Legal Lines with Locke Meredith
Buddy Roemer
Show #105
Mr. Meredith: Hello, I’m Locke Meredith and I’d like to invite you to join me on the next Legal Lines. We are very pleased to have on the show the former Governor of Louisiana, Buddy Roemer. The Governor is going to talk to us about where we find ourselves today in the State and the Federal economies. He has expertise in this area because he graduated from Harvard with a Masters Degree in Economics and Banking. So join us on the next Legal Lines with former Governor, Buddy Roemer.
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Mr. Meredith: Welcome to Legal Lines. I’m Locke Meredith and I’m very pleased to have on the show today Governor Buddy Roemer. Governor, thank you so much for being on the show.
Governor Roemer: Thanks Locke, it’s good to be here. Just don’t ask me any legal questions.
Mr. Meredith: Not a problem. I know you have a lot more areas of expertise based on what we are dealing with today. Let’s briefly tell the folks about your educational history because it’s unique in the sense that it has given you the expertise to comment on the issues that our local government, state government, and federal governments are dealing with.
Governor Roemer: Well, I attended public school in North Louisiana. I’m from Bossier Parish. I was valedictorian of my high school, Bossier High School. I went to Harvard at a young age, I was sixteen. I majored in economics. Then I went to the Harvard Business School and majored in banking and public finance. I got my MBA in 1967. I am sixty-six now. I came back to Louisiana and have been here basically ever since. My formal education was in the area of macro and micro economics and in business formation and finance. It has become relevant in the world today.
Mr. Meredith: I was going to say it was from one of the preeminent schools in our nation, in frankly the world.
Governor Roemer: They think they are a lot better than they are Locke. So don’t build them up.
Mr. Meredith: The bottom line is that we want to hear what you have to say about the circumstances that our State and really Federal governments find themselves in.
Governor Roemer: Well, two points, if I can make them right quick and then we can discuss them. First of all, I think Louisiana is well situated. It’s in the right Country; I’d rather be in America than anywhere else. We are at the heart of the Gulf South from Texas to Florida. As an economist I look across the country. I look at the far West, too hot, too dry, no water, no oil and gas, overcrowded, taxes are too high. I look at the Midwest there’s no manufacturing, about a forty percent unemployment rate, no oil, no gas, not much water. I look at the Northeast part of the Country too many lawyers, excuse me Locke, too many students, too many entertainers, they don’t want to make anything. The two parts of the country that are going to do well in the next twenty five years are the Atlantic Coast from Virginia and Maryland down to Florida. I like where they are. Their education system is good, they don’t have the water, oil and gas that we do but they have a good work ethic. They have low taxes and they want to produce. The Gulf South, they have eight deep water ports, straddling the Mississippi River, natural gas; we have everything go for us. The first point I want to make is the reason I started a bank here. I think the Gulf South, Texas, Louisiana, Mississippi, Alabama, Georgia, Tennessee, Northern Florida, Arkansas, I think that is where the country is going to grow for the next twenty five years.
Mr. Meredith: Interesting.
Governor Roemer: I like being here. The only thing that can stop us, I think, by the way we have good leadership in Louisiana. We have a Governor that’s young and fresh. I like this guy. He irritates me sometimes but heck every Governor does that. He’s not going to do it my way, I think he’s going to do it our way and I like that.
Mr. Meredith: Interesting. What do you mean by that?
Governor Roemer: I mean that he doesn’t have an agenda of one, two, three and it has to be done that way. I think he listens a lot. I like that. He started the practice of going around to small towns.
Mr. Meredith: That’s how he got elected.
Governor Roemer: I’m telling you, I wish I would have thought of it. I would drive through a town and visit with someone in a grocery store but he does it very formally. Very Methodically. I think it is going to make him a better Governor. I think he is a better Governor in his second year than he was his first year. You know why? I think he has listened to more people. That’s what I mean about having the flexibility and the focus to listen and then execute the job plan. Back to the region, we have a State that is perfectly located. We have a State with good, young leadership in Congress, the Legislature, and at the Governor. We have a State that is not written with corruption or scandal.
