day when a lot of people use the electricity. you could paddle that electricity right into the grade and make a few dollars. this system will allow every american to be better capitalist. every american would be better consumer of the electricity the thing that conserving the lettis they could sell electricity. -- conserve electricity and they could sell electricity. we talk about how they're regulated utilities and just shoot fish in a barrel. we would make every consumer in america a business person. host: last call from pecan, ill., on our line for democrats. . .

guest: let me tell you what the problem is in politics, e particularly in washington, d.c. it's about fund raising. the most extremes are the ones raising the money. and then they choose their favorites and they give them money. once they get you elected they want you to dance to their music. that big middle ground, think of a football field. it's down by the ten-year yard

line. people are -- but it's the people between the 30 yard line in that middle of the football field. they don't ware about that. they want to have safe communities, they want a job for themselves and their kids just graduated from college and can't find a job. they want to make sure that bad people are still locked up and good teachers teach students. that's what most people believe in. if we just said to some of these politicians, we're not going to elect anybody, just do the right thing for four years and go home, we'd have a much better country. host: coming to us live from the national governor's association, thank you very much for being on the program. ept to tell you a little bit about what's coming up tomorrow on the "washington journal" and we chation positions to get you there for the opening news

conference. tomorrow we begin with the washington post and times talking about next week's showdown. we'll also be talking about redistricting and the current state of libya. we go live now to the jw marriott hotel where the opening news conference is taking place for the nga winter meeting. >> we are still faced with unprecedented fiscal crisis and we must make very tough choices and decisions in our own homes. with these challenges, however, come great opportunities for us. we have veteran governors, some of them are with me here today, who will share their experiences with our new colleagues. they have institutional knowledge and with that institutional knowledge comes great benefit to our new governors. but our new governors are also going to be very important to

this organization. they come from varied backgrounds, will offer us new ideas. when these two forces are joined there is nothing that we can't accomplish together. as much as the great recession has caused fiscal challenges for our states, we are keenly aware of the challenges it has presented for our families as they are trying to make ends meet at home. governors do not have the luxury of waiting for solutions to present themselves. we are charged with finding the solutions to move us forward. at the core of the fiscal challenges for our states just like the challenges that are facing our families is the need for us to create jobs, to find steady employment, and a promising future for our children. as we come together over these next several days, we will focus on these challenges, budget gaps, streamlining state government to make it more efficient. but in the end, the big issue

that we as governors face is how do we make our states more competitive in a global economy? this is key to increasing real wages and real income for all americans. jobs are the way out of this recession. every governor knows that. so our focus will be on how we can create jobs for the many people looking for work at home, how we can use this crisis to better position our states and our country to be leaders in the world and how we can secure a strong future for our children. the recession has forced many states to make difficult short-term decisions, actions necessary to balance budgets and to find new and innovative ways to make government more efficient and more productive. over the last two years, states have had to make significant changes. cutting spending by more than 10.7%. 75 billion dollars. tapping our rainy day funds,

shrinking the size of government, streamlining state services. more difficult decisions will have to be made over the next few years as we are still facing collectively a $175 billion shortfall. including the cliff that we will all see in july, as the additional federal medicaid and education funds go away. and as congress works to get its fiscal house in order, we call on them to cooperatively work with the states. we want to help them and we need their help as well. it is a partnership to restore fiscal discipline, to promote economic growth, and long-term prosperity. this means for us not creating proposals that allows states to declare bankruptcy. a bankrupt law isn't something that we have asked for or we want to use in any way. in fact, it only serves to increase our interest rates,

raise the cost of state government, and create more volatility in the financial markets. governors and states have a clear track record. we are able to successfully manage our state finances even in the face of severe financial stress we will continue to do so. we will work with our federal partners to improve fiscal stability, produce cost-savings for government at all lels. this type of cooperation is what we need to put our nation on the path to economic recovery. governors are also asking for innovative ways to enhance the education system. by maximizing our state resources in the class room. as nga chair, i have the privilege of working with all of the nation's governors on what is called the chair's initiative. as we have proven time and again, we are far more effective when we get together bipartisan in the tradition of the national governors

association. to ensure that our states and citizens are prepared to compete in the global economy, we must develop sound policies that enable more of our people to complete degrees, increase the efficiency of our institutions that educate them so that each and every one of them can get a good job of tomorrow. the 2010-2011 chair nishstive called "complete to compete," it focuses on the urgent need to complete college and product tivity in the united states. let me share with you some facts. someone with an associate's degree will earn about twice in a lifetime what will be earned by someone who hasn't completed high school. someone with a bachelor's degree will earn about twice as much in their lifetime as someone with a high school diploma. in 2009, someone without a high school diploma was three times more likely to be unemployed than someone with a bachelor's

degree, twice as likely to be unemployed as someone with only some college or associate's degree. in the future, for america, two thirds of the jobs will require an advanced degree. whether it's a degree from a two-year institution, whether it's from a four-year, whether it's a technical program, or a credential, that is the job of tomorrow. at present, our country is not prepared to meet this workforce demand. i believe we can and we must improve higher education performance. together, we can work to increase the number of college graduates, and ultimately increase our nation's ability to compete internationally. i want to thank our bipartisan group of governors who have worked to make this possible. i thank my colleagues for their

participation and their insights. governors leadership governors experiences are crucial to reinventing the policies and the programs needed to ensure that our children receive the kind of education they need and deserve to allow them to be able to compete in the global economy. now i would like to introduce the vice chair of the national governor's association, nebraska governor. >> chris, thank you very much. and thank you for your leadership of the national governor's association. i also want to congratulate you on your award. that's jobs in her state and all across america. and that's important for this country. we have an outstanding program over the next few days. i'm excited about the opportunity to meet with our fellow governors and including many who are here for the very first time to discuss the issues and challenges that face our states. the official business portion of the meeting begins today

with a session highlighting job creation. that will feature a discussion with dr. michael porter of the harvard business school. we will conclude this session with remarks from the party secretary of hunan providence, secretary yao, who is leading a delegation of chinese officials interested in establishing a dialogue with the nga. the education early childhood and workforce committee will hear from secretary of education arnie duncan, sunday we'll include meetings of the economic development and commerce committee, the health and human services committee, the natural resources committee, and the special committee on homeland security and public safety. the economic development and commerce committee will discuss the state of municipal finance and share strategies to reenergize their state's economies in a post-recession environment. the health and human services committee will focus on the

sustainability of our medicaid programs. the natural resource committee will discuss federal state partnerships and how they will impact the responsible development of domestic resources, including biofuels. secretary of agriculture tom vill sack will be meeting with the natural resources committee. sunday evening, the governors and spouses will travel to the white house for a black tie dinner evening with president and mrs. obama. monday morning governors will return to the white house for meetings with the president and members of his cabinet. the winter meeting will conclude monday afternoon with a session focused on governor gregoire's initiative complete to compete. this initiative focuses on improving the productivity of our higher education institutions and increasing the number of students in the united states who complete college degrees and certificates. this session will be about the

importance of increasing college attainment rates for economic competitiveness and highlight options for boosting rates within existing resources. bill gates, co-chair of the bill and melinda gates foundation, will be the featured speaker. additionally thereby -- there will be governors only sessions which will be on a dialogue facing issues in our states. >> i would like, if we could, to introduce ourselves. governor would you start. >> with that, we'll be happy to

take your questions. sir. [inaudible] >> it is not unexpected on our part. the governor and i have met with the leaders of both the house and the senate on the hill to explain to them. we know there's no new money coming to the states. what we have asked them to do, however, is to be mindful that cuts could serve to undermine our economic recovery back in our home states. we want to work with them as they struggle to put their fiscal house in order but at this critical time what the states are facing, $175 billion shortfall in the next two years, anything that congress does that could undermine our recovery will be quite troublesome to us. when it comes to medicaid, we've had good conversations

with secretary sebluss. she has indicated a willingness having served as governor herself to provide us necessary flexibility so that we can meet the needs of our populations while at the same time meet the needs of a balanced budget requirements. some is outside her ability to grant us. there is some maintenance of effort issues that lie in the hands of congress because they were placed in statute. so we're asking for the cooperation both from the secretary, which she has been wonderful in providing us, as well as members of congress so that we can work our way through what is a very challenging time for us. [inaudible] after illinois passed the tax hike at least two governors came and tried to poach and direct appeals to steal jobs from illinois. what do you think of that kind of governor-to-governor tactic?

>> i'm not going to criticize any of my governors. how they serve to make the decisions they make, turf respect. but let me tell you what dr. porter will say today. dr. porter, who will be our first speaker, will talk about what states really have to do is look inside themselves and ask what are their economic opportunities for today and tomorrow. and they have to build that so that going over and stealing from someplace else really isn't the future for them. their future is in building their own economic stability inside their state, in a cluster, where they're seeing the advantages that they have, whether it's in our instance arrow space or in -- earo space or in agriculture for some states, and building on that. so i'm not going to criticize any of my colleagues. i'm telling you what the expert dr. porter will say this morning. my policy as governor is anybody who wants to come to washington state is welcome. i'm not out trying to steal a company from my colleagues.

[inaudible] >> let me put it this way. i believe in competition among the states and among the countries. and if any business is looking to come to nebraska, my number is 402-4712-2244. we're willing to compete. when i took over as governor, taxes were too high. our regulatory scomplimet was too high. we reversed that. and here we sit today in the state of nebraska with the second lowest unemployment rate in america at 4.4%. i prefer to get jobs from all over the world, and that's why i'm willing to travel anywhere to get that done, too. >> if you had to, you would go to your colleague states and make a pitch? >> we're engaged in competition all the time. governor greg water just won a comp figs for the boeing award. so i congratulate her in that regard. if she would like to have some of those jobs come to nebraska,

i'd like to talk to her about that, too. but i think they're going to my neighboring state, kansas, who has an arrow space industry. so i believe we're in competition all the time. >> let me just be clear. what we will talk about over the next three days is the real competition for all of us is global. and that we have to be prepared to compete globally. and candidly, that's what the boeing company just did. it showed that america is ready to compete. and out of that, the taxpayers got the benefit of that. so that's my focus. how do we prepare our companies to compete. we're the most trade-bent state in the station. export is our way out of this recession. that's what er one of my colleagues are looking at, how do they export more products, how do they compete more globally? to rather than fighting among ourselves, we're ready to compete. we're ready for america to compete in the global economy. >> talk about potential of a government shutdown.

it seems like they may have punted this issue at least until the middle of march as of friday here. but maybe a couple of you could weigh in, even if it's a short shutdown, how it would impact your states and how the uncertainty of this is affecting your states. >> you know, most states have a significantly higher total budget than their general revenue budget and inevidently that's made up of special revenue and federal funds. so it will definitely impact every state. it will vary from state to state in terms of their relative percentage of federal funds. in our state, for example, we're roughly 3-1 on medicaid dollars. all the workforce money, all the early childhood money. all of those funds that are off the chart from the standpoint of balancing a budget and general revenue are reflected

in federal contribution. will it have an effect? absolutely. now, way back long before i was governor, before i was attorney general, when i thought i was running the state senate, we instituted policies legislatively that impacted governors. fortunately, with term limits we don't have legislatures that know how to do that any more. but we provided on any federal funds that created jobs a proviso not only in the mou, not only we put it in the actual employment agreement with the employees so hired with federal funds that their employment ended wh the federal funds ended because we never intended -- we always reserved the right to assume those responsibilities, assume ing we had the resources to be able to do it but the supposition at the outset was that we wouldn't have state funds necessary to

supplant the loss of the federal funds. so i think most states are in that posture. they don't have the state general revenue to be able to offset the lotsdz -- loss of any federal funds. it will affect every state. one quick area. on social security disability, everybody brags on their own state and everybody has vares areas they can brag about. our people have been so efficient in that program in terms of the timeliness and the accuracy of the determinations both in denials and in approvals that we've been asked by the federal government to do that for a number of other states. what's created a lot more employment. that's all 100% federal funded and 100% federal money that supports all those jobs. but they're all state people that pay taxes and show up in our economy. that's another specific example

of how a federal government budgetary shutdown will affect my state and i suspect everybody in this group will have comparable stories. >> other questions? >> [inaudible] about establishing the u.s. china governor forum. so what kind of, is there any specific programs toupt talk about at this time? and what is your expectation on this forum in the future? >> what we are trying to do is establish a relationship through some national government. it's one thing for our state department and the president to work at their level but i for example just led a delegation to china on a trade mission this past fall. china has become the number one trading partner for the state of washington, first time in history. so what we're going to do today

is launch a new relationship where governors to governors or provencial party leaders can work together on economic development on exchanging students, cultures and language. because out of that we believe we can grow our economy and in fact we can have a prosperous future. so today we launch that in july. we hope we will see a first delegation of governors from across china come visit us in our national association governors meeting and we're hoping to have a delegation of our governors go visit china later this fall. >> [inaudible] comment on the state of the economy like colorado, connecticut, or massachusetts just whether things are coming back, whether unemployment is declining. is the recession over in your? >> i would describe ourselves in massachusetts as recovering,

not recovered. our unemployment has fallen to about a point and a half below the national unemployment level. we are adding jobs faster than about 45 other states at this point and our general state gdp is growing at about twice the growth rate. but there is still a lot of people out of work. and while i'm proud of the fact that 98% of our residents have health care today, that we are first in the nation in student achievement, veterans services, cleerge initiatives, that's all good. but for the individual who is still waiting for, work, the people i meet at the jobs clubs that i visit, for them the recession is very much here and now. so the strategy that we have pursued which has been based on education, innovation, and infrastructure, very much like what the president talked about at his state of the union as a winning strategy for us, it's a working strategy for us. and as we have made the necessary decisions to reduce spending we have done it wisely so that we are able to continue

to invest in those areas that grow opportunities. >> i would say this. that unemployment remains uncomfortably high in connecticut at a number at 9% that we are simply not used to. we are seeing recovery in the financial services industry, including traditional lines of insurance of which we're certainly one of the main site us as well as the health care end of the business which does appear to be adding people relatively rapidly. manufacturing continues to be sluggish, although we shared in the boeing news because those tankers will be powered with engines made in connecticut, we have seen an uptick in orders in engines so that's a good thing on the manufacturing side and simply having seen that decision made means many of the suppliers to that engine manufactureor prathwitni will

feel comfortable hiring or rehiring some of their folks. having said that, in a set of circumstances where you're looking at a very substantial deficit you do have to make decisions just like my good friend the governor of massachusetts just mentioned. and in each and every case we're making those decisions in ways that we think are most likely to project a strong economic future for connecticut. and wee verse a long-term trend in connecticut over the last 20 years of having been a job loser. so this is all relatively new to me. seven weeks into the job, first democrat in 20 years. but i am learning so many years from my democrat and republican colleagues here in the meetings and with these communications that i know this has been a very valuable experience and certainly look to share with them. thank you. >> let me just say, i think we're all in the status of recovering as the governor from massachusetts said.

