Show Me The Recovery: What's Working
MICHEL MARTIN, host:
I'm Michel Martin, and this is TELL ME MORE, from NPR News.
Show Me the Recovery. That's what we've been calling our series of conversations this week with people who have ideas about moving the U.S. economy forward, creating jobs and reducing this country's large and growing national debt.
We decided to take this focus this week because President Obama's bipartisan commission on reducing the debt issued its report. Yesterday, the group called it the, quote, "moment of truth report." And it made some tough recommendations like doubling the federal gas tax, cutting defense spending and eliminating some very popular tax deductions.
But these are all very long-term, meta ideas. Today, we decided to bring the discussion home to right here and now. In a few minutes, we'll wrap up our series with two of our Money Coach contributors and NPR's business editor to talk about what we can all do in our personal recovery plans right now.
But first, we wanted to show you the recovery in two places that seem to have weathered the economic storm better than most of the rest of the country, and we wanted to talk about why that might be. First, the state of Utah, unemployment is 7.1 percent. That's two-and-a-half points lower than the national average. This year's Forbes magazine rated Utah the best state to do business in in the country.
We'll also show you the recovery in the city of Dallas, which one survey by the Brookings Institution and the London School of Economics ranked fourth among large cities nationwide for its economic performance. We've called on Governor Gary Herbert of Utah and Mayor Tom Leppert of Dallas. They're both with us now.
Thank you both so much for joining us.
Governor GARY HERBERT (Republican, Utah): Pleasure to be with you.
Mayor TOM LEPPERT (Republican, Dallas): Thank you, Michel.
MARTIN: So, Governor Herbert, let's start with you. Why does Utah seem to be weathering the economic turmoil better than so many other - even of its neighboring states? I wanted to mention that Utah's unemployment rate is not only lower than the national average, it's also lower than most of its neighbors.
Gov. HERBERT: Well, in fact, you're right, Michel. It's lower than every Western state other than Wyoming, from Colorado west. So we've been fortunate. I think it's because of planning and efforts we purposely have taken. We've been very fiscally prudent as a government. We've been recognized as one of the fiscally fittest states in America, still have a AAA bond rating, one of only a handful of states to have that.
We've tried to, in fact, lower our taxes. We've lowered taxes from 7 percent income tax rate to 5 percent. And lastly, we've had a significant emphasis on education. We know that in today's global marketplace, if we're going to compete, you got to have a very educated, skilled labor force that's productive and can compete - not only just in our state, in our own region, but internationally in a global marketplace. And it seems to be working for us.
MARTIN: And what do you mean by put a focus on education? Are you saying you're putting - of the state expenditures that you're willing to make, you're putting more dollars into education? For example, community colleges is one area that the Obama administration has really encouraged. What do you mean when you say you put a focus on education?
Gov. HERBERT: Well, it's just - as part of a cultural thing, there's an understanding that if you're going to be able to compete, you've got to have skills, and that comes with education.
MARTIN: Mr. Mayor, we spoke to you almost a year ago about this issue.
Mayor LEPPERT: Yes.
MARTIN: And, actually, we should make this an annual get-together. But at the time we talked to you, you were about to go on the road. You were traveling to a number of foreign capitals to market Dallas as a good place to do business. And I want to mention that, you know, again, as we've said, the unemployment rate in Dallas is also, you know, bucking the trend. It's below the national average. I wanted to ask: To what do you attribute that?
Mayor LEPPERT: The formula isn't very complicated. Jobs follow from investment. Investment goes to where it's going to be the most favorable. Here in Dallas and in Texas, you've got probably one of the most attractive and stable regulatory environments. The tax environment is very attractive, which makes it a low-cost-of-living, low-cost-of-doing-business state.
So you pull those pieces together - you see it's a pretty effective place to do business and to attract businesses which create jobs. Plus, on top of that, we think that we have looked towards the future and a lot of places in the nation where they perhaps are starting to think the best part of the story's behind them. We've continue to make investments both on the public and the private side that make this a very attractive place to live in - so, not only attractive place to do business, but a very attractive quality of life.
MARTIN: If you're just joining us, I'm Michel Martin and this is TELL ME MORE, from NPR News. We're continuing our Show Me the Recovery series. We're talking to Mayor Tom Leppert of Dallas, and we're also speaking with Governor Gary Herbert of Utah. We're talking about why Utah and Dallas seem to be headed in a direction of recovery. At the very least, they've bucked the high unemployment trend that seems to be plaguing a number of other regions and states and communities in the country.
I do think it's fair to point out that they're both Republicans, although, in Dallas, the mayor's office is considered non-partisan. But, you know, to that end, I wanted to ask each of you that many communities are suffering right now, particularly a place like Florida and Nevada because of the housing bubble. And many people would say that that was - those were regulatory failures. That was due to a lack of appropriate regulatory, you know, oversights.
I'd like to ask each of you your perspective on that. Governor, do you want to start?
Gov. HERBERT: Yes, thank you. I think that every state probably has had some impact on the housing bubble and the crash and the subprime interest loans. I don't know if it's because of overregulation. I think it was mainly because of an encouragement to give and encourage people to get into homes and housing that they couldn't otherwise afford.
People were buying homes in some of our resort areas believing that even though they couldn't afford them, because of the subprime interest mortgage capability, could into houses that were 100 or 200 or $300,000 more expensive, believing they could kind of flip them.
MARTIN: Yeah, but somebody had to give them those loans, right?
Gov. HERBERT: Well, I know.