Mr. Meredith: And you frankly rose to your Governorship under that flag. The Roemer reform.
Governor Roemer: Most people would never come to Louisiana. They only know us by our reputation. With some Governors, all they did was laugh at us. Well they aren’t laughing anymore. I give Bobby Jindal and those of us who worked hard to do that, I give us a lot of credit. Once again, my first point is that we are in good shape as a State. We have hurdles, we have budget in balancing, tough decisions, we need to make some changes, higher education structure and we can talk about that on another show, but I like where Louisiana is. Number two that I want to make, the thing that is a danger to us is that if the Country as a whole does not get its act together and do its financial, fiscal and monetary policies in long term, so that we can create jobs in this country we have a problem in America. The problem is we are spending money that we don’t have in an unfocused way and it will lead to either a mountain of debt or taxes on the increase. John Kennedy pointed out, a pretty good economist, fifty years ago he pointed out that a rising tide lifts all boats. The best way to get the tide up and what Kennedy did was lower the tax rate on capital gain.
Mr. Meredith: You are talking about the President John Kennedy?
Governor Roemer: Yes. I’m not talking about Ted. I am talking about the man who is no longer with us, well neither are now, but I am talking about John Kennedy who as a young man I really liked as President. We’ve come fifty years now and we are having to learn these lessons again. This year President Obama has recommended and the Congress has passed about two trillion dollars of spending that we don’t have. The budget is out of balance that much and they are borrowing all of that money. At the turn of the century, 2000, we had borrowed 2.1 trillion as a nation. That was our National debt. Do you know what our National debt is now? 14.3 trillion.
Mr. Meredith: And they just raised it what, last week?
Governor Roemer: From 13 to 14.3 trillion. In ten years we have gone from two trillion to fourteen. We are out of balance.
Mr. Meredith: We are out of control.
Governor Roemer: Federal spending is out of control. We want to create jobs in America. The enemy of jobs is Federal spending too big, debt too large to borrow that money, and the jobs growth will slow down. That’s why we are in trouble as a Country. The President can talk about taking a small portion of the budget and putting a freeze on it but it was only sixteen percent.
Mr. Meredith: and it doesn’t even go into effect until 2011.
Governor Roemer: Next year. We need to do it now. I would vote against Burnake going back to the Feds, I would vote against the increase in this Federal spending. I think it is time for someone to say, we love you America but we can’t finance all of these programs. We will do the ones that are critical, we will invest in our children and we will quit spending Federal money like we are doing now.
Mr. Meredith: Well let’s talk about exactly what you would recommend to make that happen on the next segment.
This is Locke Meredith with Legal Lines and Governor Buddy Roemer. We will be right back.
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Mr. Meredith: Welcome back to Legal Lines. Again we are very pleased to have on the show today Governor Buddy Roemer. Again, Governor thank you for being on the show today.
Governor Roemer: Thanks Locke. Should I shake your hand again or is once enough?
Mr. Meredith: Once is enough. Let’s talk about, you’ve identified the problem. How are we going to fix this?
Governor Roemer: Well it’s not going to be easy and both parties have been guilty of mismanagement and lack of discipline. Just because I am a Republican I am not going to say that the Democrats are out of control. They are, but the Republicans have been out of control too. The first half dozen years of George Bush were unbelievable. I forgave him somewhat, because we were fighting two wars and all this kind of stuff but enough already. I think we need to spend money on critical things and fighting the terrorists is one of them, I can do that but we are spending money now that we don’t have. Somebody asked me the other day, “Well they are spending our tax money Buddy.” No they are not, they have already spent it, and they are spending our grandchildren’s savings.
What would my recommendations be? Let me give you two or three. One, I would have a multi-year budget. Right now we budget one year at a time. It’s like we start over every year. Nothing ever finishes so we don’t focus on it. It would be like you built a building that took you eight years to build but you put the budget together once every year. It doesn’t work like that; you need an eight year budget. Well, why don’t we have a four year, or a five year budget?
Mr. Meredith: Why don’t we?
