Horizon, Host: Ted Simons

April 9, 2009


Host: Ted Simons

Arizona Attorney General Terry Goddard

  |   Video
  • Arizona Attorney General Terry Goddard discusses a judge's dismissal of charges against a Phoenix gun dealer accused of arming Mexican cartels, and other issues concerning his office.
Guests:
  • Terry Goddard - Arizona Attorney General
Category: Immigration

View Transcript
Ted Simons
>> good evening, welcome to "horizon." I’m Ted Simons.

Ted Simons
>> Arizona attorney general Terry Goddard and governor Jan Brewer are at odds over how to proceed in an English learner funding case headed to the supreme court. some people facing foreclosure are being targeted by scammers taking advantage of the situation. and the violence from Mexican drug cartels is spreading north. also, guilty pleas in a $30 million ponzi scheme. those are some of the topics that Arizona attorney general Terry Goddard is here to address tonight on "horizon." good to see you again. thanks for joining us.

Terry Goddard
>> pleasure to be here.

Ted Simons
>> let's start with Mexico. there's so much concern about what's happening down there and it’s spreading up north. what's your take on the situation, today?

Terry Goddard
>> today we have a problem and I think that is the ultimate. Arizona has known we've had a problem for years. we've had outbursts of violence, home invasions in Tucson, kidnappings in Phoenix. all of which have connections with the cartels' illegal activities that are basically headquartered in Mexico. but what is new, and I think very exciting, is that the federal government has figured out there's a problem here on the southwest border. and they're throwing some very serious aid in our direction.

Ted Simons
>> talk about that aid. what are we seeing?

Terry Goddard
>> we're seeing a big increase in homeland security forces, border patrol, and other assets. we're seeing the first time, and I think this is really important, first time that they have started watching southbound traffic as well as northbound traffic. you see, the cartels have a business that goes both ways. they're taking cash and guns into Mexico, they're putting drugs and people into the United States. all part of an illegal operation. and we've tended to segment our response. so we go after one or another, we do a pretty good job, but they just double up on the other aspects of their criminal operations. and unfortunately, they're very good at what they do.

Ted Simons
>> and again, this is basically -- drugs in general, but marijuana really is the cash crop here, isn't it?


Terry Goddard
>> it really is there's a lot of misconceptions about marijuana and where it plays in terms of the cartels' strengths. it is 65, maybe 70% of the total revenues of the cartels in Mexico. and because of that, so much of the resources that they have, the violence that they inflict on the country, are coming because of one drug, marijuana.

Ted Simons
>> and now the demand here in America obviously is the reason this is happening. a major reason this is happening. what do we do?

Terry Goddard
>> we're the market.

Ted Simons
>> is prevention an answer? is legalizing marijuana an answer? what do we do?

Terry Goddard
>> I think what really is desperately needed is a practical common sense analysis of the problem and all the potential results. for one thing, we've used suppression and interdiction for years as the sole response to the drug invasion. and that's not working. so what we should do in response to a serious problem is put everything on the table and figure out what else we can do to cut off the cash going to the cartels. and there are a lot of different parts to that problem. we can do a better job of prevention, in my opinion. the Arizona meth project showed in just two years we reduced the demand of methamphetaminesn among high school students. we cut it in half. that's clearly an example that prevention can work and needs to be used more aggressively. treatment. we're still way behind the ball in terms of providing drug addicts with treatment. and frankly, they're a big part of the demand. so let's attack that. legalization has been talked about. I’m not a supporter. but I do think we should take the emotion away from it that tends to surround that discussion, and talk about how do we -- do we create a bigger problem if we legalize marijuana? I think we might. so let's talk about all the ramifications. how can we control it if we make it legal or partially legal if we make it subject to a prescription, there are lots of different ways to handle this problem. it shouldn't just be a group of people screaming at each other. it needs to be talked about in all of its law enforcement and every other potential.

Ted Simons
>> I know another major factor is a gun running, gun smuggling down South. I know there was a case involving a Phoenix gun dealer that didn't make it. what happened there? what was that all about?

