Plenary Session Transcripts

Governors Attending:

Guests:

Discussion Subjects:

• Agriculture (AG) - the future of agriculture
• Criminal Justice and Public Protection (CJ) - state initiatives toward prison reform; and the National Guard in state service and overseas training
• Economic Development and Technological Innovation (ED) - responsive communities: discussion of public-private competitiveness strategies
• Energy and Environment (EE) - energy issues
• Executive Committee (Exec) - a view from the Administration; and welfare reform
• Human Resources (HR) - worker adjustment: designing a rapid response capability; promising prevention programs: focus on the first sixty months of a child's life; and an innovative long-term care proposal
• International Trade and Foreign Relations (ITFR) - exports: a Governors' secret weapon for economic growth; and reports of the Subcommittee on Tourism and the U.S.-Canadian Task Force
• Transportation, Commerce, and Communications (TCC) - truck safety; update on airport legislation; update on telecommunications; and progress report on Working Group on State Motor Carrier Procedures
• Other Governors' Sessions - special work session on creating schools for the future: action in the states; Task Force on Nuclear Safety; workshop on rural development; special session on jobs, growth and competitiveness-reaction from the business, labor, and scientific communities; Governors'-only session on managing staff and agency heads; and meeting of the Governors and Canadian Premiers
• 1986-87 Chair Arkansas Gov. Bill Clinton's Initiative - Making America Work: Productive People, Productive Policies
• Plenary Session Discussion Subjects - Jobs, growth, and competitiveness; and the "Barriers Project" to address welfare prevention, teen pregnancy, adult illiteracy, alcohol and drug abuse, and school dropouts

Points of Interest:

High on the agenda was the report of NGA's Task Force on Jobs, Growth, and Competitiveness.

Guest speaker Lee Iacocca, CEO of Chrysler Motors, addressed the Governors regarding the effects of U.S. trade policies on American industry. He argued that the U.S. had everything we needed to be competitive, but lacked the will to compete, which would require significant sacrifice. He recommended: (1) reducing the federal deficit, through spending cuts and perhaps tax increases; (2) getting tough with trading partners; (3) reforming the tax system to encourage exports; (4) promoting and securing independent energy sources in part by imposing fees and taxes on imported products; (5) "ganging up on corporate raiders;" (6) improving our educational system; and (7) encouraging greater spending by American industry. In response to a question, Iacocca said that while he respected states' rights, being required to meet different state environmental and transportation regulations meant that the automobile industry had to spend more money, with the additional costs being passed on to consumers.

Donald Petersen of the Ford Motor Company noted that many foreign competitors had the advantage of enjoying government aid. He also quoted the findings of a Harvard study that while the federal government and the auto industry appeared to have a relationship mired in preglobal orthodoxies, a new model was emerging at the state level that valued government as a catalyst for competitiveness. Petersen talked about the incentives that states could and did offer to industries, including tax breaks, highway improvements, and state financing. He referred specifically to the "Auto in Michigan" project established by Governor Jim Blanchard's Administration that had brought together representatives of industry, government, and labor to assess the trends and develop options for dealing with a changing economy.

During discussion, Governors identified the following ways in which states could play a significant role in promoting jobs, growth, and competitiveness: ensuring a sound transportation infrastructure to help carry products to and from markets; encouraging the development and application of new technology; and promoting rural development by investing in the infrastructure and telecommunications advances necessary to link rural communities to the rest of the country. At the same time, the task force had identified four areas in which federal action was imperative: creating a stable economic climate and reducing the federal deficit; establishing more equitable trading relationships with other nations and broadening the scope of the General Agreement on Tariffs and Trade (GATT); developing a more cooperative federal-state partnership; and ensuring a more flexible and responsive employment system that used employment and unemployment services as well as job training and vocational education programs to help the labor force adapt to the job needs of the future.

Also discussed during the meeting were reports of the Barriers Project, composed of five NGA task forces that had studied the most widespread and crippling barriers facing the United States: welfare dependency, school dropouts, teen pregnancy, adult illiteracy, and alcohol and drug abuse. Among the task forces' findings were that the U.S. had the highest rates of teen pregnancy and abortion among western developed nations; that the cost of public assistance for teenagers exceeded the budgets of all but four states; and that between 14 and 25 percent of young people were dropping out of school.

Recommendations made by the task forces included: (1) investing in prenatal care, preventive health care, nutritional care, child care that involved developmental and educational components, and family resource centers to support parents; (2) finding ways to enhance literacy training in the workplace; (3) formalizing plans to help welfare recipients receive the basic literacy skills needed to secure productive employment; (4) establishing state clearinghouses on alcohol and drug abuse prevention and treatment; and (5) offering school choice programs that would encourage more young people to stay in school.

