof collaboration, so that's good.
The only point I'd make is thatthe federal forest, by the way,
the federal government owns halfthe forest land in California and
(09:55):
they don't have the staffing.
They have a huge number of vacancies,they're not competitive to attract people.
So they don't have the staffing,that's a big problem.
They're not putting the moneyinto protecting the forest.
Secondly, the way theyinterpret environmental rules,
Endangered Species Act, they don't dothe forest management that is needed.
(10:20):
California is doing a lot of that, notenough, we're learning more all the time.
But the federal government has beendeficient in terms of managing its
forests, but as far as FEMA goes, better.
We wanna talk about Education Department,Fish and Wildlife and
how they handle water stuff,I got a few objections and problems.
(10:43):
But in terms of FEMA, that's the brightlight in state federal cooperation.
>> Jeb Bush (10:48):
Hey, Jerry, I just noticed that you skipped over the two bushes
when you served,was that by design [LAUGH]?
>> Michael J. Boskin (10:56):
Okay, so that's the federal government,
you also had to deal with local Officials,cities and counties.
And you also had to deal withyour state legislatures.
And I know that each relationship,constitutionally and historically
between the governor, legislatureisn't the same from state to state.
(11:17):
But maybe we could just spenda moment on what were some of
the difficulties you had in gettingsome of your ideas across or
some of your fiscal issues across, oryour reforms, wherever they might be.
How did that go?
>> Jerry Brown (11:32):
Well, let me jump in there.
In terms of legislature, at least inCalifornia, there's way too many laws.
1200 a year they pass,it's a real machine.
And given the number of lobbyists,
hundreds of lobbyists from everyinterest you can think of,
(11:53):
from oil to labor unions to grocerystores to developers, you name it.
They have a very skilled,probably former legislator in Sacramento,
the state capitol, andthey're pushing for stuff and
they get paid by production, by results,and that's called legislation.
And the volume of law is incredible.
(12:16):
The education code In California has10,000 separate rules, separate sections.
I could go on all sorts of things.
>> Michael J. Boskin (12:24):
So That's the education.
>> Jerry Brown (12:26):
The education code is the law affecting all schools in California,
that's what it is.
And of course,the major point is there's too much law.
It's very intrusive andprescriptive and very hard to modify.
So that's at the state level.
It's also at the federal level,no child left behind,
(12:50):
which is a bush idea,I think that was way overdrawn and
that was modified later bythe every student succeeds.
But that wasn't very good either,then we had race to the top of Obama, and
that just compounded the problem as well.
So the federal government can help,but like the state legislators,
(13:12):
they love to pass detailed prescriptionsthat then entail compliance and
lawsuits and the hiring ofadministrators of one kind or
another to deal with allthis legal complexity.
So that would be my main point here,
that like in schools,the key is good teachers, well trained,
(13:32):
well monitored and well encouraged andwell paid, that's what it takes.
We have so many rules, state and federal,
that the teacher becomes marginalizedin the educational enterprise.
>> Michael J. Boskin (13:46):
Mitch, what about you and your legislature and
your local governments and,>> Mitch Daniels: You could break our
eight years into Into two halves,very, very different settings.
We captured a friendly two housemajority in the first two years,
lost one of those houses narrowly forthe next four, and then regained it.
(14:10):
Big majorities for the last two.
So in the first two and the last two,I don't wanna say smooth sailing,
but we were able to act andwe had a lot of ideas we wanted to act on.
I came to office and only ran for officebecause our state had been standing still,
(14:30):
in fact, slipping backwards, it wasbroken, state government was dysfunctional
and a lot of people were very eagerthat somebody try to bring big change.
So we arrived 20 years ago todayliterally was Inauguration Day,
happy anniversary, right after the speech.
(14:51):
I ended the speech in front of thousandsof people, excited people, and said,
if you'll now excuse me,I've got to go to work.
And among the somewhat symbolic actions,executive orders and
things that we did in that firstafternoon, I took a stack of bills
this big personally to the desk wherea clerk logs them in to the house.
(15:13):
And I did the same stunt over atthe Senate, and it was sort of a shock and
awe session, and in fact,apropos our last question,
journalists at the timecalled it Hurricane Mitch.
And we passed a lot of laws,there was a pent up enthusiasm,
and I think we had convincedour party we're gonna be
(15:37):
the party of change here andwe have to deliver.
And there was something similarto that the last two years,
in between it took a completelydifferent approach, of course,
and we had to try to work things out sothat we could keep making progress.
But that involved either finding thingsthat our Democratic friends could
(15:59):
agree with, Examples were health care orhealth insurance for the near poor,
a state version of what the federalgovernment tried to do a little later,
or, I don't know, deregulation of telecom.