but we are fragile. we are fragile. so anything congress does, whether it's a shutdown, or cuts that are going to directly impacts the states, can be of considerable concern to us. because we don't need a hick cup right now in our recovery. while it is fragile, we are recovering, we can actually see very positive things happening in the private sector, in almost all of our states, but still we can ill afford to have a government shutdown and cuts that will dramatically impact the states. next question. >> education funding, the other cliff, if you will. what are states doing to prepare for this coming shortfall? and are we about to see a mass layoff of teachers and education personnel across the country? >> you know, as we said earlier, the federal government

could shut down. unlike some of my colleagues, i have -- i look at it as a pay me now or pay me later. federal government is funding states with deficit funding, states are trying to struggle. in the state of maine, that is the one area that we were very fortunate we're not going to see cuts in education. i do believe that weaf long way to go to not only bring back the state of maine and the cuntry on an international -- country on an international level of education, but we are focused on not only attaining higher achievements of our students that go to college but i believe for one that we need electricians, plummers, people in the trades and in our state we are focusing on bringing the trades back. the state of maine is very

dependent on its natural resources. and what the federal government can do for us is not money, it's flexibility. let us run our states with the resources that we have and we would be very happy to work with you in dealing with the deficits. >> let me say, in nebraska i have tro two priorities that continue to work for our state, education and jobs. we need education success and economic success. they're linked together. two years ago, i stood up with the leaders of the teachers, the administrators and the school boards as we accepted that stimulus funding. we alerted everyone that it would go away for two years so take advantage of those two years in an efficient way so that we can minimize layoffs. i believe that's what we've done in nebraska. so i hope those layoffs will be minimal because ideication --

education is absolutely key to our future success. >> i want to offer a little bit of a different perspective. i'm from guam where basically in the same time zone as japan. we're the closest american soil to china. and when you touched on the issue of education, i think a penny wise and pound foolish. right now we're basically a mini hawaii. it's the military buildup and it's millions of tourists coming in. and a lot of those tourists and all our private -- in fact, our economy's taken off. but not because of the united states. it's because of asian growth. and what the growth that is occurring in china, they can't even -- they're having a tough time going under 10%. and i guess the lesson for all of us here, anyone who has been to asia and you take a look at their focus on building infrastructure, they have the

best high-speed rail systems, go to korea you go to tokyo, and you go to -- and education. education. so from a perspective of a u.s. territory, that is in asia, it is important to take lessons from asia. and one thing we cannot do is we cannot sacrifice on education. that will hurt our competitive edge. >> i just want to second the points that my colleagues have made about the connection that we all see between education and job growth and economic opportunity. and in the common welts and i think it's true in all the states, we were grateful for the stimulus funds to help us bridge the education funding during the worst of the downturn. if you're a second grader, you don't get to sit out the second grade until the recession is over. right now is your chance. we have funded public schools at the highest level of the history of the commonwealth every single year since i took

office since 2007 and we have proposed to do so again. and knowing that the stimulus funds were trailing off this year, we planned for that. and so we can afford to beat our own record in the coming fiscal year without the use of stimulus funds. and i think that's exactly how the stimulus bill was intended to work. >> i would simply close this discussion by saying i agree with the president in his state of the union address. we have to outeducate. that's what global competition is going to mean for us. we can ill afford to cut back on education. whether it's early childhood education and head start all the way through k-12 and on to higher education, which today has to keep its doors open and its quality up. only if we outeducate are we going to be able to compete in the global economy.

>> [inaudible] that indicated that the deep state budget cuts that were going on were actually slowing down the country's recovery? it seems like the chicken and the egg here because on one hand you're asking congress not to cut deeply because it will affect recovering states but now the commerce dp is saying that the opposite has happened. >> we've been saying this all along. we for years now, two years, governors have said when we cut, we impact the recovery. and cutting 75 billion as we have had to do over the last two years has had an impact on our recovery. looking now at $175 billion in cuts, we'll have an impact every time we take a cut we lay off somebody directly and indirectly. we put them on unemployment. the fact of the matter is when a business lets someone go, where do they come? they come to us.

we are now as states faced with the lifetime dilemma of decreasing revenues, increase demands, whether it's education or social services or trying to get our people back to work. so the point being here is that we know we have to make the cuts. but, again, let me repeat, we can ill afford to have congress on top of that cutting us more because the result will be we will slow the recovery not only in our home states, we will slow the recovery of the nation. you saw some of the job numbers recently. yeah saw what happened. all the growth in the private sector was overwhelmed by the amount of layoffs in the public sector. that's what we're concerned about as governors. that's been our message now for the last two years. >> to specific answer your question, we don't have any choice, the commerce secretary lives in washington and deals with the federal government.

we have to balance our budgets. we don't have the luxury of not balancing the budget. >> you know, i need to go back and remind everyone what i said earlier. we are forced to balance budgets. but we can help our states and we can slow down the layoffs of a lot of private and public sector jobs if the states are gin flexibility and we are lacking flexibility in many areas. for instance, we are restricted in our state from cutting trees. because of some of the federal policies. we're 93% of our state is a forest. think about that. >> last question. you mentioned earlier that the governors are against having a bankruptcy action for states. it seems there's there's a lack

of support for that. ? maybe states where their bond rating is so bad it wouldn't hurt them or any possibility that could move forward? >> governor hineman and i have been clear, we don't even want the subject discussed. let alone to move it forward. let me tell you why. i'll talk about my own home state. in our bond sales, we have had the best returns in history. on a friday, when this discussion erupted about bankruptcy for the states, by the following tuesday it was up 100 basis points in my home state in my bond sales. that's what i meant in my opening remarks. that adversely impacts us. so not only do we not want it, we want to stop the discussion. and we'd like the leaders of congress to say it's dead. it's not going to happen. it has impabt the market. >> as a state that plays some

role in the financial markets, this is some of the most dangerous discussion that we've had in political terms in a long time. you're threatening the entire municipal market in this country and internationally. and, you know, most of us actually believe that the full faith and credit of a state means the full faith and credit of a state. and none of us, at least that i'm aware of, ran on the basis that we should be able to dislodge the full faith and credit of any of our states. there are other tools, some of those are political, some of those are legal to use in your relations within your own state. but please don't destroy the municipal bond market as it currently exists and operates. so i'll relate this discussion, your question to the comment about the commerce secretary's

warnings. and that is, that if you were to do any additional damage by furtherering this discussion on the municipal bond market by suggesting that bankruptcies be permitted, you're talking about the drawing up of capital for every single public works project undertaken by a town of 500 people or a city of 5 million people plus all of the states. it just would be the height of insanity. >> so with that we will close this press conference. i thank my colleagues for coming and i share with all of you these governors don't have a choice but to govern, find solutions, put people to work and balance budgets. we're ready to work together on a bipartisan basis to bring our states on to the road to recovery, put people back to work, and make america competitive across the globe. thank you all very much.

[applause] >> you just heard from the chair, democratic governor chris teen greg water of washington. she spoke about bipartisanship and the complete to compete initiative focusing on high school and graduation rates. and also, competition among the global economy. and that is a good tone to start off panel one which is coming up in a few minutes

talking about growing a competitive state economy. we'll hear again from governor greg war and also republican governor. and some of the speakers on the first panel of the day will include dr. michael porter with the harvard business school. he works on the competition and economic strategies of nation states and regions. we could also hear from a chinese delegate who is at this meeting from hunan province scheduled to speak about establishing a cross-continental dialogue. in some of the latest international news, the associated press reports mow mar cadaffe is arming his supporters, asking hem to set up checkpoints and patrols. meanwhile, the u.n. is expected to meet today possibly as early as 11:00 to discuss sanctions against libya. and in egypt, a panel working on the country's constitution

is recommending presidential term limits there. that's a major change from the current open-ended presidency. while we wait to come back here to washington and the national governors association meetings, let's take a look at what montana's governor had to say earlier on "washington journal." >> joining us now from the jw marriott is the governor from montana. welcome to the program, sir. >> good to be back. >> tell us, what is on the agenda for the nga meeting this weekend. >> well, i think probably the most important thing that every governor is faced with is how to get our economies going again, how to attract folks to invest, create higher paying jobs. montana is a little better but we still have 7% unemployment and we're looking for new opportunities. so werp we reheightened our anticipation when we spoke with the president and he explained that we've got to create higher paying jobs in this country and get things moving again.

of course montana where we are natural resource state, we have 30% of the coal in america, we have the best oil and gas reserves of any place in the country, we have the best wind resources, we have the biggest wheat crop in the history of mont. and a platinum and copper. so the natural resources industry is hitting it pretty good and we need to get the rest of the country going as well. >> you've got all those natural resource there is in montana. right now you've got a budget surplus. what do you tell the governors that don't have those natural resources and are having to deal with budget deficits right now? how do you get them to follow your lead and get them back on the surplus train? >> i'm not a very popular governor around these parts right now. but honestly, the reason we have a budget surplus is because when the times were good, unlike what they had done in other states, spend the money, we saved the money and we built the largest savings account in the history of

montana. i vetoed 40 bills when times were good. and i told the legislature, i don't know what the future is, but if we've got cash in the bank we'll be all right. so during the last couple of years wee drew down on our cash reserved, we didn't cut critical programs or raise taxes. now we're coming out of the recession and we still have money in the bank. >> we're going to get to the phones because a lot of folks, people who flive montana, want to talk to you. and we want to remind the rest of our viewers in the 49 contiguous united states as well as overseas that they can get in touch with us. for a conversation with montana governor. and we do encourage residents of montana to give us a call. like gerald on our line for democrats calling from mcgregor

lake, montana. go ahead. caller: thank you very much. god bless c-span. thank you for taking my call. good morning. representing a 501(c)(3). we operate in northwest montana. we have an 800 plus billion budget neutral revenue increase jobs, gse, rehousing solution. having returned correspondents from the federal reserve system board of governors office, the federal housing finance agency with legal authority for gse policy. and the department of interior secretary's office. and early outline of the solution was forwarded to the montana governor's office during may 2010 and i am requesting the appropriate e-mail address and fax number to get the details in your hands that you might want to share with 49 other gentle people. the solution's entire file may be viewed at aloha noble house

i think.com. thank you for your attention and public service. god bless c-span. and god bless the united states of america. >> thank you. go ahead. >> wait a minute. the most important question i had for him is how is the ice fishing? have you been out yet this morning? were you ice fishing yesterday? >> gerald is gone from mcgregor lake. and hopefully he decided to go out and do some ice fishing later this afternoon. the weather will stay cold enough he doesn't stay in. >> that won't be a problem in montana because it's somewhere between 10 and 30 below all across montana. and that's not with wind chill. we're hearty people in montana. >> and his other concerns that he brought up, sir. >> well, it was actually difficult for me to discern what exactly he was talking about but i would encourage him to get ahold of my office and just call and we'll get together and talk about it. >> next up out of detroit

michigan is nick on our line for republicans. go ahead. caller: hi. in our area over here in detroit, first of all, congratulations on montana with all the resources. host: nick, this process will work a lot better if you turn down your television set. we're getting nick twice, double the money there. caller: that's good. two for one. our natural resources -- now i'm not going to be able to hear you answering back. but our natural resources are our people. we have good people here in michigan. and this is a really good state. and we're all hard working. but we just can't seem to get above and get that ball rolling and staying on top. and with our natural resources, well, first of all, the

politics because of you are the governor but you don't look like a politician. you look like a good upstrong hard-working man. first of all. that's a compliment. because the politics, like george bush, when he says after he became out of -- after his presidency was over, then he says, oh, i was a politician. oh, i don't really believe in the bible. well, we believe in the bible and we work hard to do that. but when we get ahead and get taxed on everything, and then we have competition that's so tough, i parked my ford next to a tundra and i almost melted. that toyota and honda coming in with these pickups and the pickups ain't selling because i don't care what they're saying baw i don't see them on the lot or the roads, the new ones. host: we're going to leave thrit and guarantee if you turn down your sound when you start the call, by the time you

finish your call and hang up the phone turn back the television, you'll be able to hear exactly what's going on. guest: well, i think he makes very good points. with all of the natural resources we have, our most important is people. the american chamber of commerce is now rated montana the number one place to start and gre a business. we have the sixth most business-friendly taxes and we're rated as the fourth most educated population in america. i tell people all the time. virginia's got that bumper sticker that says virginia is for lovers. i want the bumper sticker in montana to say montana is for engineers. it's not politicians that change the world. i was a rancher before i was elected governor and this is the first job i was ever elected to. but i can tell you this it's not politicians that change the world. it's ideas and innovation. and that's why we're trying to get every child in montana to get interested in science and math because the economy with the most engineers will have

the most ideas and innovation, and you'll always win with innovation. host: while we try to get the lights back on the situation, we'll show you some of the numbers that we've got for montana regarding the budget surplus. $353 million. unemployment at 7.2%, the national average 9%. foreclosures, there were 684 foreclosures in 2010. the lowest in the nation. the population of montana is 975,000. as we continue to try and shed some light on the situation in montana, as well as governor, let's take another call. this one from illinois on our line for democrats. john go ahead. goo we had a conversation before, remember last time he called it hog wash furl. that's yect. -- if you recall.

