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Texas Messes with Maryland's Economy

Aired September 18, 2013 - 18:28   ET


ANNOUNCER: Tonight on CROSSFIRE, the battle over jobs, the economy and Obama care. From threats to shut down the federal government to a red state governor's raid on a blue state's jobs.

GOVERNOR RICK PERRY (R-TX): When you grow tired of Maryland taxes squeezing every dime out of your business, think Texas.

ANNOUNCER: On the left, Stephanie Cutter. On the right, Newt Gingrich. And in the CROSSFIRE, two potential 2016 presidential candidates: Maryland's governor, Democrat Martin O'Malley and Texas Republican Governor Rick Perry. The political battleground, from now to 2016, tonight on CROSSFIRE.

STEPHANIE CUTTER, CO-HOST: Welcome to CROSSFIRE. I'm Stephanie Cutter on the left.

NEWT GINGRICH, CO-HOST: I'm Newt Gingrich on the right.

Tonight, we're looking at two very different strategies to grow jobs. Texas Governor Rick Perry has an aggressive, nationwide, pre-market strategy. Maryland Governor Martin O'Malley has a home-state-centered strategy.

Here's what Maryland business owners are seeing right now.


PERRY: We've created more jobs than all other states combined. You'll find limited government, low taxes and a fair legal system. That's why "Forbes" magazine says Texas is home to 7 out of the ten top cities in America to do business. Maybe it's time to move your business to Texas.


CUTTER: The governors of both states are in the CROSSFIRE tonight: Democrat Martin O'Malley of Maryland and Republican Rick Perry of Texas.

Governor Perry, the first question to you. You know, in your ads, you say, "Think Texas." So I want to think about a couple of statistics from your state. You have the highest number of uninsured, the highest number of minimum-wage workers, one of the highest poverty rates, and none of that appears in your ads. And I'm curious why. Those are things that I think businesses would want to know. PERRY: Yes, I think it's really interesting that you want to cherry- pick some numbers that are out there. You know, we never thought in the state of Texas that you judge success by the number of people that are on public assistance. And so we made the decision in the state of Texas that we don't want to force people to have to buy insurance. They have access to some of the finest health care in the world, when you have the Texas Medical Center there, one of the largest medical establishments in the country.

So the idea that we're going to make people buy insurance to be a part of Texas. We're about giving people freedom, freedom to make decisions.

When you see places -- or companies like Facebook, eBay, some of the -- Apple, which is soon to be one of the largest employers in the city of Austin, Caterpillar, every engine manufacturer in the United States is now in the state of Texas.

When you see Toyota decided to build every pick-up truck in America...


PERRY: ... in the state of Texas, they didn't come there if they were worried about whether or not there was not going to be a skilled workforce...

CUTTER: But most of those jobs are minimum-wage jobs.

PERRY: ... and the people were going to have health care. Ninety- five percent of all the wages in Texas are above minimum wage, 95 percent.

CUTTER: One out of ten minimum wage workers in the country live in Texas.

PERRY: Nine -- nine, well...

CUTTER: And when you talk about...

PERRY: I think the issue is this.

CUTTER: I also want to talk about opportunity. So for the uninsured -- one out of four Texans are uninsured -- where is their opportunity to be able to afford health insurance if you're not providing them the opportunity to get health insurance?

PERRY: Well, I think the real issue is here give people the freedom of whether or not they want to have the -- a good job to be able to take care of their family first. If you don't have that first, then their only alternative is some government assistance program.

CUTTER: But those people on minimum wage can't afford health insurance.

And the other piece of the argument...

PERRY: Again, I don't have to -- I can't believe when you focus on...

CUTTER: ... if you don't have insurance, you can't afford insurance, the only way you can get health care is to show up at the emergency room, which increases premiums for people like us, who have insurance. So what about the freedom of people who are paying their premiums every month? They're paying for the uncompensated care to people showing up at emergency rooms.

PERRY: I want to go back to this issue about the minimum-wage jobs that you all talk about and you want to focus on. And it sounds to me like you'd rather have no job than a minimum-wage job.

CUTTER: No, definitely not.

PERRY: Well, so let's talk about the number of jobs that are created in the state of Texas. Thirty percent of all the jobs created in America were created in the state of Texas in the last ten years. Some of those were minimum-wage jobs.

But if you know the statistics, 40 percent of individuals that have minimum wage jobs are out of it and moving up in the first year, 80 percent of them after the second year.

