Horizon, Host: Ted Simons

February 20, 2009


Host: Ted Simons

Journalists Roundtable

  |   Video
  • Local reporters review the week's top stories.
Guests:
  • Catherine Reagor - Arizona Republic
  • Matt Benson - Arizona Republic
  • Mike Sunnucks - Business Journal.
Category: Journalists Roundtable

View Transcript
Ted Simons:
Tonight on “Horizon” -- the President visited the valley for the first time as commander in chief. He was here to announce his plan to fix the national mortgage crisis. We'll find out how it will help Arizona homeowners. The state also found out this week what it's getting out of the federal stimulus package. Next, on “Horizon.”

Announcer:
“Horizon” is made possible by contributions from the friends of eight, members of your Arizona PBS station. Thank you.

Ted Simons:
Hello and welcome to “Horizon.” I’m Ted Simons. Joining me tonight -- Catherine Reagor of "the Arizona Republic," Matt Benson of "the Arizona Republic," and Mike Sunnucks of "the Business Journal." President Barack Obama was in mesa at Dobson high school to unveil his plans to fix the national housing crisis. Catherine, you were out there. Give us a description of the scene, the crowd, what did you see?

Catherine Reagor:
A packed house. Geithner, his head secretary, to talk about the plan before. Very interesting details, people were really looking forward to hearing there was more in the plan than just helping people in foreclosure. And there is. It's going to help people hurt by foreclosures because the values have plummeted. You saw people happy. We talked to him after about that.

Ted Simons:
Protests, what did you see?

Catherine Reagor:
I didn't see any protests. Saw signs. It was about average, we were talking about that for an event. But no, a lot of excitement and chanting and wanting him to come out. Obama, Obama.

Ted Simons:
Did it seem the crowd was on his side? Hopeful? Do you think they got what they were looking for?

Catherine Reagor:
I think the crowd was very much on his side. We talked to them afterward, got what they were after. People not necessarily in foreclosure, because they can't sell and they can’t re-finance. And this part of the plan that will help people who are under water, they owe more than their house is worth now will help that. And so it’s not just going to help people facing foreclosure, it’s going to help the overall housing market and economy.

Mike Sunnucks:
It gives those people confidence that's lacking in the housing market and the economy right now. People don't know where the value is going to go. This gives that group of folks some hope and I talked to bankers and mortgage brokers and that's the plus side. The question is what is it not going to address? A lot of people from California came in and bought houses in Scottsdale. Probably not going to help those folks. There's folks no matter what you do, they're not going to be able to keep their house. Going to lose it. A lot of the mortgages they modified last year, the banks did, but people just defaulted six months, nine months later. While it helps some folks, there's some folks in everybody's subdivision that it's not going to help.

Matt Benson:
The interesting part of the plan to me, this is the first time you've had a proposal to address those people not in foreclosure now or eminently at risk of losing their homes. A lot of people are too far gone. This plan is for the people who recognize the train wreck coming and maybe you can avert those and prevent the escalating thing. The foreclosures this year and next year.

Mike Sunnucks:
This is one of the root problems with the economy. At least it's an attempt to address that. But there's still a lot of houses that this might not help.

Catherine Reagor:
Its different modifications. That was the problem last year. There was no stick for the lenders to jump up and modify. Maybe took down an interest rate, let people miss three payments, throw it back on the load. This is going to have to see some issues with principal cuts and this is where the government comes in. You stay in the home for five years; we'll cut your principal a thousand for every year. We'll help those people. If you're a homeowner and you see this going on around you and you can finance, that's huge.

Ted Simons:
Let’s get to basics. Who qualifies for this plan?

Catherine Reagor:
It varies. It's not going to help everyone and President Obama was very outspoken about that. If you bought a house you knew you couldn't afford and ran up the debt, it's not going to help you. But if you're facing foreclosure and been tight with your money and your credits not blown, they're going to work with you. If you're a homeowner and want to refinance, it's going to help you if you're in the valley to have a conforming loan. It's not going to help the million dollar homeowners. This is for the middle class and lower middle class.

Matt Benson:
And it's not going to help you if you're a speculator. You purchased a dozen homes and now you're upside down in homes you aren't living in. This only helps folks living in the property.

Ted Simons:
you say speculators, we had Senator Kyl on, some folks went and bought a single house with the idea of flipping it or turning it at ate later date and that's gone down the tubes but they would be somewhat protected as opposed it a person who bought half a dozen homes?

Catherine Reagor:
They would refinance their primary residence.

Ted Simons:
But if it was your primary residence you were speculating on you might get help.

