HH: Meg Whitman, time to talk about politics and governing. When did you first get into politics?
MW: So I’ve been interested in politics, obviously, my whole life. But my first real investment in politics was from Mitt Romney’s campaign. As I said, I’d worked for him for ten years at Bain & Co., and so when he decided to run for president, he called me and he said Meg, would you be willing to help? And I said Mitt, I think you are terrific, and I’d be delighted to help on your campaign.
HH: What did that campaign teach you?
MW: Gosh, a number of different things. I mean, first and foremost, it is a tough game, right? I mean, I understand exactly what I am in for here in terms of criticism and controversy and all of that. I think the second thing I learned is it’s very important to be your authentic self. You know, you have got to mean what you say, say what you mean, and every candidate is a package of attributes and values and character, and you have to present that in a holistic way. And ultimately, the voters will make their own decision.
HH: In terms of the, obviously you were there when the whole McCain-Huckabee thing was going on, and Mitt Romney got caught in the pincer movement. Some successes – Michigan, close calls in Florida, disappointment in Iowa, disappointment in New Hampshire, in terms of the attitude you need to run a long campaign, this is going to be a long and tough campaign.
MW: It is.
HH: What did it teach you about that?
MW: You know, I think it’s first and foremost, you’ve got to focus on what your message is, and what you really want to stand for in the minds of voters, what you care about the most. And then second, you’ve got to have a great team that you can rely on, you’ve got to have a strategy, and you’ve got to execute against that strategy. And it’s always very easy with 20/20 hindsight to criticize the strategy, but you have to be thoughtful about what the right thing to do is, and then execute. And I think you have to be bold and you have to be courageous. Many candidates play to lose, I mean, play not to lose, and Mitt did not do that, but I think you can’t play to not lose. You have to play to win.
HH: Then you were very quick, as most good conservative Republicans were, to join Team McCain, as we did, and you spoke at the Republican National Convention, and of course, that was a very interesting campaign. What did it teach you?
MW: Well, I think the thing that made it challenging for John was that you recall, his campaign really almost went bankrupt the summer before, and so he let go a lot of staff, it was a very small team. And then in March, he found himself the nominee of the Republican Party. And he had to scale that organization more dramatically, I think, than any other presidential campaign, and that scaling was rocky, and it was almost impossible to go from one mile an hour to sixty miles an hour in nine months. So again, it’s about the people you hire, it’s about the strategy, and you know, I think I learned many of the same lessons. John McCain’s a great American.
HH: Yeah, he is. He is, and we’re always pleased to have him as we did this week. Let’s talk a little bit about Sarah Palin, because obviously a woman new to the stage, there’s some lessons here. She got mauled by Katie Couric. Now Steve Schmidt said on this program last week not an unfair set of questions for her. Are you prepared for the MSM? Are you prepared for a media that seeks often to embarrass rather than to inform?
MW: I think so. I mean, you know, I have gone deep on policy in California. I know a lot about business, I know a lot about job creation. I understand a lot about the economy based on my experiences, so I think I’m as prepared as anyone can be for what is a very rough and tumble environment.
HH: What did you think about the Sarah Palin campaign and how she was treated, and how she was perceived? She was extraordinarily popular with this audience, and we talked about her a lot.
MW: Right, right.
HH: …the sort of, women who felt they had no voice, actually, is who she touched a lot of people.
MW: Right, right.
HH: What did you think about what happened to her?
MW: Well, I think there were two lessons learned from this campaign, which was Hillary Clinton was very popular among women, and then Sarah Palin brought in a whole new group of women to politics. And I think that’s a good thing for politics. I think women will want their voices heard more based on those two experiences.
HH: And does it give you a particular advantage or disadvantage to be a woman?
MW: I don’t know. You know, over the last thirty years of my career, sometimes it’s been an advantage, sometimes it’s been a disadvantage. And you know, it is one of those things that it is what it is, so you just work, work hard. I think Sarah comported herself very well. She was thrust into an extraordinarily difficult situation. You know, in a sports analogy, it was the last inning of the World Series, and the home team was down by seven runs, and she was dropped into, I think, an extraordinarily challenging situation, and I think she comported herself well.
HH: Do you hope she’ll campaign for you?