So you have to have these minimum-wage jobs to get people in the workforce, and then they work their way up. That's how it works.

GINGRICH: There's a difference.

PERRY: We also have the number of highest paid jobs that were created in America in that same period of time.

GINGRICH: Let me ask Governor O'Malley for a second: You wrote a very interesting piece the other day...


GINGRICH: ... sort of responding -- It was a very interesting dialogue, I think. But one of the challenges that I think that I'd like to have you comment on is, one of the things which gives your economy a unique position in the country is that you have places like Montgomery County, where you have federal employees who are getting -- who are averaging $95,000, because federal workers in the Washington area are among the highest paid workers in the country.

Doesn't that put you in a very different kind of box than any other state because of the sheer number of federal workers who are being paid by the whole country but who are able to live in three or four of your key counties?

O'MALLEY: Well, we certainly have competitive strengths, and we have competitive advantages and we build on those. But 90 percent of our new job creation in Maryland has actually come from the private sector jobs. Albeit, there are sectors like biotech, life science, that want to be near NIH. They are I.T. and cyber that want to be near places like Ft. Mead. And I'm very proud of those federal employees who do those jobs in science and security, and they are certainly people that are well- trained.

See, the debate here is really -- and I think that the governor has it half right. I mean, I think job creation is critically important, and there is no progress without a job. But we have to be about building an economy from the middle out, an economy that creates middle-class opportunities. An economy where we're actually strengthening that talent pipeline, improving our skills of our people and able to actually create more and higher jobs.

One of the key differences between our two states, Newt, is that our state was ranked among the top three in upward economic mobility. Texas was ranked among the worst states in terms of downward economic mobility.

GINGRICH: Let me ask -- let me ask you this. As an objective fact, in the five years you've been governor, Texas has gained 440,000 people. According to the U.S. Census, Maryland has lost 20,000.

Now, if we're having all this upward trajectory, why is Texas doing 22 times better in population migration over the last five years than Maryland?

O'MALLEY: Actually, you need to check your facts. We've actually added 230,000 people. And we've actually grown by 4 percent. But that fact is dubiously put out by some blogs...

GINGRICH: This is the U.S. Census.

CUTTER: And I think the other issue is that the number of people coming to Texas, those are lot of low-wage workers looking for jobs, and that's where they're finding them, in Texas.

PERRY: Again, you're absolutely incorrect on that. Look, how do you -- how do you justify, how do you stand there and say that you've got all these low-wage workers that are coming to Texas when Facebook, eBay, all of the technology companies, Apple -- you've got, again, Caterpillar, Toyota -- major manufacturers that are coming into the state of Texas?

Martin's state lost 4,700 jobs in July. That's the fact. You lost 4,700 jobs in July. Texas created 18,200. So this idea that, I mean, there's some real...

O'MALLEY: And in August, we created 9,700.

PERRY: There's some real disconnect here about the story that's gone on that we're hearing at this table and what the facts are.

Everybody in this country understands that there's something really fascinating going on in the state of Texas, and it's been going on for some time.

How in the world would you -- I mean, what's the reasoning that you would give, if the story that you're painting, Stephanie, is even close to true, why would Facebook, eBay, those major technology companies move to the state of Texas if it was such a dark and ominous place...

GINGRICH: I think -- I think Governor O'Malley wants to answer.

O'MALLEY: Governor, it's great that you have those companies in Texas. We have great companies -- Lockheed Martin, Under Armour, Marriott and others -- in Maryland. And they're great companies.


O'MALLEY: Well, and you're welcome to try.

PERRY: We are.

O'MALLEY: I know you are.

PERRY: I'm here, and I've made progress.

O'MALLEY: But the fact of the matter is we have the No. 1 median income in the country. You have the 25th median income. Your state is tied for last place, along with Mississippi now, in the percentage of your people who work in minimum or less than minimum-wage jobs. That's not an economy that is actually lifting up the middle class and expanding economic opportunity.

We made college more affordable. You made college more expensive...

PERRY: Your colleges were more expensive than the state of Texas tuition and costs. That's just the facts.

O'MALLEY: We've made our schools the No. 1 in America for five years in a row. You've had the greatest number of uninsured citizens.

PERRY: You're trying to -- trying to say that Texas and Maryland are the same are talking a lot like apples...

O'MALLEY: Oh, no, they're very different.