Catherine Reagor:
Yes. Some people, when this issue came up, you might have to relocate for a job and you can't sell a home. But even if it's not an owner-occupied house, you can't refinance it.

Mike Sunnucks:
Consumer spending is in the toilet. This lowers your payment and gives you more money to spend and gives you more confidence that some of these people in the far off suburbs, they don't know where it's going. When you’re uncertain like that, you’re not going to go on vacation; you’re not going to buy a new car. So, on that front it is a help.

Ted Simons:
Is that going to have -- how does this impact -- how -- any indication?

Catherine Reagor:
It’s huge for us. The one problem, this plan, they pulled it together quickly and there's few details and a lot of speculation going on. One problem could be the loan-to-value ratio, if it's not high enough. If you can only be 10% on your house. A lot of parts of the country, Nevada, California, Florida, I talked to the housing department today and I think they're going to be open with that, otherwise it's going to help a small portion.

Mike Sunnucks:
You hear a mixed bag. On the one hand, it helps folks, and there's a lot of homes that it won't help and they'll sit there.

Ted Simons:
Any response from the capitol?

Matt Benson:
It interesting, politically, the Governor, of course, is Republican and said this is not the plan she would have done. She's not happy with the taxpayers again having to bail out folks nor bad choices with their mortgages and housing issues. At the same time, she's hoping it will help. She's going to implement everything fully and, you know, it's interesting. You hear two complaints. One is that this is way too much money; we're throwing good money after bad. The other complaint I’m hearing about as much, is this may not be enough money. $75 billion may not address the full issue. Especially those people whose properties are several hundred thousand of dollars under water. 75 billion could go away in a snap.

Mike Sunnucks:
There’s a lot of fatigue with the bailouts. The automotive and the banks. One of the things that he didn't do, that Bush did, it wasn't the panic button. This isn't holding a gun to everyone's head. The power is going to go off. They've been fear mongering people, both administrations and if you want people to good on vacation and spend money, you can't have a panic that the economy is going to collapse. This was a better step this time.

Catherine Reagor:
Some of this program doesn't cost. Fannie Mae and Freddie Mac. The lenders that have to participate with the loan modifications, people facing foreclosures are the ones getting tarp money. So --

Ted Simons:
There seems to be a line of thinking. And congressional legislation delegation talking about this on “Horizon” this week. Pros and cons. And those skeptical, say if you want to fix the economic situation right now, the housing crisis will follow if you just get jobs out there. Is a line of thinking that the capital again, this is all fine and dandy, but how does it help with jobs?

Matt Benson:
Certainly, that's the Governor's point of view. She has said my priority is to create more jobs. If we get people working, housing issues will take care of themselves. The answer to that would be that's sort of the point of President Obama's stimulus plan is to get more people working. And in Arizona, does not have nearly the unemployment rate that some parts of the country have.

Ted Simons:
At least not yet.

Matt Benson:
Yes.

Ted Simons:
Before we get to the stimulus plan, really quickly, I know you wrote about the property tax notices, what are they saying about that?

Catherine Reagor:
Down across the board. 99% of all homeowners will see a decrease. Overall the average was about 23%.

Ted Simons:
What does that mean for cities and towns?

Catherine Reagor:
Less revenue. This tax bill you get in the mail will not be reflected on the 2009 tax bill. That won't come until 2010. This is the time when schools and cities decide to do what the taxes and they're getting a lower share. It's going to be very unpopular but you know, they’re going to raise taxes.

Ted Simons:
Are foreclosures included in all of these numbers?

Catherine Reagor:
For the first time. They have to. In the past, it wasn't a valley-wide thing and because of the foreclosures and homes being taken and resold for such low prices it's part of the formula and we'll have a better idea of the values.

Ted Simons:
Ok. Let's get to the federal stimulus package. How much is Arizona going to get and who decided where it goes?

Matt Benson:
$4.2 billion on Governor Brewer. The short answer.

Ted Simons:
Do we know how she feels about accepting-- we've seen Louisiana’s Governor saying we're not going to take it.

Matt Benson:
There’s been a few Governors making noise about not accepting at least a portion of the money. Governor Brewer has not gone as far as them, but her office has said that she's going to examine each of the funds and determine whether the costs and benefits make sense of accepting the money. In many cases the money has strings attached. You can only accept this if you spend so much on whatever the case may be.

Ted Simons:
Isn't it that the state government doesn’t replenish what the state governments have already cut?

Matt Benson:
They don't want to give the states accuse. We can cut another $2 billion out of the social services. Times are tough and people need these services and we need to prop them up.

