Horizon, Host: Ted Simons

April 5, 2007


Host: Michael Dixon

Congressman Flake


  • Arizona Republican Congressman Jeff Flake appears on Horizon to talk about his immigration bill and other issues.
Guests:
  • Jeff Flake - U.S. Congressman
  • Ken Cheuvront - State Senator, Democrat


View Transcript
Michael Dixon:
Tonight on "Horizon," Congressman Jeff Flake will talk about his new immigration bill. Also we'll hear from both sides on the State Bill that would restrict cities which want to give tax incentives to businesses. That's coming up next on "Horizon."

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

Michael Dixon:
Good evening everyone. Welcome to "Horizon." I'm Michael Dixon. Arizona Congressman Jeff Flake has introduced a bill that provides comprehensive immigration reform because it deals with immigration, of course, the bill is not without controversy. Earlier I talked to Congressman Flake about the bill and some other issues.

Michael Dixon:
Congressman, thank you very much for coming back to "Horizon." It's always good to see you.

Jeff Flake:
Thanks for having me.

Michael Dixon:
Yesterday we had kind of something momentous happen we had 15 British sailors being held by the Iranian government released, and it was very magnanimous and the president pardoned them and all that. What's your take on it really? What's really going on there, and how do we read Iran?

Jeff Flake:
I don't know. I don't know if any of us can really read Iran. It's a very complex country. There are forces there in terms of modern young groups that may think differently than the government does that I just don't know how in the world Iran thought that this could play in their favor if they kept those sailors for longer than they did. And I think they finally realized that and let them go.

Michael Dixon:
I think one of the interesting things about this just from a geopolitical point of view is that you had a division within the Iranian government, and it looks like maybe it because the religious division that actually said let these guys go and started putting a little pressure, which means maybe that's not as formidable a government as we thought it might be. At least they weren't speaking with one voice.

Jeff Flake:
It's certainly more complex than most of us give it credit for, and that's a good sign frankly, the fact that there are differences of opinion there. That's a good thing. It's not a monolithic government.

Michael Dixon:
Exactly. Let's talk about the one thing that everybody talks about when they talk about Jeff Flake, and that's your immigration bill. This is something that people are saying, wow! All right. Boy, this sure sounds a lot like the president's bill and sounds a lot like what the Democrats wanted, but you've really crafted something unique. Tell me a little bit more about it.

Jeff Flake:
Well, this is something actually that Jim Kolbe and I and John McCain -- when I first was back there, I introduced it with John Kolbe. There are a lot of elements now that existed in the initial form, so some of it hasn't changed. But I always thought that we simply need to have a law that reflects reality, and we haven't had that with immigration reform, and it's the reason we're in the fix that we're in. And so this Legislation basically has three main parts. It has more and better border security. It has a temporary worker program moving forward, which we didn't do in 86 and we should have or we wouldn't be in the fix we're in now, and it also has a mechanism to deal with those who are here illegally now. It's comprehensive reform and if you really want to solve the immigration problem it's got to be comprehensive.

Michael Dixon:
A big point in the minds of a lot of Americans because it's been such a volatile issue, so emotional for so long is anything that appears to reward people who are already here is striking a tough note for a lot of people. They call it amnesty. You don't call it amnesty, but how do you walk past that?

Jeff Flake:
Well, what we did in 1986 was amnesty where we said, if you can prove that you've been here for a certain period of time illegally, you've got a shortcut to a green card. I don't know how to cut it other an amnesty. That's what it is, and we did it, and we shouldn't have because it did reward illegal behavior. Today what we're saying is, if you're here illegally and you wish to adjust your status and become a legal permanent resident, there are a lot of steps you've got to go through. You have to pay fines. You have to pay back taxes. You have to have a criminal background check. You have to learn English, have some knowledge of civics, and then you have to go back across the border and re-enter the country legally. Amnesty by definition is an unconditional pardon for a breach of law. That's not what we're doing here. This is a tough process for someone who wants to become a citizen who is here illegally. But anyway, we made a mistake in 1986. We shouldn't have done it. We're not going to make that mistake now.

Michael Dixon:
How is this flying with other members of Congress on both sides of the aisle?

Jeff Flake:
I think certainly among the Democrats we have broader support, but there are some Democrats who don't think its kind enough to those who are here illegally. They think it ought to be a shorter process, an easier process. We have some on the other side who say that it's too easy. So you have to craft Legislation that's the best Legislation that can pass.

Michael Dixon:
But do they agree that the time has come to do something? For a while, there was a lot of debate, but there was very little motion. I mean, there wasn't really anything happening that looked like it was going to end in a realistic bill that someone could sign or not sign.

Jeff Flake:
I think we've got a window now between now and the end of July when we take our summer break, that we've got to do it now or it probably won't get done for a couple of years. Democrats, who are in charge of Congress, I think, realize that they're in charge and people expect them to do something. We Republicans, I think, made a big miscalculation last term. We said, let's just gin the issue up, hold a bunch of hearings around the country, let everyone know what a problem it is. I don't think we had to tell anyone here in Arizona it was a problem. But then don't do anything built and then blame the Democrats for wants amnesty. I think the voters saw through that, and we were punished at the polls for that and many other reasons. I think the Democrats know that they can't do the same thing, can't not solve the issue. But we Republicans, we know what we want. First and foremost, as conservatives, you want the rule of law, and we're so far away from it now. That's what we have to have.