PERRY: They very -- they truly are very different. You led the nation in the creation of government jobs in 2008 to 2012.

O'MALLEY: Not true.

PERRY: Yes, you did. That's factual. Next door to Washington, D.C. is a pretty good draw.

But at some point in time, this issue is really about who has the best idea about how to grow America, how to put Americans to work. And it's the private sector.

O'MALLEY: I agree. And 90 percent of our jobs have come from the private sector since the Bush recession happened. That's 90 percent are private sector.

PERRY: But your job growth has been abysmal compared to states like Texas.

O'MALLEY: Actually, last year we led the region in rate of jobs.

PERRY: We're talking about America here.

GINGRICH: We had this dialogue earlier about low-paying jobs. And I want to ask from that perspective, the city of Baltimore, one out of every four people is in poverty. Wouldn't they actually be better off to have a job, even if it was a minimum-wage job?

O'MALLEY: Oh, absolutely. There's dignity in all work. And every job is important. And this year, we moved more of our citizens from welfare into work than at any time in the history of the welfare-to- work program. So that's very important.

But what I'm trying to underscore here, Newt, is that it's -- there's a mix that's required. You not only have to be willing to cut your budget, you not only have to be willing to be fiscally responsible. We have a triple-A bond rating. You also have to be willing to make the smart investments that actually improve the levels of education for your people, improve their skills.

We have the third best talent pipeline of any state in America. That's not according to me; that's according to the U.S. Chamber of Commerce. And we rank No. 1 in innovation and entrepreneurship, again according to the U.S. Chamber of Commerce. And we rank the fourth best state for new -- new business start-ups, according to "Fast Company" magazine.

So we believe that you need to educate, you need to innovate, you need to rebuild and need to give to your next generation the opportunity to move up the ladders of success, not simply to see their wages decline, which is what's been happening in our country...

PERRY: Absolutely not correct. That is not correct if you're pointing to Texas with that. When you look and see what we've done in our public schools in the state of Texas, particularly over the last decade, we have seen the national assessment of educational progress. That's kind of the gold standard, I think you'll agree, when you talk about how kids are doing in school. Eighth-grade African-American and eighth-grade Hispanic kids in the state of Texas scored the second highest in America.

That's the type of progress you're looking for, particularly in the areas that people care about, which is those stem courses and where you're moving them into college. We've had almost a half a million young Hispanics access higher education in the state of Texas from 2000 to 2011.

O'MALLEY: And the second worst -- and the second to worst dropout rate in your high schools.

PERRY: Our graduation rates are 86 percent in the state of Texas. You know what yours are in Maryland?

O'MALLEY: They're improving. Eighty-three percent. PERRY: That's less than 86, Governor.

CUTTER: Look, I think that we're throwing a lot of statistics around. I want to change course a little bit.

Today the Chamber of Commerce put out a letter asking House Republicans to stop playing games with the debt limit. You've previously told them, told House Republicans not to raise the debt limit. Is that still your position?

PERRY: It is. I think it's not in the country's interest to -- to raise the debt limit. They need to address the spending issue. Americans realize that one of the great problems that we have in this country is this massive debt that's been created. Multi generations...

CUTTER: The business community versus Republican politics, that's where you're coming down?

PERRY: I'm coming down with the people of the United States.

CUTTER: Even though you've increased your debt by 300 percent?

PERRY: The bottom line is we've been growing at a state. And we've got a bond rate as high as...

CUTTER: And your debt.

PERRY: The debt in the state of Texas is one of the -- per capita -- our debt in the state of Texas is one of the fourth lowest in the country. So the idea that we've increased debt versus our ability to be able to pay it off -- and what we're doing in the state of Texas, again, you're Apples and oranges on your...

CUTTER: The numbers are the numbers. But we're going to take a quick break. One person at this table is turning down billions of dollars of money to help his state citizens. I'll ask him why next.


CUTTER: Welcome back. Maryland Democratic Governor Martin O'Malley and Texas Republican Governor Rick Perry are in the CROSSFIRE tonight.

What I most want to ask, Governor Perry, is about health care. And as I said in the break, I'm sure you've been asked this a million times. So the answer should be great.

You've been very critical of the president's health-care law, now the national law on health care. Yet one in four of your citizens are lacking insurance. They can't get the care that they need. You are refusing to implement the law or take any of its funding. How do you rationalize that with your own citizens?

