'This Week' Transcript: Gov. Arnold Schwarzenegger and Gov. Edward Rendell

SCHWARZENEGGER: I think that the economy, we see signs of a comeback, but it's very clear that the comeback is not going to be as quick as we've seen in the past. It's slow, and we have (ph) seen in our revenues that there's more than a billion dollars a month coming in more than we anticipated. We've seen that the foreclosure rate has slowed down. We've seen that the house sales have picked up. We've seen people are getting back to work, especially in the green sector. So there's signs all over, but the key thing is not to be overly optimistic, just to be optimistic, and to keep pushing and to take the responsibility that we have as a -- at the state level is to do even thought we have a limited amount of power, but to do everything that we can to do -- to create jobs, jobs, jobs. To get the economy back and to create those jobs, because that is the important thing.

We in California have a 12 percent unemployment rate, and the faster we get the people back to work, the better it is.

MORAN: What's the view from Harrisburg? The worst is yet to come, or the worst is over?

RENDELL: No, I agree with Governor Schwarzenegger. Our economy has done much better. We're at about a 8.8 percent unemployment, I think the lowest of any big state. We have a very diversified economy that sort of has gotten us through this, although 8.8 percent is terrible, obviously. But we've seen real signs of improvement. In the last three months together, we only lost 4,300 jobs, and we were losing 30,000, 40,000 a month a year ago. So things are getting better. Arnold is right.

Our economists predict growth will actually return next year, 3 percent growth, not great. The following year, they predict 4.5 percent growth, which is almost where we were in the beginning of the last decade, in the middle of the last decade.

But I think what Jim Douglas was referring to is the states are going to really have a problem when the stimulus money drops off. It's going to be a problem. But again, stimulus was never meant to be a permanent solution. It was meant to do two things. One, to be a bridge until growth returns, and it has been a very helpful bridge. No ifs, ands and buts about it. We would have had to lay off 50,000 more people had we not had the federal stimulus funds.

And then secondly, President Obama did something (inaudible). A lot of the programs are long-term programs. The green energy jobs, the broadband, the electrical grid jobs. Those jobs, that benefit from the stimulus is going to stretch out over the next five to 10 years. So states are going to have a management problem of their own budget when the stimulus funds drop off, but the economy -- I agree with the governor's estimate -- is coming back slowly, I think surely.

MORAN: Well, the Senate, as I said, is taking up a jobs bill this week, $15 billion. When it started at the White House, it was $200 billion. The House passed a $180 billion version. There was a deal for $85 billion. We're down to $15 billion now, but do you think there needs to be another stimulus, federal stimulus like this? Is $15 billion enough?

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