Steve Poizner speaks with Eric Schmidt

Uploaded by AtGoogleTalks on 14.04.2010

>>> Hello. My name's Leslie Miller.
I'm the California Policy Manager here at Google.
And I am pleased to introduce Eric and our current insurance commissioner and Republican
candidate for governor, Steve Poizner. First, I'd like to just say a few remarks
about Mr. Poizner before they get started. And then Eric is going to do some Q&A with
him and open it up to Googlers. Steve has had some great success here in Silicon
Valley. He founded two companies, both of them were
acquired, the latter being acquired by Qualcomm for a sizable amount of money.
It's up to him if he wants to discuss that. But after he sold his last company, he took
a detour and has been committed to public service since then.
He was a White House fellow. He taught at a local high school around here
for a year. And he's been our insurance commissioner for
the last few years. And for those of you who don't know what an
insurance commissioner is or the importance of that, it is, when you imagine insurance
companies increasing their rates or going after you for more money than what you think
is fair as a consumer, it's his responsibility to run the agency that has consumer protection.
So it's an important job. And I'm pleased to introduce our insurance
commissioner, Steve Poizner, and Eric. [ Applause ]
>>Steve Poizner: Thank you, all. >>Eric Schmidt: Thank you, Steve.
The -- Thank you very much for coming here to Google as part of our series on our upcoming
gubernatorial race. I have a very simple question.
It seems to me, if I look at California, you've got so far $41 billion budget deficit.
You have a situation in the legislature where it requires a two-thirds majority to essentially
enact anything that involves spending. Redistricting and politics make it almost
impossible to build a consensus, according to everyone who's part of it.
A million people, a budget that never gets signed, huge frustration with the local government.
Why are you running for this job? [ Laughter ]
>>Steve Poizner: Well, Eric, I came here for a pep talk.
[ Laughter ] >>Steve Poizner: Actually, it's a great question.
I get this question all the time on the campaign trail.
Like, why on Earth would you want to be governor in the midst of this meltdown.
This is the worst economic crisis in the state's 160-year history.
We have 3,000 people a week that pick up and leave the state of California, the schools
are deteriorating. You talked about the budget deficit.
We're out of cash, bankrupt as a state, worst credit rating.
Honestly, this is the best time to be running for governor, it's the best time to be governor.
Sometimes it takes a huge meltdown, a huge crisis, in order to galvanize a new coalition
of people. Over the course of our chat here, we'll talk
about some of my positions on policy, but, honestly, I'm not here as a partisan warrior.
I'm here to gather together a group of Californians, Republicans, Democrats, and Independents alike,
to put together a new working coalition of folks to get our state back.
I think California is heading completely the wrong direction, totally.
I want to take California in a completely different direction.
Sometimes a real meltdown, a real crisis, is exactly what it takes in order to get at
some of the structural problems that face our state.
If I can mention one other thing. I came here 30 years ago from Texas.
Maybe my Texas accent will come out. I love California.
California is worth fighting for. This is just a beautiful state, great people,
great natural resources. The state is in deep trouble.
And I just can't sit on the sidelines. >>Eric Schmidt: It's interesting that you're
here at Google. You went to Stanford Business School.
You have a E.E. degree, always good to see engineers in politics.
Are there any engineers here? >>Steve Poizner: Yes, okay, good.
In Sacramento, it can be pretty lonely for us engineers here.
>>Eric Schmidt: We're send being our best and brightest to somewhere else.
It's interesting that your first company was a mapping company of some kind, and your second
company was a GPS company. So when you come to Google, do you see the
technology that you worked on? Is there -- what is the connection between
what you did as a young entrepreneur -- 'cause -- in what I read about you, you're basically
an entrepreneur. You have started companies.
It's what you think. Does it show up here.
>>Steve Poizner: Thank you for calling me a entrepreneur.
I really do think that is the one word -- if someone asked me just one word, what are
you? I'm an entrepreneur.
Not only in the private sector, but I've been an entrepreneur in public education reform
with the charter school movement, in the Department of Insurance.
I have to say I'm thrilled to see some of the things I worked on in my first two companies,
you have taken advantage of this. My first company, Strategic Mapping, 1982,
could have been the first digital mapping technology for PCs and Macintoshes back then.
We developed a G graphic information systems technology that before was on a mainframe.
We moved that to a PC with a nice user interface. We sold tens of thousands of copies to people
who wanted to analyze data that had some G graphic component to it and then display it
in map form on a PC or a Macintosh. And my second company came out of my first
company. People started to use our mapping software
with GPS systems to map out the locations of things on a map.
And so my second company came out of that idea.
I was watching a TV show one day where someone was being reported upon who had major handicaps,
was in a wheelchair in the back of a van. The van comes to a grinding halt on railroad
tracks. The person whips out the cell phone after
the driver has a heart attack, passes out. The person who's handicapped talks to the
911 operator, "Help me. My van is on a railroad track. The driver is passed out."
And then the 911 operator never could locate the person in time, and that person got hit
by a train, and it killed them. And I said, I'm going to start a company to
solve that problem. So my second company, SnapTrack, we figured
out a way to put a GPS receiver into a cell phone.
Maybe there are some electrical engineers in the audience.
In Sacramento, I never get to talk about this. So let me just say that it is hard to put
a GPS receiver into a cell phone and make it work.
GPS receivers were designed to be used in airplanes and ships where you have a clear
view of the sky. We figured it out.
700 million cell phones have this SnapTrack location feature.
Sold it to Qualcomm. And, of course, you all take full advantage
of the fact that cell phones are now location-aware. And it's fantastic to see it.
>>Eric Schmidt: My guess is people here are young enough that they assume it's always
been true that cell phones had GPS in it. And now we know where it came from.
After you did these successful businesses, you ended up in education as -- basically,
as a teacher. Why the shift and why was -- what -- you obviously,
as governor, are going to have to deal with education, which is roughly half or on the
order of half of the state's budget. What did you learn there?
>>Steve Poizner: Well, after running companies in Silicon Valley here for 20 years, I did
decide a few years ago, I just can't sit on the political sidelines, and I have to take
steps to start getting California back on track.