Memorable Quotes:

Lee Iacocca, Chairman of the Chrysler Corporation, said: "You discovered, as governors, competitiveness long before it got to be the popular buzz word that it is today. Your states and the programs for a long time [were] designed to attract new industries and support old ones. In fact, four of you in this room covered me for $107 million in loans that helped Chrysler survive a couple of years ago. And, things like that, well, you never forget them, naturally. But today, I see 50 states fighting, really fighting for jobs. But a funny thing, I don't see that same kind of fighting spirit in Washington. I see 50 subsidiaries doing a decent job, but, truly, you are not getting much help from the home office. And every state seems to have a foreign trade policy, with missions going all over the world to increase exports and attract new jobs. But I have looked for a long time now, and I really cannot find an American trade policy. I cannot find a policy in Washington with the same determination to compete in the world...Some of you really got pragmatic a couple of years ago when the GM [General Motors] Saturn plant was up for bids...You fought like tigers. You tried to outgun each other with free land, free training programs, free roads, low cost energy, tax abatements, you name it, anything it took. I thought to myself, this is really strange. Nobody in Washington is fighting for American jobs, but we've really got the states fighting among themselves for those jobs...the sad fact is that you may be competing, but without a coherent national policy and without the same commitment in Washington that you people have, you are competing for pieces of a smaller and smaller pie. I am afraid, as an American now, that one of these days you are going to find yourselves fighting over crumbs." [NOTE: In the late 1970s, Chrysler received federal subsidies to avert bankruptcy.]

Iacocca also said: "We need a trade policy with teeth, that says to our friends...Hey, trade has to be two-way, guys...It's okay for you to come and sell here, but while you are in town, you damn well better be doing a little shopping."

Donald Petersen of the Ford Motor Company quoted a recently-published Harvard study (titled "Changing Alliances") that had concluded: "Even though the relationship between the Federal Government and the auto industry appears to be mired in preglobal orthodoxies, at the level of state governments across the country, a new model is emerging, one that emphasizes the value of government as a competent partner, a catalyst for competitiveness."

Governor Gerald Baliles of Virginia said this about the roles of transportation and education in making the U.S. a more competitive nation: "...we witness and endure an increasing morass of crammed, inefficient, urban and suburban highways and crowded, unreliable national airways. We watch as our productivity declines from the simple inability to quickly move our people to work [and] their products to market...it's critical that we establish new avenues to action to insure that the future is not compromised by an inability to move our people in their enterprise. Likewise, our intellectual infrastructure must consistently reflect the realities of world commerce and political competition...We pay a political price for our inability to understand and communicate with our global neighbors. Knowing the language of trade is to be able to communicate with the buyers and sellers of the world. Knowing the geography of other nations is to appreciate the basis of other economies...we urge the acquisition of a heightened sensitivity and an appreciation of the diversity of the people of our planet...if we are to benefit from global interdependence, members of our current workforce must understand the world around them. Accordingly, as the principal providers of education in the nation, states must invest in and internationalize their schools."

Selected Policy Positions Adopted:
(1) Advocating closure of a federal loophole created by the Supreme Court decision in Bellas Hess that prohibited states from collecting state sales and use taxes on goods sold by interstate mail-order firms absent the firm's presence in the state levying the tax, unless Congress specifically authorized the states to collect such taxes; (2) calling for prevention of, and education about, AIDS, and supporting increased resources for AIDS counseling and testing, urging expansion of programs to reduce intravenous drug abuse, calling for appropriate treatment for current and future AIDS patients, and recommending clarification of state authority under Medicaid's home and community-based waiver program to affirm the ability to states to use the program in treating AIDS; (3) recognizing the Nuclear Regulatory Commission to be the single agency responsible for approving the design of nuclear power plants and issuing necessary construction and operating licenses, and stating that the NRC should: provide information nuclear power plant systems and operations upon the request of Governors; approve emergency plans before issuing construction permits for new nuclear power plants; develop objective criteria for the review and approval of off-site emergency responsible plans, in consultation with the states; and establish a mechanism to provide for timely response to a Governor's recommendations for changes in standards relative to the safe operation of nuclear power plans within his or her state; (4) opposing any efforts to divert airport trust fund revenues for other purposes; (5) seeking promotion of uniformity in motor carrier taxation to encourage states to join a base state fuel tax agreement; (6) identifying majority components of a comprehensive national policy on motor carrier safety; (7) recommending: improving and more effectively coordinating federal programs affecting the quality of ocean and coastal waters; ratifying parts of an international treaty prohibiting dumping of plastics and other debris; and establishing a federal system for oil spill liability and compensation; and (8) Charting actions that states could take to ease the development of new electricity transmission lines in order to take advantage of sales of inexpensive electricity from areas like the Midwest that had surplus capacity.