Their unions, the communications workersunions actually saw that there would be
a lot more investment if that happened.
(16:20):
In a couple cases, they didn't wanna help,we cornered them into it.
Enormously popular ideas like capping
property taxes at a very low level.
I didn't always do this, butI can remember having one of those signing
ceremonies with the speaker ofthe House who really didn't like
(16:42):
anything we were trying to do, buthe couldn't put his members in
the position of being against whatwe were doing on that occasion.
He managed to smile as I handedhim the pen, that sort of thing.
So really depended on the politicalsituation on the ground.
But we felt that we were never gonna let ayear go by without doing some big things.
(17:07):
There were way too many needed doing.
Yeah, what about you in Florida?
>> Jeb Bush (17:10):
Well, I had a similar situation as Mitch did.
I think when I got elected in 99,it was the first time in Florida's
history a Republican governor workedwith a Republican legislature.
There were many Republican governors andthere certainly there never was
(17:30):
a Republican controlled legislatureuntil two years before I got in.
So there was high expectations.
And in the 98 campaign,
I kind of said what I wantedto do in a very detailed way.
Seems obsolete these days.
Campaigns are not run ondetailed plans anymore.
But I was nerdy enough to doa detailed plan across the,
(17:52):
you know, spectrum of policy.
And the legislature wassupportive of the first two years
in a way that we developeda really good relationship.
I learned how to dealwith the legislature.
As I went along, I got smarter.
But the first two years, thankfully,
they kind of let the rookiegovernor have what he wanted and
(18:16):
it set in place eight years ofpretty significant reforms.
And I'd say the one thing that weaccomplished that doesn't get much
attention was westrengthened the executive.
The legislature agreed to it,which was very kind of them.
Judicial appointments basically were,the governor controls
(18:36):
the judiciary now in terms ofthe appointments, we shrunk the number
of elected officials from seven tofour statewide elected officials.
The governor took on more responsibilitiesas it relates to environmental policy,
really across the board the legislaturegave me the chance to strengthen
(18:57):
the executive.
We reformed career civil serviceprotections to the point where we tried
to replicate what exists in the privatesector, portability for pensions,
as well as being able to fire peopleat will, basically for incompetence.
Which Washington probably could,maybe doge should focus on that or
(19:19):
anything else to improveproductivity in the workforce.
So we had a chance to, because of the goodrelationship I have with the legislature,
to become an Article 2 state,if you will, which is helpful.
And at the local level, I mean, the truthbe told, I'm sure that local mayors and
county commissioners felt the sameway that I felt about Washington.
(19:44):
I think that's the constanttension is that they think there's
too many preemptive efforts bythe state legislature and the governor,
too many mandates.
And they might have been right,I don't know.
I had a different view when we were therecipient of the mandate mandates that I
did when, I guess when we were given them.
But that natural tension is part ofour democracy, and it helps create
(20:08):
a little bit of tension that makesbetter policy over the long haul.
>> Michael J. Boskin (20:13):
Yeah, let me stick with you as I turn to some specific
things the three of youaccomplished during your tenure.
Education, particularly K-12 education,also higher education, is one of the most
important responsibilities of state andlocal governments in combination.
If we look at the broad outline ofwhere the funding comes from in
the United States, obviously it'snot the same in every state, and
(20:37):
your three states are somewhat different.
But it's about 45% from the state,state coffers,
45% from local,around 10% from the federal government.
So there's a big partnershipgoing on in various ways.
And there have been legal issuesabout who gets to have what and
whether you can lose local property taxes.
That was a big issue in California andsome other states.
(21:00):
But your education reforms, I think,justifiably been lauded as a national
model andwere adopted in many other places.
I remember Joel Klein,when he was commissioner in New York City,
said that he was trying to model hisreforms and what you had done in Florida.
Maybe you could explain briefly what youtried to do and how you're able to get
that through both the legislature andbureaucracy to actually generate results,
(21:25):
as Mitch was saying, because thoseresults on test scores, especially for
minority students, forexample, look really good.
So let's start with one ofyour signature achievements.
And what was it?
How you achieved it?
>> Jeb Bush (21:38):
Well, I'd say just to start with,
it wasn't a check the box kind of thing.
It was a comprehensivesuite of reforms and
the success at the beginning allowed formore reforms going forward.
And to this day Florida continuesto move in that direction.
So we created the first state that gradedschools A-F based on learning gains and
(22:00):
based on how,how students did to the standard.
We eliminated social promotion in thirdgrade and created a pre-K to 3 strategy so
that more and more kids were grade levelreaders by the end of third grade.
We had the largest program forthe College Board.
We expanded the number of APclasses taken particularly for
(22:24):
low income kids,exponentially greater than most states.