I mean, it's clear even a few years ago that California is heading off a cliff.
And the people that run our state, from both parties, pretty much oblivious to the fact
that we're now in this new global economy where competition's intense.
Our public schools are just deteriorating. It's a fact.
If we don't get the public schools back on track, we'll never fix our great state.
How many of you went to California public schools?
Just curious. Maybe most of you here.
That's the irony, I think, when many of you went to public schools, best in the country.
California had the best public education system in the country, bar none.
We've gone from first to worst in a very short period of time.
I decided, you know, the engineer that I am, decided to plunge in, get into the trenches
in order to understand the issues firsthand. So I decided to volunteer as a teacher.
Well, easier said than done. They didn't exactly embrace me, the public
school system. I don't have a teaching credential.
In fact, Eric, I'm -- maybe I don't -- do you have a teaching credential?
Do you know that you could walk into a high school district right now and they wouldn't
let you teach? I mean, they, of course, would be honored
to have you as a guest teacher. But what happened with me I'm sure would happen
to you or anybody at this point. It's hard to get into the public school system.
That's a problem that needs to be changed. I remember walking into the Eastside Union
High School District, which is on Story and White, East San Jose, about 45 minutes from
my home. Walked in there and said, "I want to volunteer
and teach. I'm not looking for compensation.
I just want to help as much as I can and learn as much as I can."
And the head of personnel comes out, she -- it was during lunch.
She had a scowl on her face, a little mustard on her lip, and she asked me, "Well, what
can I do for you? Why are you here?" I said, "I'm looking to volunteer and teach."
Says, "What qualifies you to be in the classroom?" I said, "Well, hmm, let me think about it.
I have an electrical engineering degree from the University of Austin, graduated number
one in my class. Then came to Stanford Business School, got
an MBA with honors from Stanford. Then I spent 20 years starting and running
high-tech companies in Silicon Valley. And then last year, I was in the White House,
where I worked in the National Security Council in their counterterrorism group.
I got there one week before the 9/11, crisis. Helped build a new Homeland Security plan
for the whole country." Without missing a beat, Eric, she points and
she says, "Nothing you said qualifies you to be in the classroom."
Now, hey, I don't have a big ego or anything, but my ego shrank in size that day as she
sent me packing. But I didn't give up.
And I finally got into the classroom by getting guest teacher status.
>>Eric Schmidt: Why don't you just create a charter school in that situation?
You're an entrepreneur. >>Steve Poizner: Funny you should say something
about charter schools. So I learned everything I needed to know about
the public schools the first day I was teaching. I taught twelfth-grade American Government
at Mount Pleasant High School in East San Jose.
I learned everything I needed to know the first day.
It rained the first day. And it leaked in my classroom and I had to
position the trash can in the right spot to collect the rainwater.
Now, really, public high school, wealthy Silicon Valley, leaky roof.
Just shameful. Who runs this school?
How come they can't fix the roof at Mount Pleasant High School?
Well, when you all went to the public schools, the teachers and the principals and the educators
controlled the schools and the budgets. Not anymore.
The legislature has taken over the running of the public schools through the state education
code. Now, the state education code are these mandates
that they apply uniformly to all public schools at the same time.
There's 10,000 public schools. That's just crazy.
So one reason I'm running for governor, I'm going to rip control of the public schools
out of the hands of Sacramento politicians and move it to the local level where it belongs
and where it used to be. I became convinced that local control is a
key part of the answer here. I went off to help pioneer the growth of the
charter school movement. I am the founder of the California Charter
Schools Association. I have worked with others to build a bunch
of charter schools in East Palo Alto and Oakland. I believe that's a key part of the answer.
They are public schools but granted waivers from the education code.
The education code in the 1960s was this size. Now the education code is this size, 2,400
pages and growing. I want to give all schools the flexibility
that charter schools have. There's over 800 charter schools in California.
The most important education reform activity going on in California, in my opinion.
>>Eric Schmidt: After the charter school movement, you ended up as our insurance commissioner.
And now you actually work, live, and breathe in Sacramento; right.
>>Steve Poizner: Well, actually, I have over 1,000 employees in 16 offices and so I do
lots of traveling around. I do have -- maybe 20, 30% of my time ends
up in Sacramento. My largest office is in Los Angeles.
So lots of moving around. >>Eric Schmidt: So from the perspective of
a Silicon Valley entrepreneur who has gone voluntarily, apparently, to Sacramento to
serve us, what's it actually like? What is the correct criticism for the culture,
the decision-making? If you're governor, it's -- they're all going
to work for you. And you can't fire them.
>>Steve Poizner: Right. So I have --
[ Laughter ] >>Steve Poizner: You can't fire these people,
either. They're pretty good, too.
So I have an 18-year-old daughter. And she just loves to tease me that, dad,
you have the most boring job in the state of California, insurance commissioner.
That's probably what somebody might be thinking right now.
Insurance commissioner turns out to be a fantastic job, though.
It's only one of eight positions elected statewide. I do have this massive oversight of everything
insurance in California. That turns out to be a big number, about $160
billion industry, 10% of the economy. I love my job because when I make a decision,
it impacts everybody, every business, every consumer, every family.
When I get there, three years ago, culture shock.
I'm used to Silicon Valley companies. I get there.
Over 1,000 employees, all of my employees practically are lifetime civil servants.
What that means is that you're part of the civil service system and you really cannot
be fired. It's almost impossible.
So in addition to their civil service protection, they also belong to public employee unions.
So there's collective bargaining agreements that sit on top of the civil service protection.
So it took me maybe, I don't know, five minutes to realize, this is not like running a company
in Silicon Valley. But, Eric, your point's exactly right.
Do I want to get anything done or not? This is my team.
And I had a bold, aggressive agenda and the goals and objectives.
So I had to change. So I had to evolve.
The first thing I did was to go meet them all.
Took me a few months. Met all thousand of my employees.
We built a strategic plan for the Department of Insurance.
I asked questions, why are we doing this program here?
All too often, the answer was, "Well, we've been doing it this way for 50 years."
Well, does it help anybody? Not that we can tell.