Michael Dixon:
Has conservatism changed in terms of its definition? We talk about Goldwater Conservatism and Reagan Conservatism. Those are two different things. What is conservatism today? What is Jeff Flake's Conservatism?

Jeff Flake:
The definitions have changed over the years, what used to be a liberal now something else. I'm not sure. But I think conservative today would be more appropriately defined as a classical liberal, one who believes in liberty, one who believes in individual freedom. That's a long way from the liberal definition today. I think Milton Freedman described himself as a classical liberal. That's the term I like best.

Michael Dixon:
Let's go back to the immigration bill for just a minute. It's one thing to sell two sides of the aisle. You can have lunch with them; get them in the cloak room. Truth is there's a lot of phobia out there, a lot of anger about foreigners out there just because of 9/11 or just because they look different. Just because. Just because. The selling job has to be with the American people, it would seem to me, because Congress isn't going to pass a bill that isn't going to return them to Congress.

Michael Dixon:
Right. So you have this big selling job for the American people. What makes you think you can sell this if it allows people who are here to stay here?

Jeff Flake:
Well, I think poll after poll show -- poll after poll shows that people don't want amnesty, that they don't consider it amnesty if you have conditions and punishments, fines, a condition that you go back across the border and then come back. If you have all these conditions, that's no longer amnesty. They also -- people understand that you're not going to deport 12 million people. Simply not going to happen. And if you're not going to, if you accept that premise, then anything short of getting a program for them to go into is an amnesty. I mean, what we're living today is the biggest amnesty of all where we basically turn a blind eye to illegal activity.

Michael Dixon:

Well, your bill, the Strive Act of 2007 that it's called, makes a big point of cooperation with Mexico. What kind of signs have you had that Mexico is ready to step up, assume some responsibility, and work closely with us as opposed to just doing their own thing while we go off and do ours?

Jeff Flake:
Well, certainly it's in Mexico's interest to have people here on a temporary basis who can send money back home, but they also want people to return home and bring the skills that they've learned. And so, if we can mesh our interests with Mexico's, that's good, but we shouldn't rely on them. I think we have to assume that we're going to do what's in our best interest. And if it happens to be theirs, that's fine. But I tell you, I've met with the new ambassador to the U.S. from Mexico. Very impressed. I think that they're getting it more than they have before.

Michael Dixon:
The big issue with all of us here, I think, in Arizona, in California, in Texas is this business of border security. We're trying to deal with the immigration and figure out who comes in, who can stay, and all the rest, but when it comes to how do we keep them out, those people that we definitely don't want in ever and those people we want to say to, wait your turn. Ok. We've not done well. Your bill addresses that very quickly. Talk about that provision.

Jeff Flake:
Well, what we say is the Department of Homeland Security has to certify that we're moving ahead with the president's Border Security Initiative, which has several elements. Some of it is more fencing. Some of it is high tech enforcement. Some of it means more border patrol officers. We provide for a lot more in this Legislation. But most important we have to have a temporary worker program where the worker flows can come on a legal framework and then return home, because if you want to stop terrorists who are coming across or those who come for other nefarious reasons, drug running, whatever, you can't be chasing every gardener that wants to come over. So if you have a legal framework for people to come and just as importantly to return home, then you can focus on those who have come to do us harm. That's what we're trying to do here.

Michael Dixon:
What about the two border agents in prison now? How do you analyze that? To many of us, it just seems like something was wrong there, that now they're doing very hard time for trying to do their job, and we're trying to make sense of that. Do you know something we don't?

Jeff Flake:
Well, we haven't been involved at the correctional level, but I can tell you that I'm a huge fan of the border patrol and what they're trying to do, and what they don't need is bad actors who act out of school. And according to the indictment that came down and then ultimately the conviction, the jury felt that these were bad actors, that they had actually covered up evidence and gone on. Now, I wasn't in that trial. I don't know. But I believe in the rule of law and, if they're convicted by a jury, then -- you know -- I don't think Congress ought to intervene there. Having said that, the deal that the so-called victim who got shot here got for his testimony seems rather strange, and I don't know how anybody can defend that kind of thing. So I can tell you that the border patrol has a tough job on the border, and they're doing it, for the most part, very well, as well as they can.

Michael Dixon:
But it's part of the mix that has to be solved.

Jeff Flake:
Certainly.

Michael Dixon:
Listen. Just quickly, quickly, how are we going to resolve this whole money for troop's thing that's just sitting there looking like it's stalled? I mean, it looks like there's going to be a bill passed. The president is going to veto is and; it back, and -- and send it back. It seems like a waste of time. Is anything really substantive happening?

Jeff Flake:
In the end, I don't think we need 535 generals, and the constitution very wisely gives the role of Commander and Chief to the president. So I think that the elections that come around every two years certainly indicate where the country wants to go, and that's been duly noted, and the president is having to deal with that. But I think it's unwise for us to try to dictate every battle that's fought and every troop movement that occurs. So I think, in the end, that the troops will get the money. But for the long-term, this has an effect, and the fact that we had an election that didn't come well for Republicans will have an effect on what happens in Iraq.

Michael Dixon:
Congressman, it is always a pleasure. Thanks very much for being with us on "Horizon." We hope you come back.

Jeff Flake:
Thank you.

Michael Dixon:
Thank you.