Terry Goddard
>> we're repealing -- repealing that decision, because we think errors were made in the trial court. the bottom line, yes, there have been so-called straw buyers who fill out the federal forms, but do it knowing that it's false. they don't intend to own that arm, that gun. they intend for somebody else to take it. and they know, at least in this case they knew it was headed to the cartels in Mexico. I think that's a very serious violation, and we continue to be aggressive in this area, we're looking for other partners to help make sure that folks are not buying -- not lying for the other guy, as the foundation says. that is a felony crime in the federal statute, I believe it is in Arizona as well.

Ted Simons
>> was the fact there was a differentiation in federal and state law --

Terry Goddard
>> that made it confusing, yes.

Ted Simons
>> as far as just general trade with Mexico, how much is that being affected by the violence down there? and creeping North?

Terry Goddard
>> there's no question that spring break was way down in terms of college students and other tourists going to Mexico. this is a huge part of their economy. so the they're economically suffering, as is the united states from the trade that we prosper from that comes north from Mexico. so the violence is real, but it is in particular areas. obviously you don't want to go to Juarez, and you should be careful in Tijuana. but other parts of Mexico are relatively safe. I think people overstate the idea that Mexico is in violence. Mexico is in a war with cartels. the president of Mexico should be applauded in this country because he has taken essentially the tiger by the tail, the bear by the throat or whatever the right analogy is, and he is shaking it. that has caused the disruption, which has resulted in very serious violence that continues this year, and I’m very concerned that unless the U.S. is much more aggressive as we're beginning to be, that violence will come much more into this country.

Ted Simons
>> let's talk about what seems to be a difference of opinion between you and the governor regarding the English learners case and arguing before the supreme court. she wants to you file a brief, and you apparently aren't going to do it. why?

Terry Goddard
>> well, I’m elected by the people of Arizona to be the state's lawyer, to be the advocate in court and to make decisions about legal policy. I guess that's the fundamental issue. and I don't work for the governor. I’m independently elected. she has her own lawyer, and so if she wants to protect a particular position in court, that certainly is her option. but I take my very best decision as to what our appropriate legal policy is. and this one, it wasn't hard. we've been doing the same position ever since the statute in question was passed. and it's very serious that the statute, I believe, and what I argue in briefs, I won't be there personally arguing, but in the briefs before the supreme court, we point out that this statute, if it's effective in Arizona, appears to violate federal law. and the consequences for violating federal law are over $600 million in withheld federal money from Arizona’s education system. and I can't in good conscience go along with something that would have that serious an impact in our state.

Ted Simons
>> when she says as attorney general you're supposed to defend the state, you would say --

Terry Goddard
>> I am. I am. I am defending the state. I’m defending the state's budget, something I thought we had in common with the governor. so that's -- that's a difference of opinion, but I respect her position. I submitted our brief over a week before it was due to the governor's office, as I’ve done with the previous governor, to see if they had any suggestions, if they had any positive critiques that would help us sharpen our argument. I got no response.

Ted Simons
>> do you take seriously the effort, I note treasurer is doing this again this year, the idea of having that representation taken away from the attorney general's office, if it in some way disagrees with the public official? this could be at play with the governor here as well. legislation to that end, talk about that.

Terry Goddard
>> it seems like everybody wants their own lawyer. their own person, mouthpiece in the words of the movies. it happens all across the country. this is no surprise. there's been many attempts by other agencies to get somebody to represent them. Arizona I think very commendable, most states, have legal representation concentrated in the attorney general's office. the reason is simple -- you don't want state agencies suing each other. you need to speak with one voice in court. especially in criminal actions. you need to make sure on appeals from major felony cases that you maximize your impact and you pick your fights in the most strategic way. that's what we do.

Ted Simons
>> so speak with one voice, not necessarily one office holder's voice.