Then stop it. We got rid of dozens of programs that didn't
make much difference. Other programs we ramped up.
That's the good thing about a strategic plan. You're reallocating resources to optimize.
Take my fraud unit. I have a couple hundred police officers who
work for me in my insurance fraud unit going after insurance fraud in the middle of a deep
recession. Now, that's high appropriate, because insurance
fraud drives up insurance rates. We have arrested over 2,000 people for insurance
fraud in the last couple years. That's more people to be arrested for insurance
fraud than any other two-year period ever. But the overall impact on my budget, 'cause,
you know, we're in the middle of a financial meltdown, my operating expenses are now lower,
permanently, by 15%. I've generated this big surplus at the Department
of Insurance. I've passed this surplus back into the marketplace
with tax cuts on insurance agents and companies that fund my department.
Now, the last time the Department of Insurance did a strategic plan in its 130-year history
was, well, never. And it can be done.
So one thing I'm going to do as governor is do the same thing across the other 399 different
state departments and state agencies. These are good people who work for the state
of California. The system has got lots of constraints.
But people who work, public employees, will respond to great leadership, just like people
here respond to great leadership. >>Eric Schmidt: Did you find -- develop a
view about the union structure and culture of Sacramento, in particular, it's widely
reported that the teachers' union and the prisons union and so forth have a great deal
of power. Has that been your experience?
>>Steve Poizner: Yes. No question.
And so all of my employees are public employee union members.
I have fantastic employees at the Department of Insurance, honestly.
But the public employee union leadership is a problem.
And we Californians are going to have to address it.
Public employee unions are a very small percentage of the total population, but they have the
lion's share of the political power. And they use their political power in a very
sophisticated way. And they have pretty much access to unlimited
political resources by tapping into the paychecks of public employee union members, do automatic
payroll deductions, and they create these massive political action committee war chests.
And they have used this political power to negotiate unsustainable compensation structures
and pension programs to block reform. So we are going to have to take the power
back. I do support a constitutional amendment that
would curb the power of the public employee unions by forcing the public employee unions
to get permission from the employees first before they yank money out of their paychecks
for political purposes. And so if public employees want to contribute
to political causes, that's their right. But they should have to do so with their permission
in advance. That would be an important step to curb that
power right now that pretty much blocks any kind of reform in Sacramento.
>>Eric Schmidt: Let's talk about this in the context of how the governor actually works.
There is the theoretical model where the governor goes out and gives speeches, provides great
leadership to the state. And then there's the reality, which even the
terminator could not overcome, which is the gridlock that exists among the political parties.
As I understand it, there's a majority of Democratic support.
The Republicans are relatively different in view on both social and financial issues.
The horse trading is severe. We went through in the last couple of years
-- you were there, so you were right in the middle of it -- two essentially failed budget
processes which ultimately have resulted in an unsolvable budget situation.
So what -- as governor, how will you horse trade better than the previous governor?
>>Steve Poizner: Yeah, if Schwarzenegger couldn't do it, how can you do it?
I get that question a lot. No one's ever confused me with Arnold.
That's for sure. I do have a black belt.
I think I could take him, if I had to. [ Laughter ]
>>Steve Poizner: But -- >>Eric Schmidt: Thank goodness, that's not
how our politics work. Only in Korea does that work.
>>Steve Poizner: That could be a step in the right direction.
You never know. Look, we are in a very serious crisis right
now. It really is a meltdown, a complete functional
-- dysfunction, really, in the legislature and in Sacramento.
There's no easy answers. And I enter this race with the full appreciation
of how hard it's going to be. But just like any crisis, there are some steps
you can go through to make progress. The first step is, you've got to identify
what the problem is and then be honest with people about it.
Second step is to come up with a plan of action. How are you going to fix it?
Then the third step is to have great leaders rise up and rally the troops and to get a
new working coalition. So the way I'm running for governor is vastly
different than my opponent. My opponent, Meg Whitman, in the Republican
primary, she won't even come here and take your questions.
She doesn't do debates. It's a different strategy.
You all can figure out, you know, what strategy's the best for California.
My strategy is to be very open about my positions. And I'm going to take some positions today
that I know you're going to disagree with. That's okay.
You're not going to agree with me on everything. The question really is do I have the leadership
skills and the vision to get California back on track in the middle of this deep crisis?
So I'm going to be very specific here today with you as well as on -- through the rest
of the campaign. When I'm elected, it will be with a mandate.
Okay, we knew exactly where he stood. Didn't agree with him on everything, but he
had pretty much the right idea to get this broken state fixed.
We're going to send Poizner to Sacramento with marching orders, "Go get it done."
And that extra political capital that I'm going to have once I have this mandate in
place, it's going to be very essential to making progress in Sacramento.
Second part of the strategy is to use the powers of the governor's office like you've
never seen before. The governor, on paper, very powerful here
in California. The line-item veto power, the statute veto
power, the appointments power, huge. I'm going to focus this authority, power,
on a reform agenda that's focused on bringing jobs back to California and fixing the public
schools. And that will give us a chance in the middle
of this crisis, you know, with voter mandates, to actually make progress.
The alternative is, California falls off a cliff.
That's unthinkable. If enough people rise up and say, no, we want
a different direction, then we can make progress. >>Eric Schmidt: Let's talk about the actual
race. You must have a plan to win.
You've got two months until the Republican primary.
Can you describe what it's going to take, as I understand it, again, your competitors,
Meg Whitman, has greater name recognition, she has spent more money than you and so forth.
Can you describe in what ways you're different from her and when the vote -- and I believe
this is a Republican primary, and I believe it's mostly Republicans who vote in the Republican
primary -- how will you get them to vote for you instead of the other significant opponent,
Meg. >>Steve Poizner: By the way, if you're a decline-to-state
voter, you can also vote in a Republican primary or the Democratic primary.
>>Eric Schmidt: Let's be clear what the rules are a registered Republican can vote for or
against you and a decline to state can vote for or against you and a registered Democrat
should not vote, that would be illegal. >>Steve Poizner: You've got it.
>>Eric Schmidt: We like precise instructions. >>Steve Poizner: And June 8th is the primary.