MW: You know, I haven’t asked her to, but I hope she will, actually.
HH: Now obviously, the press has got lots of gotcha questions, and I could sit here and ask you about 1602, streambed alteration permits, the regional water quality control board, the Delta smelt. I don’t do that, but a lot of reporters do. And California’s got a million gotcha questions, because it’s such a giant place.
HH: How are you going to handle those?
HH: Yeah, well, I have gone deep on policy. I spent much of last year really understanding the key issues facing the state of California, so I have a pretty good working knowledge of most of the major issues. But I think you can never be expected to know every third order question on something that someone is passionate about and that’s the only thing they’re focused on. So I think you have to be willing to say tell me more about that, you know, what is your perspective on that, what do you I need to know that I don’t know about that issue? And I’m very comfortable with that. I mean, I think the sign of a great leader is someone who can actually say tell me more about that.
HH: Now you’re very experienced with business media, obviously, and I discussed this with Governor Romney. He was, too. Business media’s different than political media. Business media’s about facts, bottom lines, testing. They want real information upon which investors can rely. Political media, they bring their biases to the table.
HH: Do you think, perhaps, the business media is a bad training ground for political media?
MW: No, I think it’s just different, right? I mean, I think being able to express yourself succinctly and thoughtfully is an important trait in both, and you just have to be prepared as best you can for the kind of questions that you will get. And I keep coming back, Hugh, to this notion of your authentic self. If you know who you are, you know what you stand for, you have a certain confidence, then I think you can actually do a good job in both venues. And you will always be criticized. And that is part of the nature of the game. I think the criticism is more intense in politics than it was in business, and in large part, because there aren’t metrics. I mean, one of the observations I’ve had in business, there is, you know, very clear metrics. The sales increased or they didn’t. Net operating income increased or it didn’t. You gained share or you lost share. In politics, there’s not as much, you know, easy to digest metrics. And so I think it tends to be a little more critical and a little more variable. But I’m prepared for that.
HH: In terms of retail politics, I’ve worked for a lot of retail politicians, and they either love it or they hate it, and they do it either way. What about this, shaking hands? Can you see yourself with the farmers in Fresno? Can you see yourself with the Navy in San Diego?
HH: Can you see yourself in Marin County? Obviously, you can see yourself in Marin County. You grew up…you’ve lived in Marin County.
MW: I have to tell you a funny story about Marin.
MW: So I did an event in Marin the other night. There were four hundred people there, and the host said we didn’t even know there were four hundred Republicans in Marin.
HH: And were they demonstrating? I didn’t…
HH: But in terms of retail, do you like that aspect?
MW: Yeah, I love that. I love it. And you know, I love people, I love understanding what their daily lives are like, what their challenges are like. And you have to remember, this is very similar to e-Bay, because we had 345 million people who used e-Bay. Every year we had a conference called e-Bay Live, where 15,000 e-Bay users came. It was my favorite time of the year, you know, just chatting and understanding what people were interested in, and what their challenges were.
HH: All right, let’s talk California. I have spent 23 of my 53 years here. I love the state, but I’m ready to leave. And in fact, I’ve said Colorado, you find me a teaching job, and I’ll bring my studio there. We can do this from anywhere.
HH: As you know, most people with portable businesses can leave anytime, and 12% marginal income tax rate is too high. How does California get out of this whole?
MW: Well, you have just described the microcosm of the problem. You are representative of the problem that California faces. We are bleeding jobs, not so much, interestingly, to India and China, but to Colorado, Arizona, Utah, Nevada, Texas. And that is because it is just too hard to do business here. Tax rates are too high, both for individuals as well as companies, regulation is strangling small and big business alike. I have travelled now from Yuba City to San Diego, from Stockton to San Luis Obispo to Marin, and every business of every size that you talk to, their number one complaint, followed closely by taxes, but their number one complaint, is regulation. It’s killing us.
HH: Yeah, in fact, I’ve been trying to help a friend who’s got a problem at the AQMD, it’s a printing company, they employ 350 people. AQMD has mandated solvents that are killing their equipment, they can’t get an exemption, they’re going to end up, you know, you can print things anywhere.