And now other states have modeled some oftheir efforts there because it's the best
indicator of how you can getlower income kids into college.
We did a ton of stuff and it startedwith a really cooperative legislature.
And know I was praying the rosary whenthe first test scores came out because
(22:47):
the only way for meaningful reform tosustain itself is to have meaningful
results that people understand.
And we had rising student achievements.
So we went on the NAEP test, the nation'sso-called nation's report card.
We were 29th out of 31 in 1997 onthe fourth grade reading test.
And in 2003, I think,
(23:10):
2002 maybe we were fourth.
I think, yeah, 4th out of 50 states.
Right after No Child Left Behindrequired every state to take the test.
And low income kids in Floridaare in the top three or
four every year from there on out.
Kids with learning disabilities,top four or
(23:30):
five, Hispanic kids, they're just,it's always top ten.
So these reforms have helped particularlywith lower income and kids of color.
And it's thanks to the Floridalegislatures after I've been long gone and
governor support of this stuff,Florida continues to lead the way.
So I think the lesson is that if you'regovernor and you have a chance and
(23:55):
I know Governor Brown did the same andcertainly Mitch did.
Seize the moment, fill the space and thenmake sure that the people that oppose it,
maybe in some cases you'reasking them to implement it,
you've just gotta bang heads.
You can't let people at the local level,we have 67 school districts,
they hated these ideas to begin with.
(24:17):
You have to just hold them to account andwork really,
have to be all in over the long haul.
You just can't pass a law andsay you've done it.
>> Michael J. Boskin (24:26):
Well, you're raising two really important generic issues.
One having long term impact because as agovernor you had to deal with all the day
to day issues which are voluminous.
You had to deal with these naturaldisasters we spoke about earlier.
And you also are trying toinstitute some longer run reforms.
And so there's also this long standingview, I think it traces to Mr.
(24:47):
Justice Brandeis, that the stateshould be laboratories of democracy.
That innovations that work in onestate can be emulated by others and
things that don't work can beeliminated or avoided by other states.
So I think that's an important theme and
I think on the education frontthere have been a lot of efforts.
(25:10):
Governor Brown, maybe we'll turn to you,I know you had some education reforms and
then I have another question about dealingwith the fiscal volatility California
experience.
But maybe you could chime in a bit hereabout what you try to do in education.
>> Jerry Brown (25:26):
Mike, the very significant was the local funding control
formula which eliminated statemandated programs like 40 of them.
I think there was 50, 55,we got that down quite a lot.
And that came by the way, from a guythat I first met when I met you,
(25:47):
Mike Curse, way back in 1974 andhe became the chair chairman
of the State Board of Education forall 16 years that I was governor.
So anyway, the local control fundingformula gave local discretion and
I emphasize the term subsidiarity.
The closer to the problem,the best solution will be found.
(26:11):
Now that that has demonstratedthrough research improvement with
lower income kids,particularly real improvement.
>> Mitch Daniels (26:19):
[INAUDIBLE] by the way.
>> Jerry Brown (26:22):
What's that?
Subsidiary is a papal term which I used.
I did get it from the Catholic Church,said the family is the first institution,
then you get to the state and all that.
So anyway, still a good idea.
The people who have the biggest stake andthe most immediate reach.
But I will wanna say two things aboutthis local control funding formula.
(26:47):
Number one, the gap is still rather great.
Latinos and Blacks are like 22,25% on grade level,
Whites and Asians, Caucasians andAsians are probably almost 60%.
So a gap is still there eventhough the lower income kids have
(27:08):
significantly improved.
But as it happens,the more advantaged kids are improving
as well at about the same rate,that's the first problem.
Second, that's a more generic thing.
Secondly, that the elimination of socalled mandates didn't
totally survive, because everyyear the same interest groups
(27:31):
wanna get back these programsthat fund specific activities.
So the original purity, if you will,
of subsidiarity is being erodedby the same old interest group.
So it's a bit about whack a mole andit's government is not just mechanics.
(27:51):
Government is human beings, and
human beings wanna do thingsthe way they wanna do do it.
And the more powerful get donewhat they wanna get done.
>> Michael J. Boskin (28:00):
I couldn't agree more,
from my own personal experience inthe federal government, I sometimes said I
spent half my day wielding a machetetrying to knock down some of this stuff.
It's not an easy thing to do, butthey're all the interest groups and
they're not going away.
Mitch, what about you on education?
And then we can turn to some more specificthings that you and Jerry were known for.
>> Mitch Daniels (28:23):
Well, pretty simple in our case.
We went to school on Jeb Bush,so to speak.
And when we got our chance,we were in a state heavily dominated
until we got there by the same unionsthat have done so much to damage
the public education system in thiscountry over the last half century.