>>Eric Schmidt: And June 8th is the primary. >>Steve Poizner: Right.
Google, you all were founded in 1998, yeah? I do feel like Google back when you were starting
your company. Because how many search engines were on the
market when you all came around? A lot.
And not many people gave Google much of a chance back then, because there were a lot
of search engines on the market and big, huge players.
How can Google survive? It turns out, you all had the best search
engine, best product, and people figured it out.
I feel the same way about this Republican primary.
I'm up against the establishment. I'm up against someone who has spent $59 million
so far. Actually, put $59 million of her own money
into the campaign, spent about $50 million so far and growing.
>>Eric Schmidt: And your number is. >>Steve Poizner: I've put $20 million in my
campaign. I thought that was a lot of money.
>>Eric Schmidt: And you've spent? >>Steve Poizner: We've spent maybe 5 or 6
or 7 million so far. We've saved our money here to the end.
You have to note that the most money that's ever been spent in a Republican primary for
governor in the history of the country was about it does 20 million.
So Meg Whitman is now -- she's going to blow that out by a factor of 4X.
You have to -- people are going to start asking, "Why are you spending so much money?
What are you trying to compensate for? Why does it take so much money in the middle
of this deep recession? What's the purpose of the saturation advertising?"
I have to get the word out. If I was here talking to you and I didn't
have any money, no matter how strong of a candidate, it's kind of a moot point.
But I do have plenty of money. Won't get anywhere close to Meg Whitman's
money. Doesn't have to be that way.
So just like back then when consumers started to compare search engines, people here in
the Republican primary, they know that the state's broken.
They know that the Republican party needs to be revitalized.
They're going to do their comparing and contrasting. I can promise you all this, everyone who's
eligible to vote in the Republican primary will know all about me by election day.
And we're going to have the money on TV and radio and the Web.
>>Eric Schmidt: And how will they see you, in your view, as different from your other
competitors? >>Steve Poizner: Part of my challenge is to
get people to understand that Meg Whitman and I couldn't be any different.
Just because we're from the same area here, a lot of people put us both in the same --
>>Eric Schmidt: All three leading candidates are from the Bay Area.
>>Steve Poizner: And that drives people in Southern California nuts, by the way.
Only one of us running in the Republican primary has actually started companies from scratch.
Now, Eric, there's nothing wrong with being a large company, Fortune 500 CEO type, nothing
wrong with that at all. There's absolutely nothing wrong with that.
But that's not me. I'm an engineer.
I'm an entrepreneur. I build things.
I fix things. Meg Whitman is a marketing, branding expert.
It's just different, her strengths and her background.
Honestly, I think as people compare and contrast, if they're looking to rebrand the state, they're
going to vote for her. If they want the state to be rebuilt, they're
going to look to someone with my type of skill set.
Between the two of us, only one of us has actually run for office before and won, in
my case. Only one of us has taken a large state agency
and shrunk it, made it more efficient, less money being spent, more productivity being
had. Only one of us has been in a classroom for
an extended period of time. Only one of us has actually voted most of
our lives. That's a big issue.
So Meg's going to have to explain, how do you go from not being a Republican, not voting,
have no connection to public service at all, and now she wants to be governor.
And so people are going to start digging in to why is all of this money being spent, what's
her background, what's my background. I'm just going to focus on my unique experience
of 20 years of starting and running companies from scratch here in Silicon Valley.
I know how to bring jobs back to California, which is essential.
But the same time now I have eight years of success in politics and public-sector service.
It's not like running a business in Sacramento, as you've already noted, Eric.
It's about having the leadership skills to put coalitions of people together.
I have proven I can get that done as an entrepreneur in both the private sector and in the public
sector. >>Eric Schmidt: So you've taken what are considered
to be -- The Republican primary has ended up being focused on a lot of social issues,
as best I can tell, as opposed to some of the other themes, maybe because people aren't
really focused on the general election until the fall.
And, of course, you have two elections. You have the Republican primary, which you
need to win, and then, of course, you have the general election should you win that.
In the -- on the social side of the Republican primary, there's been a lot of discussion
about your positions on -- let's go through the list -- immigration, Prop. 8, A.B. 32,
a couple of others. You want to sort of give us your political
and policy views on that so we can get that out here with this audience?
I'm sure people have questions about that. And you've also been criticized by your opponent
for having changed your mind. So here's a good opportunity to say what you
really think. >>Steve Poizner: Right.
Well, I am a pretty conservative person in terms of my passion for small government,
low taxes. I want to create an environment for lots of
innovation. I'm also -- I'm a big believer that our government
spending has gotten completely out of control. I do think California has become the most
liberal state in the country. I don't say that, really, as a criticism of
liberalism per se. It's just a fact.
That if you look at the number of government programs that have been started to solve problems
for people, California has led the way in terms of putting one program in after another.
And most of these programs are very ineffective. And now the jury's in.
The state is bankrupt. We now have -- at least the current short-term
budget deficit is $20 billion. You know, we're firing teachers.
This is a mess. So eight years from now, maybe a more liberal
agenda might appeal to people. Not right now, though.
I think Republicans, Democrats, and Independents alike are coming to the conclusion that we
need to get back to some basic principles. We've got to balance the budget.
We have to properly fund high-priority programs like public education and higher education.
We have to scale back this mentality of people tapping into government benefits as a way
of life. And so I'm running on a pretty conservative
platform. Some people point out, well, you seem more
conservative than you used to be. Well, I've always been pretty conservative.
In fact, some of you are too young for this maybe, but "Family Ties," the TV show, I was
the Alex P. Keaton of my household for sure. I don't know how many Republicans are here,
but I suspect not as many as I hoped there would be here in Silicon Valley.
But I'll say this: After the last few years of being in Sacramento, Eric, it's -- I now
have even more insights into the dysfunction in Sacramento and all the wasteful spending
and all the tax rates that are driving people out of the state.
My conservative principles have crystalized in my mind.
Since I started getting involved in politics for the last four, five years, the state's
unemployment rate has doubled, our budget deficit has ballooned, the tax rates have
gone way up. So part of my platform that I am, you know,
pitching on the campaign trail is based on the current situation we find ourselves in.