MW: Yeah, this is a huge problem. Unless we make California a more business-friendly environment, unless we continue to create jobs and keep jobs here, I don’t see a way out of this economic problem. We have got to get the job creation and job retention engine going again in California. And my view is the formula is pretty simple. It’s streamlining regulation. We can still have high standards, high environmental standards and others. We have to streamline the regulation. We have to stop agencies from competing against one another to regulate companies like your friend’s.
HH: Now there are a couple of models here. Pete Wilson, and I met my wife at a Pete Wilson fundraiser, so I’ve always loved Pete. We’ve had our disagreements, but I’ve always loved Pete – tough-minded, got it done. Arnold? I liked Arnold, worked hard for Arnold. He folded. It just hasn’t happened under Arnold.
HH: I think my analysis is the difference between Pete and Arnold is that Pete had a team beneath him that was as tough as Pete was, and Arnold didn’t. What’s your assessment of why Pete worked and Arnold didn’t?
MW: Yeah, well first of all, I think this job is the ultimate test of leadership and conviction. And you know, you are going to get tremendous amounts of criticism. I’ve often said if you have a huge need to be liked, this is a very bad job-person fit, because half the people are going to be upset with you all the time. And while you are making the necessary reforms, 75% of the people are going to cast aspersion and doubt on your actions. And you have to know that you have a center belief, a core set of beliefs about what you are doing, and it is the right thing for the state of California. So I think that’s one thing. The second is it is all about the people you hire. And as I mentioned, you know, the governor gets 4,000 appointments, 400 of which are incredibly important. And frankly, I think we need to find the very best people within the state of California. I would advocate we’ve got to go and get some new ideas from Texas, Florida, Illinois, New York. We no longer have the corner on the very best ideas in the United States for government, so we’re going to have to import. And then I think we’ve got to actually go to the private sector. The IT infrastructure, the information technology infrastructure that runs the state is a mess. And if we’re going to deploy technology to reduce costs and improve service and bring the government into the 21st Century, we’re going to have to go to the private sector, is my guess.
HH: Now one of the things about Arnold again, and I don’t expect you to criticize the governor, I know he’s a friend of yours, but he hired a lot of Democrats. And can GOP primary voters rely on Meg Whitman if they give you their vote to find people who share the center-right philosophy to staff your government?
MW: Yes, 100%.
HH: Okay, that’s very important to people. Now let’s talk about trial lawyers. My friend, Gary Wolensky, comes in here a lot. He represents the largest companies in catastrophic injury cases. Plaintiffs lawyers now want to bring their cases in California. The tort systems is out of control here. Juries are runaway. Can you, does this matter to you, because I don’t think e-Bay gets sued a lot.
MW: But we got sued a lot.
HH: Did you?
MW: Oh, yeah.
HH: Okay, so you know about…
MW: Every business gets sued. It is the national pastime.
HH: So what about, my friends at the Citizens Against Lawsuit Abuse will be wondering, what is she going to do about tort reform?
MW: Well, you know what? I have three priorities. And it isn’t that other things aren’t important, but remember I talked about priorities in our first segment, and I have three. One is job creation, and one is job retention. And what you want to do is what is the 20% of the changes you can make that will get you 80% of the way home. And while tort reform is important, deregulation, taxation and an interest in keeping business here I think are the most important things. So we may get to tort reform later, but I’m telling you it’s not the first thing that we’re going to do. The second priority I have is government spending. Trust me when I tell you, we do not have a revenue problem in California. We have a spending problem of epic proportions. The government is not run energetically, efficiently. There is at least $30 billion dollars of savings that I think we can get out of the way the state is run, and I’ve committed to getting $15 in the first four years. And then my third priority is education, and I know you want to talk about that.
HH: I do.
MW: But I’m always going to come back to those three priorities, and it isn’t that other things aren’t important, but it is a what can we get accomplished first and foremost that will make the biggest difference.
HH: Let’s stay on spending then for a moment, because I am voting against 1A. I already have. I’m voting against them all except 1F for a symbolic thing. How are you voting on 1A?
MW: So I’m voting no on 1A. I’m voting no on 1A, 1B, 1C, and I’m voting yes on D, E and F.
HH: Yes, we disagree on D, which is Prop. 10.
MW: I know we do.