(28:45):
But we broke through andover time, first bit by bit, and
then in that last two years I talkedabout, we captured big majorities,
in fact a super majority in each house andran the table.
So by that time we had foundways to do the very same
things that came out ofthe playbook of governors
(29:10):
like Governor Brown and Governor Bush.
In the last two years we were able to pusha little further forward than some had.
We passed universal voucher program,took all the wraps off charter schools.
Maybe one of the more interestingthings about our system in Indiana,
(29:34):
we backed in frankly toa total public school choice.
And so now far more students takeadvantage of the opportunity to move
across public school lines actuallythan go to a charter school or
use a voucher at a non government school.
We got there because we took overpublic funding of education,
(29:57):
operational funding at the state levelas a means of lowering property taxes,
which it did dramatically, andthen we put a cap on those.
So in our state, unlike most, propertytaxes only go now to capital projects and
I guess maybe transportation and
capital projects have to bepassed through a referendum.
(30:20):
So in the process of doing that,
we took out the last reason thata school could deny a student
who would like to transfer infrom another public district.
And so it had the very effectthat it has had elsewhere.
And it was predicted forthat is greater competition,
(30:44):
not only of the public system withits charter and private competitors,
but with its own traditionalpublic school competitors.
>> Michael J. Boskin (30:56):
Governor Brown, you already alluded to the fact that
the federal governmentimposes lots of rules and
restrictions and made someremarks about no child left fine.
Anybody wanna weigh in any additionalissues with the federal government's role
in K-12 education and how it helps orhurts or supplements or
conflicts with what you'retrying to do as governor and.
(31:17):
And with the localitiesfollowing [INAUDIBLE].
>> Jerry Brown (31:21):
Well, let me add a point.
I started two charter schoolsin Oakland are still going.
The one I'm now currently chairmanof the Oakland Military Institute.
It's a military framework type of school,6th grade through 12.
I started in 2001, andI still keep it going.
And I can tell you the regulations,the intrusion,
(31:45):
we're spending too muchmoney on compliance,
not enough on improving teacher quality,skill and performance.
And I have to say that I didn't like that.
Bush's no Child Left Behind,I didn't like Obama's Race to the Top.
I didn't like the every school succeedsbecause they're too intrusive into
(32:09):
the local level.
Even the state government can't reallyaffect what goes on in the classroom.
When you shut that door,it's the teacher and the kids.
And the most important thing isthe quality of that teacher and
how you get the bestteaching more of the time.
So a lot of these rules,the legislation is frustrated,
they want to do something, butall they can do is pass a rule.
(32:32):
And I like what Montaigne said about law,
if you got to have it,it should be infrequent.
And law should be very abstract,not concrete, specific, and
very do this precisely, don't do that,because you can't govern
from a state capital or from Washingtonwhen it comes to a kid learning math or
(32:56):
English or science,that's got to be very local, very human.
>> Michael J. Boskin (33:01):
Yeah, Mitch, you want to weigh in?
>> Mitch Daniels (33:03):
I'd say that in the ideal situation, whatever money is spent
in Washington or appropriated inWashington, there should be freedom for
states that wanna try somethingdifferent to do it with federal money.
So if the federal government spends,
call it $30 billion on 12 to 15different early childhood literacy,
(33:27):
early childhood programs,why not block grant all of that and
then hold the states to accountwith meaningful outcomes.
The main outcome for that would beare kids, particularly low income kids,
are they kindergartner ready?
Are they ready to beginthe journey of learning?
There's there, there's ways toassess this in a non intrusive way.
(33:51):
And Florida would do it significantlybetter than the bureaucratic,
mandated, heavily regulatedprograms that come in that are not
the major part of our earlychildhood literacy efforts.
By the way, the state andlocal government spend more, but
the rules in Washington make itharder to achieve the objective.
(34:13):
They, they need to let go and focuson outcomes being the primary driver.
You could do the same with title one,you could do the same with the IDEA money,
the money that goes forkids with learning disabilities.
States are better positioned to createpolicies and local school districts or
schools are better situated inimproving student outcomes,
(34:37):
which ultimately is the onlything that matters.
But Washington hadn't been much, muchgiving up power these days over the last
generation of time in D.C. and maybethis is the chance to begin to do that.
California would have verydifferent approaches than Florida,
I think the Florida approachprobably is a better one.
But the best way to measure that is byoutcomes and let the best ideas work and
(35:01):
then those ideas become models forother states and
other municipalities to emulate,that's how it should work.
We've lost that laboratory ofdemocracy kind of approach,
bottom up approach in our politicalsystem, and we need to restore it.
>> Jerry Brown (35:19):
Mike, let me just inject one point, very hard for
the politics to accept diversity,for example.