you really held your own with mitch daniel yesterday on television. thank you very much. and could you tell us, vacation season is coming up. could you tell me where to come to montana and visit? guest: we've got 56 counties. let me say this. of all the extraordinary places we have in montana, i'm going to promise you if you go to glacier national park, and i don't know whether you've got any particular religion or religion at all. i can tell you that after you've been in glacier national park for a few hours and you're at the top of the continental divide where the only place in the united states where water flows both east and west and north that goes to three oceans, something will overtake you and you will look around and you will say, this place is so magnificent it is impossible that this place was created through random acts. it's impossible that just the forces of nature and geeology over a course of a billion years could have created this

remarkable place we now call glacier national park. it actually had the finger of god in creating it. so i would say make it out the glacier national park. host: next up, texas on our line for republicans. allen on the "washington journal." caller: first, i would like to thank c-span for all they do. i do have a comment and a question. my comment is i'm a republican that lives here in abilene texas and this is the first time i've called in to c-span. i watch c-span quite a bit. my comment is to the governor. i was listening to him and talking about him and their state having a surplus, and anyway, here in texas it's kind of a crazy situation here nowadays. but with the education system and the economy we're in, and so from a republican to a democrat, thank you, governor, for your hard work in montana

there and having the surplus and talking about education. i believe education is very important. my question would be to you, is, what would you tell our governor if you had a chance to talk to him, the governor of texas, rick perry, on how to continue having a surplus in our state at the same time improving education? because they're going to have tons of teachers that are not going to be returning next year. so far 120 here in abilene by itself. and so that's a concern to me. and so i really like what you're doing in montana. so i would like texas to kind of go by your example, governor. thank you. guest: wole, i don't know -- well, i don't know much about abilene but i understand it's so flat you can watch your dog

run away for three days. i'm not going to give advice to our governors but what i will say is the montana legislature is in session and i've proposed a budget that 49 other states would pull their teeth out to be able to accomplish. we've increasesed funding for k-12 education. we've proposed to put enough new money in higher education that we won't raise tuition for the next two years. we're cutting taxes for home owners. we're eliminating the business equipment tax for businesses. at the end of the day we'll still have the second largest savings account in the history of montana. so i think it's important to invest in education because we're going to attract new companies to come to montana. we might get them from texas and we may get them from tazz mania but we'll get them to come. we do have great natural resource. but the economy with the most engineers always wins. host: in the associated press earlier this month, they

reported on the ongoing budget and revenue dispute between yourself and the republicans saying that it had flared up with the goffnoffer declaring he thinks in the end that republican leaders will have to fund education and social services to levels that he finds adequate. republican leaders said they had to plan to bend to the governor's wishes. tell us a little about this fight that's going on that's being reported in the associated press. guest: we don't fight that much. you can't sell a newspaper unless you make it sound like a big fight's going on. we agree more than we disagree. and the advantage we have is we have some money to argue about. the rest of the states have deficits to fight about. in montana, it's pretty clear that if we don't invest the money from the state to the local school districts, that the school districts will turn to raising mill lev levees and will force the property taxes to go up. and in the case of higher

education, if we don't fund higher education at the levels i've suggested then the only other way is to raise tuition like they're doing in every other state in america. i think that's a rong-headed approach. it's the middle class that is the strends of this country look, i have a master's degree in soil science ow, i have a bachelor's degree in international agrandson my and neither of my parents were farmers. that is the american dream. and i want every family to be able to afford the american dream and that is higher education, which is the best path to a higher paying job. rur our next call comes from florida on our loin -- line for independents. >> thanks. we're sort of a rural-urban community right outside of tampa. guest: how are you? guest: good. we have a small cattle ranch and 40 acres out here is huge. that's small. guest: but you can run 25, 30

cows. caller: that's right. i saw you last night, enjoyed hearing the discussion, gratified that what you've done has been working for montana but one of the things that i haven't really heard and similar to the caller from abilene, wanted to know about education, is how do we exprap late what you've done there to other states to our nation? not necessarily giving advice but i don't remember if it was truman or eisenhower but one said something to the effect it's amazing what we can accomplish if we're not worried about who gets the credit. give us some of your ideas. let's enjoy the success of montana and study what your ideas are. share some in terms of applying them to our national situation. i'd love to hear some of that. host: challenge the status quo when it comes to education. montana's a rural state and in many cases we have high schools

with only 25 or 30 people in the entire high school, four grades. so how is it that you can have the best biology and chemistry teacher? how is it that you can have someone who is teaching algebra or trigtri? so what i've done is said to our high schools and our universities, we need to partner. so we're streaming classes from our universities directly into our high schools and we have something called dual credits. in order to graduate from high school you have to have a certain number of social studies and math and science and other curriculum. what we're saying is if you take one of your math classes as a college credit, then when you graduate from high school you'll already have a few college credits and we're going to give you credit for both high school graduation and for that college. and so all over montana those students who are eager to achieve at a higher level are taking university credits already when they're a sophomore, junior, senior in high school. because this is a dirgetal generation.

i can tell you people my age have a tough time learning on the internet. but people that grew up with the internet, they don't have any problem at all looking at a screen just as though there were a teacher in that classroom. so this generation more than any generation in the history of the world can learn in a classroom where their teacher is maybe 25,000 miles away. so you can have a kid in a little school in scobeie, montana, who is studying mandarin or already studying civil engineering. and that's why montana is going to get ahead and have the engineers that will change the world. host: louisville, kentucky. jeb on our line for democrats. go ahead. caller: i appreciate what you do, governor. and thank you very much. i would like to ask you about the state bank. it was a constitutional thing, i believe, that started out as. and one state has one. i would like to have your thoughts on that. guest: north dakota has a state bank. montana has something similar to that.

for the last three decades we've been collecting a tax on our significant coal reserves as they, people mine the coal, 15% tax is collected and it goes into a permanent fund and then that permanent fund which is nearly $1 billion now, loans that money to businesses who want to start and grow in montana. now, we're not the only money. we partner with private banks. we're also the last money in and the first money out so that we can keep moving that money and get businesses starting and growing in montana. we don't throw that money away. we are tight-fisted with that money. if you don't have a good business plan, don't come to us to borrow that money. host: hollywood, florida, on our line for independents, you're on the "washington journal" with montana governor. . . you're on with montana gov. brian schweitzer. caller: i want to think c-span for all that you are doing. i live here in florida, in hollywood.

when the oil was leaking in the gulf coast of florida, our university students were measuring about 1 million barrels per day. if united states on its own oil wells and sold it at international market prices at $90 per barrel, that could help to meet the unquenchable thirst that our government needs in taxes. any other surplus could probably going to education, on turn health care into a treasure trove, as well as securing social security for many years to come. 1 million barrels per day times $90 per barrel. you do the math. do before the people, by the people to pay off the taxes and

possibly our government does not even need to ask an american working person for taxes ever again. host: governor schweitzer? guest: we consume 20 million barrels per day. you talk about 1 million and then we will still imports two- thirds of the oil we consume. it is clear to me that we need all sources of energy. we need wind power, solar power. we need a call from places like montana. each one of these energy systems as a challenge. wind has a reliability problem. solar, the sun does not shine at night. new clear has a problem with a radiation. oil has a problem of not having enough of it -- a nuclear power has a problem with radiation. we have these energy sources that together we can create energy independence. nick call from detroit and i

have the solution for michigan and detroit. here it is. harvard university recently completed a study and they said the wind energy potential of montana alone could produce enough electricity that we could run every light truck and suv as far as america. we are now proposing that olli montana produced electricity because there is wind in the southwest -- midwest, in the southwest. if we converted our fleet to elector, we would have an energy storage system support in every garage or in front of every office building there would restore electricity in the battery of a car. when you are not driving it, you plug it into the grid. at any minute commute to be selling electricity back into the grid and some other business needs it, you lose it bitter row-- you use it.

if there was a disruption, every american would have stored electricity and they could use it for the functioning of their house. this is about creating jobs in america. the entire world was made -- waiting for america. the future will be a different kind of energy, one that is not dependent on oil produced by dictators. host: what you say to those who will talk about how it is not about the production of the energy either by wind, solar, nuclear, or whenever that is the grade in the united states that is not built transport this energy from one area where it is produced to other areas where it is needed. it does not matter that montana is the largest wine producer in the country if you cannot get that energy outside of the state of montana then it only >> intends this "washington

journal" segment on line. we will have not to live coverage of the national governors association meeting. the first panel is a growing a competitive state economies. >> as the chair, i would like to welcome each and every one of you to the 2011 nga winter meeting. i would to start by apologizing for my laryngitis and to assure you that you can shake my hand. this is just an overzealous reaction to the boeing tanker award. this is an attack for allergies. i took your vice last night to -- advice last night to shut up. they have a motion for the adoption of the rules of procedure for the meeting. it has been moved and seconded. any discussion?

all in favor? those opposed? part of the rules require that any governor who wants to submit in a policy resolution for adoption at the meeting will lead dave 75% vote to amend the rules to do so. please submit anything in writing by friday. i would like, if i could, to take a moment to recognize our new colleague. this is a historic moment for the national governors association to have 29 new colleagues. congratulations to each and every one of the and welcome to the national governors association. [applause] all of us who are incumbent governors would say to you that it is one of the best jobs in america. we would also say to you that based on the circumstances of our times that it is truly one

of the most challenging jobs in america. we have a wonderful group of governors, spouses, former governors, state officials, federal officials, foreign government, dignitaries, corporate partners, members of the media and many others here today. i want to thank all of you for coming. anyone around this table knows that we did not get here without the tremendous support of a spouse, a friend, a family member. gov. heineman, our two spouses are leading them as they go to this meeting over the next three days. he would like to introduce to you are two responses to tell you that today they will make all of us proud as they lead the spouse's delegation to walter reed. there they will participate in supporting our military families. they will read to children there and they will greet their families.

they dedicated their time to the veterans of my home state in the washer tanned of veterans across america. my husband, mike, and gov. heineman's wife, sally. if you would stand? thank you. [applause] we're joined here today by a delegation from the turn and -- hunan province. we also have a delegation from canada who has joined us today. a point of personal privilege, if i might. to all of us who have known ray, he served as national director for the nga for 28 years. he has seen us through amazing times. this is his last meeting.

please take the time, if you would, to thank ray for all that he has done on behalf of all of us over the 28-year span. join olla said the reception following to honor the gray and all that he has done for our nation and the governor -- to honor ray and all that he has done. [applause] [applause] for those of you who do not know where he is headed, he is moving to higher education to inspire a generation to join us in the public service and to lead the nation of tomorrow. let me begin today by saying that we certainly live in interesting times.

the times are downright challenging for all of us. from conflicts abroad to fiscal challenges on the home front to families needing to save and build for their futures, these times are testing all of us. as americans, we always face up to our challenges and our job as governors is to leave those solutions to find a path for root for a competitive america. we're now just beginning to regain our footing from the severest economic downturn that most of us will ever experience in our lifetime. we have not yet fully recovered and we may have many tough fiscal challenges ahead. as we gather here this morning, all of us have one thing on our mind and that is how do we regain quickly our competitive edge. we're going to address that question over the next three days and leave you a lot of good

ideas to take your home state to grow your economies and balance your budget. that is what the governors do at these meetings. we share ideas and experiences. we figure of solutions to the problems that we face. that is with the national governors' association is all about. our greatest opportunity in the most fervid challenge is building a strong, competitive state economy in each of our home states. all the demands that we face, health care, pensions, infrastructure will all be much harder to meet if we do not have thriving economies with more people employed in high-quality jobs in growing industries. we also know that having a more educated population is an essential ingredient for a competitive economy. the days when jobs paid middle- class wages and required only high school diplomas are behind us. the job market of tomorrow will belong to those who have some

credentials beyond high school. a certificate or a degree. the jobs will move to where those skilled workers are and if we're not careful that means overseas. that is why we are opening the 2011 winter meeting with the discussion about competitiveness with one of the leading experts in america on this subject. it is also why i am focusing on productivity in my chairs initiative, complete to compete. in front of you are materials that to the little bit about this initiative. i would like to draw your attention to a couple of points. complete to compete is about promoting better measures of performance for our higher education institutions. it is no longer and have to know how many students are enrolling in our colleges. we need to know how many students are actually completing their certificates and agrees. how long is it taking them?

are they taking up a spot that to go to entering freshmen? how many students end up in remedial class is making a for the k-12 system are preparing their students. it also highlights what is working in our state. when it comes to graduating year students, there will be new and innovative ideas for how we fund and maintain high quality higher education in america. we will be hearing more about this initiative and opportunity to participate over the course of the meeting. i encourage your to contact the nga staff if you need more resources to deal with these higher education issues that are facing us today in these difficult economic times. we are truly fortunate today to be joined by dr. michael porter who has spent his career examining factors that allow nations, states, and businesses

to compete in the modern, global economies. pressure porter's 1990 publication, the competitive advantage of nations, printed a new theory that is well accepted today about nations and regions competition and what powers their economic prosperity. his theory of industrial clusters has given rise to new ways of thinking about how governments create environment for high quality job growth and strong business expansion. his way of thinking recognizes that human talent is a critical element for such growth and that a state higher education system can be a powerful engine if it is properly aligned with the region's economic goals. prof. porter is recognized as the father of the modern field of competitive strategy and has been identified in a variety of rankings and surveys as the world's most influential thinker on management to competitiveness.