Michael Dixon:
All right. A bill has been introduced that would reduce city's state-shared revenues by the amount of tax incentives that they give certain businesses. Now, the bill is an attempt to stop bidding wars between cities for businesses. Got that? All right. Some cities oppose the bill, others support it are or neutral. Here to talk about the bill is its sponsor Democratic Senator Ken Cheuvront. In opposition to the bill is Ken Strobeck, Executive Director of the League of Arizona Cities and Towns. Gentlemen thanks very much for being with us. Do you think that we need this? What is the overriding issue that long-term suggests we need a law?

Ken Cheuvront:
Well, there's a couple. One, over the years, the cities have said that they were going to work together and come up with a solution to the bidding wars, and they came together last year, most of the major mayors, and said, hey, we need to deal with this program on our own. Obviously they didn't. Second, as a business person and a person who owns a small business, when somebody already has economies to scale like a Wal-mart or a Costco and you're having to compete with them and then the city subsidized them more, you're really at a competitive disadvantage.

Michael Dixon:
Is that what's happening? Do we have cities saying to a Wal-mart, please come and we'll give you tax break?

Ken Cheuvront:
I've seen it at Wal-mart, Home Depot, many others. The other avenue where most of the cities' incentives are given are the automobile dealerships. You know, there's only a certain amount of automotive dealerships given to a city or valley or metropolitan area. So what they do is the city of Gilbert will say if you want to come over here I know you're in Mesa, we'll give you a tax incentive. So pretty much what happens is you lose that tax revenue, and somebody has to make it up, and it's usually the taxpayers.

Michael Dixon:
Are you bucking for the little guy here? Is that the idea of the bill?

Ken Cheuvront:
Oh, yeah. I mean I think that I can't afford a big lobbyist to go to the city and say, hey, can you give me a 3 million-dollar tax break for wine. It just doesn't happen. So, to me, I think really, if a business is not viable, having the city intervene financially is not going to make it more viable. It's just going to mean that we're going to lose more money.

Michael Dixon:
You don't see this as being a viable bill for a need for it.

Ken Strobeck:
First of all Michael, I think what you said in your intro is very important for people to remember. I represent sent all 90 cities and towns in the state of Arizona. And unfortunately they're not all unified on this position, and so I'm going to talk more about sort of the global philosophical idea behind the need to have economic development as a governmental purpose and not necessarily specifically on this bill, because even though we oppose some of the provisions of this bill, we certainly have members of councils and mayors who are in support of the bill as Senator Cheuvront has acknowledged. But I think the important thing to remember is that the Arizona strong economy is not happening by accident. You know, a lot of people believe, simply because we have the population growing here and because we have a nice climate and a good place to live that automatically business will flow here and that we don't need to make economic development something that we invest in. I go back to the philosophy that people say run government like a business. What this is, is an investment in future economic prosperity. There's already statutes on the books that say a city cannot offer more in a development incentive than they can reasonably expect to receive back, and that has to be verified by an independent third party, and they also can't offer a development incentive unless it's known that the retailer or the entity that they're offering the incentive to will not locate there. So there's already two pretty significant tests that say this has to be something that makes economic sense and actually provides an economic benefit to the community.

Michael Dixon:
Do you agree with that? Do you agree that that's the provision of the law?

Ken Cheuvront:
Well, there's a couple things. When he was talking about those provisions in the laws, they completely sidetracked him. The city of Phoenix, when they were dealing with city north, they did everything in executive session, so we have no idea -- you know -- what the circumstances are, whether it's economically viable or not, because nobody saw that information. The third person is Pollack who comes in there and he's an economist but he works for the cities. Third, they say that the city -- that the entity will not come into the city. Well, anybody just has to say, nope. I'm not going to go there in also you give it to me. That's not really a good test and obviously hasn't worked.

Michael Dixon:
It may not be a good test, but let me just put this to you. If you have a company that different cities are vying for, different states would love to have that industry because it's going to create jobs and create a boost in the economy and all of the rest that would come with it, how do you compete? I mean, aside from saying we've got a great ballet company, a wonderful symphony orchestra, four sports teams and the rest of it, they say, yeah, but we're talking dollars and cents now, and they say you're going to give me a tax deal and you're not going to give me a tax deal, so I'm going to go to Denver.

Ken Cheuvront:
I agree with you for economic development. These are retail operations. These are just stores, people who are selling a commodity that somebody's going to purchase whether it's in Glendale or Scottsdale. We know that we already have Nordstrom's. The economic development individual putting forth the city north project, he came into my office yesterday and I wanted to hear his concerns and he said why should somebody shop in Scottsdale or Chandler when they can shop in Phoenix at Nordstrom's?

Ken Cheuvront:
And he made my point that we already have Nordstrom's. It's just that one city's willing to give one-hundred million dollars away to get them on their side of the border. If these were well-paying jobs, you might have a point, but these are retail jobs, and all we're doing is creating a situation where somebody is getting a brand-new garage at taxpayers' expense.

Michael Dixon:
What I'm hearing him say is that we're not getting any bang for the buck, that if we make these incentives, we don't have anything coming back. Is that what you are saying essentially?

Ken Cheuvront:
Well of course. These retail operations are going to be in the cities --

Michael Dixon:
I just wanted to make sure I had it right. I'm concerned about that. It would seem to me that what we're doing is weighing the cost benefit ratio.