Florida has one approach,California has another.
Having those two different approachescoexist becomes difficult.
The ideology becomes strong and uniformityis a real pressure as I've seen it.
>> Michael J. Boskin (35:45):
Absolutely, the federal government likes to impose it, and
I remember many people havecomplained over the decades,
especially about unfunded mandates.
Mitch, you wanna weigh in on that andwe'll move on to some other.
>> Mitch Daniels (35:59):
No, I can't say it a whole lot better,
the federal distrust of states runs back,
I don't know, at least to Wilson,if not before.
And there was a reason to distruststates in a long ago racist past and
(36:20):
so forth, but not these days,especially not when
demonstrably states deliverservices more effectively.
That's why those polls you citedare always so lopsided and
people expressing greater confidence ingovernment, the closer to home it gets.
>> Michael J. Boskin (36:40):
We all seem to agree that there's ample opportunity for
the incoming administration.
Maybe Doge will see this as an importantopportunity, they have it at
times they think responsibility should bereturned to state and local government.
But how that's done,if it's done how it's done,
(37:01):
if it's streamlining regulations and
rules rather than just decidingthey're gonna impose more or
shift responsibilities withouttheir cognizant funding,
I assume there'll besome sort of necessary.
>> Jeb Bush (37:19):
Hey, Michael, here's a place to start.
It shouldn't take 10 years to geta permit to build a refinery or
if we're going to electrify the economy,
to be able to have a rareearth refining process or
build anything, for crying out loud,to get a bridge built.
I mean, we've so clogged this down and
(37:41):
Washington's is the primary reason forthis and they ought to let it go.
We can build a bridgepretty good in Florida and
I know they can do it in California,we don't need all the stupid rules that
basically create a series of lawsuitsbefore you can start at enormous cost.
Just look at the semiconductorplant being built in Arizona,
(38:02):
it's apparently double the costthan the same plant, actually,
it's not the same plant becausethe technology is higher in Taiwan.
I mean, if this is a national priority,maybe we should make it a priority and
learn how to build quickerat a lower cost and
trust the people ultimatelyresponsible for it to do the job.
>> Mitch Daniels (38:25):
Michael, let me document what Jeb just said.
Years ago, because of an unusualtransaction, we were sitting on billions
of dollars Indiana,all to be committed to infrastructure,
road building, bridge repair,all those sorts of things.
It was our money we hadsecured it through a lease of
(38:46):
an existing toll road andas more or less a laboratory test,
I said to our folks,I say, go build something.
Most projects, there's a federal share,
which then brings the federalrule book into play.
I said, just go buildsomething just with our money,
don't even tell them we're doing it.
(39:08):
I just wanna see how it works,what they built was miles and
miles of trails which is supposed to bepart of your federal highway expenditure.
And they build them at one thirdthe cost and half the time,
if that tells you anything.
>> Jeb Bush (39:26):
It tells me something.
>> Michael J. Boskin (39:28):
Yeah, we see now, I think we see now, we've seen in the past,
I know that previous governors ofCalifornia, probably including you,
Jerry, have waived some contractingrules and various rules and regulations.
Governor Newsom mentioned yesterday thathe was in the process of doing some of
(39:49):
that with California's EnvironmentalQuality act and the Coastal Commission.
We have to balance the environment andthese important issues as well but
But I think many people believethe pendulum has swung too far and
it's become too ossified andit needs cleaning up for sure.
Governor Brown,you governed California twice, and
(40:12):
both times you came in indifficult economic times.
And you governed California throughsome troughs in revenue and
some years when revenuegrew much more rapidly.
How did you deal with this volatility, and
how did you deal withthe legislature through lean times,
(40:34):
when you're gonna have to cut andnot expand various things?
And maybe, especially something Icertainly appreciated you're doing was
resisting the temptation to overspend whenrevenue started flowing in at a high rate.
I know the second time around especially,you had a legislature, I think
it would be fair to say, was somewhat toyour left on fiscal and other issues.
(40:59):
And you had to operate as something ofa break on some of their spending desires.
So, how did you navigate that, andany lessons for the federal government,
which sometimes goesthrough similar things?
And Mitch and Jeb,weigh in about any fiscal ups and
downs you guys had to deal with?
>> Jerry Brown (41:17):
Well, first thing I did was I vetoed the entire budget,
which had never been done before.
And that sent some shock waves,particularly since there was a rule
that said if they don't have the budget,they don't get paid.
And that was the big,super motivator to get a real budget.
(41:37):
That's one.
Secondly, I would notethat between the first and
second time I was governor,there are 8,000 more rules.
The third thing I'd note is thatthe budget went up about 9 or
10, times from 22 billionto over 200 billion.