And so what will I'm proposing is what it's going to take to get California back on track.
Okay, some specifics. On some social issues, of course, people want
to know where you stand on social issues. I believe social issues are important.
Some of my positions on social issues are likely going to differ from some people here.
That's fine. We can disagree on those.
I really do think the most important thing of all, though, is we have to fix the public
schools and bring jobs back. And a lot of these issues I think we can probably
agree. On the controversial issues, let's get them
out here, on Proposition 8, I supported Proposition 8.
I do believe it traditional marriage, I believe a marriage should be between a man and a woman.
It's not the engineer in me that feels that way.
It's more of -- on issues like that, it's more of a gut of what you think is the right
way to do it. That's my view.
It's always been my view there. On abortion, I am pro-choice, but I do believe
that we should drive the number of abortions down to zero as best we can.
That's why I do want to take steps to reduce the number of abortions.
I don't think abortions should be just another medical procedure.
That's why I support parental notification. I also want to end taxpayer-funded benefits
for abortions. Let's go to something less controversial.
Illegal immigration. Just kidding.
That's controversial, too. One of the key cornerstones to my campaign
is my focus on trying to address the problems of illegal immigration.
Honestly, there hasn't been a politician in 20 years that's even mentioned the words,
because most of them don't have the guts. It's one of those issues where you can't even
have a conversation without people starting to criticize you.
The fact is, legal immigration has been a fantastic thing for California, I mean, fantastic.
Legal immigration is part of the backbone of this great economy.
I want to make the legal immigration pipeline as big as possible.
Eric and I were talking before we started here about my support for expanding the H-1B
visa program substantially, my belief that we should be stapling green cards to diplomas
of people who come here to our colleges and universities.
We don't want great people to come here to U.C. Berkeley or to Stanford or anywhere and
then be forced out because they can't get a visa.
That's crazy. So let's make the legal immigration pipe as
big as we can. But illegal immigration is a different story.
And, again, I want to be a truth teller in this campaign.
We can't afford it any longer. We spend billions and billions of dollars
in taxpayer-funded benefits for people who come here illegally.
And it's something that is causing us a very difficult time in terms of balancing the budget.
In the public schools, I saw it firsthand. It overwhelms the public schools, it overwhelms
the emergencies and the health care system. We have to take steps to turn the magnets
off. Now, I did work in the White House.
I was in the National Security Council. I am very concerned about border security.
But I'm pretty convinced, even though we need better border security, I'm pretty convinced
you can't build a wall long enough or a fence high enough.
This is about incentives. People come here to tap into jobs and to taxpayer-funded
benefits. And as governor, I will turn off the magnets.
We should stop benefits for people who are here illegally.
And we should make sure that if you're an employer and you hire someone, you better
hire someone who is here legally. As governor, if a company hires people illegally,
I will revoke their business license. And if you turn off those magnets, what's
going to happen is that people will change their behavior.
Hopefully, people won't come here in the first place illegally if we turn these magnets off.
>>Eric Schmidt: Why don't we get some questions from the audience.
Let me ask sort of my last formal question, which is, in terms of the politics here, the
state has large, relatively liberal city centers, L.A. and San Francisco, and so forth.
And then a reasonably mixed suburban area, and then lots and lots of conservative rural
earliest. Is it fair to say that your challenge --
you'll get the rural areas because of the Republican history there and your positions
and so forth. Is the challenge to speak to the urban dweller?
Is that the way to say the problem before you?
>>Steve Poizner: If I was running for the U.S. Senate or state assembly, it would be
a different campaign. I might not be the right fit for that kind
of campaign. I wouldn't be interested in that kind of campaign.
I'm running for governor, for all the people, Republicans, Democrats, Independents, everyone.
The issues that I am talking about affect all Californians.
If you look at the people who have been elected governor in California, there's only been
a handful of elected Democratic governors, even though the legislature is dominated by
Democrats. People understand the governor is not a partisan
warrior, but the leader of the state and we need checks and balances.
It's a remarkable thing how many people vote for a Republican governor, because, honestly,
to turn this state over to just one party in Sacramento would be a disaster.
Complete disaster. I have an excellent chance of being your next
governor, because the state's in the middle of this massive meltdown.
People are going to be looking for problem-solvers with a track record no matter which party
they come from. >>> I understand that you --
>>Eric Schmidt: Let me just remind everybody that you are on the record.
>>> Gotcha. >>Eric Schmidt: Trust me.
[ Laughter ] >>> I understand that you have proposed and
still plan to force insurance companies to diverse from Iran, which I support.
I commend you for standing behind that since the insurance industry has been coming after
you for it. And I know that they are -- you know, they
hired the campaign team that did Prop. 8 to, you know, plant news articles and op eds against
you. And I'm just wondering, like, what your view
is of how we need to reform the influence of business on the political process.
You talked about public employee unions. But in my view, the -- you know, the runaway
power is, you know, independent expenditures from corporations in California and these
other kinds of attacks, like the ones against you, that aren't even disclosed.
>>Steve Poizner: Well, thank you for asking an insurance question.
So, as insurance commissioner, one of my most important duties is to make sure that insurance
companies stay financially sound. And I mentioned my over 1,000 employees.
A big chunk of them are in financial surveillance, where we monitor the 1300 insurance companies
that do business in California very closely. In the middle of the financial meltdown, we
were making sure that they stayed financially strong.
I'm pleased to report, we've been able to keep most insurance companies safe and secure.
And so when you turn in a legitimate claim, you know, after you pay -- you know, you pay
for your auto insurance and your health care insurance and your earthquake insurance year
after year after year. If you have a legitimate claim, there better
be money there to pay off a legitimate claim. That's why my financial surveillance duties
are important. When I was looking at the financial health
of insurance companies, I found that they have this massive investment portfolio, $4
trillion is the global investment portfolio for insurance companies.
They're the largest investor group in the world.
At least 6 billion invested in Iran, in their military, nuclear, and defense sectors.
It's just wrong. And so I am pushing them as hard as I can
with all of my powers and duties and persuasive skills to get them to divest.