Ken Strobeck:
Right. I think what we're doing already, according to the law and the way cities evaluate these projects, is making sure that they payoff. As I said, we commissioned a study last year that was -- produced this report, the role of Arizona cities and towns and the state's economy. One of the things this talks about is just what I said earlier. The economy of the state is not happening by accident. It's happening because we're making an investment in recruiting business, recruiting retail, recruiting very viable, healthy, quality retailers and businesses to the state that may not locate here. You know, just because Nordstrom's is here now does not mean that Nordstrom's will always be here or always will locate here. The Cabella's, other stores that have a regional radius of several hundred miles for their customers, they look for these incentives. We're not just competing with each other in cities. We're competing with California, with Las Vegas, with New Mexico, with other areas that are offering these incentives and that have that kind of a radius for their business.

Michael Dixon:
At the same time, I'm thinking to myself how long are we going to be held hostage economically. If a business comes and says, hey, you give me some money or I'm not going to play, it's not like we're a slum industrial city in the east. This is Phoenix, Arizona, Scottsdale, Arizona. These are cities that people want to come in. Their executives want to live here. Their families want to move here. So we have a different kind of situation, it would seem to me, than other cities, and why isn't that enough and why can't we say, look what you have here already?

Ken Strobeck:
There's another component that has to do generally with just our business climate. Are we a business-friendly state or not? There's another big tax tool that we don't have in this state, tax increment financing, that's something that a lot of businesses look at and say, let's see. You don't have tax increment financing. You're against giving incentives. Maybe this isn't a very business-friendly state after all, around that can lead to a down cycle.

Michael Dixon:
Senator, what about that? That seems to be kind of --

Ken Cheuvront:
Again, we're not talking about businesses. We're talking about stores.

Michael Dixon:
Wait, wait, wait. Now, ok. What's the difference between a Wal-mart, which is a store -- what's a business if Wal-mart isn't?

Ken Cheuvront:
It can be a business, but people have so much disposable income, they are going to by shoes, shirts, allocate so much money. By us opening up a Gucci store in Scottsdale is not going to mean that they're going to be creating any new people purchasing that product, because Gucci can be bought now at Nordstrom's or Neiman Marcus. That product that these different places are selling are already obtainable in the city. All we're doing is that disposable income that they're using to purchase these and the tax revenue that we would have collected is now being lost.

Michael Dixon:
But let me put this to you. Do we need a law in order to do this? When I look at laws, I think, that's pretty permanent, and they are broad based, as laws should be. But should there be a broad-based attack on -- which could be a very legitimate problem you want to address. Sould there be that kind of broad-based assault?

Ken Cheuvront:
I was hoping there wouldn't have to be. When the cities came last year and said, we're going to work together to tackle this issue and then didn't, this has been going on for three years and all we've see is that the incentives or tax giveaways increase exponentially every year. We've given away almost four-hundred-million dollars in these tax giveaways in the last five years. Mostly to automobile dealer ships, to big companies, to big developers. And at some point you have to say, ok, the taxpayer has to make sure they're not being taken advantage of. The small businesses whose having to compete with these retailers. The situation when Cabella's was given that kind of incentive and the one in Tempe -- I forget the name of the sports company, but we had a home-grown Glendale sports company. They went out of business. They couldn't compete with those different big companies. And should we be subsidizing national firms to make our local firms go under?

Michael Dixon:
That's a real powerful point, Ken.

Ken Strobeck:
We don't need a state law to tell cities and towns how to do their business. That's why we elect city councils. When some people say things don't work, the other thing is look at that particular bill. This affects only Maricopa County and Pima County. Just outside of this border, we can have all the incentives we want exactly the same. Just a mile outside of the end of wherever this border is. So this is not something that's being addressed on a statewide level. Furthermore, 20 years ago, nobody would have said that they believed that Los Angeles would not have an NFL football team. They don't have an NFL football team because they're not willing to offer incentives to bring somebody in there.

Ken Cheuvront:
What about giving them the Cardinals? I don't think many Arizona people would mind.

Michael Dixon:
[laughter]

Ken Cheuvront:
We're more than willing to work with them.

Ken Strobeck:
My point is that these things don't just happen simply because we're here and because we have this particular situation today. We have the golden goose. We have to be careful not to kill that golden goose or the goose that's laying the golden eggs for us.

Michael Dixon:
10 seconds here, 15 seconds. Tell them what they need to know about why this is not a good idea.

Ken Strobeck:
Because cities and towns are making this an investment in the future. They're putting their money in a guaranteed return with a contract that is bringing prosperity and economic development to the state. Good jobs, good economy.

Michael Dixon:
Why is this a good idea?

Ken Cheuvront:
The cities are picking winners and losers when it comes to these retail operations. Every study I've ever seen shows that incentives just don't work, and it's bad public policy.

Michael Dixon:
Well, gentlemen, we will watch this. What's the status right now?

Ken Cheuvront:
Today it was voted on, and now it'll go back to the House.

Michael Dixon:
All right. Very good. Thank you very much, Senator Ken Cheuvront and Ken Strobeck. Thank you very much for your time. We appreciate the analysis. Thank you very much for watches us on another program of "Horizon." these are issues, of course, that we will continue to follow for you. I'm Michael Dixon. I'll be back tomorrow night, and we hope that you'll join us as well at 7:00. Until then, have a good evening.