So it got a lot.
(41:57):
Now, California relies over halfthe income tax of very wealthy people.
You literally can identify a few thousandpeople that pay for half the budget.
So if they ever move out of California,it's in big trouble.
Now, how do we manage all that?
(42:17):
Very difficult.
You either have too much money orway too little.
So how we manage too little,which is easier, you cut.
And I cut a lot of things andI impose pension.
I got a pension reform bill that wouldnever happen except for the fiscal crisis.
Arnold Schwarzenegger lefta $27-billion deficit.
(42:38):
Kind of indicate how things got worse,when I left, I left a little one and
a half billion dollar budget deficit,and then Arnold left 27.
Anyway, we cut, we use that.
We cut our pensions back by a third.
And that's, I think that's significant.
But I also got voted the peopleto increase taxes and
(43:02):
that gave us some money, butwe did cut a lot, and it was real.
And the thing that people don't understandis government does a lot of good stuff.
If you wanna cut it, you gotta cut good.
And what I like to say is,too many goods make a bad.
They're all good, buthow many goods can you have?
If you look forward, there's unlimitedmisery and need that government,
(43:27):
if you want to, could come in andspend a lot of money on.
So you're always holding back some idea,a proposal to spend on
something that is actually okay,but government can't do all that.
It's gotta be done in some other way, why?
How did I handle that?
Well, my own instinctwas not to spend a lot.
(43:50):
My parents were born,got married in the Depression.
I grew up, born in 1938, it was a lot,World War II, we had rationing.
It was a much more limitedkind of experience.
We didn't have credit cards.
My instinct is to be suspicious ofspending, and sometimes that's wrong.
(44:13):
I admitted some things I should have done.
But in general, you have to havean appetite to curb spending, and
that takes a particular kindof sensibility, and it's hard.
So other than that, I'd say,California has a very
crazy financing system andyou get huge deficit.
(44:34):
You got to cut, cut, cut,cut, and then pretty soon,
four or five years, you have moredarn money you know what to do with.
And then you spend it, andthen you don't have any more.
So we're gonna see that at this round,
another couple of years gonna seethat very problem writ very large.
>> Mitch Daniels (44:50):
Michael, far from the first time, I find myself thinking how
much America could have useda Democratic president like Jerry Brown,
someone from his party,speaking the language he just spoke.
Would have, andstill would be enormously valuable to,
if we're gonna get some forwardmotion on these actions.
(45:12):
Let me just mention two things atthe state level that bear on this,
and one of them is suddenly, current.
For many, many years, I thought I wasthe only person around who thought
impoundment would be it was a good ideaand should be restored to our presidents.
And it's being discussed right now,
sometimes as though it'ssome sort of radical notion.
(45:35):
No presidents had thisauthority until 1974, and
the Watergate reforms took it away,but we had it at the state level.
But Jeb and Jerry may have, I don't know.
In other words, the ability of thegovernor to withhold spending just because
the legislature voted forit didn't mean it had to be spent.
(45:55):
Maybe the job had already been done,there was money left over,
maybe it wasn't working, didn't matter.
We asserted at least that we had it.
It was ambiguous, to be honest, underIndiana law, but we were not challenged.
And we cut hundreds of millions ofdollars by essentially executive action.
Let me tell you the politicaldynamic that I saw,
(46:18):
it was ideal froma legislator's standpoint.
They could raise Cainabout what I was doing,
and tell the client groups and
the interest groups thatthey shared their distress.
Meanwhile, the blame, if there was any,came to me and not to them.
(46:40):
So we used it very aggressively foreight years, and
it was a major reason thatwe made the change we did,
from literal bankruptcy to one of the fewAAA credit ratings among the 50 states.
The second thing, andyour question remind me of this,
(47:01):
how do you avoid overspendingwhen times are good?
And so I ran the second time,
among the other ideas I ran on the ideaof an automatic taxpayer refund.
Which says simply that,when the state's books were balanced and
reserves were beyond a certain point,
(47:22):
x percent of those 12,we settled on of next year's budget.
A savings account that everyonecould agree was ample.
Anything above that had to go backto the taxpayers automatically.
I know when I pitched the idea I said,better the money stays in your pocket than
(47:45):
burns a hole in the pocket of government,which is what it tends to do.
And that's happened nowseveral times in Indiana.
So, Indiana has a balanced budget, has alot of money in reserve, but not too much,
because that Becomes a temptationto legislators and governors alike.
(48:05):
One last little detail, I found ingovernment there's a simplicity premium.
If you really want something to work,sometimes the second or third best policy
answer, if it's simple to implement andfor people to understand is better.
So in that case,I told everybody, per capita,
the money will mean a little more to thelow-income person, that's a good thing.