he's the bishop william lawrence professor at the base at harvard business school. this position is the highest professional recognition that can be awarded to a harvard faculty member. in 2001, harvard business school and university joined nacreous the institute for strategy and competitiveness dedicated to furthering progress reporter's work. i commend his reza made to you. you will find it both interesting. one thing i found morrison -- more interesting is that he is the senior policy adviser to the boston red sox. my home team could use a little strategy session with dr. porter. this is why you guys are doing so good. prof. porter has been kind enough to bring to each of us some very specific analysis regarding our state's economy and competitive strengths. if you pay for this backup, it would cost you thousands of dollars.

you will find that analysis and materials in front of you. i think i speak for all of us in saying, tell us how we can use this information to grow our economies and their citizens back to work which is the fundamental challenge that each of us as governors face. dr. porter, think for joining us and we look forward to our discussion with you. [applause] >> thank you, governor. that is very kind. we are very hopeful for the red sox this year. hopefully we will have a good year. i am so honored to have this opportunity to speak to all of the. it is really quite a remarkable moments in our country's history and also in the history of many of our states. you had your hands full. all of you. the country has their hands full in terms of our competitiveness. this is a time when i think our position is challenge of a level

that i have never experienced before as states, we are of focusing on a fundamental challenge of trying to get fiscal houses in order. ultimately, that will not solve our problem. as governor grigory just said, the only way to create prosperity is to actually build competitive economies. that is a long term agenda. at a time when there's so much pressure on now coming the here and now, dealing with the fiscal problem, what i like to talk to run to dave may seem a little difficult to think about at this moment, but ultimately, i think it will be single greatest agenda that will determine ultimately the success of your states. that is building an economic strategy in which you can get

the consensus of of the key stakeholders in your state to create competitiveness. that is the fundamental agenda. if we can do that, they will have the resources to deal with the the -- the other problems and issues in our society. that is the ultimate agenda. that is the core agenda. how do we build competitive state economies? we have very limited time this morning and we will only be able to give started on that discussion. in order to try and make this discussion continue from each of you and from a year has a presentation that we prepared about your state. it has a lot of very rich data to try and benchmark where you are, talk about the nature of your economy as it is today, how it is progressing and the stars to provide some of the facts

that i think you will all media and many of you probably already know which of the necessary to create that economic strategy. i would like to put the presentation the side for the purposes of this discussion. i'm not going to follow those presentations. i will talk to you now about strategy for the next 20 minutes or so. this presentation is background information for you. as we go out of this meeting, we would offer to work with any of you. we would work to continue this discussion. hopefully, we can have a dialogue. we want to create successful economies in your states. this ultimately, i believe is the fundamental challenge that you face. as i said one minute ago, already has some very short-term challenges in terms of achieving

fiscal stability in your states. gov. gregg nor -- gregoire talked about that. when you are doing short-term things like cutting, it is important to do long-term things at the same time. you have to offer not just a challenging short-term agenda to the citizens of your stay, but you have to offer some kind of a positive longer-term agenda. if you can do these two things together, we have found over and over again the you'll be a lot more successful. if all of you talk about is the negative stuff, you will get much less of traction and willingness of citizens to move ahead than if you could also offer a positive agenda. that is why even though it time like this, you talk about economic strategy, and you get by, it is incredibly important.

we see that states differ tremendously and the economic performance. this is one of the many charts that talk about how the states are doing in terms of the fundamental agenda of prosperity. we see tremendous differences. we see states with very high levels of prosperity that are not growing. we see states that are moving up, states moving in every possible direction. you have to get a handle on where your state stands and that will dictator particular strategy that you will pursue. the question is, how do we think about that economic strategy? what will it take for your state to actually build some momentum and build a competitive economy that will allow you to create jobs over time? that is the agenda that we would like to talk about today. in order to do that, we have to

understand this idea of competitiveness. but i have found is that competitiveness is widely misunderstood. it is misunderstood in ways that create unnecessary divisiveness and controversy in states about economic strategy. combativeness is it fundamentally the productivity with which you can use the state's people and capital and resources in order to produce valuable goods and services. if you are a productive state, you can produce a lot of value in a de's work. they could be able to support high wages. it is as simple as that. your prosperity is determined your -- by your productivity. but if you're never productive, you have a really hard time competing against other locations. if you are setting policy is

that improve productivity, you're going to have ultimately improved wages and create jobs. if you are setting policies that make it harder to be productive in business, you will be moving in the wrong direction. productivity determines wages. productivity sets jobs. productivity determines the standard of living. this is the fire loss of the modern global economy. the more we are open to the rest of the world and the more our businesses can invest, it is productivity that determines whether your particular state is going to succeed. your agenda must be limited on your question of how can we improve productivity. we also need innovation. if a company in your state is doing the same thing that it did 10 years ago, using the same production process, producing the same product come it will be hard to succeed.

we have all these other nations out there with the low wages. this is why innovation and so on fortin. we have to keep moving the bar, particularly in the united states where we want a high standard of living. we need to stimulate innovation and process these products. part of a stay competitive this agenda has to be how can we step up the level of innovation in our state? to do that, again, we have to create the right environment for business. that is your job. the job is not to compete but create the right environment. when we find is that if you can trade the right of barman for productivity and innovation that competitiveness is not a zero sum game. your state success does not mean that another state needs to fail. few are addressing fundamental productivity, we could now get more prosperous. that is something on which there

is no doubt. if we think the wrong way about competitiveness, the making their cells in serious trouble. we will talk with iran about how state should compete. when some level, you all the compete. the question is how should we do that from a strategic point of view. this benchmarks the performance of this state. i've got some of gov. christie because he also works with princeton university. i will take an opportunity to use him as an example. you can see that it is the seventh most prosperous state in america. look at the productivity metric here. it is also the seventh most productive state and that is not an accident. prosperity depends on

productivity. is the fifth highest wages stayed. that is the maximum. these are all connected. in order to be so productive, we see that new jersey has a very high ranking in innovation. they have been a great state in generating patents and new ideas. as you look at this chart, you can see that there are some yellow and red highlighting. new jersey, although they are in a good position today, they have slowed down their productivity improvements. they have slowed down the rate of innovation. the clusters are not growing any

more. gov. christie's fundamental challenges non the level of productivity. his fundamental challenges to had to get the engine of innovation and change improvements going again. that is the fundamental challenge. other states will be in very different circumstances. some of you have to create stronger foundations so you can move up in the first place. others of your starting to progress in you're going back to make some transitions in terms of industry. every state has a different strategic challenge. every state must have its own unique strategy. that state's strategy will require, will demand that you engage the private sector. if you do not engage in the private sector, all of the strategy in the world will fail. it is 85% or more of everything economic in your state.

you have to give the private sector on board. is a challenge when things are little bit partisan. competitiveness and economic strategy, you cannot be partisan. you have to fundamentally and gives the private sector to be successful. let's talk about strategy at the state level. at the state level, there are three big strategy issues that we see over and over again as we have a chance to work at the state level, not only in the united states but elsewhere in the world. one has to do the general business environment. everyone of you that has estate offering a business environment. the business environment has to support productivity. how do you improve it? where are the constraints in your business environment relevant to peers at your level? what will it take if you want to

move up? that is agenda number one. number two are the clusters. what fields are you strong in? reidy have emerging or existing strike? -- where do you have the merging or existing strengths of. it is not about having firms in a lot of different industries. it does not work like that. the way to build productivity is to have critical mass is of expertise, suppliers, and supporting industries in particular fields. every state economy is specialized in a certain set of fields in which it builds up some unique position. the question is where is your state specializing in how can you reinforce and improve that? that is the second agenda. the third agenda of is the one that has to do with multiple levels of geography.

it is partially due to federal policies but your competitiveness is also affected by how well your neighboring states do, what we found is that you want a strong neighbors. strong neighbors making more prosperous. that is an actual fact. your state is not homogeneous unless your tiny. most of your states consist of multiple subregions, different metropolitan areas. in some cases, your actual economy crosses state borders. four of its successful strategy is to manage across geographic levels. you need to work across state borders and effectively with the federal government.

they're better leave a piece on that shelf. what you're going to find is that you will not achieve the success were hoping for. the business environment can consist of four big pieces. one is the input available. you have to improve the uncut. if you're going to be more productive, you need to have more input. yet the better people if you want to be more productive. the second piece is the set of rules that you put in place about how businesses than in your state with other rules and regulations that govern competition. you want rules for efficiency and productivity. with their peace has to do with the relevant to the -- the

supporting industries in your state. finally, the demand conditions. whether the state is a sophisticated market for goods and services because the regulations that encourage sophistication because the policies you said there really encourage new businesses to grow because you're really encouraged -- encourage it accumulates that demand. of the state level, there are many differences in instances, but there are a number of issues that are important in almost every state in terms of the business in burma. one is regulation and permitting. getting that to be efficient and fast is fundamental. most do have that issue and almost all of you do better. two, there is a lot of unnecessary costs of doing business that we have allowed to grow up in america and your states. unnecessary costs in the sense

that we're spending more of the value that we're getting. whether it is energy, health care, you have to find a way to reduce those unnecessary costs. when there are unnecessary costs to doing business, do you know what that does? it reduces the wages in your state. the depend on productivity. if companies are wasting money because they're spending too much time on permitting, that means they can pay less. do not think of this as some abstract thing, these costs. think of this as coming out of the pocketbooks of your citizens. states have an obligation to make the environment as efficient and supportive of productivity as possible. again, time is short. most of you need to get your training system better aligned with the needs of industry. we see that in state after

state. many of you need to improve your infrastructure. we spend a fair amount of money on infrastructure, we just do not spend it smartly. we do not spend it on the pieces of infrastructure that really have a big economic impact because we tend to spread it around because of the political process to put in place. if you could do a better job of prioritizing investment, it would make a big difference. infrastructure investments that speed up commerce, support productivity in the economy. anything you can do the ease the burden on small businesses will pay big dividends. we know small businesses really generate most of the jobs. any cost falls disproportionately among small businesses because they're small. anything they have to do hurts them more. finally of course, there's the issue of education. education is fundamental and

there will be more discussion of that in the session, so i will not cover that. without the talent pool and the skill base, we simply cannot be productive. this is the biggest single issue facing america. we do not have a strong enough talent pool to allow us to justify our high wages. that is a challenge of the state level as well. the business in burma is part of the story and improving that overall, for all companies but also we find that true competitive success requires you go further and really understand the composition of your economy, what kind of business is the state in? by the business is developing these clusters? we look a state economy, there are two types of industries. one of is what recall local industries. these are industries that every state will have a retail come

utilities, health care. these are industries that serve almost totally the local market. there are based on serving the population that lives in your state. there are the majority of all jobs, local jobs. there are also what we call the traded clusters. these are industries that have to compete across state and across countries. it is this traded a part of your economy that really drive you to prosperity. they have much our wages. they have much higher productivity. they have much higher rates of innovation. we have given you the data on your state in terms of the mix of your state economy in terms of the treated and local clusters. what is a cluster? it is a critical mass in a particular field.

this is the crown jewel in the massachusetts, as governor met -- matthews knows. is the life sciences cluster. it is not only manufacturing companies but also service, support, supporting institutions like universities that all come together with expertise and technology in a particular field. here is another cluster in the oil and gas in houston. this got its start selling oil. because houston has built this enormously successful cluster, now they did not sell much oil. when it sells technology, services, skill, and supports a very high wages. this is what happens when you truly can build a cluster. this is how productivity gets built. this is how innovation occurs making it a critical mass a series of fields in your states

and reinforce that process. you let the state government support those clusters. that is how successful economies. . we have growing evidence of helen fortin these clusters are. here is what we know. if you can build a strong cluster, it will create faster job growth. we know that if you can build a strong cluster that it will provide higher wages. we know that if you can build a strong foster that you will have more parenting and other types of innovation. we know that if you can build a strong cluster, that is where the new businesses form. they do not form randomly in any field in your state. they tend to bird is proportionally out of the clusters that you have. if you can get the fly wheel turning, and it spits out of touch of the things. not only do more businesses

form, but they grow better, survive better over time. these are something very fundamental to the success of your state. this slide is complicated and it is in your packet. there is a tendency to think that some clusters are better than others. some clusters, like financial services, have higher wages than other clusters than, for example, tourism. what we have found is that it is the wrong way to think about it. what we find is the dominant influence on prosperity is not what clusters you are in. the dominant influence on prosperity is how you compete in each of the clusters that you are in. 75% of all the differences across the states in terms of wages are not determined by the mix of cultures that you have in your state but by how good you

are in the cluster you are in. the last thing for economic development here is very clear. build on your strength. do not chase hot field or try to get into biotech because that is whatever losses as cool. you have to build on your existing strength. you have to build on your emerging strength. that is the way to build your state economy. do not dream about some field where you have no capability or assets. it will not work. for strategy is to build on your strength. for each of you in your presentation, i have given you the portfolio of clusters in your state. this is south carolina. the red clusters are losing jobs. the green clusters are gaining jobs. the ones in the upper right are gaining market share. the ones on the left are losing market share in america.

everyone of you has your own portfolio. everyone of you has your own circumstances. getting a handle on this, what is going on, and how you can help is going to be fundamental to your strategy. this will really this proportionally drive your prosperity. what we find is that clusters in an economy are interconnected. some of them are related. this chart is a little schematic in the sense that it is try to capture multiple dimensions. see the areas that are overlapping? these are the roughly 40 coster's that exists in any modern economy. when these overlap, that means they are synergistic. with that says as -- is that if you are in education, it helps to compete in the medical devices. if you can put those two together in your state, that

will create an even greater strikes. -- strength. the way states diversify is not random. it will not scatter shot over the chart. it will follow the connections. if you are in medical devices, you have a better chance in analytical instruments. this is how economies develop. here is m massachusetts. you can now see why it is so prosperous. it has an array of clusters. they are synergistic. the challenge is how to keep the vitality going.