HH: I’m a Prop. 10 commissioner, and we can come back to that, but I’m concerned right now with the 20%, and that’s spending.
HH: Are you tough…a lot of people say about Arnold he just folded up in these negotiations. Darrell Steinberg’s a tough guy, and these Democrats in Sacramento are backed by tough union people. California Teachers’ Association is nobody’s idea of a fine dance partner when you’re cutting spending. Can you sit in that room and just say no long enough to make them come to ground?
MW: Absolutely. I mean, you know, I have not spent thirty years in business for, you know, and had been a soft touch. I’m, you know, I understand other people, I listen very well. But in the end, I’m willing to make the tough decision, and I’m willing to say no. And I think you’ve got, you know, really four levers as the governor. First is the people you hire. We’ve talked about that. Second is the veto pen. It turns out in California the governor has line item veto. And this is the way you actually communicate to the legislature what you will and will not put up with. And the legislature in many ways is a bill factory. That is how they are rewarded. And you know, if you are not willing to veto items, veto line items, veto bills that have spending attached to them, you will end up with what we have ended up with, which is the government today is 80% bigger than it was 10 years ago. And it’s simply unacceptable.
HH: Okay, let’s…before we go to education, I do want to spend a chunk of our time on education.
HH: Talk about the key job. Arnold’s done this well. Pete was magnificent on it – crisis, because we have fires, we have earthquakes, we have floods, we have famines, we have everything. The locusts are coming to California. And if you’ve been here long enough…and that means like, when we’re taping this for the first time, it’s May 8th on Friday, and Arnold’s in Santa Barbara where fires have destroyed the lives and dreams of dozens of people, and that’s where he needs to be, and he does that very, very well.
HH: How will you be in a crisis?
MW: Well, I think the first job of government is to protect its citizens, and to be there in times of a crisis, whether it’s a flood or a fire or an earthquake. And I do think, I mean, we have been lucky that we have not had an earthquake of major proportions in the last five or six years, I think. So I will be there. We always have to have the capacity, meaning the financial capacity to bring forth the firefighters, other police, or the emergency crews in the event of a natural disaster of any kind. And it’s the number one job of state government.
HH: But would you be ready, do you think you’re ready to go in when the I-5 has fallen, or the I-10 has fallen down in L.A. like Pete Wilson says, blow off all the rules, this has got to get rebuilt?
MW: Oh, absolutely. Absolutely, absolutely. I mean, this is, these are emergency situations, 911’s, where you have to suspend all rules and you have to say what is the most important thing to get people safe, to get them taken care of, and to get the infrastructure back up and functioning.
HH: All right, let’s turn to education. We’ve got about fifteen minutes left, that’s not enough time. First, let’s have you just give your assessment of the problem and your solutions, and we’ll talk some specifics.
MW: Well, California, K-12 public education, should be an embarrassment to the state. We’re just rated 48th out of 50 states in K-12 reading and math. And think about it. In 1956, the year you and I were born, we had the number one public school system in America.
HH: In California.
MW: Sorry, no, we had the number one public school system. California was number one in America.
HH: That’s what I thought you meant, okay.
MW: And so think about it. Over the last 50 years, we’ve effectively dropped one rating point almost every single year. And when I first started this journey, people said Meg, the population is so diverse in California, you are destined to be the bottom of the barrel. And I said gee, that doesn’t sound quite right. And all roads lead to Florida for very large, diverse states and how they’ve done in public education. So I went down and spent some time with Jeb Bush, who 11 years ago as you may know, started a reform movement there to really improve the public school system, and he did four things. First, he graded every single school, A through F, and he told the parents. He said Meg, you’ve never seen the mothers of third graders so riled up when you told them their son was in a F school. He then created the largest number of charter schools in the country. And that gave parents choice. So if your child was in a failing school, you had a place to go. And he said everyone moved their children – low income, high income, medium income, everyone understood. He then instituted pay for performance, where he paid the better teachers more, and he paid more for science and math teachers.
HH: After this hour, because I’ll be on the road next week when I replay this, I’m going to have Duane play Jay Matthews and I. Jay wrote a book called Work Hard – Be Nice, the most important book on education reform I’ve read in 20 years, about KIPP – Knowledge is Power Program.
HH: I heard you, the first time I listened to you, you mentioned KIPP.