Terry Goddard
>> that's true. if the constitution wanted us all to work for the governor they would have said so. but they set up independent -- individual constitutional offices. the attorney general, the superintendent of public instruction, the state treasurer, state mine inspector. the governor doesn't tell the mine inspector what mines to put the tires in or the treasurer how state money should be invested. the same applies to the attorney general. I’m the chief's legal officer for the state of Arizona.

Ted Simons
>> ok. I know a big ponzi scheme, a couple minutes left here, a big ponzi scheme, another ponzi scheme, talk to use about that.

Terry Goddard
>> another. that's the sad part. here in tough economic times, we found many of these schemes. this one was very common with others that you've heard about. somebody guaranteed that this security investment would bring a 36% return. in this case I thought the person's name would have given his victims a clue. it was Villain. he took over $25 million from unsuspecting Arizonans, thinking they were investing money in a no-lose proposition. and I guess if people hearing this will want to have -- the key is to avoid these ponzis, it seems like it's an astonishingly high interest rate and it's guaranteed, whether it's Bernard Madoff or Mr. Villain in Arizona, they seem to have a common denominator -- you can't lose, we guarantee the return. those shed be red flags to anybody thinking to invest.

Ted Simons
>> what red flags do you look at besides those? was this guy licensed?

Terry Goddard
>> oh, no. he was not a securities dealer in the state of Arizona. he must have been an incredibly fast talker. even after the cease and desist order was issued, he formed another company and sold another $5 million in securities, or bogus securities. this is something that unfortunately is alive in the land and I guess bad economic times make fraud artists even more viable, because people are desperate. they want to believe that they can get an answer to their financial problems, and these guys are all too happy to provide that answer, although unfortunately it's an illusory answer.

Ted Simons
>> with that I want to wrap it up with the idea of mortgage scams out there.

Terry Goddard
>> same scheme.

Ted Simons
>> same business going on there. are we seeing more of it?

Terry Goddard
>> oh, yes.

Ted Simons
>> are you able to prosecute more?

Terry Goddard
>> we've had a disturbing number we're prosecuting, and I’m sure there's much more out there. anybody that has heard about somebody who calls up and says, "I guaranteed I can lower your mortgage rate," again, they can't guarantee it, so that's one danger sign. but the second part is, people are so desperate, if they're one or two payments behind, they want relief. they want to hear from somebody that they're going to give them a key to the federal money that's supposedly flowing so freely. and we found and prosecuted quite a number of people, including some just this month, that are guaranteeing, promising, I’m the guy that can stand between you and your lender and I will get your mortgage lowered. well, you don't need somebody standing between you and the lender. one of the beauties I think of the federal program is it says to the lenders, you need to talk to the homeowners that are in trouble, and you need to try to work this out. and so the best advocate is the homeowner themselves. they don't need a middle man, or a voice on their behalf. this program is meant for them to talk to their lender, and I hope that's what they'll do.

Ted Simons
>> very good. thank you so much for joining us. we appreciate it.

Terry Goddard
>> thank you.

Arizona Budget Options

  |   Video
  • A team of experts in finance and public administration from Arizona’s universities have released a report of options to help erase Arizona’s $3 billion budget shortfall. A member of the Fiscal Alternatives Choices Team talks about some of the options included in the FACT report.
Guests:
  • Tom Rex - Associate director, Center for Competitiveness and Prosperity Research, Seedman Researcg Institute, ASU W.P. Carey School of Business
Category: Business/Economy

View Transcript
Ted Simons
>> Arizona is facing an estimated budget shortfall of more than $3 billion in fiscal year 2010, which starts July 1st. Arizona’s universities have come up with a list of options to help lawmakers close the budget gap. the fiscal alternatives choices team, FACT, for short, released its recommendation last week. more on that, but first we turn our attention to a budget event that took place earlier today in Tempe. governor Jan Brewer and other political business and education leaders spoke about the budget at a public summit sponsored by the greater Phoenix economic council.

Jan Brewer
>> in order to put Arizona back on the path to prosperity, we need to have the courage to set aside our own partisan political interests and stand together, both republicans and democrats, for an honest budget that builds a better Arizona.