ok. having the dreaded computer issue here. thank you.t here -- there we go. it's done. ok. now, this picture is a great story about how economies evolve. this is san diego. it is a some region of california, but it is its own defined economy. california needs a strategy for not only california, but each of these defined regions. you can see that the california economy built from one cluster to the next.

there are a random. the position in one area give the region some assets that allowed them to get into the next area. this is how each of you needs to think about this state. where do you have assets to we can build upon and had we facilitate diversification process? let's talk for a second about multiple geographic levels. you all are affected by federal policy and federal programs. one of the jobs the you have to accomplish is that you have to do a good job of getting your fourth -- fair share of the support. you all work on bottle law. all of you are affected by your neighbors. the department of commerce, when it defines what an economy is, usually the concept is an economic area. there are regions in which the

data shows that congress takes place. i have shown a picture of the northeast of the united states. what you can see is that massachusetts is part of three different economic areas. it is connected to the albany economic area, boston economic area, then down with the connecticut area. when you are thinking about economic strategy for your state, you cannot think of this has the right unit. they're usually not the right economic unit. your state is often connected to multiple economic units. setting the policies to understand and it established that will be very important. the other thing is that you have both rural and urban areas. they're systematically less prosperous.

the average world rage -- rural is $32,000 and urban is $45,000. had to get those connected is a fundamental challenge. we have a big problem in massachusetts year. we have a very high wage state in massachusetts. we have a below average wage state ever else. one of the biggest challenges is to move the prosperity is to not to make the boston region better, of course you would love to do that, but the real problem is how to get the rest of the state that does not really participating engaged. any state economic strategy coming you cannot just look at the capital city. you have to understand how the state's success is built up into these multiple geographic areas. there are a few comments we can talk about later. what i am been talking about, i

hope the impression about was to build strategy for your state and the competitiveness that you would have to deal with a fair number of things. there is no silver bullet. you have to deal with a lot of issues. many things matter. the roads matter, schools, regulations. lots of things matter. when you have a problem like that, you need a strategy. it is the list of 55 action steps. most of them are 55 action steps. that is not a strategy. a strategy is where you develop an overarching view of where your state can be unique. how your state can create a unique platform for a particular set of businesses. as you understand the strategy,

it starts to give you a sense of priority. one of those things and i really need to do, because these are critical to how my state will be different, is because strategy's about being different. also, that type of thinking should tell you which weaknesses that you really have to deal with. every state needs a strategy rego every state needs a strategy that can allow themselves to find their own distinctive role in the american economy and the world economy. i am confident that everyone of you can develop a strategy. all of you have access. it is a question of doing the thinking to think about it that way. how should you be competing with each other? barbara question, is it not? we are all sitting around this table in trying to build competitive economies.

yet, we're competing. at the level of individual businesses deciding where to locate. one of the problems is that we have not been competing the right way. we have been falling into the trap which is sought -- which are cozier some competition. one state wins, the other loses. we have been using the wrong tools to compete. this talks about how we need to change the nature of competition in america. we have to focus even more on getting our existing companies to invest more in our states. we will have much more success if we doing your job of existing with our companies rather than going out looking for new ones. it is the existing companies

that are really going to drive success. we have to stop competing for every plant. our state has this position, these strikes, and let's focus on reinforcing their strength. we have to be more strategic about the way that we compete. if we could lead to specialize and get better at what we're good at then we will see everyone living a much more rapidly. offering general tax breaks does not work. all it does is take money from the state and give it to businesses in a way that is not very productive. if we're going to spend subsidies, we need to do not assets that will stay in our state. we can support training, infrastructure, help build the

institutions. those kinds of state investments are going to lead to a long-term return on investment. just competing for tax breaks will make this neutralize each other. we have to think about how we hadort and how we've businesses come in and not just doing it. many states come i find, offer subsidies to offset the high cost of doing business in their state. what you're going to do is fundamentally lower the cost of doing business. do not hunt. tackle the real problems rather than try use subsidies to offset our neutralize them. that principle is ineffective over and over again. many states are in free-for-all. every city, region, subregion, county, is out there struggling.

the states generally successful are the state's that can get some appropriate efficiency and collaboration. understand that is not a zero sum game. the issue. looking for those investments that it is circumstantial and everyone should not -- should not be going after everything. if we're going to attract investments, we have to engage the private sector. of the best efforts i have never seen around the world are those where the government in the private sector do it together. where you can get business leaders in a particular field to help and work with you to the record the next in the next one, it will be much more effective. i promise you. we also understand that the process of economic development has fundamentally changed. it used to be government driven. today, it is a collaborative process and involves engaging

companies, universities, trade groups, and all types of other institutions in the process. the you have that five of collaborative process going on in your state. i do find a way of engaging these and other actors around a fact-based agenda? as this time when you are having to take all these really tough actions that is important in achieving the ultimate success. let me make a few final remark said that if we have time, we will take the questions. what we have to understand is that the goal of the economic shredded you for your state is to enhance competitiveness i

hear too many governors say their goal is to create jobs. you cannot do that. the only way to do that is to enhance competitiveness. we have to get the cart before the horse. is about building competitive this and then that will create jobs. two, as we go about doing that, productivity and innovation must become the guiding principles. everything we do, every policy that we said, every executive order, you need to be thinking, is this moving the ball on productivity? will this make us a more productive state taxes is moving the ball on innovation? will this allow for more innovation? if the answer is yes, usually the thing to do. number three, sometimes the five governors get it into their head that to do competitive finishes that they need lots and lots of new money. the answer is you do not.

this is really about using existing resources better. there is often plenty of money being spent on economic development. do not think that this is capital intensive stuff. bayh they give we could just make our infrastructure investments more effective that we could get a huge impact even if we did not have more money, even if we had less money. they give competitiveness as setting the rules, policies, collaboration, strategic agenda. it is not about taking out your checkbook in deriding a big check. as i said, to do this welcome you have to mobilize the private sector. you have to get them on your team. they can do a lot of this themselves. if you could just get them energized and if you to give them a feeling like you are all in it together. of you arent many

doing so, but i cannot emphasize enough from the world. finally, i want to say that coming out of the bruising political campaign, in which many of you have been engaged recently, on what to say that improving competitiveness and economic strategy is not partisan. it is about building the prosperity of everyone. the benefits of economic strategy are going to be even greatest for the middle and lower middle income brackets that it will be for those who are at the top. we have to turn this issue into one of getting results, not ideology. there is no ideology here. in the competitiveness, there is the iron law of productivity. it is just a fact.

we have to be able to convince all of our colleagues the matter would discussion we have all these other issues to think of it that way. that comes from being clear about what we need about competitiveness and taking the collaborative approach to the process. hopefully -- will take a look and this will provide you with some specific advice about your state. this is meant to start the discussion and not concluded. we would be thrilled not to take some questions and have dialogue with you in your economic development directors over the coming years. i will say this to conclude. i hope things get better in washington. i hope our federal government is more successful in tackling some of the issues it has to tackle

in terms of economic strategy. i'll tell you that what is really going to determine the success of america in restoring competitiveness is actually what all of you do. the real greatness of america from an economic point of view is the decentralization. every state, and many cities, take responsibility to drive competitiveness themselves. i hope washington will help, but i have great hope that the skipper people can be those who will turn around the competitiveness of this country. thank you very much. [applause] >> we do have time for questions. can we begin? gov. herbert? >> thank you, dr. porter. i think the states are the laboratories of democracy and we

can lead to this economic recovery. i am fascinated to hear the discussion about how this is not about ideology and how this works. there are certainly differences among the economists in the country to stimulate their not to stimulate. how do we get past the ideology because there were certainly in -- >> may have your attention please? may i have your attention please? we have an emergency report in the building. please leave the building in the nearest stairway. do not use the elevator. may i have your attention please? may i have your attention please? >> there has been a fire emergency reported in the building. please the the building in the nearest exit. >> do we need to do it? >> we need to go. [sirens]

[no audio] . .

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> let's take a look at what some of the governors had to say after meeting with president obama at the white house yesterday.

>> good afternoon. i'm the chairman of the democratic governors and with me are democratic governors from across our country. we just emerged from a very pro ductive meeting with the president and the vice president and we had been asked prior to our coming together -- >> it looks like that fire drill, they're being called back into the room with everything being secured by the security here at the hotel in washington, d.c. the national governors association. this is their first panel of the day. there will be two panels today. the second one which is expected to start at around 3:00 eastern.

and that one will deal with education and early childhood and workforce information. and you are watching our live coverage of the national governors association. the chairwoman is christine gregoire of washington and earlier she spoke about the complete to speet initiative focusing on completing school and graduation rates, and the global economy. >> please take your seats so we can resume with dr. porter.

>> ladies and gentlemen, if you can please take your seats again, especially the governors, we will resume our conversation with dr. porter. this is at the request of our chair who is losing her voice, and maybe her patience. >> can we continue, governor. ok. so this is much more like my harvard business school class than such an august meeting. but let us quiet down, if we can, please, ladies and gentlemen, and move quietly and we'll continue the discussion in the time we have. so governor, your question

about partisanship. i think there are many macro economic issues like stimulus or not that there's a lot of debate on. but i think when you get down to the level of competitiveness, there's actually quite a wide consensus on many of these issues. the big partisan issue that i encounter over and over again is if people think that competitiveness means lower wages, that gets very partisan. but of course competitiveness isn't about lower wages. if you have lower wages, that means you're not competitive. competitiveness is about higher wages. so if we can get everybody to understand that it's about creating productivity so that we can support higher wages, then i think a lot of the partisan concerns tend to get less vigorous. and i think if you can communicate to your citizens

that my job is to create conditions here so we can all get paid more, but we can't get paid more unless we earn that, unless we're more efficient, unless we have better skill, unless we have a more efficient infrastructure, then hopefully that can be a less partisan discussion than some of these broad issues of stimulus or not stimulus, exactly how -- should tax bs this high or that high. those issues get very partisan. but a lot of the fundamentals i find can be agreed upon certainly with the business community. so i would not go into this thinking that it has to be partisan and i know that there's other governors here who i'm sure have had some positive experiences. >> so we'll do the governors. >> dr. porter, you were describing the importance of not having resources leave the state and that the competition that often exists between states going and offering significant financial incentives to get a corporation

to build a plant or open an office in their state. do you think it's feasible to consider if the governors all agreed which would be, talk about herding various animals, but if we were all to agree that no state would offer a financial incentive for existing jobs? they would only try to fuel new jobs or new offices but no one would try to poach a company from one state to another. how do you look at that? >> well, again, i tried to frame the discussion as what kind of competing across states is just shifting from one state to another, keeping the total the same. i called that zero sum. and what kind of competition is actually healthy competition that makes the state better, that builds strength. i think in this particular area, i would suggest maybe a giss tinction between -- distinction between general tax breaks. that is you just get lower taxes. and, incentives that are tied

to the company-making investments in training, in the state, in infrastructure in the state, if we could get the competition and incentive game to be about investing in state assets rather than just giving tax breaks, i think that would be a very great step forward. and maybe that's something many states could agree on. because ultimately plants that come to your state just because of low taxes are going to be what economists call foot loose. that is, when that tax break runs out they're going to be up for renewal and they'll go somewhere else. so you want to attract investment to your state because you offer some assets, because you have a cluster in that area, because you have some trained people in that area. and that's the way we want to compete because that makes us all better and more productive. whether that's pie in the sky,

that's governor, i hope you could lead us in that direction. >> thank you. my question has to do with reconciling the medical industry with your definition of productivity, which i think is clearly the basis for competitiveness. in oregon and washington, almost half of the top 50 employers are hospitals and health systems which grew right through the recession. a lot of that growth was peefl shuffling insurance papers and running mris that probably didn't need to be taken. you have no impact on population health and we're spending about a fifth of that industry. could you talk about that contradiction? >> first, health care delivery is a local industry. not a traded industry. and that's part of the problem. if health care delivery in your state had to really compete with health care delivery

organizations all over the world for patients, they would probably be a lot more effective. it's a local industry. and it's almost an industry where almost a local monopoly. that is, people go to the local hospital and they don't really choose where to go. i have done an enormous amount of work on health care delivery and how to move away from the mess that we're in, which has a lot to do i think with defining value as the goal. starting to measure health outcomes, starting to reduce the incredible duplication of services that we have in virtually every state. every community hospital offers every possible service even though they're subscale and can't be efficient, can't deliver good results. so any governor that would be interested, i would be happy to send you some easy to read, not too dense material about some of the critical steps to drive productivity in health care delivery. i think we are starting to get

some consensus on some of the key principles there. i'm very encouraged today. i wasn't a year ago or two years ago. i'm getting more encouraged. i think there's been a wakeup call in our health care delivery system. and there's a lot more flexibility now to actually change. but i think every governor needs to be making sure that your hhs director, your medicaid program is leading restructuring, not just pumping in more money. because if we pump in more patients and more money and we don't change the way we do it, we're in deep, deep trouble. >> it seems like years ago whenever we saw state by state comparisons of wages and personal income, you would always see relative cost of living statistics state by state. why is it that i feel like i never see those statistics any

more? >> well, you know, you should be comparing your wages to your cost of living to really understand your true prosperity. if you earn a very high income but you have to pay a whole lot for everything you need to buy, then somehow that income produces less. when we compare countries, that's pretty easy to do. there's something called purchasing power parity and we adjust country incomes for what the dollar will buy or what the yen will buy. but in the state, we don't seem to see those comparisons but when you're trying to improve the standard of living in your state, driving up that wage is ultimately what is going to matter. but you also have to make sure that you are controlling the cost of living the best you can. and if you have a high cost of living that's going to hurt you in completing for talents, and this is an issue governor patrick and i and many others in massachusetts have been

talking about for a long time. we have a tremendous magnet for talent except that you can't afford a house. and that's luckily getting better now for unfortunate reasons. but so i think the cost of living is another agenda that i didn't emphasize. but in the overall economic strategy equation, it's a piece of the pie. >> thanks. i thought it was a great presentation. and what i was wondering, you mentioned that a state is best off when it has strong neighbors. >> yes. >> and you then talked about the importance of working together across state lines. i was just wondering if you could give a couple of specifics about how states can work together in a regional area when they've got different policies and different industries and the like to really promote that. >> well, one of the thing that is we found is that if you're

in pharmaceuticals and your neighboring region, which may be in the state next door, is also strong in pharmaceuticals, it turns out that both of you are disproportionately stronger than if you just had one region in that area and not the neighbor. and that's because the economic choices don't respect state boundaries. they're more focused on where the people are and where the geography is and so you often see clusters and other economic activity kind of spill across state borders. and all of you have examples of that in your state. so that says if you're in delaware, you can't think of delaware as the economy. you know, delaware is connected south, delaware is connected into the philadelphia region, and you need to think, when you're thinking strategically

about how to drive philadelphia forward, you've got to think about how could i make it easier, avoid any distortions or barriers or silly policy differences that would somehow hurt our ability to truly integrate across that whole region. it's that kind of thinking that i was suggesting needs to be done. and certainly having good transportation and logistical connections is key. you know, trying to harmonize sales taxes and things like that so that we don't have again these artificial thing thalsd distort the economically most productive thing to do. that would be the way i think think about it. >> one last question. >> thank you for the presentation. i think all of us around this table share the same goal of wanting to create jobs and frankly that's what most of us ran on and are trying to do.