HH: And so you’re obviously familiar with how these charter schools work. What is it about KIPP that attracts your attention?
MW: Well, charter schools, all the studies have shown that charter schools make a meaningful difference in the performance and the education of children. And the reason is that charter schools, the principal, has much more authority than in regular public schools. They have higher fire authority over teachers. They can fire bad teachers, they can hire new teachers, and they can control their own destiny. The other thing they’re not subject to as much is the categorical spending. So you know how it works in California. If you’re a principal of a school, you get $500 dollars for textbooks, $300 dollars for soccer balls, and $400 dollars for art supplies, for example. And if you said but I don’t need $400 dollars for art supplies, I need them for math textbooks, too bad. And charter schools are free from that micromanagement of how you spend your money. And so the reason that charter schools perform so well is they have degrees of freedom that make sense in education.
HH: Now…but you’re going to run into the CTA, California Teachers’ Association, just as everyone across the country right now listening…
HH: …has a teachers’ union. Now I love teachers.
HH: And I have worked hard to pass public tax hikes in various communities because you know, I think they need the education money that they can get. But the CTA is just not for education. They’re for unions. What are you going to do about them?
MW: Well, I think you’re right, that the teachers’ union is not for the education of kids. They are for the status quo. And I think we’ve got to do a couple of things. One is we’ve got to get parents more involved. The brilliance of what Jeb Bush…in California, you can actually figure out how good your public school is, but there’s ten different objectives. You’ve got to add them up, divide by ten, as opposed to an A, B, C, D, F rating. So I think we’re going to have to bring the parents into this, because they need to make their voices heard. The second thing is, it’s getting pretty hard to hide behind the results. I mean, it’s hard. If you’re the California Teachers’ Association, it’s hard to defend why we are not rated 48th out of 50 states, and why an equally diverse state like Florida has done so much better. So I think we’re going to have to really work hard to say you know what? We are in this for the kids. If you think about it, there are two great levelers in American society. One has been the military over the years, and the other is education. And we are failing our children of every gender, every race, every creed. And it is actually, in my view, it is the single most important thing that we can do. Think about it. Knowledge and education is the gateway to prosperity, it’s the gateway to a better life. And in L.A. Unified, we have a 50% high school graduation rate. What are you going to do in the 21st Century if you do not graduate from high school?
HH: Let’s talk about higher education as well. There are a lot of unhappy parents in California. They look at the UC system. They can’t get in, and they’ve got…Berkeley is jammed to the gills. I know UCLA, I was just there for the Festival of Books, they can’t accept any more kids. What is…California used to make a promise to their kids that if they did well in high school, they’d get to go to a UC system. What’s happened?
MW: Well, you know, the good news is the UC system did open a new campus, UC Merced. And UC Merced actually does have spaces, right? So there is places for people to go. The community college system here is very good. The California State University system here is very good. We still lead the nation from a higher education point of view. But we should not be short-sided about that, right? We’re going to have to make sure in the prioritization of where we spend our state dollars that education is at the top of the list. I mean, as I said, I think the government has a small number of really important responsibilities – public safety, natural disaster, education. These are the things we have to prioritize.
HH: All right, Meg Whitman, I have to go over some of the issues, I want to go over some of the issues that obviously people always ask. I’ve left them for the end of our conversation. But they are the hot button issues, so let’s talk about them first of all.
HH: Prop. 8 – marriage, same sex marriage, what’s your position?
MW: Sure. Well, the first thing I want you to know, Hugh, is I am not running for governor on any of these social issues. I’m running for governor, as I said, to fix the economy, improve employment, get government spending under control, and really tackle our K-12 education. But with regard to Prop. 8, I voted yes on Prop. 8, so I voted against gay marriage. And the reason I did is that we have some of the best civil union laws in America. And civil unions in California provide virtually all the rights and remedies to gay and lesbian couples, and I felt personally that that term marriage was important that that stay between a man and a women.
HH: All right, in terms of abortion rights and abortions controversies, what are your positions?
MW: So I’m pro-choice, but I am not for abortion. I don’t think anyone really is. We want to bring down the number of abortions, we want to increase the number of adoptions, but I felt that I did not, you know, I don’t feel I want to take that right away from women and their doctors. So I am pro-choice.