MARTIN: I mean, you can believe whatever you want to believe, but somebody's got to give you the loan to do it.
Gov. HERBERT: An encouragement, and the secondary mark was Freddie Mac and Fannie May, was clearly to encourage loans to people that didn't qualify otherwise. And so that was an encouragement that came from government, as opposed to a free market...
MARTIN: Governor, excuse me, with all due respect, those are not - those are...
Gov. HERBERT: ...to sell the loans.
MARTIN: Governor, forgive me, those are government-sponsored entities, but they are private entities. They all have shareholders and, also, they had a minority of the loans that were considered sort of predatory and that were at issue here. But I do understand your point. But to that end, what do you say to that?
Gov. HERBERT: Well, again, I happen to come from the real estate business, and - before I got into politics, and - as a broker and developer. And I can tell you, there was time when people had put, you know, 20 percent down. They had to qualify for a loan on certain ratios. And we violated that during the subprime mortgage. And that's caused this housing bubble that was a kind of a house of cards that collapsed. And, again, we'll pay the price. But it's like anything else. When you make a mistake, you don't salve the wound. You take your punishment and recover.
MARTIN: So you don't think those were regulatory failures? The housing bubble, you don't think that's a regulatory failure? If not, what is it?
Gov. HERBERT: I think it was well-intentioned. And as Republican and Democrat alike - I'm not partisan on this issue - and encouragement from the Bush administration and others to - and a Democrat-controlled Congress, to get people into housing that they normally - the marketplace would say: You can't afford it, but we can get you into it. We're encouraged to do it, and we have a secondary marketplace we can sell these loans that we've not been able to do in past years. And so we just went down a rabbit trail was had a dead end to it, and I don't think it was overregulation. I think it was encouragement by government to do things that the marketplace normally would not do.
MARTIN: OK. Mr. Mayor, what's your perspective?
Mayor LEPPERT: I think one of the things you got to look at and I think you see it both in Dallas and Utah, is a much more stable economy, including the areas that you mentioned are known for booms and busts. In Dallas, if you went back 20 or 30 years ago, you would us in that category, too. But since that time, there's been some lessons learned. You have probably the most diversified economy in the nation. No area are we dependent on for a significant part of the economy. We've got a number of different areas that all contribute, and contribute in significant ways.
At the time, where in some of the markets that you mentioned, real estate prices were going up 30 and 40 percent, we were going up three and four percent. Now, at times, people wanted to know why we weren't going up more, but clearly since that period of time we maintained that kind of stable picture, which has allowed us, again, because of the regulatory environment, cost of living, all those sorts of things, to have performed very well. And we anticipate that's going to be the situation going forward.
MARTIN: And I wanted to ask each of you, though, about education, which was something that the governor mentioned. Do you need an advanced education to take advantage of the opportunities in each of your communities? I want to note that, governor, in your state, you know, Adobe recently moved there. There have been a number of high-tech companies that have recently moved to Utah or expanded their operations in Utah, which is one of the things that's contributed to significant, you know, job growth there.
Do you need an advanced education to take advantage of these opportunities? And what if you don't have one?
Gov. HERBERT: Well, you don't need to have one. We have a lot of people who are successful have high school diplomas. Some have even have been successful have been high school dropouts. But the odds are that the better your education, the more opportunities that you have in the marketplace.
MARTIN: And what about you, Mr. Mayor? What's the word I'm looking for here? Education has been one of your concerns, along with business growth.
Mayor LEPPERT: (unintelligible) and historically the city hasn't been involved in. But the reality, as the governor said is, more and more, those advanced degrees are going to indicate the success of economic regions. I can give you a couple of examples. AT&T, just in the space of two years ago, moved their headquarters to Dallas. One of the major reasons that they did that was the high number, in their case, of telecommunications and IT engineers that they found in the Dallas area. That was a major factor of moving.
But it also goes beyond just the technology. In the space of the last year or so, we've seen one area of our downtown that literally has attracted nearly every major financial institution name in the world today. And that, again, is because we've got the human resource base to make that attractive and to really set up a regional headquarters within Dallas that will rival most other areas in the nation. We hope at some point, too, even the areas in the Northeast, in terms of financial institutions, financial expertise. So the advanced degrees are critical, education is very important.
MARTIN: But you've also said, Mr. Mayor, I'm sorry, you've been quoted as saying that you don't think the city's educational system is near where it should be. And so one of the things I'm curious about is how do you sustain opportunities for people who don't already have those skills?
Mayor LEPPERT: You continue to work on education, absolutely. And as successful as we've been, if we look out the next 10 or 20 years, we've got to be a lot better because we're not just competing against ourselves. We have to understand here in this country that we're competing not just to have our students compete against the students in Utah, but there's going to be students in South Korea and in China and in places like that. And if you look at our numbers in this country and compare them against some of those places, then you see how far education has to go.
MARTIN: And, finally...
Mayor LEPPERT: So, we're fortunate here in Dallas, the reality of it is, we've got to get a lot better, our nation's got to get a lot better if the sort of things that the governor and I are doing are going to be meaningful 10 or 20 years in advance.
MARTIN: Gary Herbert is the governor of Utah. He was kind enough to join us from the governor's mansion in Salt Lake City, despite the fact that he's a little under the weather, which you can hear in his voice. Tom Leppert is the mayor of Dallas, Texas. He was kind enough to join us from his office in Dallas. They are both Republicans. And I thank you both so much for joining us.
Gov. HERBERT: Thank you.
Mayor LEPPERT: Michel, good to be with you.