They can do better than that. They have no business really being -- investing
in companies that are propping up the Iranian regime.
I think the Iranian regime, it's crystal clear they're a big danger to its own people, to
its neighbors, and to our national security. Now, $6 billion turns out to be 2 or 3% of
Iran's gross domestic product. It's a very small, tiny percentage of their
investment portfolio. They could easily divest here.
And so, of the 1300 insurance companies, I have gotten over 750 to agree to not only
voluntarily divest, but to not invest in any new investments in Iran in the future.
Now, there's a few hundred insurance companies that are fighting back hard.
They just want to maximize their returns independent of the impact that they're having on our national
security. And I'm going to fight them on it.
And the fact that they're pushing back on me so hard should tell you something.
Republican or Democrat, doesn't matter, I will do what it takes to stand up to insurance
companies to make sure that they fulfill all of their legal obligations to policyholders.
When they cancel people's insurance improperly, I am going to go after them, make sure they
reinstate people's health insurance, even though they canceled it sometimes in the middle
of major health procedures. In the case of Iran, I'm going to do what
it takes to make sure that they purge their investments.
And if I can just say, Google, you know, what you did in China, I'm sure it was a lot of
discussion, maybe a big controversy even inside of Google, I don't really know, I only know
what I read. But I've got to tell you how proud I am to
know you all. I think what you did in China was a fantastic
thing. There's a big difference between focusing
on just the very short term and focusing in on the long term.
And I suspect that people who focus on the long term, where, you know, censorship is
wrong, investments in Iran are wrong. If you do the right thing, I'm pretty confident
it will pay off for folks who do that. >>Eric Schmidt: Next question.
>>> Hello. I'd like to ask about Prop. 13.
As a legal immigrant to the U.S., I find it really bizarre that I have to pay ten times
as much as my neighbor for essentially the same home.
And I don't understand why I need to be punished for coming to work in Silicon Valley.
>>Eric Schmidt: And this is a question about Prop. 13; right?
1978. >>Steve Poizner: Yeah, Prop. 13 is very controversial.
I support Prop. 13, though, for one basic reason.
It provides predictability for home owners. So even though people across the street from
each other might be paying different rates, on the other hand, when people get into their
homes, they know the situation. When you bought your home, you know what the
property tax was going to be and you know what your mortgage is going to be, and you
run the numbers. Can you afford it or not.
And then Prop. 13 starts to benefit you. Once you're a home owner, then you know what
your property taxes are going to be in a very predictable way for many decades to come.
And that will benefit new the longer term. What I like about Prop. 13, then, is it doesn't
drive people out of their homes. When it passed in 1978, property taxes were
being ratcheted up. And some people were on fixed incomes and
they were having to sell their homes because they didn't have that predictability.
I think having this cap on property taxes is a good thing.
The other important part about Prop. 13 is that it requires a two-thirds vote to increase
taxes in California in most cases. I think that's a good thing, too.
I know that's also controversial. But the fact is even with the two-thirds voting
rules, you have to ask yourself, if we made it easier to pass taxes, if we lowered that
two-thirds to something less than two-thirds, would taxes go up or down?
Of course they're going to go up. Now, even though the two-thirds voting rules
have been in place now since 1978, do we have low taxes?
No. Now, property taxes, even with Prop. 13, property
taxes are at the national average, median. All the other taxes are the highest in the
country, practically, highest sales taxes, income taxes, vehicle license fees.
We have gas taxes, beer taxes, wine taxes, phone taxes, capital gains taxes.
We have 900 different taxes and fees. If you add them up and divide by the number
of people, you get the per capita tax burden, 50% higher here in California than nearby
western states. I mean, no wonder 3,000 people a week pick
up and leave the state of California each and every week, because this place is way
overtaxed. I would never change those two-thirds voting
rules, because our taxes will even go up higher. I think taxes have to come down, not up.
That's why, actually, one of the key center pieces of my campaign is actually to cut taxes.
I'm proposing a 10% cut in sales taxes, a 10% cut in corporate taxes, a 10% cut in personal
income taxes, every bracket, and a 50% cut in capital gains taxes.
People ask me all the time, how on Earth can we afford a tax cut when we can't balance
the budget as it is. Honestly, the answer is, we can't afford not
to. We need lower tax rates so we can become competitive
again. And then the tax base will increase in size
as jobs return to California, and then the tax revenues go up, not down.
And just briefly, we did an economic analysis of this.
We looked at the other 49 states. We found a dozen examples of when people
-- when states actually cut taxes across the board.
Tax revenues went up, not down, immediately after the tax cut.
We need to bring jobs back to California. It's essential.
>>Eric Schmidt: Our next question. >>> Hi, Steve.
Thanks for coming today. You mentioned that the expenditure of your
department has decreased during your tenure. But what Meg Whitman is saying is that it's
increased by, like, 14%, I believe. What do you say to that?
>>Steve Poizner: She's wrong. And she's very misleading.
Her negative attacks are ugly, nasty, false. Shame on her.
If you see her out there, you tell her. [ Laughter ]
>>Steve Poizner: Here's the facts. My operating budget is down by 15% permanently.
And you know this is a fact, because when I got to the Department of Insurance, I had
a budget deficit of about $5 million, structural deficit.
Now I have this huge surplus. And I've taken the surplus, and I mentioned,
tax cuts. I've cut taxes twice on insurance agents and
brokers and companies that fund my department to the tune of millions and millions of dollars.
If I hadn't been able to reduce my operating expenses by 15%, I would never have been able
to generate the surplus. This has all been documented.
And she's just wrong. >>Eric Schmidt: Our next question.
Yes, sir. >>Steve Poizner: Which, by the way, you may
be looking at the only person in Sacramento history that's ever downsized anything.
And right now, downsizing is not really the perfect word.
It's really right-sizing. I know you're in the growth mode.
But in Sacramento, they've been in the growth mode for 20 years, unfortunately.
Now they need to go into the right-sizing mode.
We need to balance the budget with no more taxes, no more gimmicks, no more borrowing.
We can do it, but we're going to have to go through every line of the budget, like I have,
all 1200 pages and overhaul and modernize the entire state of California.