HH: There are often parental notification statutes.
HH: They’ve been on the ballot three or four times.
HH: What’s your position on that?
MW: I voted yes on the parental notification for girls under 16, I think the age was, and I voted yes for that, and I think I voted yes for that as a mother. You know, I would want to know. And yes, all families don’t work perfectly, and I know there’s whole issues, but I think it’s really important for parents to be involved and informed about the lives of their children.
HH: Guns – first of all, are you a gun owner?
MW: No, I’m not a gun owner.
HH: What do you think about gun rights?
MW: So we have strict gun laws on the books in California, and I think we should enforce those laws. But I don’t think we should add to them.
HH: Okay, let’s talk about the campaign. Obviously, there’s a primary and there’s a general. You’ve got at least two and probably three primary opponents – Steve Poizner, Tom Campbell whom I’m down the office from at Chapman Law School.
MW: At Chapman, yeah.
HH: …and Peter Foy, a county supervisor in Ventura. What do you see the dynamics of this race evolving? And will you be willing to debate them anytime, anywhere, that sort of thing?
MW: Yeah, so actually, there was this notion of a debate that I think they wanted to have in mid-May around these propositions. And actually, I said to Steve, you know, actually we agree on this, and we are both all against, Steve and I are against 1A, 1B and 1C. I said yes on D, E and F when he said no. And I said you know, it doesn’t seem like there’s enough to debate here. Why don’t we in the fall have a series of debates in the north and the south that covers all of the issue, not just the May 19th special election. So I look forward to doing that.
HH: Well good. You are both welcome to come into this studio along with Tom Campbell and Peter if they’re in the race.
MW: Thank you for that. Thank you for that.
HH: Now it is a conservative electorate.
HH: You’re both pro-choice.
HH: You both have got business credentials. How do you…so you’ve got Peter Foy out there on the right, and you’ve got Tom Campbell on the left of you. I think Tom would agree that’s a fair characterization. How do you get the conservatives to come over to Meg Whitman as opposed to Steve Poizner, or away from Peter Foy?
MW: Yeah, well, I think the first thing is to get out and meet the key conservative groups in the Republican base. And I’ve been spending a lot of time doing that. I was at the CRA convention last week in Bakersfield.
HH: That must have been interesting.
MW: It was fun.
HH: California Republican Assembly for the benefit of our national audience.
HH: …represents the right wing of the right wing of the Republican Party.
MW: Right, and you know what? As I said, what I want to do is explain my three priorities, that this is all about the economy, this is all about jobs. And in the end, who do you think will be the best at handling the economy, getting government spending under control, and fixing the education system? And I have run very large organizations, very complex organizations. I understand that dynamic, I understand leadership, I understand conviction. And so that’s the story that I’m going to tell.
HH: In terms of tax hikes, will you rule out any future tax hikes in California?
MW: Tax hikes are the worst possible thing for California. We are the highest personal income tax rate, we’re the highest corporate income tax rate. The only sustainable way to grow revenues in California is to grow the job base, the number of people who are working, and the number of people who are paying taxes.
HH: Is that a no new taxes pledge?
HH: Let me ask you about the fundraising. It’s such an expensive state to run in. What are you budgeting the primary race at?
MW: Well, you know, estimates are that this race could cost $150 million dollars.
HH: That’s from now until November, 2010.
MW: Now all the way through the general election.
HH: That’s per candidate.
MW: And the reason is we have the three most expensive, among the three most expensive media markets in the country. It is an enormous state with, you know, diversity from Yuba City, as I said, down to San Diego to the central valley. So I think it depends how hotly contested the primary is, but estimates are that it could cost, you know, $50 million dollars to get through the primary.
HH: Now when Romney was running with incredible personal assets, he always said I’m not going to fund the majority of my campaign. He wanted to have at least 50% of his money coming in from the private sector. What’s your assessment about how much has to come into your campaign?
MW: So I haven’t put a percentage number on it. It’s very important to be able to demonstrate that one can raise money, particularly from a large number of small dollar donors as well as the more traditional way of raising money, which is large dollars from a small number of people. So we’re working both of those very hard. We’ve got a great website that’s been up and running, and is very dynamic. We add new content almost every day.