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Tax Incentives


  • A bill is working its way through the Arizona Legislature that would penalize cities that give big tax breaks to companies to move to their city. Sen. Ken Cheurvront, the sponsor of the bill, will debate the issue with Ken Strobeck of the League of Arizona Cities and Towns.
Guests:
  • Jeff Flake - U.S. Congressman
  • Ken Cheuvront - State Senator, Democrat
Category: Business/Economy

View Transcript
Michael Dixon:
Tonight on "Horizon," Congressman Jeff Flake will talk about his new immigration bill. Also we'll hear from both sides on the State Bill that would restrict cities which want to give tax incentives to businesses. That's coming up next on "Horizon."

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

Michael Dixon:
Good evening everyone. Welcome to "Horizon." I'm Michael Dixon. Arizona Congressman Jeff Flake has introduced a bill that provides comprehensive immigration reform because it deals with immigration, of course, the bill is not without controversy. Earlier I talked to Congressman Flake about the bill and some other issues.

Michael Dixon:
Congressman, thank you very much for coming back to "Horizon." It's always good to see you.

Jeff Flake:
Thanks for having me.

Michael Dixon:
Yesterday we had kind of something momentous happen we had 15 British sailors being held by the Iranian government released, and it was very magnanimous and the president pardoned them and all that. What's your take on it really? What's really going on there, and how do we read Iran?

Jeff Flake:
I don't know. I don't know if any of us can really read Iran. It's a very complex country. There are forces there in terms of modern young groups that may think differently than the government does that I just don't know how in the world Iran thought that this could play in their favor if they kept those sailors for longer than they did. And I think they finally realized that and let them go.

Michael Dixon:
I think one of the interesting things about this just from a geopolitical point of view is that you had a division within the Iranian government, and it looks like maybe it because the religious division that actually said let these guys go and started putting a little pressure, which means maybe that's not as formidable a government as we thought it might be. At least they weren't speaking with one voice.

Jeff Flake:
It's certainly more complex than most of us give it credit for, and that's a good sign frankly, the fact that there are differences of opinion there. That's a good thing. It's not a monolithic government.

Michael Dixon:
Exactly. Let's talk about the one thing that everybody talks about when they talk about Jeff Flake, and that's your immigration bill. This is something that people are saying, wow! All right. Boy, this sure sounds a lot like the president's bill and sounds a lot like what the Democrats wanted, but you've really crafted something unique. Tell me a little bit more about it.

Jeff Flake:
Well, this is something actually that Jim Kolbe and I and John McCain -- when I first was back there, I introduced it with John Kolbe. There are a lot of elements now that existed in the initial form, so some of it hasn't changed. But I always thought that we simply need to have a law that reflects reality, and we haven't had that with immigration reform, and it's the reason we're in the fix that we're in. And so this Legislation basically has three main parts. It has more and better border security. It has a temporary worker program moving forward, which we didn't do in 86 and we should have or we wouldn't be in the fix we're in now, and it also has a mechanism to deal with those who are here illegally now. It's comprehensive reform and if you really want to solve the immigration problem it's got to be comprehensive.

Michael Dixon:
A big point in the minds of a lot of Americans because it's been such a volatile issue, so emotional for so long is anything that appears to reward people who are already here is striking a tough note for a lot of people. They call it amnesty. You don't call it amnesty, but how do you walk past that?

Jeff Flake:
Well, what we did in 1986 was amnesty where we said, if you can prove that you've been here for a certain period of time illegally, you've got a shortcut to a green card. I don't know how to cut it other an amnesty. That's what it is, and we did it, and we shouldn't have because it did reward illegal behavior. Today what we're saying is, if you're here illegally and you wish to adjust your status and become a legal permanent resident, there are a lot of steps you've got to go through. You have to pay fines. You have to pay back taxes. You have to have a criminal background check. You have to learn English, have some knowledge of civics, and then you have to go back across the border and re-enter the country legally. Amnesty by definition is an unconditional pardon for a breach of law. That's not what we're doing here. This is a tough process for someone who wants to become a citizen who is here illegally. But anyway, we made a mistake in 1986. We shouldn't have done it. We're not going to make that mistake now.

Michael Dixon:
How is this flying with other members of Congress on both sides of the aisle?

Jeff Flake:
I think certainly among the Democrats we have broader support, but there are some Democrats who don't think its kind enough to those who are here illegally. They think it ought to be a shorter process, an easier process. We have some on the other side who say that it's too easy. So you have to craft Legislation that's the best Legislation that can pass.

Michael Dixon:
But do they agree that the time has come to do something? For a while, there was a lot of debate, but there was very little motion. I mean, there wasn't really anything happening that looked like it was going to end in a realistic bill that someone could sign or not sign.

Jeff Flake:
I think we've got a window now between now and the end of July when we take our summer break, that we've got to do it now or it probably won't get done for a couple of years. Democrats, who are in charge of Congress, I think, realize that they're in charge and people expect them to do something. We Republicans, I think, made a big miscalculation last term. We said, let's just gin the issue up, hold a bunch of hearings around the country, let everyone know what a problem it is. I don't think we had to tell anyone here in Arizona it was a problem. But then don't do anything built and then blame the Democrats for wants amnesty. I think the voters saw through that, and we were punished at the polls for that and many other reasons. I think the Democrats know that they can't do the same thing, can't not solve the issue. But we Republicans, we know what we want. First and foremost, as conservatives, you want the rule of law, and we're so far away from it now. That's what we have to have.