Governor Roemer: I can’t answer that. I don’t have a good answer.
Mr. Meredith: I guess politics?
Governor Roemer: It has to be. I was in Congress for eight years. I used to submit my own budget Locke. I got more votes than President Reagan or the Democrats.
Mr. Meredith: On your budget?
Governor Roemer: On my budget. It was simple, easy to understand. They could do this Locke. If they decided to quit making points against each other, if they decided to not worry about their re-election, if they decided to put their Country first. You know how I got elected to Congress in 1980? I walked across my District. We had a project from the Federal government; it was going to be four billion dollars. It was to make the Red River navigable. Remember that project?
Mr. Meredith: I do now that you are saying that.
Governor Roemer: I said guys I will give this project back. I will ask every Congressman to give back one project and we will balance the budget.
Mr. Meredith: And you balanced the State budget three years in a row.
Governor Roemer: absolutely. Governors have to do that. That’s the Constitution. Back to the Federal budget, it can be done only over a several year period. Let’s see the several year budget. Don’t give me one budget and say to me that we will get to that next year. Show me a multi-year budget number one. Number two, go across the aisle to the other party and let’s ask for sacrifice for Americas behalf. Listen to Scott Brown, this young man that got elected in the Democratic State of Massachusetts.
Mr. Meredith: Ted Kennedy’s old seat.
Governor Roemer: Exactly. What did he talk about? He talked about spending our money where we needed to on Military defense, protecting the Country. He said everything else was up for negotiation that we were going to cut back. The best way to compete is to cooperate. We are running out of our competitive strength with the rest of the world. I would ask our parties to cooperate when it comes to creating jobs, and putting America back to work. A multi-year budget, everyone give up a project, lets take the long range view, lets cut taxes on small business. You will lose a little money at first but when they blossom, the Country blossoms. Kennedy proved that, Ronald Reagan proved that, this President, this Congress ought to look like that. Finally, I think we need leadership. We need somebody, somewhere, sometime, some how, to stand up and say if I don’t get re-elected its fine with me. As your Congressman, Senator, as your President, here’s what I am going to do. I am going to ask us to do this right. Lower taxes, lower regulation, let business bloom, and let’s be competitive in the world again.
Mr. Meredith: That makes term limits scream in my head because really what we are saying is this isn’t rocket science. We know what we need to do but politics is getting in the way. Each person is more concerned about their own individual interests instead of the publics.
Governor Roemer: We have a U.S Senator in Louisiana, she shall go nameless, who got three hundred billion, and I think it was, in a healthcare bill that no one read. She enabled it to pass the Senate. She voted for it because she got three hundred billion for Louisiana. Well that was money that we deserved anyway. That was coming to us anyway. I don’t want her to give up her vote for things that we would have gotten anyway. Does that make sense?
Mr. Meredith: I understand what you’re saying.
Governor Roemer: Why do we let our politicians trade their vote for money? I want her to stand on principle. I want her to lift every Louisianan. I want her to worry about jobs in our State.
Mr. Meredith: Explain to the folks how reducing taxes ultimately helps everybody. The reason I say that Governor, is because the Democratic philosophy is give us your money and we are going to spend it for you. We can do it better than you. For the most part, the Republican strategy is you keep your money and you spend it the most wise and efficient way and that will benefit others.
Governor Roemer: Twenty six percent of our grossed domestic product, that’s all the business in America is controlled by the Congress and the Federal government.
Mr. Meredith: Just twenty six?
Governor Roemer: Twenty six percent. At the height of the depression it was seventeen. It’s only been higher three years and that was World War II. We are out of control. Taxes are the revenue that feeds government. If government is too big, how do you stop it? You lower the taxes because then they don’t have the revenue.
Mr. Meredith: You would hope but what they do is they keep raising the deficit ceiling.
Governor Roemer: The borrowing will come to an end Locke. It did a little bit last year when there was a paralysis in the government and in the credit markets. At the end of the day, the U.S government cannot keep borrowing money from China.
Mr. Meredith: Do you think that the China government is ultimately going to say, enough is enough we are not going to give you anymore?