i know you refer to competitiveness and we know too the people who elected us are excited about this they might think we're on the sports channel. but my question is, my frustration as a governor, and i bet we all share this, is when i go talk to my job creators and say, hey, as governor what can i do to help you grow jobs, their answer nine times out of ten is, hey, i've got jobs. i just can't find the workforce that's trained to do those jobs. and that costs money. so what we're trying to do, vermont has looked at early childhood education, have kids be more ready to learn. but you suggested that it doesn't cost to become more competitive. i asked, since education is one of the places where governors can close the gap between the jobs that are out there and the lack of folks to do those jobs, how do we do that if we don't spend more resources?

>> well, you raise an excellent point. and i certainly don't want any of us to oversimplify this challenge. i would make a couple of responses. first of all, i would say that absolutely the talent and skill issue is at some level the fundamental issue. ok? we, you know, as we think about productivity, as we think about supporting high wages, ultimately the only way we'll be successful is to raise the skill level. the americans with very high skills and very high education are just thriving. the americans that don't have a high school degree or even that just have a high school degree are struggling. and it's all about skill, it's all about education, and ultimately that is the long-term agenda. now, the question is what do we do as governors to try to move the needle on that.

i would say first of all that all of you are probably spending money on training already today. every state has training programs. you can spend that money a lot better. you can get those programs much more tied to your clusters, to the private sector needs if you think about how to reorganize it. some stathes have moved staster than others. if you have a little more money to spend og training, so much the better. but ultimately there's a lot you can do just by doing it more effectively. i would tell you that the private sector will spend more money on training, too, if you can, if you can help create the right framework. the private sectors' willing to step up on this because the private sector is understanding it's lacking skilled people. companies don't want to train inhouse. they would love to have well-trained people that they could just hire. so i think you could get the

private sector to help co-fund training. in the area of public education, the statistics i've seen suggest that in america we spend quite a bit on education compared to other parts of the world. the question is, are we spending it well? are we -- do we have a structure that spends it well? in massachusetts, we did and we had a commission a few years back and we have all these school districts. and there was an estimate of $1 billion that we were wasting because we had all these school direction and they were doing all kinds of overhead functions and doing redundant reptive and so forth. again, i dent want to make this simple. if we have more resources obviously we want to deploy them and spend them. but i just find so much opportunity to deal with the human resource issues much more effectively than we are now if we're willing to take on some of the system design and structural issues that we have in other areas like health

care. and we have a moment here where maybe some of these issues rnd fragmentation in school districts and duplication, maybe we can take some of these issues on right now. given the overall climate. so i would encourage you to don't be paralyzed by your budget. realize there's a lot you can do to kind of spend the money that you have available better. and think structurally and think about innovation in terms of tackling some of these things. that we all know have been holding us back and making us less effective. very good question though. and i know there will be extensive discussion of education issues later in the program. so i kind of shyed away from those given the limited time but governor you've asked the hard question. thank you. [applause]

>> on behalf of the national governors association, thank you, dr. porder. not only has he done a wonderful presentation here today, but he's volunteered to give us his presentation, which we will get out to each of you, but he's also volunteered that there may be ways in which we can continue this delab rative work with him, with our commerce department agency heads, and other ways. so i can't tell you how valuable your vision and your experience is to us. and we thank you for being here today and thank you for your continued prendship. thank you. [applause] as many of us know, the president of china visited our nation just this last month. while here, governor mark el and i soid as witness to a memorandum of understanding that was signed between the u.s. and chinese governments concerning the establishment of

a u.s.-china governors subnational cooperation. as part of this cooperation, we will have a forum at our meeting in july in utah. it will be co-convened by the national governors association and the chinese people's association for friendship with foreign countries. it will serve as a platform to promote peer-to-peer exchanges between u.s. governors and chinese leaders and governors. topics will be discussed that are of mutual interest. we will explore opportunities in promoting practical coops and friendship. we will talk about education and the exchange of students. and we will talk about trade. on behalf of the national governors association, i would like to welcome you party secretary and i would like now all of us to give a warm welcome to party secretary jao

of the hunan province, to say a few words about the u.s.-china governors forum. mr. secretary. [applause] >> respected governor, governors, ladies and gentlemen, dear friends. it gives me great pleasure to attend the winter conference of national governors association and inauguration of china-u.s. governors forum.

[speaking foreign language]

i am from hunan province, which is located in the central part of china. as one of the oldest provinces in china, hunan province was among the first chinese provinces to interact with the united states. over 100 years ago, the china association, a nonprofit association affiliated with yale university established a school in the capital city of hunan pro-ance. the school has now developed into the school of meds b, a renowned institution of higher learning in the province. more than 70 years ago, during the second world war, the general headed the american flying tigers to fight against the japanese invaders, with local army and civilions. they made important contributions to the victory of china's war of resistance against japanese aggressions

and will always be remembered by the chinese people. a memorial museum was built as an educational site for the future generations. in september 2010, more than 300 chinese and americans, including president jimmy carter and some veteran flying tigers and their families, attended the peace festival to commemorate those who have dedicated their thrives the world peace during the second world war.

>> there are a lot of provinces in china with reference to economic growth. hunan is just one of them. it is a vibrant province with fast development. in 2010, the gdp reached 1.59 trillion juan, representing a growth of 14.5% over the previous year. since 2006, the gdp has maintained an annual growth rate of over 14%. in present of the state of the union address, he mentioned twice the fastest computer in the world, gal axey one, the super computer, was built in hunan. and also he mentioned the high speed rail. the design and electro control system was actually design by a hunan company. big companies in hunan have

extensive international cooperation. for instance, semi-heavy industries and prestigious company nationwide, invested $69 million in the state of georgia to build an assembly center for construction equipment. at present, the city of hunan has formed 11 pairs of sister city relations with american cities and universities in hunan have established sister university ties with american universities, 15 fortune 500 companies have invested or set up offices in hunan and all have been quite successful.

not long ago, the president made a visit to the united states at the invitation of president obama. the visit has achieved important results, the one of them being the signing of memorandum of understanding concerning the establishment of

china-u.s. zpwove nor forum. with the efforts of the chinese people's association for friendship with foreign countries and the american national governors association, the mechanism of china-u.s. governors forum will be officially established. this is a pine nearing undertaking to expand bilateral cooperation. i believe with the establishment of this forum there will be more frequent exchanges, closer cooperation, and brighter prospects for the local governments of our two countries. the increasing exchanges and cooperation will enrich and invigorate the china-u.s. cooperative partnership based on mutual respect, benefit, and win-win outcomes.

>> i visited the united states many times. in february 2009, i was in wall street and met with many business leaders, most of whom were pessimistic. they told me they had no idea when the economy could get out of the crisis. during the visit this year, i have seen the strong recovery of the u.s. economy. the economic recovery in china and in the united states contributed greatly to the recovery of the world economy.

in today's complex and changing world, china and the united states face many common challenges and risks. in responding to these challenges and risks and promoting the development of china's cooperative partnership, the local governments of our two countries can play effective roles. this morning i have had talks with different governors in the united states. we explored a lot of areas of common interest.

we all felt that time was not enough and i hope that the china-u.s. governors forum and even the national governors association meeting can be held in china or hunan in particular so that we can have more time to have more extensive dialogues. i would like to suggest that we strengthen dialogue and communication, deepen economic cooperation, and expand people-to-people exchanges. as a well-known chinese tourist destination, hunan province invites governors and all friends to visit and explore more opportunities for cooperation.

in conclusion, i wish this conference a complete success. thank you. [applause] >> thank you. before we head into the governors only meeting, secretary jmb ao will join the governor and myself along with madam lee in signing an accord that will establish a u.s. -china governors forum. if the media can please stay on the risers in the back, then we will proceed to the signing ceremony and take any questions you may have. again, dr. porter, on behalf of the national governors association, thank you for joining us. thank you for your wonderful insights. and we look forward to a continuing partnership with you. thank you all very much.

[applause]

>> watching some of the activity here at the national governors association meeting happening at washington, d.c. a delegate a few minutes ago from china's hunan province wrapped up the first panel of the national governors association dealing with economy, state economies, global competitiveness, and we'll bring you the second panel live expected to start at

3:00 p.m. eastern when governors will cover global lessons to improve k-12 education. governor jay nixon of missouri was in charge of putting together that second panel dealing with education, early childhood and the workforce. and we also expect to hear from governor bob mcdonnell of virginia and secretary arnie duncan. and then tomorrow the meeting continues when we'll take a look at homeland security and public safety. in our other news today, the u.n. is set to hold a second emergency meeting and is meeting, the security council, to discussion sanctions on libya, could include, possible arms embargs, a travel ban. already president obama froze u.s. assets of colonel gadaffi and his family. the treasury department is applying the freeze to any assets held by the lybian government. if the security council makes a

public statement we will bring that to you here at c-span. we are expecting a possible news conference. we will bring that to you if they do go to it announcing a partnership between some of china's delegates and governors here in the u.s. you're watching live coverage here on c-span.

>> good afternoon. i am pleased to be joined today by my colleague governor heiman of the great state of nebraska. he is vice chair of our national governors association and commited as chair the following year to carry on our wonderful relationship we will establish today. also joining us is secretary zhao. thank you, secretary, and thank you for your kind remarks. madam lee. i was a parts pant last month when the president came to visit our country.

during his visit, the u.s. and chinese governments signed a memorandum of understanding concerning the establishment of a u.s.-china governors subnational cooperation. as part of that cooperation, we have a forum at the national governors association annual meeting in july that will be coconvened by our national governors association and the chinese peoples association for friendship with foreign countries. it will serve as a platform to promote peer-to-peer exchanges between the u.s. governors and the chinese secretaries and governors on topics of mutual interest where we'll have an opportunity to explore opportunities beneficial to both of us providing practical cooperation and friendship that we hope will last forever. this dialogue will be advantageous for both of our countries.

expanding exports is key to our economic recovery. i know it well in my state because here in my state china has now become for the first time in history our number one trading partner. we have strong relationships over many years. we have student exchanges. we have come to be good friends. we want to continue that friendship and we want to do it now with party provencial secretaries and governors, and we want every one of my fellow governors in the u.s. to have the same opportunity that i have had as governor of washington state. we have made tremendous strides with china and, as i said, it has been a long-standing and growing trendship. i look forward to our continued exchange and our strong working relationship. now it is my pleasure to introduce to you party secretary zhao from hunan provencial committee.

thank you, secretary for being here and also for addressing the national governors association. [speaking foreign language] >> respected governor, friends, good afternoon. first of all, i would like to express my congratulationses to the signing of the establishment of china-u.s. governors forum. just as gove nor mentioned, the forum will provide a wonderful platform for the exchanges between chinese and the american local governments.

and through this mechanism we can resolve problems from our bilateral trade and economic disputes. so i believe this forum will effectively promote investment and economic cooperation and cultural activities. i believe that the establishment of this forum will further enrich and envig rate the china-u.s. government relations. thank you. >> now i would like to

introduce the vice chair for the national governors association, the governor of the great state of nebraska. >> thank you very much. let me start by expressing my thanks and commending the leadership of governor gregoire on trying to enhance the relationship between our respective states and china. the nation's governors look forward to making the u.s.-chineave governors forum a success. as governor gregoire said, we are committed to promoting a meaningful dialogue and improving relations that will create opportunities for both china and u.s. states. dozens of governors have made trade missions to china. i've been there myself. and states are always looking for opportunities to increase trade and attract investments to their states. both activity that is create jobs. in 2010, there were more than

eight governors who led trade delegations to china and more than 100 visits by various chinese officials to the united states. u.s. and chinese state and local governments have established numerous cooperative relationships. governor gregoire mentioned that china is their number one trading partner. today, china is our fourth largest trading partner and that relationship is growing by leaps and bounds. we hope to have a larger dialogue at our annual meeting this summer in utah and eventually take a delegation to china this fall. we intend to build upon what we've already done to ensure more opportunities for our states which will lead to job creation and economic growth for both china and our states. thank you. >> now it gives me a great deal of pleasure to welcome madam

lee. madam lee and i met while i was on a trade mission to china this past fall. this really was an idea that she participated in as well as ambassador huntsman and secretary of state hillary clinton. when i met madam lee, i think we were hopeful that we would be able to make this day happen. but through her tenacity and ours as well, as well as secretary of state clinton, and president zhao, this day has been possible. so ladies and gentlemen, please welcome madam lee. >> thank you. respected governor gregoire, respected governors, respected secretary, ladies and gentlemen, today it gives me great pleasure to sign on behalf of the chinese peoples association for friendship with

foreign countries, the establishment of china-u.s. governors forum with the national governors association. this project has got support from the u.s. department and also from the chinese government especially the milt ry foreign affairs. it is one of the important achievements of the president's visit to the united states january this year. we will work with the national governors association to implement this important achievement and ensure the successful first forum in the coming summer, hopefully in july in juth. since its founding in 1954, the chinese people as i sosheation for friendship with foreign countries, has been commited to

promoting local government and other countries of the world. the association is also authorized to coordinate city to city programs. after today there are 201 affiliations between china and the united states. among this number, 36 of these between province and the states. what we can do, we try our best to bring more and more chinese party secretaries and governors to come over to the united states and we definitely hope more and more american governors can come to visit us. because we definitely will do good things for this world. finally, i look forward to strong -- to have a long and strong relationship with national governors association and all governors from the

united states. i wish the china-u.s. governors forum a complete success. thank you very much. >> now, ladies and gentlemen, we will sign the memorandum of understanding.