Mike Sunnucks:
The money coming into the states is not economic stimulus. It's expanding the safety net and offering social services to folks in AHCCCS and the social services. Where you see jobs, building roads and but from the state, it's just an expanded government safety net.

Matt Benson:
But remember, some of this will allow the state from laying off people. Those are jobs saved.

Mike Sunnucks:
And it could help the state avoid raising taxes because they won't have the huge deficit.

Ted Simons:
And you could have a billion dollars with k-12 saving jobs there, and efforts saving jobs there. The idea of saving jobs if you can get people to do a little bit more, as far as inputting into the economy.

Catherine Reagor:
Right.

Mike Sunnucks:
Critics would say those are all government jobs. Those aren't investments in small businesses.

Matt Benson:
But a job is a job. These are people taking a paycheck, staying in their homes, making purchases, maybe a new car. I understand a private sector job may be more valuable, but in this economy, a job is a job.

Ted Simons:
Did I read or see where some lawmakers were upset 1100 pages of the stimulus plan sent across in a low-tech fashion and they didn't have a chance to look it over?

Matt Benson:
That’s been one of the complaints and frankly there's some question about the accuracy of that. We found the 1100 pages and it was word searchable. You could do key words and search. Its 1100 pages as is the case with a lot of federal legislation. It's cumbersome and you can't just leaf through it.

Ted Simons:
You can do control+F and find a word. The impression I got they couldn't do that.

Matt Benson:
And it's been something we've been hearing locally and nationally as well.

Ted Simons:
Interesting. Reaction by -- let's start with reaction by just people that you deal with away from politics. Neighbors, business people you deal with. Real estate. Whatever. Between stimulus and foreclosure plans, what are you hearing?

Mike Sunnucks:
They -- have a lot of confidence from the business community. They would prefer to see encouragements to investments. Tax cuts and help from small businesses and there's nothing in this thing for small businesses. It helps the construction industry. And the question is whether somebody working in the home building industry or owns a business that's been hit, can they transition into building roads or water treatment systems? Some. But the business community is skeptical of the government solutions. They’d rather see tax cuts and things that could create jobs.

Catherine Reagor:
They’re happy to see the money coming. It's something. Particularly the real estate, first time home buyer credit. We're looking for more details but it did bring hope. Something is being done. They're looking at it -- it's not like last summer where we were hearing what's wrong. The housing market is fine. They realize we need something.

Mike Sunnucks:
There’s still a lot of uncertainty. And the economy works on that. And we don't have either. No one is sure what they're going to do with the banks. Nationalize them? Let them go under? There's a big question of how fast these programs can get going. How fast you can get the construction projects going.

Ted Simons:
The folks you're dealing with. Obviously a lot of people -- are they willing to go along to get along right now because something is being done.

Matt Benson:
If you had to characterize it in general, it's a feeling of we sure hope it works. No one has the answer. Even the folks in Washington. They don't really know and we're feeling our way through this. Even people opposed to this, are really hoping it works. Because we've got a lot at stake here.

Ted Simons:
Let’s get to a story that I believe you set off a firestorm a few days ago, the Governor floating up a trial balloon of possible referendum initiative.

Matt Benson:
It would be a referendum and in terms of whether it's a trial balloon or not, I don't know how you characterize that but it's something that they're spending time on. This would be a ballot issue for perhaps June for a special election asking voters to increase taxes for a period of two or three years. About a billion dollars a year to rise to bridge the shortfall the state is in. And also the big piece of that would be to ask the voters to loosen the mandates they've put on spending programs for healthcare and education and other things that the voters approved at the ballot.

Ted Simons:
Response by lawmakers to -- if it's not a trial balloon, maybe it's a little butterfly. Whatever. Response?

Matt Benson:
They’ve been shooting a lot of arrows at it. Both parties. Democrats seem content to wait to see if Governor Brewer can come up with Republican support. They're not happy with loosening the voter mandates and the Republicans don't like the idea of a tax increase.

Mike Sunnucks:
You’re seeing the CEO's in the business community and education folks nibble at the edges, they're talking about -- nibble at the edges and I don't know if it would pass. I don't know if people would be willing to raise their own taxes, consumer spending is down. You're going to ask them to raise their own taxes on things they would buy. I don't know if that would pass. Even with the talk of helping the service industries.

Ted Simons:
Isn't the argument that it doesn't make a lot of sense to raise the sales taxes when you're taking away permanently the state equalization rate and those sorts of revenue streams are taken away and you're talking about a tax increase?