Michael Dixon:
Has conservatism changed in terms of its definition? We talk about Goldwater Conservatism and Reagan Conservatism. Those are two different things. What is conservatism today? What is Jeff Flake's Conservatism?

Jeff Flake:
The definitions have changed over the years, what used to be a liberal now something else. I'm not sure. But I think conservative today would be more appropriately defined as a classical liberal, one who believes in liberty, one who believes in individual freedom. That's a long way from the liberal definition today. I think Milton Freedman described himself as a classical liberal. That's the term I like best.

Michael Dixon:
Let's go back to the immigration bill for just a minute. It's one thing to sell two sides of the aisle. You can have lunch with them; get them in the cloak room. Truth is there's a lot of phobia out there, a lot of anger about foreigners out there just because of 9/11 or just because they look different. Just because. Just because. The selling job has to be with the American people, it would seem to me, because Congress isn't going to pass a bill that isn't going to return them to Congress.

Michael Dixon:
Right. So you have this big selling job for the American people. What makes you think you can sell this if it allows people who are here to stay here?

Jeff Flake:
Well, I think poll after poll show -- poll after poll shows that people don't want amnesty, that they don't consider it amnesty if you have conditions and punishments, fines, a condition that you go back across the border and then come back. If you have all these conditions, that's no longer amnesty. They also -- people understand that you're not going to deport 12 million people. Simply not going to happen. And if you're not going to, if you accept that premise, then anything short of getting a program for them to go into is an amnesty. I mean, what we're living today is the biggest amnesty of all where we basically turn a blind eye to illegal activity.

Michael Dixon:

Well, your bill, the Strive Act of 2007 that it's called, makes a big point of cooperation with Mexico. What kind of signs have you had that Mexico is ready to step up, assume some responsibility, and work closely with us as opposed to just doing their own thing while we go off and do ours?

Jeff Flake:
Well, certainly it's in Mexico's interest to have people here on a temporary basis who can send money back home, but they also want people to return home and bring the skills that they've learned. And so, if we can mesh our interests with Mexico's, that's good, but we shouldn't rely on them. I think we have to assume that we're going to do what's in our best interest. And if it happens to be theirs, that's fine. But I tell you, I've met with the new ambassador to the U.S. from Mexico. Very impressed. I think that they're getting it more than they have before.

Michael Dixon:
The big issue with all of us here, I think, in Arizona, in California, in Texas is this business of border security. We're trying to deal with the immigration and figure out who comes in, who can stay, and all the rest, but when it comes to how do we keep them out, those people that we definitely don't want in ever and those people we want to say to, wait your turn. Ok. We've not done well. Your bill addresses that very quickly. Talk about that provision.

Jeff Flake:
Well, what we say is the Department of Homeland Security has to certify that we're moving ahead with the president's Border Security Initiative, which has several elements. Some of it is more fencing. Some of it is high tech enforcement. Some of it means more border patrol officers. We provide for a lot more in this Legislation. But most important we have to have a temporary worker program where the worker flows can come on a legal framework and then return home, because if you want to stop terrorists who are coming across or those who come for other nefarious reasons, drug running, whatever, you can't be chasing every gardener that wants to come over. So if you have a legal framework for people to come and just as importantly to return home, then you can focus on those who have come to do us harm. That's what we're trying to do here.

Michael Dixon:
What about the two border agents in prison now? How do you analyze that? To many of us, it just seems like something was wrong there, that now they're doing very hard time for trying to do their job, and we're trying to make sense of that. Do you know something we don't?

Jeff Flake:
Well, we haven't been involved at the correctional level, but I can tell you that I'm a huge fan of the border patrol and what they're trying to do, and what they don't need is bad actors who act out of school. And according to the indictment that came down and then ultimately the conviction, the jury felt that these were bad actors, that they had actually covered up evidence and gone on. Now, I wasn't in that trial. I don't know. But I believe in the rule of law and, if they're convicted by a jury, then -- you know -- I don't think Congress ought to intervene there. Having said that, the deal that the so-called victim who got shot here got for his testimony seems rather strange, and I don't know how anybody can defend that kind of thing. So I can tell you that the border patrol has a tough job on the border, and they're doing it, for the most part, very well, as well as they can.

Michael Dixon:
But it's part of the mix that has to be solved.

Jeff Flake:
Certainly.

Michael Dixon:
Listen. Just quickly, quickly, how are we going to resolve this whole money for troop's thing that's just sitting there looking like it's stalled? I mean, it looks like there's going to be a bill passed. The president is going to veto is and; it back, and -- and send it back. It seems like a waste of time. Is anything really substantive happening?

Jeff Flake:
In the end, I don't think we need 535 generals, and the constitution very wisely gives the role of Commander and Chief to the president. So I think that the elections that come around every two years certainly indicate where the country wants to go, and that's been duly noted, and the president is having to deal with that. But I think it's unwise for us to try to dictate every battle that's fought and every troop movement that occurs. So I think, in the end, that the troops will get the money. But for the long-term, this has an effect, and the fact that we had an election that didn't come well for Republicans will have an effect on what happens in Iraq.

Michael Dixon:
Congressman, it is always a pleasure. Thanks very much for being with us on "Horizon." We hope you come back.

Jeff Flake:
Thank you.

Michael Dixon:
Thank you.