David Majure
>> governor Jan brewer talked about the state's $3 billion budget deficit and how she plans to address the problem.

Jan Brewer
>> no one think for a moment the federal stimulus dollars alone will solve this huge budget deficit we face over the next several years.

Eileen Klein
>> so these are a few of the ideas.

David Majure
>> Brewer's budget director outlined the governor's plan. it calls for reforming both the state's budget process and its tax structure. it also includes additional spending cuts of $1 billion along with a tax increase of the same amount.

Eileen Klein
>> the governor has called very bravely for a temporary tax revenue increase of some sort. we need about a billion dollars in additional revenues we believe to be able to bridge the gap temporarily. we have recommended this not lightly, this is a very difficult decision, and it certainly is seen as a last resort, but we believe it's necessary to provide the recurring revenues needed on a temporary basis so that we can provide the essential services for the state.

David Majure
>> legislative leaders hope to avoid a tax increase.

Bob Burns
>> we think that is the last possibility that should be even addressed in this situation of this severe economic downturn.

Krik Adams
>> it will make consumer purchases more expensive. when we need them to begin opening up their wallets and getting the economy moving again. we also know that tax increases under any circumstances are harmful to economic growth and job growth.

David Majure
>> speaker of the house Kirk Adams believes lawmakers can avoid raising taxes by selling state aspects, privatizing public services, and borrowing money.

Kirk Adams
>> we believe it is appropriate to engage in short-term and long-term borrowing to shore up the fiscal deficits to avoid the potential devastating risks of a tax increase on the economy at this time.

David Majure
>> earlier in the year, legislative leaders invited universities to suggest ways to brighten the financial picture in the grand canyon state. last week, the fiscal alternative choices team established by the Arizona board of regents released its report. it offers up some familiar short-term options to help balance the budget. such as optimizing the use of federal stimulus dollars, delaying scheduled business property tax cuts, depositing some vehicle license tax revenues into the general fund, and temporarily raising taxes. the report also contains long-term solutions that include reforming the state's tax structure. broadening the tax base. improving the rainy day fund. privatizing some services, and creating a dedicated funding stream for school construction.

Ted Simons
>>joining me to talk about the fact report is Tom Rex, a member of the fiscal alternative choices team from A.S.U he's associate director of the center for competitiveness and prosperity research part of the seedman research institute in ASU’s W.P. Carey school of Business. thank you for joining us. the thing that seems -- there's so many things in the fact report to talk about, but I want to start with the one that seems to be getting the most attention. the concept of the legislature raising taxes without going through that two-thirds super majority. talk to us about that.

Tom Rex
>> well, it's not certain as to whether it's legally viable or not. no one has raised the issue before. this is a new idea. the idea is to temporarily raise taxes and then permanently reduce the same tax so that you do not have a tax increase, in fact you'd have a net tax decrease.

Ted Simons
>> and so it would have to ensure that those cuts would happen. it's not one of those things where it has to be a pretty strong sunset clause here.

Tom Rex
>> well, it would be in the legislation exactly what you're talking about. we laid it out year by year as to just what the tax rate would be. no, there would be no question that the rate would go down. it's there in the legislation.

Ted Simons
>> again, I think tax issues are what people are looking at the report most about. there's a modified flat tax idea here. give us a better indication of what's being talked about.

Tom Rex
>> the idea of the flat or graduated tax is tax simplification. and hopefully some ability to more stabilize the revenue stream. that's one of the biggest problems that we have today, why we're in the position that we're in. revenues are so volatile. so that's the idea behind it. the idea is to basically eliminate an estate tax form, personal income tax form, all deductions, all additions, sub extractions to income. you just simply would be taxed based on your federal adjusted gross income. either you could do it as single flat tax where everyone paid the same rate, or as a graduated, where depending on what your adjusted income is, that's the percentage that you would pay.

Ted Simons
>> so when you say getting rid of deductions, this means charitable donations kaput?

Tom Rex
>> if you truly wanted to completely simplify it, yes.