Matt Benson:
Of course, there's some cognitive dissonance there. We don't know if that's something that the Governor would approve. The legislators have said that's a priority to eliminate that equalization tax. Governor Brewer hasn’t been so clear.

Mike Sunnucks:
The people want to cut the property taxes and income taxes and when it comes to sales taxes, they're not as tightly wound on that. They're more open. That's a consumption tax and for some reason they think it's better to tax that.

Catherine Reagor:
It’s not necessarily a shoulder in all of that.

Ted Simons:
As far as communication between the Governor and lawmakers, are we starting to see a little bit of frustration?

Matt Benson:
I think there is on both sides I know legislators and Republicans especially were unhappy they didn't know about this in advance and on the other side, I think the Governor's office is less than thrilled at some of the lawmakers openly panning the idea before it's been fully cooked and presented.

Ted Simons:
Ok, major reason for this conversation is there are folks losing their jobs all over government agencies and I know there's a union involved and trying to find -- have they sued the Governor?

Matt Benson:
Yes, on Thursday, the Service Employees’ International Union, along with eight state employees, current and former. Basically alleging in the state laying off the folks haven't been following its own administrative code and the due process in the constitution.

Ted Simons:
And some lawmakers are now coming up saying that DES cuts looked overly draconian to make a message.

Mike Sunnucks:
I think a lot of them are following Michael Crow's model. Crow comes up with the most public and symbolic possible cuts. We're going to close ASU West. Polytechnic. And you see these agencies and, that works. If they tell us to cut, we're going to cut things that resonate with the people. It makes the government look like the bad guys, because we're cutting shelters and children's services. These agencies can say, look, these are important and they're going to make us cut them and we're going to cut something that people support.

Matt Benson:
They made a choice to make those cuts in 2009. Lump sum cuts for agencies and universities and the reason they did that was they didn’t want to take the heat for the individual cuts.. They didn't want to have the headline be: legislators cut childcare program and you name it. They wanted that heat to fall on the agency.

Ted Simons:
Is that going it change with the agencies coming back and say, you want us to cut, we're cutting.

Matt Benson:
We may see a different tack in the 2010 budget.

Ted Simons:
What time line are we looking at here for watching right now, this might be something I can use?

Catherine Reagor:
They say March 4th you can call your lender and they'll have a program up and running. For now, there's extended moratoriums on foreclosures. There's some breathing room. They say they're going to do it fast. There's the model in place at the FDIC and now it's getting the lenders on board and setting up the guidelines.

Mike Sunnucks:
If this chance has a chance to work, it's got to be fast. It can't be people waiting and sitting on a line before someone talks to you in a call center.

Ted Simons:
It’s got to be fast and quick. But is it so complicated that a lot of folks don't know what's going on?

Catherine Reagor:
That’s a concern. Very much a concern. It sounds like when they were coming together and the FDIC having the program and housing counselors and they've been doing foreclosure prevention, that they're hopeful. Big lenders have a moratorium. If you're facing this, contact your lender right now. The HUD secretary said that. On the 4th, it's supposed to be up and running.

Mike Sunnucks:
Four states we're talking about. Arizona, California, Nevada, Florida, that's where most of them are. And they've got to be flexible. If they're not, people will rebel.

Catherine Reagor:
Everyone who took tarp money has to follow through.

Ted Simons:
We have 30 seconds left. A new veteran's memorial at the capitol.

Matt Benson:
It’s a new Arizona veteran's memorial. At the capitol, between the house and senate buildings. Representative Jerry Weiers. A series of three flag poles and bronze plaque.

Ted Simons:
And a nice edition I suppose to the monuments down there?

Matt Benson:
They had a big gathering of people who came out for the dedication.

Ted Simons:
All private funds?

Matt Benson:
Yes, not a cent to the state.

Ted Simons:
Don’t want to get too -- no one can get upset about that. Great discussion. Thanks for joining us.

Ted Simons:
Coming up Monday on “Horizon.” you think you know Joe Gariagiola, Sr.? Well you don't know everything. Join me as I talk with the famous baseball player, announcer and television host. Tuesday “Horizon” will be pre-empted for the President's address to Congress. Wednesday, a mid-week legislative update with "Arizona Capitol Times" reporter Jim Small. Thursday, Arizona’s unemployment figures for January will come out and we'll talk about the numbers with economist Dennis Doby. Friday we'll be back with another edition of the journalists' roundtable. Coming up -- a shocking investigation on teen sexual harassment on the job. That's next on "now". That's it for now. I'm Ted Simons. Thank you so much for joining us. You have a great weekend.

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