Michael Dixon:
All right. A bill has been introduced that would reduce city's state-shared revenues by the amount of tax incentives that they give certain businesses. Now, the bill is an attempt to stop bidding wars between cities for businesses. Got that? All right. Some cities oppose the bill, others support it are or neutral. Here to talk about the bill is its sponsor Democratic Senator Ken Cheuvront. In opposition to the bill is Ken Strobeck, Executive Director of the League of Arizona Cities and Towns. Gentlemen thanks very much for being with us. Do you think that we need this? What is the overriding issue that long-term suggests we need a law?

Ken Cheuvront:
Well, there's a couple. One, over the years, the cities have said that they were going to work together and come up with a solution to the bidding wars, and they came together last year, most of the major mayors, and said, hey, we need to deal with this program on our own. Obviously they didn't. Second, as a business person and a person who owns a small business, when somebody already has economies to scale like a Wal-mart or a Costco and you're having to compete with them and then the city subsidized them more, you're really at a competitive disadvantage.

Michael Dixon:
Is that what's happening? Do we have cities saying to a Wal-mart, please come and we'll give you tax break?

Ken Cheuvront:
I've seen it at Wal-mart, Home Depot, many others. The other avenue where most of the cities' incentives are given are the automobile dealerships. You know, there's only a certain amount of automotive dealerships given to a city or valley or metropolitan area. So what they do is the city of Gilbert will say if you want to come over here I know you're in Mesa, we'll give you a tax incentive. So pretty much what happens is you lose that tax revenue, and somebody has to make it up, and it's usually the taxpayers.

Michael Dixon:
Are you bucking for the little guy here? Is that the idea of the bill?

Ken Cheuvront:
Oh, yeah. I mean I think that I can't afford a big lobbyist to go to the city and say, hey, can you give me a 3 million-dollar tax break for wine. It just doesn't happen. So, to me, I think really, if a business is not viable, having the city intervene financially is not going to make it more viable. It's just going to mean that we're going to lose more money.

Michael Dixon:
You don't see this as being a viable bill for a need for it.

Ken Strobeck:
First of all Michael, I think what you said in your intro is very important for people to remember. I represent sent all 90 cities and towns in the state of Arizona. And unfortunately they're not all unified on this position, and so I'm going to talk more about sort of the global philosophical idea behind the need to have economic development as a governmental purpose and not necessarily specifically on this bill, because even though we oppose some of the provisions of this bill, we certainly have members of councils and mayors who are in support of the bill as Senator Cheuvront has acknowledged. But I think the important thing to remember is that the Arizona strong economy is not happening by accident. You know, a lot of people believe, simply because we have the population growing here and because we have a nice climate and a good place to live that automatically business will flow here and that we don't need to make economic development something that we invest in. I go back to the philosophy that people say run government like a business. What this is, is an investment in future economic prosperity. There's already statutes on the books that say a city cannot offer more in a development incentive than they can reasonably expect to receive back, and that has to be verified by an independent third party, and they also can't offer a development incentive unless it's known that the retailer or the entity that they're offering the incentive to will not locate there. So there's already two pretty significant tests that say this has to be something that makes economic sense and actually provides an economic benefit to the community.

Michael Dixon:
Do you agree with that? Do you agree that that's the provision of the law?

Ken Cheuvront:
Well, there's a couple things. When he was talking about those provisions in the laws, they completely sidetracked him. The city of Phoenix, when they were dealing with city north, they did everything in executive session, so we have no idea -- you know -- what the circumstances are, whether it's economically viable or not, because nobody saw that information. The third person is Pollack who comes in there and he's an economist but he works for the cities. Third, they say that the city -- that the entity will not come into the city. Well, anybody just has to say, nope. I'm not going to go there in also you give it to me. That's not really a good test and obviously hasn't worked.

Michael Dixon:
It may not be a good test, but let me just put this to you. If you have a company that different cities are vying for, different states would love to have that industry because it's going to create jobs and create a boost in the economy and all of the rest that would come with it, how do you compete? I mean, aside from saying we've got a great ballet company, a wonderful symphony orchestra, four sports teams and the rest of it, they say, yeah, but we're talking dollars and cents now, and they say you're going to give me a tax deal and you're not going to give me a tax deal, so I'm going to go to Denver.

Ken Cheuvront:
I agree with you for economic development. These are retail operations. These are just stores, people who are selling a commodity that somebody's going to purchase whether it's in Glendale or Scottsdale. We know that we already have Nordstrom's. The economic development individual putting forth the city north project, he came into my office yesterday and I wanted to hear his concerns and he said why should somebody shop in Scottsdale or Chandler when they can shop in Phoenix at Nordstrom's?

Ken Cheuvront:
And he made my point that we already have Nordstrom's. It's just that one city's willing to give one-hundred million dollars away to get them on their side of the border. If these were well-paying jobs, you might have a point, but these are retail jobs, and all we're doing is creating a situation where somebody is getting a brand-new garage at taxpayers' expense.

Michael Dixon:
What I'm hearing him say is that we're not getting any bang for the buck, that if we make these incentives, we don't have anything coming back. Is that what you are saying essentially?

Ken Cheuvront:
Well of course. These retail operations are going to be in the cities --

Michael Dixon:
I just wanted to make sure I had it right. I'm concerned about that. It would seem to me that what we're doing is weighing the cost benefit ratio.