PERRY: I think you're wrong in your synopsis there that you say they can't get the care that they need. They do get the care. They've got access to health care in the state of Texas. We made the decision in the state of Texas that this is how we're going to operate our state, that we don't count as a big success the number of people that you put on government assistance. We allow them the freedom to...

CUTTER: So where are they getting their care?

PERRY: They get health care in a multitude of different places. Federally-qualified health...

CUTTER: Did they pay for it?

PERRY: Some do, some don't. But the fact is they do have access to health care. So I think it's a bit of a misnomer for you to say that they don't get the health care they need. They do get that.

CUTTER: They show up at...

PERRY: But let's get back to Obama care and why we don't want to participate in Obama care. No. 1, we know that it's a broken system. Even the expansion of Medicaid was one of those things that we said we're not going to participate in.

And the reason is because even the president himself in 2009 said Medicaid is a broken system. And I agree with him: Medicaid is a broken system. And why would we want to put thousands -- tens of thousands of people on a system that is broken? Because it would be tantamount to putting another 1,000 people on the Titanic, knowing how that's going to turn out.

CUTTER: Well, if you did, you'd cut your uninsured rate in half, including hundreds of thousands of veterans these days who are lacking insurance.

PERRY: Listen. Eighteen -- If we were to put $18 billion over the next ten years is what it's going to cost the state of Texas, $100 billion in total costs is what Medicaid would cost the state of Texas in the next 100 -- or next ten years, we would only see 3 percent drop in the uninsured rate in the state of Texas. So the idea that you're going to put...

CUTTER: I don't think that that's accurate.

PERRY: I do think that's accurate.

CUTTER: And the other thing is, you are talking about -- for the one in four Texans that are lacking insurance, maybe some of them could afford to buy insurance, and they're choosing not to. But many of them cannot afford it, so they don't have insurance.

PERRY: They have access to health care.

CUTTER: Which means they show up at the emergency room to get their health care.

PERRY: I think the idea that -- the left wants to say everybody has to go get insurance.

CUTTER: Regardless of that, though...

PERRY: What we say is people shouldn't have...

CUTTER: ... they are showing up at the emergency room to get their health care.

PERRY: And you know what? The people of the state of Texas have made the decision that that is how they would rather run their health-care system rather than allow for Washington, D.C...

CUTTER: The cost of that -- the cost of that falls to local communities, hospitals, people with insurance, who are carrying those without the insurance. But if you implemented Obama care, all of that -- all of that cost would go down.

PERRY: I suggest to you that the cost -- why are the unions standing up and saying that they're against Obama care now? I mean, the unions, which were one of the strong supporters of Obama care through the years? Because we heard, you're going to see your premiums go down by $2,500. Now we know they're going up by three -- by $3,000.

You said you're going to be able to keep your doctors. We know that's not right. So the whole premise of which Obama care was sold to the American people, even the labor unions are saying, "You know, we don't think we want to participate in this. Thank you very much."

GINGRICH: Let me ask Governor O'Malley about that. Because you've been a strong supporter of the president. You are a strong supporter. And you run a government, so you understand the importance of actually running something.

Obama care so far has missed 41 out of 82 deadlines. And we're coming right up on October 1. Doesn't it trouble you that there are that many different parts of the system that are literally not meeting the standard? For example, they have no check on who's going to apply to get money from the government, and they're going to rely on, quote, "an honor system." Now, as somebody who runs a government, balances a budget, doesn't that worry you to think that we're going to give away billions under an honor system?

O'MALLEY: Well, I think we were talking when I was listening to the governor earlier, he was talking about a broken system. What we have right now is a broken system.

For our part in Maryland, I can't speak to the 41 misses in the federal bureaucracy, but I can tell you that we've decided to be an early implementer of the Affordable Care Act, and we know that there's going to be hiccups. We know that this won't be easy. But we also know that it's crazy to depart with 17 percent of GDP for our health care. No other industrial nation does that.

When I was a boy it was about 5 percent of GDP for health care. So we believe that we're going to have a competitive advantage on states like Texas that don't implement this.

GINGRICH: So let me build on that a second. I'll ask you two other questions. One is you just saw Walgreens announce that they're dropping their corporate insurance, and they're going to give people money to go out and buy their own insurance. Doesn't it concern you when you see big companies like that, in essence saying to people, we're now going to dump you onto the exchanges, good luck? And doesn't that change what has been the No. 1 insurance model for the whole country, which was an employer-based system?

