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Meg Whitman on the federal and state budget woes, her Rx, and the bizarre Poizner press conference

Thursday, February 4, 2010

HH: Joined now by Meg Whitman. She wants to be governor of California, former head of e-Bay. Meg, welcome back to the program. Today, Blanche Lincoln, Senator from Arkansas, looked at the president of the United States and said there are people in Arkansas who fear there is no one in your administration that understand what it means to go to work on Monday, and make payroll on Friday. Does that make sense to you, Meg Whitman?

MW: It does. I mean, I think the country is crying out for people who’ve met a payroll, who’ve gotten a return on investment, who’s gotten more productive. You know, in business, next year, you’ve got to do 10% more for the same amount. And I see that every day on the campaign trail. I think she’s exactly right.

HH: Now in terms of, well, you’ve had an interesting week. Let’s do the headlines first. This whole Steve Poizner press conference, what is the aftermath of that?

MW: Well, you know, I think he’s been out there, and going on and on. You know, my view is after listening to his press conference on Monday, I just think it’s best to let Steve continue to speak for himself.

HH: Is Mike Murphy going to remain as part of your team?

MW: Absolutely.

HH: Okay. Now back to this budget deficit, the President responded to Blanche Lincoln that he had to do everything that he did, and he has to spend the money that he’s spent in order to stabilize the economy. Is a $1.6 trillion dollar deficit sustainable, Meg Whitman?

MW: No. The answer to that is absolutely no. I mean, we’re mortgaging our future here. And you know what’s interesting in today’s politics? I think normally, spending and the debt levels isn’t a particularly sexy, political issue. Everywhere I go, people are desperately concerned about the level of spending and the debt, and how are we ever going to get ourselves out of this at the national level. So my view is it’s not sustainable. We’ve got to start bringing down spending. We’ve got to get more efficient. And you know, one thing that I think Barack Obama finally came to late is jobs is the most important issue. And I listened to the State of the Union message, and I said great, he’s going to jobs, and he’s going to go to spending, and then he kept going with eleven more issues.

HH: Yeah. What about now from the big budget deficit of $1.6 trillion to the California endless sinking hole? The governor has made some statements, the legislature has made some statements. Do you see them actually dealing with the problem right now?

MW: Well, it doesn’t appear to me that they’re yet geared up. You know, you saw the controller, I think, say hey listen, we’re going to run out of cash, right, in April? So it seems to me they need to get to work fast. And procrastinating the solve here, I don’t think is a good idea. So I hope they get to work on this real fast.

HH: Now in terms of filling up this hole…

MW: Yes.

HH: Is it going to have to be by cuts, or do they have to raise revenues?

MW: Well, I think they have got to first go to cuts. I mean, I don’t think we can raise revenue on Californians today. We can’t raise taxes on Californians. Californians are taxed out, and it’s part of the reason that we’re losing jobs to neighboring states, is because taxes are too high. So I hope they will go to running the government more efficiently and effectively. And you know what’s too bad, I mean, the next governor of California, so if I am in that office, you’ve got to solve the near term problem, but you actually have to start working on the 2013-2014 budget right away, because there’s many things that you want to do that take time to reorganize, like using technology to deliver more services for less, to fight fraud. So you’ve got to do two things at once. In the near term, there’s going to have to be some serious cuts. And in the long term, I think we can make this run far more efficiently. And that’s what I hope they’ll start to do?

HH: Where do those cuts come from? I don’t expect like a line by line budget…

MW: Yeah.

HH: But where are they going to come from?

MW: Yeah, the first place is head count, right? The number of people who work for the state. And you and I have talked about this before, that we’ve got to get back down to levels of state employees that we had just five years ago. There’s 357,000 people who work for the state, 40,000 more than just five years ago. We’ve got to reform public employee union pensions. You know, this is, the unfunded pension liability, a little bit of which hits us every year in the budget, and this will bankrupt the state if we don’t get that under control. We’ve got to reform our welfare system. You might have heard my new ad on the radio, that what happened under President Clinton, many states went for the Welfare-to-work program. California never did. And we have twice the population of New York, but five times as many welfare cases. We’ve got to go after fraud. Many people say that in the administration of Medicare and Medical, there’s $4.8 to $5.2 billion dollars worth of fraud. We’ve got to make sure that we take a thorough look at sunsetting programs that no longer work. We’ve got to deploy technology, use technology to do more with less. And so those are the big buckets of things that I’d go after. It’s a big undertaking, but this is what we do in business all the time. And if you have people who know how to do this, I have every confidence that we can save billions of dollars here. And then we have a choice of how we want to invest the savings. We balance the budget, we cut taxes, we pay down the debt. There’s lots of ways to spend the money that we save by running it more efficiently.

HH: I’m talking with Meg Whitman. She is running for governor in California, former head/CEO of e-Bay. Going back to the federal budget deficit, Meg Whitman, the immensity of it, $1.6 trillion, has a lot of people running around wondering if this problem can be solved. It’s sort of like the California problem. People keep announcing solutions, and then there’s no solution at the end of that. Are you confident? I know this is an easy question for a politician to answer. I’m trying to get past that, because you’re not a politician.

MW: Yeah.

HH: Can it be fixed? People really want to know if these things can be fixed.

MW: You know, I’ll come back to California, because before I decided to run, that was the first question I asked myself. I said can California be fixed? Is California actually governable, because I do think we have a crisis of confidence in California. I see it every day. People are panicked. Can we really fix this thing? And I think we can. I absolutely think we can, but it’s going to take a very different approach, it’s going to take a different kind of leadership, and it’s going to take the ability to bring people together in ways that have not, we’ve not seen in Sacramento in ten years. And I think I can do that. What we certainly know is the approach in the past has not worked, so we better try something else. And you know, there’s that old phrase, the definition of insanity is keep on doing the same thing over again and expecting different results. We’ve got to change the approach here. But I have every confidence that we can.

HH: What about the California media? I mean, everyone loved this Poizner story, because it was so out of left field, and just so bizarre. But in terms of the budget crisis, I still don’t see a single, serious treatment of California’s fiscal woes anywhere in any of the media. Have you come across anyone who’s really willing to communicate just how desperate the situation is in this state?

MW: You know, I haven’t seen it. People say well, you know, we have a $20 billion dollar budget deficit. I’m not, you know, billions, trillions, I mean, I think it’s hard to comprehend how big a gap that is, and how much work it will take to close that gap. And I would just encourage the legislature to get to work on this and to be serious. You know, we have to be adults. We’re going to have to put aside the politics, and we’re going to have to be adults here. And we’re going to have to look at things that aren’t pleasant to look at, we’re going to have to do things. But the truth is, we have a government we can no longer afford. And I’ll tell you the thing that really, you know, I just feel badly about, this was completely predictable. A year ago, I think virtually everyone thought we were going to be in this same budget position because I knew that the economy wasn’t going to turn around last June. I think most people did. And so if we’d gotten to work on some of the things that have longer lead time, you know, utilizing technology, restructuring departments, maybe we would have saved five or six billion by now, and we wouldn’t have a $20 billion dollar hole. And you know what politicians do, they kick the can down the road. It’s easier to sort of solve the near term problem than the long term problem, and we can’t do it anymore.

HH: Meg Whitman, thanks for stopping by today. I appreciate it.

End of interview.

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