It hasn't been done. It can be done.
It's essential that we get it done. >>> Thank you for coming.
You mentioned the $20 billion deficit that our state is facing, and you also touched
on, with the severe gridlock between the legislature and traditionally the governor's mansion,
the challenge in cutting costs and programs. So with your tax cuts that you're proposing,
can you talk a bit more specifically about how you plan to perhaps bring in more revenue
for the state. Are you looking to perhaps stimulate certain
sectors of the economy through -- for instance, we've had the first-time home buyer's credit
that's been in effect the last year and a half or so.
What other specific credits or policies do you have in mind to perhaps drive up the revenue
for the state? >>Steve Poizner: This is a major difference
between Meg Whitman and me, by the way. I mentioned before some of difference in our
background, but we have some major differences on policy.
Meg Whitman definitely is a fan of targeted tax cuts, you know, where she wants to stimulate
certain sectors. I've got to tell you, I am completely opposed
to that. The idea of empowering a bunch of Sacramento
politicians to pick winners and losers, just absolutely wrong, in my opinion.
I'm proposing across-the-board tax cuts so that everyone benefits, every consumer, every
small business. We want to encourage more people to come here.
My last company, SnapTrack, you know, I came here from Texas, I think I've said "y'all"
a couple of times. I catch myself, I'm giving away where I come
from. I came from Texas 30 years ago because this
was the best place on the planet to start and grow companies.
And we're not that way anymore. We have to get back to that.
I ran some numbers. If I would have started my company back in
Texas rather than California, I had 100 employees when I sold to Qualcomm.
And we did sell for a billion dollars. It was in the Mercury News, so there's no
secreted. Qualcomm is a public company.
All my employees were shareholders. It was a great thing.
But I did run some numbers. If I had started my company in Texas rather
than here, the state of California would be out $100 million, meaning that my employees
paid $100 million in state and local taxes. And so it really makes a difference where
companies set up and grow. Eric, we did -- we did back of the envelope
on Google. It's hard to know for sure.
But we ran some numbers. If Google would have started the company in
Nevada rather than in California, we estimate at least $10 billion difference, meaning that
if you weren't a California company, California would be $10 billion more in the hole.
You all have paid -- >>Eric Schmidt: In other words, we would have
had $10 billion more had we gone to Nevada? [ Laughter ]
>>Steve Poizner: Let's get -- >>Eric Schmidt: Let's get the math right.
When are we moving to Nevada, guys? >>Steve Poizner: Since 1998, Google as a company
and its employees have paid $10 billion in state and local taxes.
So thank you for being in California. Thank goodness you are here in California.
But it all has to do with creating an environment so that the next Google or the next SnapTrack
wants to start here. And right now, we have an environment with
super-high taxes, burdensome regulations, and, I'm telling you, there is a huge exodus.
Cisco, quote, we haven't created a new tech job in California in a decade.
Intel standing right next to President Obama, the CEO of Intel, talking about all of the
expansion of chip manufacturing in this country, none in California.
Hewlett Packard, California is no-man's land when it comes to new manufacturing.
NUMMI, the last automobile manufacturing plant in California, just closed down last week.
5,000 jobs gone, 25,000 supplier jobs. Why?
Taxes are too high; regulations are too burdensome. That's why I'm proposing sweeping, bold changes.
Half measures won't do here. >>> Thanks for coming here.
A while back, you were talking about how you are clear about your issues so that when you
get elected, you'll have the mandate. And I really appreciate your being straight
about that. My question is -- and you also talked about
keeping the two-thirds requirement in the legislature for the budget.
Now, if anything -- if we have learned anything in the last one year, right, getting elected
based on an issue and -- you know, does not give you an easy way to enact things.
Now, you're promising all these tax cuts, but are you sure you're going to get more
than two-thirds of the legislature actually voting for it other than just sending it,
like, across veto messages? How are you going to do that?
>>Steve Poizner: Your question's really a great question.
And the essence of your question is, how on Earth are you going to get anything done?
And, Eric, you asked a form of that question earlier.
And it's -- there's no easy answers. I know this: If we don't try, it'll never
get fixed. I also know that there's nothing keeping us
from fixing these problems other than political failure and leadership failure.
So we're in the middle of a meltdown, which creates rare opportunities.
A few years ago, I don't think my bold, sweeping reforms would have much of a chance.
Maybe a few years from now, we won't need to be so aggressive.
But right now, we're bankrupt. And people are suffering.
Do you know that the unemployment right now is officially 12.5%?
If you add in all the people who are -- who have quit looking for jobs, plus all the people
who have part-time jobs but need full-time jobs, that's 20%.
So 4 million Californians are either unemployed or underemployed.
That's depression-level misery. When you have a situation like that, where
Republicans and Democrats and Independents, everyone agrees, the state's broken, and we
need to fix it, under that kind of environment, the legislature is going to pay attention,
especially given how clear I am in my campaign. If I'm elected, it will provide that extra
political clout. But I'll say this, if I'm blocked and the
legislature simply doesn't implement these critical reforms, which, by the way, I still
maintain, it's unthinkable that we can't get this state fixed.
And we don't have much more time. We're going to get steam rolled in this global
economy. We are getting steamrolled.
We need to move along at an urgent pace. If the legislature doesn't fix these problems
after I propose them after I get elected governor, then I will take single-issue ballot initiatives
directly to the voters. If we have to, the voters will have to take
the state back. There are some very specific, simple, short
and sweet ballot initiatives that I will put in front of the voters in order to get the
reforms that we need. >>> Can we ask follow-up questions?
>>Eric Schmidt: Of course. Go ahead.
>>> If there's one person you remind me of, it's Obama, like, a candidate who --
>>Eric Schmidt: That's probably not helpful in the Republican primary.
But we'll take that. >>> A candidate promising sweeping reforms,
you know, claiming that when he gets elected, he'll have a mandate to do it.
And then going to face supermajority requirements in the legislature.
And, you know, I don't know how you square your own opposition to the health care reform
with what you're promising now and what you are saying about how you're going to handle
it later. >>Steve Poizner: It's one of these things
where if you don't try, it'll never get fixed. So I know I -- it's like my startup companies.