Ted Simons
>> ok. that's probably going to be a tough sell, don't you think?

Tom Rex
>> probably, yes. the nice advantage of it, though, is that there are taxpayers out there today that are paying absolutely nothing because they are able to take advantage of so many of the credits and deductions and the like, where another person that has the same income to start with, is paying a fair amount in taxes. so that's the offset to it. yes, there are some clearly some negatives, but there are some also positives in terms of tax fairness.

Ted Simons
>> the report also suggests delaying a repeal of the state equalization tax, the property tax. we've had a lot of lawmakers on this program, and those who feel that this tax, if this comes back, it is a, a tax increase, and b, it would kill jobs. it would kill businesses that would hire folks and get the economy going. how do you respond to that?

Tom Rex
>> well, first, it’s interesting if it’s that bad of a tax -- I do agree, I think the team agrees, that we have some serious problems with the business property tax in particular as it affects the economy. that's been here for a long time. it was called attention to 15, 20 years ago. and nothing was done until recently. they waited over a decade before they went after that particular tax while they were busy cutting taxes. so I have a little problem with the urgency aspect of it. all that we're suggesting is when it was first passed, it was going to be phased in over 10 years. then they went and changed it the next session to five years. all we're suggesting to go back to a 10-year phase-in to what their original legislation was.

Ted Simons
>> there's also talk of gas tax, vehicle license tax, and these sorts of things. again, what kind of sell are we talking about when we're in a deep recession here, and the word "tax" seems like it's an anathema to a recession?

Tom Rex
>> right, these are all options. nothing in the report is a recommendation. they're all simply meant to be options. yes, a tax increase in a recession is not something we want to do. we all acknowledge that. what you don't tend to hear, though, is, ok, what's the negative effect of the spending reductions that we've already seen passed and which probably will be increased in number? turns out that has a greater negative impact than the tax increase. they're both negative. we're stuck here, folks. we have no good alternatives. and that's mentioned in the report. there's no good option. so it's a matter of what's the least bad. and we have found, and this has been true across the country, that a tax increase is actually not as bad as the spending cuts.

Ted Simons
>> does it matter what kind of tax increase?

Tom Rex
>> absolutely.

Ted Simons
>> how so?

Tom Rex
>> you don't want to increase business taxes. that will have a more serious negative effect. you want to increase personal taxes. the two ideas we had in the report was you could increase the personal income tax, which is very, very low in this state, or you could increase the sales tax. that unfortunately is very high, but the public seems more amenable to that particular tax increase. and in any case, we're only suggesting a temporary increase.
Ted Simons
>> the dynamic between short-term solutions and long-term solutions. how is that at play as far as the task force's report?

Tom Rex
>> we've got the two problems that we're faced with today. we have a cyclical deficit and a structural deficit. once the economy improves, we're still going to have that structural deficit. that's why we have a long-term problem. it's not -- our problem we have today is not just due to the economy. in fact, it's probably a relatively small part of our problem. we have a problem in that we have a very large imbalance between our revenues and our expenditures. on an average every year, we have that problem. so that's where you need to do -- our suggestions are, one of two things. either do major tax reform, so that you have a more stable tax base that you aren't getting a wild fluctuations in the revenues, and/or, and probably it's an and, and you beef up the budget stabilization fund very substantially so that you have more money available to get you through the bad times, which are inevitable. we're not going away from economic cycles.

Ted Simons
>> real quickly, 30 seconds. if you could go back 10, 15, 20 years, what would you tell lawmakers to do to keep this situation from happening in the future?

Tom Rex
>> well, in the early 1990’s we pretty well had things in hand. we just passed a 15% cap on a budget stabilization fund, we had just taken care of the structural deficit that was in place at that time, and it all got unwired they changed the budget stabilization fund, only 7% instead of 15%, they passed a series of tax cuts without spending decreases to match it. and that's why we're in the situation that we're in today.

Ted Simons
>> all right. Tom thank you so much for joining us.

Tom Rex
>> thank you.

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