>> thank you. >> please come in july. >> yes. >> can we take a couple of

questions. yes, sir. >> [speaking foreign language]

[speaking foreign language] >> -- increased the index. so what plan does hunan have in this five-year plan. and your visit to the united states, what can you learn from the development of american states and the exchange with the american governors, how do they feel about china's rapid development and what can they learn from it?

[speaking foreign language] . .

>> [speaking foreign language] >> the united states is very [unintelligible] high-tech and in their business management. there are a lot of things we can learn for hunan and the huge scale of the economy and the high-tech substance of the united states is far more advanced than that of china. >> [speaking foreign language]

>> we look forward very much to the china-u.s. governors forum. i think in this forum we can explore a lot of areas of common interest and explore opportunities in ways to resolve our differences. thank you. >> i have a question for the madam chairman. not for you. [laughter] there are already many platforms for cooperation between the two countries' existing. how is this forum to different from existing ones? many governors today are focusing on the topic of improving american competitiveness and job

creation. how can this forum facilitate both country's competitiveness and the economies in the future? thank you. >> so, what we have in washington state is a longstanding relationship with china. and it is very neutral. we import a considerable amount from china and we export, obviously, we are the no. 1 trading partner. what i have found is that by as governor when i do my trade missions and much more capable of bringing about greater cooperation then if i solely rely on the federal government. it sets the groundwork. the when we want to talk about developing friendships, that has to be done peer-to-peer. we work in partnership with the national government, but the

relationships will allow us to advance the economies of provinces and states much more than what we have been able to do before, simply relying on our federal government. competitiveness -- all of us have to develop competitiveness. we talk today during our session about being more competitive in our respective states and. competitiveness does not mean we cannot be a good trading partner and exchange. when i have the occasion to meet with president hu jintao, in 2006 when he visited the united states, i asked him what some of his priorities were. he indicated he wanted to work with us in washington state on environmentally-related issues. since that time, we have transferred to china technology to make cold-fired plants cleaner for the environment and for the people of china, and

thus for the world. that is what we want to do on a sub-national level and advance the competitiveness of both nations, provinces, and states, but also to the mutual benefit of the people of china and the united states. we have to develop a trust and friendship if we are going to be able to grow our respective and economies. we want this forum to be an opportunity to grow the french ship, to grow that trust, and to allow all of our peoples to be able to profit. i think this is an historic day. i think the minister of the foreign affairs of china, our secretary of state, our secretaries here today and madame li as well as my colleague. i think this will be wonderful for america and wonderful for china. thank you all very much. [applause]

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> it taking a look and some of the activity happening at the national governors' association after the press conference but

before a 3:00 eastern panel begins. that panel will be about global lessons to improve k-12 education. we will bring that to you live around 3:00 p.m. eastern. we expect to hear from governor bob macdonald from virginia and education secretary arne duncan. of for now, let's take a look at some of the earlier opening evens of the conference. >> i am delighted to be working alongside dave heineman. i really do admire his dedication to the association. as governors, we really do face similar situations on any given

day. we are still faced with an unprecedented fiscal crisis and we must make very tough choices and decisions. with these challenges, however, comes great opportunities for us. we have the veteran governors, some of them with me here today, which will share their experiences with our new colleagues. they have institutional knowledge. our new governors are also going to be very important to this organization. they will offer us new ideas and different perspectives. when these two forces are joined, there is nothing that we cannot accomplish together. as much as the great recession has caused this court challenges for our states, we are keenly aware of the challenges it has presented for our families as

they are trying to make ends meet at home. governors do not have the luxury of waiting for solutions to present themselves. we are charged finding the solutions to move us forward the need for us to create jobs, to find steady employment, and a promising future for our children. as we come together over these next several days, we will focus on these challenges come up budget gaps, streamlining state government to make it more efficient, but in the end, the big issue that we face -- how do we make our state more competitive in the global economy? this is a key to increasing real wages and income for all americans. the jobs are the way out of this recession. every governor knows that. our focus will be on how we can create jobs for the many people

looking for work at home, how we can use this crisis to better position our states and country to be leaders in the world and how we can secure a strong future for our children. the recession has forced many states to make difficult, short- term decisions, actions necessary to balance budgets and to find new, innovative ways to make government more efficient and more productive. for the last two years, states have had to make significant changes, cutting spending by more than 10.7%, $75 billion, tapping our rainy day fund, shrinking the size of government, a streamlining services. more difficult decisions will have to be made over the next few years as we are still facing, collectively, a $175 billion shortfall, including the cliff we will see in july as the

additional medicaid and education funds to go away. if congress works to get their fiscal house in order, we call on them to corporately work with the states. we want to help them and we need their help as well. it is a partnership to promote economic growth and long-term prosperity. this means, for us, not creating proposals that allow states to declare bankruptcy. a bankruptcy law is not something we have asked for or we want to use in any way. it only serves to increase our interest rates, raise the cost of state government, and create more volatility in the financial markets. governors and states have a clear track record. we are able to successfully manage our state finances even in the face of severe financial stress. we will continue to do so.

we will work with our partners to improve stability, produce cost savings for government at all levels. this cooperation is what we need to put our nation on the path to economic recovery. governors are also asking for innovative ways to enhance the education system. up by maximizing our state resources in the classroom. as the chair, i have the privilege of working with all of the nation's governors on what is called the chair initiative. we are far more effective when we get together, bipartisan, in the tradition of the national governors' association to ensure that our states and citizens are prepared to compete in the global economy, we must develop sound policies that enable more of our people to complete degrees, increase the efficiency of our institutions so that each and every one of them could get a good job of tomorrow.

the 2010-2011 chair initiative focused on the urgent need to increase college completion and productivity in the united states. let me share with you some facts. someone with an associate's degree will earn about twice in a lifetime what will be earned by someone who has not completed high school. someone with a bachelor's degree will earn about twice as much as the lead time with then someone with a high- school diploma. someone without a high-school diploma is three times more likely to be unemployed than someone with a bachelor's degree, twice as likely to be unemployed as someone with only some college or an associate's degree. in the future, for america, two- thirds of the jobs will require an advanced degree weather is from a four-year, a technical

program, or a credential. that is the job of tomorrow. at present, our country is not prepared to meet this demand. i believe that we can and we must improve higher education performance. together, we can work to increase the number of graduates and ultimately increase our nation's ability to compete internationally. i want to thank our bipartisan group of governors that worked to make this possible, governor heineman, indiana gov. mitch daniels, and tennessee gov. [unintelligible] i thank my colleagues for their participation and insights. leadership and experiences are crucial to reinventing the policies and programs needed to ensure that our children receive the kind of education they need and deserve, to allow them to be able to compete in the global economy. i would like to introduce the

vice chair of the national governors' association, neb. governor heineman. >> thank you for your leadership. we have an outstanding program over the next few days. i am excited about the opportunity to meet with fellow governors, including many who are here for the very first time, to discuss the issues and challenges that face our states. the official business portion of the meeting begins today its session high letting job creation. that will feature a discussion with dr. michael porter of the harvard business school. we will conclude this session with the remarks from secretary zhou who is leading a delegation of chinese officials interested

in establishing a dialogue with the nga. will also hear from secretary of education arne duncan. sunday, we will include meetings with the commerce committee, the health and human services committee, the natural resources committee, and the special committee on home and security and public safety. the economic development and commerce committee will discuss the state of finance and share strategies to reenergize their states' economies in a post- recession and firemen. the health and human services committee will focus on the sustainability of our medicaid programs. the natural resources committee will discuss partnerships and how they will impact the responsible development of domestic resources, including biofuels. secretary of agriculture tom vilsack will be meeting with the natural resources committee.

sunday evening, the governors will travel to the white house for a black-tie dinner evening with the president and mrs. obama. monday morning, governors will return to the white house with meetings with the president and members of his cabinet. it will conclude monday afternoon with a session focused on an initiative focusing on improving the productivity of our higher education institutions and increasing the number of students in the united states who complete college degrees and certificates. this session will be about the importance of increase in college attendance rates for economic competitiveness and highlight options for boosting rates within existing resources. bill gates, co-chair of the foundation, will be the featured speaker. additionally, there will be several governors-only sessions.

it will provide governors the opportunity for a dialogue on a variety of issues facing all of us in our individual states. >> thank you. i would like to introduce -- could you start? introduce yourself, please. >> [inaudible] [laughter] >> [inaudible] >> [inaudible] >> [inaudible] >> [inaudible] >> we will be happy to take your questions. >> [inaudible] >> it is not unexpected on our part. governor heineman and i have met

with leaders on both the house, the senate, and the hill. what we have asked them to do however is to be mindful that cuts could serve to undermine our economic recovery back in our home states. we want to work with them as they struggle to put their fiscal house in order. at this critical time, while the states are facing $175 million shortfall, anything that congress does that and undermined our recovery will be quite troublesome to us. when it comes to medicaid, we have had discussions with the secretary who has a willingness to provide as necessary flexibility so that we can meet the needs of our populations while at the same time meet the needs of our balanced budget requirement. there are some maintenance

effort issues that lie in the hands of congress. so we are asking for the cooperation both from the secretary, which he has been wonderful in providing us, as well as members of congress to weaken work our way through what is a very challenging time for us. >> [inaudible] after illinois passed a tax hike, at least two governors came to try to poach. what do you think of that kind of governor-to-governor tactic? >> i am not going to criticize any of my governors and how they serve to make the decisions that they make. dr. porter who will be our first speaker will talk about what state really have to do to look inside themselves and ask whether economic opportunities

for today and tomorrow. they have to build that so they're going over and stealing from someplace else really is not the future for them. their future is really in building their own economic stability inside their own states, whether it is aerospace , in our instance, or agriculture for some states, and building on that. i am not going to criticize any of my colleagues. my policy as governor is anybody who wants to come to washington state is welcome. i am not out trying to steal a company from my colleagues. >> let me put it this way. i believe in competition among the states and in the country. any business is looking to come to nebraska, my number is -- [laughter] we are willing to compete. when i took over as governor,

our taxes were too high, our regulatory climate was too high. here we sit today in the state of nebraska with the second unemployment rate in america at 4.4%. i prefer to get jobs from all over the world. that is why i and willing to travel. >> if you had to, you would go to your colleagues states -- >> we are engaged in competition all the time. i congratulate her in that regard. if she would like to have some of those jobs come to nebraska, i would like to talk to her about that too. i think they are going to my neighboring state of kansas. i believe we are in competition all the time. >> let me just be clear. we'll talk about over the next three days is the real competition between all of us is global. we have to be prepared to

compete globally. that is what the boeing co. just did it. out of that, the taxpayers got the benefit of it. that is my focus. how do we prepare our companies to compete? we are the most trade-dependent state in the nation. exports are our way out of the recession. rather than fighting amongst ourselves, we are ready to compete, but we are pretty for america to compete in the global economy. >> -- the government shut down -- it seems like they have pointed this issue until the middle of march as of friday, but maybe a couple of you could weigh in on how this would individually impact your states and how the uncertainty is affecting your states? [applause] [laughter]

>> you know, most states have a significantly higher budget than revenue. that is made up of special revenue and funds. it would definitely impact every state and will vary from state to state. we are roughly 3 to 1 on medicaid dollars. all of the work force money, all of the early childhood and money, all of those funds that are off the chart from the standpoint of balancing a budget which the general revenue are reflected in general contributions. will it have an effect? absolutely it will have an effect. when i thought i was running the state senate, we instituted policies legislatively that impacted governors. fortunately, with term limits, we do not have legislators that

know how to do that anymore. [laughter] we provided any federal funds that created jobs a proviso not only in the m.o.u., but we put it in the actual employment agreement with the employees so hired with federal funds that their employment ended when the federal funds ended it. we always reserved the right to assume those responsibilities assuming we had the resources to do it. we would not have state funds necessary to supplant the loss of the federal funds. i think most dates are in that posture. they do not have the general revenue to be able to offset the loss of any federal funds should that occur. if it does occur, it will affect us and every state. everybody has various areas

they can brag about. our people have been so efficient in the program in terms of the timeliness and accuracy of the determinations, both in the niles and in approvals, that we have been asked by the federal government's to do that for a number of other states, which created a lot more employment. that is 100% of federally funded and 100 percent and federal money that supports all of those jobs. they are all state people that pay taxes and show up in our economy. that is another example, a specific example, of how a federal government budgetary shutdown will affect my state. i suspect everybody in this group will have comparable stories. >> other questions? yes? >> [inaudible] -- about establishing the u.s.-

china governors forum. is there any specific program that you want to talk about? >> what we are trying to do is establish a relationship through national government. it is one thing for our state department and the president to work as their level, but i, for example, just led a delegation to china on this trade mission in this past fall. china has become the no. 1 trading partner for the state of washington for the first time in history. what we are going to do today is launch a new relationship where governors to governors or party leaders can work together on economic development, on exchanging students, cultures, and language, because out of that we believe we can grow our economy and in fact we can have a prosperous future.