The probability of success at the beginning was small.
And then over time, I built the confidence of my venture capital exists they invested
more money over time. And over time, the probability of success
really ratcheted up. Here we have a situation where the state of
California is a mess, and we have to start taking some big, bold steps in order to fix
it. It's going to be very difficult.
>>Eric Schmidt: Thank you very much. Sir, you have the honor of the last question.
>>> It's great. Because I'm torn between two.
>>Eric Schmidt: Well, you can have two questions, then.
>>> Okay. First question I have is sort of still a follow-up
along the same lines. You talked about the mandate.
Governor Schwarzenegger certainly talked about it.
Arguably, he had it because of the virtue of the recall.
No offense intended, but you're probably not as popular as he is, you know, so you have
an even more -- >>Steve Poizner: I'm more popular now than
he is. >>> That may be.
But, you know, you'll have even more of an uphill battle against the legislature than
he did because of that fact. How do you see yourself as being different
from him? >>Steve Poizner: It's, again, a really good
question. Voters have a right to be very skeptical and
cynical, because they've heard this before. This is what Schwarzenegger said a few years
ago, and here we are in worse shape. Now, I'm a pretty good friend of Governor
Schwarzenegger. But, honestly, we're in worse shape than when
he started by a lot. Unemployment rate's double; debt's through
the roof. Now, his heart's in the rate place.
I really do think that. But the fact is, when he tried to go after
these fundamental structural reforms, he tried to bite off too much in 2005 during that special
election. And there were some flaws in some of the ballot
initiatives that were pointed out by the opponents. And then he lost his appetite for reform.
That's not me. I can promise you this: I'm going to have
the tenacity, the backbone, and the will and the drive to not budge.
You lose the first time. You try it again.
You lose again. You try it again.
We have to get this fixed. I think there's probably not much of a debate
on what we need to do. Our taxes are too high.
Our spending is out of control. The regulatory system doesn't allow for permits
to be obtained to build manufacturing facilities. We have to overhaul that.
Our education system is micromanaged by the legislature.
Let's' go on here is the problem, here's the solution.
And then let's figure out how to put political pressure on the legislature to get the job
done. Here's one idea I have that's pretty controversial,
but I'll take it to the voters if I have to. That's to convert the legislature from full-time
to part-time. I know that's counterintuitive to some of
you. I would convert it to no time if I can get
away with it. I'm kidding about that.
>>Eric Schmidt: They make fewer laws because they're in office less.
>>Steve Poizner: That's a fact. Right now there are thousands and thousands
of pieces of legislation that flow through the legislature.
Now, A few months ago, for example, in the middle of the financial meltdown, they actually
debated whether they should form a blueberry commission to promote the sales of blueberries.
Now, hey, -- >>Eric Schmidt: You don't like blueberries?
>>Steve Poizner: I love blueberries. I just don't think we need a new commission.
Especially, we don't need the legislature focusing on it.
The other advantage of a part-time legislature -- which exists, by the way, in 42 states
have a part-time legislature -- is you change the mix of people in the legislature.
Part of the part-time legislature proposal is to cut their salaries in half.
That would force people on the legislature to have a job someplace else.
That would be a good thing, people who actually come from the trenches.
California had a part-time legislature from 1850 to 1967.
And then, in my opinion, California started to deteriorate as a state when a professional,
full-time legislature emerged in the early 1970s.
And these professional politicians from both parties have done huge amounts of damage.
>>> So I think that's a natural segue to the second question, which is, how do you distinguish
yourself from Governor Brown and what his campaign is?
He's clearly a professional career politician, but he at least is saying, look, we tried
the mandate with the governor, businessman who is going to come in.
That didn't work. You need a professional politician to fix
things. >>Steve Poizner: That's a great last question.
Because here, there's one of three people who will be governor, that's for sure, Jerry
Brown, Meg Whitman, or Steve Poizner. There's three people that are really vastly
different in their backgrounds and approaches. You have to love this.
Voters have choices. That's what campaigns are about is to draw
distinctions and make the choices crystal clear.
Voters have to decide. What a perfect time for an election right
now, because the state is in trouble and voters really need to give guidance, a mandate to
the next governor. You have Jerry Brown on one end of the spectrum,
40 years of political experience. He has had basically one job his whole life.
That's being in politics. And being in one elected position as another.
And some people, you know, like that extensive experience.
That's one end of the spectrum. Personally, I think a lot of voters have had
enough with career politicians. I think people are looking for someone who
actually has other experiences other than just being in politics, which takes you to
the other end of the spectrum. The other end of the spectrum is Meg Whitman,
who has no experience in politics, zero, didn't vote, never run for office, has no idea, you
know, what it's like to be in Sacramento. Likes to say all the time, "We should run
Sacramento like a business." Of course that should alert people that she
doesn't really know much about what she's talking about, because it's not a business.
It's not even set up like a business. That's not even the right analogy.
Maybe running Sacramento like a well-functioning nonprofit organization, that might be closer.
That's the other end of the spectrum. And I'm in the middle.
I think this is the sweet spot here. I have this 20 years of experience of starting
and running companies from scratch I know how to create jobs.
That's essential to get this economy back on track.
But I do have this eight years of success now in public service: In the White House
during the 9/11 crisis, in the classroom, running successfully as insurance commissioner,
being a very successful insurance commissioner. I think that the voters will focus in on my
hybrid skill set here and track record, and that's going to make all the difference in
the world in the outcome of this election. Thank you, all, very much for the opportunity
to be here. I really appreciate it. >>Eric Schmidt: And, Mr. Commissioner, I think
all of us in California can thank you and admire you for two things.
The first is that you're an example of what is good about politics, that people care so
much about the state that they give up being an entrepreneur to do something for the better
good of the state. And you've clearly done that.
And the second is, even if people disagree, the clarity of your positions and the clarity
with which you speak, I think, is a welcome improvement in politics today.
Thank you so much for being here. >>Steve Poizner: Thank you, all.
>>Eric Schmidt: Good luck. [ Applause ]