Ken Strobeck:
Right. I think what we're doing already, according to the law and the way cities evaluate these projects, is making sure that they payoff. As I said, we commissioned a study last year that was -- produced this report, the role of Arizona cities and towns and the state's economy. One of the things this talks about is just what I said earlier. The economy of the state is not happening by accident. It's happening because we're making an investment in recruiting business, recruiting retail, recruiting very viable, healthy, quality retailers and businesses to the state that may not locate here. You know, just because Nordstrom's is here now does not mean that Nordstrom's will always be here or always will locate here. The Cabella's, other stores that have a regional radius of several hundred miles for their customers, they look for these incentives. We're not just competing with each other in cities. We're competing with California, with Las Vegas, with New Mexico, with other areas that are offering these incentives and that have that kind of a radius for their business.

Michael Dixon:
At the same time, I'm thinking to myself how long are we going to be held hostage economically. If a business comes and says, hey, you give me some money or I'm not going to play, it's not like we're a slum industrial city in the east. This is Phoenix, Arizona, Scottsdale, Arizona. These are cities that people want to come in. Their executives want to live here. Their families want to move here. So we have a different kind of situation, it would seem to me, than other cities, and why isn't that enough and why can't we say, look what you have here already?

Ken Strobeck:
There's another component that has to do generally with just our business climate. Are we a business-friendly state or not? There's another big tax tool that we don't have in this state, tax increment financing, that's something that a lot of businesses look at and say, let's see. You don't have tax increment financing. You're against giving incentives. Maybe this isn't a very business-friendly state after all, around that can lead to a down cycle.

Michael Dixon:
Senator, what about that? That seems to be kind of --

Ken Cheuvront:
Again, we're not talking about businesses. We're talking about stores.

Michael Dixon:
Wait, wait, wait. Now, ok. What's the difference between a Wal-mart, which is a store -- what's a business if Wal-mart isn't?

Ken Cheuvront:
It can be a business, but people have so much disposable income, they are going to by shoes, shirts, allocate so much money. By us opening up a Gucci store in Scottsdale is not going to mean that they're going to be creating any new people purchasing that product, because Gucci can be bought now at Nordstrom's or Neiman Marcus. That product that these different places are selling are already obtainable in the city. All we're doing is that disposable income that they're using to purchase these and the tax revenue that we would have collected is now being lost.

Michael Dixon:
But let me put this to you. Do we need a law in order to do this? When I look at laws, I think, that's pretty permanent, and they are broad based, as laws should be. But should there be a broad-based attack on -- which could be a very legitimate problem you want to address. Sould there be that kind of broad-based assault?

Ken Cheuvront:
I was hoping there wouldn't have to be. When the cities came last year and said, we're going to work together to tackle this issue and then didn't, this has been going on for three years and all we've see is that the incentives or tax giveaways increase exponentially every year. We've given away almost four-hundred-million dollars in these tax giveaways in the last five years. Mostly to automobile dealer ships, to big companies, to big developers. And at some point you have to say, ok, the taxpayer has to make sure they're not being taken advantage of. The small businesses whose having to compete with these retailers. The situation when Cabella's was given that kind of incentive and the one in Tempe -- I forget the name of the sports company, but we had a home-grown Glendale sports company. They went out of business. They couldn't compete with those different big companies. And should we be subsidizing national firms to make our local firms go under?

Michael Dixon:
That's a real powerful point, Ken.

Ken Strobeck:
We don't need a state law to tell cities and towns how to do their business. That's why we elect city councils. When some people say things don't work, the other thing is look at that particular bill. This affects only Maricopa County and Pima County. Just outside of this border, we can have all the incentives we want exactly the same. Just a mile outside of the end of wherever this border is. So this is not something that's being addressed on a statewide level. Furthermore, 20 years ago, nobody would have said that they believed that Los Angeles would not have an NFL football team. They don't have an NFL football team because they're not willing to offer incentives to bring somebody in there.

Ken Cheuvront:
What about giving them the Cardinals? I don't think many Arizona people would mind.

Michael Dixon:
[laughter]

Ken Cheuvront:
We're more than willing to work with them.

Ken Strobeck:
My point is that these things don't just happen simply because we're here and because we have this particular situation today. We have the golden goose. We have to be careful not to kill that golden goose or the goose that's laying the golden eggs for us.

Michael Dixon:
10 seconds here, 15 seconds. Tell them what they need to know about why this is not a good idea.

Ken Strobeck:
Because cities and towns are making this an investment in the future. They're putting their money in a guaranteed return with a contract that is bringing prosperity and economic development to the state. Good jobs, good economy.

Michael Dixon:
Why is this a good idea?

Ken Cheuvront:
The cities are picking winners and losers when it comes to these retail operations. Every study I've ever seen shows that incentives just don't work, and it's bad public policy.

Michael Dixon:
Well, gentlemen, we will watch this. What's the status right now?

Ken Cheuvront:
Today it was voted on, and now it'll go back to the House.

Michael Dixon:
All right. Very good. Thank you very much, Senator Ken Cheuvront and Ken Strobeck. Thank you very much for your time. We appreciate the analysis. Thank you very much for watches us on another program of "Horizon." these are issues, of course, that we will continue to follow for you. I'm Michael Dixon. I'll be back tomorrow night, and we hope that you'll join us as well at 7:00. Until then, have a good evening.

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