(48:30):
But very, very simple,everybody gets the same refund check, and
that's the way it works.
>> Michael J. Boskin (48:36):
If you wanna quickly comment, we're getting going and
I promised I was gonnagive you [INAUDIBLE].
>> Jeb Bush (48:39):
Yeah, I wish I ware in government when Mitch did that,
it was a brilliant idea.
I would have stole it from him,that's for sure.
We created limitations on overall spending
by putting caps on non-recurring revenues
being spent on recurring obligations.
(49:00):
Put it in the constitution, which,as long as there's no cheating,
is a huge constraint that dealswith the volatility of revenue.
And then we had reserving requirementsthat were, I think we had 25,
when I left, 25% of the generalrevenue was reserved for a rainy day.
And the rainy day happened withthe great financial crisis and
(49:24):
there was no raising of taxes.
And we did all this without an income tax.
And as was the case in Indiana,
Florida went from AA to AAA bond rating.
I used to go up to New York and say, look,you don't have to have a excuse me for
living tax,a tax of everything that walks and
(49:46):
breathes to be able to have a revenuestream that is worthy of AAA rating.
And they finally got convinced of it,that a dynamic economy and a growing
economy is probably a better way ofcreating fiscal restraint than otherwise.
And I just give credit to a successivegovernor, Governor Scott,
who during his tenure, eight years, cutthe debt in half, nominal debt in half.
(50:12):
Florida has the lowest debt per capita,I think, of any state in the country now.
I couldn't claim that when I was governor,but
you got to give credit where credit's due.
It's a smart thing to do cuzthe bonding capacity now for
the state is ginormous, if it ever isneeded to build infrastructure again.
>> Michael J. Boskin (50:32):
Let's turn to infrastructure real briefly then I wanna
save a few minutes at the end fora quick lightning round of questions,
which I think everyone will enjoy.
In turning to infrastructure,we had this huge infrastructure bill,
more or less double the run rateof previous infrastructure bills.
$1.2 trillion that's beensent out rather slowly, but
a large slug of it of course goesto states, and through states,
(50:57):
the local governments and the like.
And so how that's spent,if we can do that as wisely as possible,
the Trump administration may make somemodifications, change some things around.
It came with a lot of regulations andrules about things,
about how the money had to be spent.
But Mitch, you were lauded,deservedly so, for
(51:17):
some of your privatization initiatives.
Maybe you could quickly tell us,for a minute or two,
just tell us about that andhow you got that part.
>> Mitch Daniels (51:25):
Well, first of all,
I think we covered pretty well what theyshould do about the infrastructure money,
which is set the rule book aside and keeptrack of who does the best job with it.
It'd be the best way toencourage its efficient use.
Prioritization, generally,pretty simple concept to me.
(51:47):
We were simply looking for
the best way, get the job donethe best at the lowest price.
So often that is throughthe traditional agencies of government,
and where it is, we added money,like child protection.
But there's so many things.
Back when there was such a thing,
I used to talk aboutthe Yellow Pages presumption.
(52:08):
If it's in the yellow pages,somebody's doing it all day,
every day to make a living,maybe they can do it better than we can,
putting up a building,filling it up with government employees.
So we were very selective about it andwe weren't ideological,
and we always tried to help,by the way, help the incumbent
(52:32):
government employees put upa competing bid of their own.
Usually, what they wanted to dois get rid of middle management.
And they were right.
And some of my best occasions,when we went and gave an award and
more money to governmentemployees who had organized and
made a winning bid, butthe fruit hangs very low.
(52:57):
There were so many things thatcan be done more effectively,
at a lower price by the private sector.
And we did it, as I say,selectively and surgically.
But where it works,it works very, very well.
I hadn't been on the job very,very long when the bright young man who
(53:21):
came in to clean up our prisonsystem called me and said,
did you know you're paying,I think it was 72 cents a meal for food?
And I said, well, no, is that a lot?
He said, well, where I came from it was 39cents, and I think the food was better.
You mind if I compete this out?
And we did, he brought it in forless than 39 cents.
(53:42):
And the nutritional requirements thatwent with it meant that people were
eating better.
So, I could give you lots of examples, but
it's not a matter of ideology,it's purely practical.
How can government deliver itsservices more effectively?
And when it does,
(54:03):
that leads to that greater publicconfidence that you mentioned.
And if there's anything we could use moreof in this country right now, it's greater
confidence in our institutions,starting with the public ones.
>> Michael J. Boskin (54:15):
Well, I'm into that.
And let's hope that DOGE andthe incoming administration,
working with Congress, hopefully there'llbe some bipartisan desire to make
the federal government more efficient.