Governor Roemer: They already told the President that in the last year of George Bush’s Presidency. Fannie Mae and Freddie Mac doing all of these mortgages and the President said they need to be business like, let them pay the consequences and China called the White House, the Prime Minister did and told the President of The United States, that debt is backed by the Federal government. That’s the way we bought it Mr. President and we expect you to honor it.
Mr. Meredith: Interesting.
Governor Roemer: These are tough times. We need a tough leader.
Mr. Meredith: It’s a National Security interest Governor. When China tells us what we have to do, we have a problem.
Governor Roemer: Locke, we are not there yet. I can see it coming unless someone stops this flow. We are spending too much money at the Federal level. We are borrowing too much debt to pay it. The job growth is zero. Let me give you a number, zero.
Mr. Meredith: So where do we go from here?
Governor Roemer: We need a new plan. We will talk about that when we talk again.
Mr. Meredith: Let’s talk about that on the next segment. This is Locke Meredith with Legal Lines and Governor Buddy Roemer. We will be right back.
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Mr. Meredith: Welcome back to Legal Lines. Again, I am very pleased to have on the show today Governor Buddy Roemer.
Governor Roemer: Good to be here Locke.
Mr. Meredith: Thank you again. Let’s take it forward. So we have identified the crisis that seems to be on the horizon and what needs to be done in terms of a plan. What do we do?
Governor Roemer: Let’s divide it up. It’s too big to get your arms around.
Mr. Meredith: It is.
Governor Roemer: Let’s talk about little parts of it and how it affects me and you. How does it affect Baton Rouge? How does it affect Ascension Parish? The first thing I think we need to start with is spending. Spending is out of control and we eventually have to pay for that. We pay for it either in higher taxes, which kills business, and loses the number of jobs, therefore ours sons, daughters and neighbors lose their jobs.
Mr. Meredith: They stay with us in the house a lot longer.
Governor Roemer: Exactly. That’s pretty expensive. We either raise taxes or we borrow money. So lets talk about number three. We have spending, its too big, we have taxes they need to be lowered.
Mr. Meredith: And they are talking about raising them.
Governor Roemer: They are talking about raising them. It’s a mistake but it often happens first. They will talk about raising them. I think we can get them to lower it.
Mr. Meredith: They are talking about some kind of business credit.
Governor Roemer: They are but I don’t think that large business ought to get breaks and small businesses have no idea what’s happening.
Mr. Meredith: Small businesses, as I understand it, generate seventy percent of the jobs.
Governor Roemer: It’s better than that. Its eighty percent. Eighty percent of all the jobs in America in the last twenty five years were created by companies with five hundred employees or less. That’s the definition of a small business at the Federal level. Mom and Pop stores, my bank has eighty employees. That’s a small business in America. We increased twenty five percent last year in the number of jobs. The thing that hurts small business are tax raises and regulatory pressures. As you know, I was on the board for years at the Shaw Group. Well Shaw has its own Lawyers and own regulatory people. A small business doesn’t have that. They have to go hire a Lawyer, hire a lobbyist, hire a representative they cant afford it. So regulations hurt small business. Taxes need to be stable and lower. Regulations need to be stable and less that will let small business grow.
Mr. Meredith: It lets the people work.
Governor Roemer: If President Obama would do that he would be a hero in the next two years. Jobs would blossom. The third area is the area of borrowing. Let me talk about that as an old banker, you would think I want to lend money to everyone. Just loan a lot of money. We’ve over done it. The credit crisis of two years ago and last year came because we lent money to people, good people, who wanted to buy a house and we made credit so easy, I say we, the Federal government did; Fannie Mae and Freddie Mac. It was political. Barney, Frank and other guys say, every American, I mean President Bush said it, Bill Clinton said it, every American should own a house.
Mr. Meredith: Which would be great, but they have to be able to afford it.
Governor Roemer: Shouldn’t they be able to afford to pay off the mortgage on that house? Rates were lowered to four percent, five percent and people were lent money to buy a two hundred and fifty thousand dollar home. Three million Americans were lent money to buy a two hundred and forty thousand dollar average home and they didn’t make their first month repayment Locke.