today, we launched that in july. we hope we will see a new delegation of governors from across china come visit us. we are hoping to be able to have a delegation of our governors go visit china later this fall. sir? >> -- comment on the state of the economy [inaudible] massachusetts since coming back, whether unemployment is declining. it is at the recession over? >> i would describe ourselves as a recovering, not recovered. and our unemployed has fallen to about a point and a half below the national unemployment level. we are adding jobs faster than about 45 other states at this point. our gdp is growing at about twice the national growth rate but there are still a lot of people out of work.

we are first in the nation on student achievement, of veterans services, clean energy initiatives, that is all good. but for the individuals to witting for work, the people that can meet at the jobs clubs, the recession is very much here and now. the strategy that we have pursued it based on education, innovation, and infrastructure, very much luck with the president talked about at the state of the union address. as we have made the decisions to reduce spending, we have done it wisely so we can be able to continue to invest in those areas that growth opportunity. >> i would say this. unemployment remains uncomfortably high in connecticut. we are seeing a recovery in the

financial-services industry, including traditional lines of insurance which were certainly one of the main citings. as well as the health care side of the business. manufacturing continues to be sluggish, although we shared in the boeing news because those tankers will be powered by engines made in the conn. we have seen an uptick in the order of engines. simply having seen that decision made it means many of the suppliers will feel comfortable about hiring or rehiring some of those folks. having said that, in a set of circumstances where you see a deficit, you have to make decisions just as my good friend from massachusetts just mentioned, and in each and every case, we are making good

decisions that will most likely project a strong economic future for connecticut and reversed a long-term trend in connecticut over the last 20 years. so this is all relatively new to me. seven weeks into the job, the first democrat in 20 years, but i am learning some money things from my democrat and republican colleagues here in the meetings and with these communications. i know this has been a very valuable experience. thank you. >> let me just say that we are all in the status of recovering. we are fragile. we are fragile. so anything congress does, whether it is a shutdown or cuts that are going to directly impact the state's, can be a considerable concern to us because we do not need a hiccup right now and our recovery.

we are recovering. we can actually see very positive things happening in the private sector in almost all of our state, but we still can ill afford to have a government shutdown and cuts that will dramatically impact the states. next question. >> what are states doing to prepare for this coming funding shortfall? how are we about to see a mass layoffs of teachers across the country? >> as was said earlier, the federal government could shutdown. unlike some of my colleagues, i look at it as pay me now or pay me later. the federal government is -- states are struggling. in the state of maine, that is the one area where we were very

fortunate. we are not going to see cuts to education. i do believe that we have a long ways to go to not only bring back the state of maine and the country on an international level of education, but we are focused on not only attaining higher achievements of our students who go to college, but i believe, for one, that we need electricians, plumbers, people in the trade. in our state, we are focused on bringing the trades back to. this demand is very dependent on its natural resources. what the federal government can do for us is not money. it is flexibility. let us run our states with the resources that we have. we would be very happy to work with you in dealing with the deficits. >> let me say, in nebraska, i

have two priorities that continue to work for our state. education and jobs. we need education success and economic success. they are linked together. we accepted the stimulus funding. we alerted everyone that it would go away in two years, so take advantage of those two years in an efficient way so we can minimize layoffs. i believe that is what we have done in the press, so i hope those layoffs will be minimal because education is key to our future success. >> i want to offer a little bit of a different perspective. i am from bon guam. we are the closest american soil to china. when you encroach on the issue of education, i think it is

penny wise, tom foolish. right now, we are like a mini hawaii. it is millions of tourists coming in. a lot of those tourists -- our economy has taken off not because of the united states but because of asian growth. what the growth that is occurring in china, they are having a tough time going under 10%. i guess the lesson for all of us here -- anyone who has been to asia, and you take a look at their focus on building infrastructure, they have the best high-speed rail systems, you go to korea, tokyo, and education. education. from the perspective of a u.s. territory that is in asia, it is important to take lessons from asia. one thing we cannot do it

sacrifice on education. that will hurt our competitive edge. >> i just want to second the point that my colleagues have made about the connection that we all see between education, job growth, and economic opportunity. we were grateful for the stimulus funds to help us bridge the education funding during the worst of the downturn because if you are a second grader, you do not get to sit out from the second grade until the recession is over it. we have funded public schools at the highest level in the history of the commonwealth every single year since i took office. knowing that the stimulus funds were trading off this year, we planned for that. we can afford to beat our own record in the coming fiscal year without the use of stimulus funds. i think that is exactly how the stimulus bill was intended to

work. >> i would simply close this discussion by saying i agree with the president in his state of the union address. we have to out-educate. that is what global competition is going to mean for us. we cannot afford to cut back on education. higher education has to keep its doors opened and its quality up. only if we out-educate are we going to be able to compete in the global economy. ma'am? >> [inaudible] -- indicated that the steep budget cuts going on but were slowing down the country's recovery. on one hand, you are asking congress not to cut deeply because it will affect our recovery and the states. now the commerce department is

saying that the opposite has happened. >> we have been saying this all along. governors for two years have said when we cut, we mpeg the recovery. cutting $75 billion as we have had to do over the last two years has had an impact on our recovery. looking now at $175 billion in cuts, it will have an impact. every time we take a cut, we lay off somebody directly and indirectly. we put them on unemployment. when a business lets someone go, where do they come? they come to us. whether it is education or social services are trying to get our people back to work. we know we have to make the cuts that.

again, we can ill afford to have congress on top of that cutting more because the result will be we will slow the recovery not only in our home state but we will slow the recovery of the nation. you saw some of the job numbers recently. you saw what happened. all of the gross and private- sector was overwhelmed by -- all of the growth in the private sector was overwhelmed. that has been our message for the last two years of. >> to specifically answer your question, we do not have any choice. the commerce secretary deals with the federal government. we have to balance our budget. we do not have the luxury of not balancing our budget. >> i need to go back and remind everyone would said earlier. we are forced to balance budgets. but we can help our states and

we can slow down the layoffs of a lot of private and public sector jobs if the states are given flexibility. we are lacking flexibility in many areas. for instance, we are restricted in our state from cutting trees because of some of the federal policies. we are at 19.3% of our state is a forest. think about that. >> you mentioned earlier that the governors are having integrity option for states. it seems there is a lack of support for that. do you have any indication that others are pushing for it? or that there is a possibility that that could move forward? >> governor heineman and i have been clear. we do not even want this subject discussed, let alone to move it forward. let me tell you why.

we have had the best returns in history. on a friday when this discussion erupted about equity for the states, on the following tuesday, it was up 100 basis points in my home state in bond sales. that is what i meant in my opening remarks. not only do we not want it, but we want to stop the discussion. we would like leaders of congress tuesday that it is dead is not going to happen it has impacted the market. >> as a state that plays some role in the financial markets, this is some of the most dangerous discussion that we have had in political terms in a long time. you are threatening the entire municipal market in this

country and internationally. you know, most of us believe in the full faith and credit of the state means the full, faith and credit of the state. none of us ran on the basis that we should be able to dislodge the full faith and credit of the united states. some of those are political, some of those are legal to use in those relations with your own state. please do not destroy the municipal bond market as it currently exists and operates. i will relate this discussion and your question to the comment about the commerce secretary's warnings. that is, if you were to do any additional damage by furthering this discussion on the manciple bond market by suggesting that bankruptcy's be permitted, you are talking about the drying up of capital for every single public-works project undertaken

by a town of 500 people or a city of 5 million people plus all the states. it would be at the height of insanity. >> with that, we will close this press conference. i thank my colleagues for coming. these governors do not have a choice but to govern, put people to work, and manage their budgets. we came here to make that happen. we are ready to work together to bring our states onto the road to recovery, put people back to work, and make america competitive across the globe. thank you all very much. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> those were some of the comments earlier today. we will be bringing you the second and final panel of the day, live at 3:00 p.m. eastern

when governors will take a look at global lessons to improve education with virginia gov. bob macdonald and education secretary arne duncan. before that, here is a look back at the montana gov. speaking this morning. >> joining us now is the democrat of montanathank you fo. what is on the agenda for the and ge meeting this weekend? -- nga meeting? agenda iseveryone's creating jobs. montana is better than the rest of the country on some, but we stopped & unemployment. -- still have 10% unemployment. we need to create higher paying

jobs and get things moving. we are a natural resource state and during a 30%; in america. -- we have a 30% of the cold in america. we have the biggest platinum, palaadium, copper, wheat. we need to get the rest of the country going as well. host: you have all those resources in montana. right now you have a budget surplus. what do you tell the governors to do not have those natural resources and they're having to deal with budget deficits? how'd you get them to follow your lead and get them back on the surplus train? guest: i am not a very popular governor around these parts. the reason we have a surplus is because when the times were good, unlike other states we've saved the money. we built the largest savings account.

i vetoed for the bills even worm -- even when times were good. during the last couple of years, we just the third down on our cash reserves and we did not cut programs oraise taxes. we still have money in the bank. host: we will get to the phones. especially people in the montana want to talk to you. we want to remind the rest of our viewers in the other 49 states as well as overseas that they can get in touch with us on 202-737-0001. we do encourage residents to give us call. gerald on our line for democrats.

go ahead. caller: god bless c-span and thank you for taking my call. we operate in the northwest montana with dave -- with a 501c3. we have a revenue-increasing housing solution. we have had encouraging correspondence from the federal reserve office. an early outline of the solution was sent to your office in may 2010 and i am requesting the appropriate details that you could share with 49 other people.

alohanoblehouseinc.com. thank you for your public service. guest: the most important question i have is how is the ice fishing? host: gerald i gone. hopefully if he decides to go out and do some ice fishing that the weather will stay cold enough. guest: that will not be a problem because it is somewhere between -30 and -10. host: and his other concerns? guest: it was difficult for me to discern what exactly was talking about i encourage him to get ahold of my office andall at 444-3111. host: next about of detroit is

neck from airline for republicans. -- nick on our line for republicans. caller: first of all, congratulations on all the resources you have in montana. host: this will work better if u turn down your television set. caller: two for 1. i will not be able to hear your answering back because i have the tv down, but our natural resources are our people. we have good people in michigan. this is a really good steak. we are all hard workers. we jt cannot seem to get the ball rolling to stay on top. first of all, the politics.

you do not look ke a politician. you look like a good, hard- working man which is a complement. the politics, like george bush, after his presidency was over in his said he was a politician and he really does not believe in the bible. well, we believe in the bible and we work hard. when we get ahead, you get taxed and everything and then we have competition. i almost melted in the tundra with toyota and honda coming in with the pickups. host: we will leave it there, nick. if you turn down your sound by the time you hang up and turn on

the tv, you can hear what's going on. guest: with all the natural resources we have in montana, the most impornt resource we have is our people. the chamber of commerce has rated montana the number one place to start your business. we have the sixth best friend in taxes and the fourth most educated population in america. virginia as the bumper sticker that says "virginia is for lovers." i want montana to say "montana for engineers. it is not a politician to change the world. i was a rancher. this is the first job i have ever been elected to. it is not a politician to change the world. ideas and innovation changes the world. that is why we're trying to get every child in montana interested in science and math. the economy with the most

engineersill have the most ideas and innovation. you always win with innovation. host: we will try to get the lights back on for your situation. here are some of the numbers for montana regarding the budget surplus. $355 million. on employment at 7.2% with the national average 9%. there were 684 foreclosures in late 2010, lowest in the nation. of the population of montana is 975,000. as we continue to shed some light in this situation in montana as well as gov. brian schweitzer, let's take another call. this one is from iinois on our line for democrats. john, go ahead. caller: we had a conversation before. you're really held your own with

mitch daniels yesterday. thank you very much. governor, vacation season is coming out of. could you tell me where to come to montana and visit? guest: of all the extraordinary plac we have in montana, i will promise you that if you go to glacier national park, i did not know if you have any particular religion, but after you have been to glacial and national park for a few hours and you are at the top of the continental divide, the only place in america where the water flowsast, west, and north, something will oveake you. you will look around and say this place is so magnificent that it is impossible that this place was greeted the random act. it is impossible to adjust the forces of nature andrology over the course of a billion years could have cated this

remarkable place we now call glacier national park. it actually have the finger of god in creating it. i would say make it up to glacier national park. host: abilene, texas, on our line for republicans. you are on "washington journal." caller: first call, thank you to c-span for all that you do. i do have a comment a question. i am republican in abilene, texas. this is the first, have called in to c-span. i what she's been quite a bit. my comment is to the governor. -- i watched c-span quite a bit. they talk about their state having a surplus. but here in taxes, it is a crazy situation nowadays. -- here in texas with education and the economy. om republican to democrat, thank you for your hard work in

montana and having a surplus and talking about education. i believe education is very portant. my question to you is what would you tell our governor if you had a chance to talk to him, the governor of texas, rick perry, on how to continue having a surplus in our state? at the same time we need to improve education. we will have to cut tens of teachers who will not be turning next year. so far 120 here in abilene by ourself. that is a concern to me. i really like what you are doing in montana. i want texas to go by your example, governor. host: i do not know much about abilene, but they understand you can watch your dog run away for three days. each of the governors are ceo's

of our businesses and our own states the montana legislature is in session right now and i proposed a budget to than the 49 other states would poll their other teeth out if they could. we proposed increased funding for k-12 by 1.8%. we put enough funding into higher education to not have to raise tuition. we are raising the business equipment tax for businesses. but the end of the day, we will still have the second-largest savings account in the history of montana. it is important to invest in education because we're going to attract new companies to come to montana. we may get them from tasmania or texas. we have a highly educated work force. as i said before, the economy with the most engineers always wins. host: in the associated press host: in the associated press earlier this