And let's hope that part of thatis trimming some of the rules and
requirements that states and
localities have to follow to enablethem to become more efficient.
I want to do a quick lightninground of a few simple questions.
(54:38):
They're sort of yes, no, at most onesentence answer, a sentence answer.
I do not mean to insult your intelligencewith this, but we're almost out of time.
So just some [INAUDIBLE] apparentlyis very popular on social media.
So, a real quick lightning round.
What's more important,reducing regulations or
improving their implementation?
>> Jeb Bush (54:57):
Reduce.
>> Jerry Brown (54:58):
Both.
>> Michael J. Boskin (54:59):
Both, reducing.
>> Mitch Daniels (55:02):
Reducing regulation,
you can't abuse a regulationthat's not on the books anymore.
>> Jeb Bush (55:07):
Exactly.
>> Michael J. Boskin (55:08):
Gary, what about you?
>> Jerry Brown (55:10):
Yeah, both, you got to reduce and you got a lot of regulation of
dominant should be gotten rid of,but you can also manage better.
And so,I suppose you'd call that improving.
Well, maybe that's an oxymoron forsome people.
>> Michael J. Boskin (55:25):
Who is more influential on state policy because their
lobbying power, business groups orpublic sector unions?
>> Jeb Bush (55:32):
In Florida, business groups.
>> Mitch Daniels (55:33):
Depends on the state, but across the country,
I would say the unionshave had more effect.
>> Jerry Brown (55:43):
Second time around, unions are much more powerful,
particularly public sector,much more powerful.
But the private sector can bevery powerful too, oil companies,
banks, insurance companies,particularly developers,
who Who are very adept atinfluencing government.
(56:03):
So it's unions have become much stronger,
even though they've become morediminished in the population.
But other interest groups are powerful.
Government is very much a partof a vast array of pressures
represented by interest groups andthey're lobbyists and
(56:23):
the money and the campaign contributions.
So we're talking billions.
A presidential campaign, I remember 1976,Jimmy Carter lived on matching funds.
We're talking about a couple of million,now we're talking over 10 billion or
something number like that.
So yeah,it's becoming more difficult to manage and
(56:46):
I would say that may be one ofthe reasons why Trump did win.
He only won by 1.5%.
But there's an effort there that wantsbigger changes than we've seen before.
>> Michael J. Boskin (56:58):
Term limits become common.
Some argue that they can get ridof some unocified structures and
people being entrenched.
Other that you lose expertise,some institutional memory and
ability to shape legislation.
Do term limits help orhurt legislative effectiveness,
including dealing with the governor?
>> Jeb Bush (57:16):
If you believe in limited government, term limits are wonderful.
>> Mitch Daniels (57:20):
I haven't lived with them, so except in my own case, but
non legislative term limits.
So I can't say for sure.
I will observe that in many places,specifically the US Congress,
without term limits, we've hada heck of a lot of turnover and so
it may be happeningthrough natural forces.
>> Jerry Brown (57:40):
I would say you have to make a choice between ignorance and
arrogance.
If you have strong turmoils, yeah, peopledon't know what the hell they're doing.
If you have unlimited tenure in office,you have people who get very arrogant and
act like they own the place.
>> Michael J. Boskin (57:56):
What's the best description, the better description of
the relationship between the federalgovernment and the states?
Partnership or adversarial?
>> Mitch Daniels (58:06):
Adversarial.
>> Jeb Bush (58:07):
Yeah, I agree.
>> Jerry Brown (58:08):
I don't know if it's adversary, it's both.
I mean it's adversarial in some ways cuzdifferent entities have different goals.
But there's a lot of partnership can be.
But it's a pretty complexsmothering embrace in many cases.
>> Mitch Daniels (58:25):
You should have included a third option, Michael,
which is dependency.
>> Michael J. Boskin (58:30):
Absolutely.
Well, there's dependency andthere's codependency as well.
Well, I can't thank Jeb,Jerry and Mitch enough for
sharing their wisdom andexperience with us today.
That's a lot to digest and a lot ofuseful information and perspective for
their successors.
And I think for the incomingadministration and Congress and Doge in
(58:53):
particular, since we spent so much time onprescriptive and overbearing regulation.
That can be done to sort of freeup innovation at the state and
local level and to make the governmentmore efficient at all three levels.
So thank you very much.
You can find more aboutthe Tennenbaum Program For
Fact-Based Policy at hoover.orgwhere we post informative essays,
(59:15):
books and podcasts aboutimportant public policy issues.
If there are any topics you wish we hadcovered and didn't have time to today,
please let us know and we'll see if wecan deal with them in a future podcast.
Once again, Jeb, Jerry, Mitch,thank you so much and take care.
>> Jeb Bush (59:32):
Thanks Michael.
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