Mr. Meredith: I need you to say that again. Three million people borrowed money and never made the first mortgage payment?
Governor Roemer: Not one. These aren’t evil people. They just got sucked in by some new mortgage company, banks and a Federal government that wasn’t rooted in reality and they were given money.
Mr. Meredith: And the reason the banks didn’t care is because they sold that paper to the Federal government, got their money out and then another man is sitting there holding a worthless mortgage.
Governor Roemer: My job is not to convict somebody. Let me convict the system. My little bank is six hundred million dollars. It didn’t take any Federal money, we took no bailout money, and we are free and independent. I am proud of us, we have a had a profit for twelve consecutive quarters. We’ve gone right through this. It’s been hard and tough but we are profitable and growing all over Louisiana. Let me talk about the Wall Street banks, the big boys who should know better. They are all on the Federal bailout list. They all pay their Presidents five, ten, fifteen, twenty, thirty, forty-five million dollars. I think in a free market system they should do what they want to but I will be damned if I am happy as a taxpayer of bailing them out after they do that. They got greedy. They wanted their profits to double and triple. They started lending money to people that couldn’t pay them back.
Mr. Meredith: And they didn’t care.
Governor Roemer: They didn’t care they were making money out of it. They sold that paper overseas, they sold it to another bank, and they sold it to whoever.
Mr. Meredith: Whoever would buy it.
Governor Roemer: Whoever would buy it. It was a system gone crazy.
Mr. Meredith: And China bought a lot of it didn’t they?
Governor Roemer: China bought a lot of it. About sixty or seventy percent of it. They are going to get their money back. America has got a problem. It can be solved Locke, I don’t want to be negative. It can be solved. We need a President to lead, we need a multi-year budget, we need to lower the tax burden on smaller business, we need to tell the banks they are not too big to fail and we need to move on with the free enterprise system.
Mr. Meredith: Governor, tell the folks what is going to happen if those steps aren’t taken.
Governor Roemer: There will be a tsunami at some point of high interest rates coming towards us. I remember, I’m old enough to remember Jimmy Carter.
Mr. Meredith: Me too.
Governor Roemer: As President. We went through a smaller version of this. High taxes, high regulation, low productivity, low job creation, a recession came and interest rates went to twenty one percent on the prime.
Mr. Meredith: In fact, I read today that Burnake, who is the Fed chairman, is now talking about steps that he and the Feds are going to take to pull the money out of the system which is going to result in the interest rates going up.
Governor Roemer: Look, I’m not negative. It can be done. We need a plan, we need to tell everyone what the plan is and we need three or four years to get it done. We cant wait until next year, now Mr. President lead.
Mr. Meredith: Governor, do we have three or four years?
Governor Roemer: I don’t think so.
Mr. Meredith: So if you are advising just Joe Blow who has a house mortgage and credit card debt, do you tell them you need to pay off that debt as soon as possible because interests rates are going to go up.
Governor Roemer: Yea, if you have a good thirty year mortgage at five percent hang on to that don’t give it up. I don’t think this is going to happen tomorrow but its happening already.
Mr. Meredith: Do you see any leader on the horizon that you think has..
Governor Roemer: I’m going for Scott Brown now from Massachusetts. There are plenty of good leaders. A guy named Pat Ryan is in the Congress. He is from Wisconsin or Minnesota, remember that name. I like what he is doing. He is trying to put his own budget plan together.
Mr. Meredith: What about Democrats? Do you see any Democrats who are fiscally conservative and willing to tackle this in a fair way?
Governor Roemer: Ya know, I’ve been out of politics for so long, thank goodness, that I haven’t worried about people or personalities in Washington. I’m sure that the Democrats have some. I was a Democrat when I was in Congress, it’s a party of pride. I am so proud to be a part of the Abraham Lincoln party now.
Mr. Meredith: Governor, thank you so much for being on the show. I really appreciate it.
This is Locke Meredith with Legal Lines and Governor Buddy Roemer. Thank you for being with us.