O'MALLEY: Well, sure, it's concerning. And we need to be able to be willing to adjust and make changes as we move forward with this. If this were easy, we would have done it long ago as a country.

For our part, though, we will be meeting the deadline come October 1. We have a lot of smart people working to implement the exchanges, and we're moving forward, not back. And we're excited by the challenge.

And we know also, we think this. We think that we're actually going to be able to increase our competitive advantage and that even more people will start businesses when they don't have to worry about losing their health insurance if they move from another plan. So we're excited about what this can do for our competitiveness.

GINGRICH: Do you think in that model, you know, Walgreens and others and in your own state two community colleges have now announced they're going to have shorter time periods. I think Ocean City government has announced they have shorter time periods so they have fewer people who are eligible because they keep them under 30 hours a week. I think a major corporation has also done that.

Do you think it would also be fair then for state and federal employees to have to go to the same exchanges under the same conditions as employees at places like Walgreens?

O'MALLEY: I suppose if their government dumped their health insurance, they'd have to. But I think...

GINGRICH: ... the money like Walgreens.

CUTTER: Well, Walgreens, just to correct the record here, Walgreens is going into a private exchange. It's pooling its coverage with other private businesses, an option that they didn't have before. If they have the ability to lower costs and provide better care, why shouldn't they be allowed to do that?

GINGRICH: But they're not going to provide group insurance. They have to give people a voucher.

CUTTER: But their costs are going to go down.

PERRY: From the standpoint of a couple of governors who have the responsibility to make decisions in each of our states, wouldn't you rather have the flexibility that Washington, D.C., basically said, "Listen, we think Maryland knows best how to run the health-care program in the state of Maryland." That's one of the things that I've been promoting for a long time, is the idea of the flexibility of block granting back to the states. And we could never get the federal government to allow us to do -- that's one of the things that I would...

CUTTER: The law actually allows you to do that.

PERRY: Well, not as far as block granting goes, because we've asked multiple times to have the ability to allow Texas to set its own program into place. And we think we're very capable, and I think you're capable of making those decisions better for Maryland decisions than somebody in Washington, D.C., with a one-size-fits-all.

And that's my problem with Obama care. It's Washington, D.C., forcing the states to meet all of these standards, and that's why we've said, "No, thank you, we're not going to participate with this. We're not going to be involved in the exchange."

O'MALLEY: We haven't had that experience. We've actually found that HHS has been very responsive, and that we do receive the flexibility. You and I differ in terms of, you know, capping it and block granting it and not letting people sign up. But a lot of the other governors are also having the -- are receiving the flexibility. But if you don't want to do it, you know, you're not going to do it.

PERRY: That's going to be our -- that's going to be our choice. We're not going to -- we're not going to sit there and allow for Washington, D.C., to make decisions for how health care is delivered in the state of Texas and bankrupt our state, because we've run the numbers.

And we think that there is a clear path towards the bankruptcy not only of our states but of this country if this goes into place the way that it's set up today.

O'MALLEY: You should come to the National Governors' Association meetings again. I know Texas seceded from the National Governors' Association, but if you came, you might be able to learn from some of the other governors that are actually implementing this, doing it well and actually doing a better job of supporting an innovation economy and their workers' well-being.

PERRY: Well, the bottom line is going to be, by seeing which of these states succeed as we go into the future. Right now on job creation, Texas is leading the march.

O'MALLEY: On schools and median income, Maryland is leading the march. On innovation, Maryland is leading the march.

GINGRICH: Let me ask -- let me ask you both to stay right with us. Next the results of our "Fireback" question. Would you rather live in Maryland or Texas?


CUTTER: Welcome back. Tonight we're talking about the governors of Texas and Maryland, which leads us right to another "Fireback" question on Facebook or Twitter. "Would you rather live in Texas or Maryland?" Right now, 54 percent say Maryland; 46 percent say Texas. And before we close out, I just want to point out one thing. I think I'm the only one sitting at this table who has never thought about running for president. Am I right? I'm right.

PERRY: I don't know whether you've ever thought about it or not.

CUTTER: Let's assume the answer is yes.

The debate continues online at as well as Facebook and Twitter. From the left, I'm Stephanie Cutter.

GINGRICH: From the right, I'm Newt Gingrich. Join us tomorrow for another edition of CROSSFIRE.

"ERIN BURNETT OUTFRONT" starts right now.