Tim Cahill

Jul 14, 2009|

Tim Cahill talks about his job, the state and the economy with Todd and Avi

Transcript - will not be 100% accurate

Good morning good morning morning -- so what's gonna. Aria good very good excellent ways I know there were these tough fiscal times. If as a belt tightening measure we were to eliminate the treasurer's office would there be any problem with that no donuts for us. -- offensive and a struggle lottery and but doesn't Iran itself at this point you print tickets you collect the money what's the big deal well it does a lot about it on its -- but I think it needs some oversight -- so. -- -- -- we serves as CFO of the of the commonwealth are you like the bank so what exactly do you as to and we manage all the cash now McConnell so we the states bank so I went up there this bunch of Milledge wanna -- cash drawers with like a billion dollars in each one. They used to live in -- prelude to be teller windows. And you go and cash a check at the turns off the set is gone now it's all computerized and people get that direct deposit everything you do the banking you do the payroll for the state -- the bank can we do the payroll pay all the bills month so every checked it goes out on the state goes on in my name. It's about 504550. Billion dollars of of banking on a yearly basis. And we managed to states. What used to be the State's rainy day fund which is is very thin right now so it's not like to manage the that we do. All of the debt for the com while so we issued debt in the antigen pay all the bills when. Aren't that bad sign when the rainy day fund has no arraignment girls on especially when we're just the beginning of what's gonna be along recession what has changed since the fall. Period the fall of Saigon. For them the fall of 08 every thought can. Everything we used to all the investment banking world this change mean this is this less of them around there really aren't more pure investment banks left anymore. And we work with beginning I -- As of march of 08. We. We at six banks that we did business -- a rotating basis beginning with Bear Stearns and they all went away so in borrowing money has changed dramatically over the last year. Investing money has changed dramatically. This a lot of investment firms that have gone away as well. But the world as we know -- in the treasury has changed dramatically in its just a different world and it's not going to be easy easy -- cheap to borrow money going forward. Org and to manage the money that you -- how much is the states spend every year since you write all the checks what's the total. Well the budget is it last year was about -- little over twenty half. Billion dollars up and in this all the federal money then is all the federal might well that includes -- federal money that comes in. So the 28 billion and we had a vote. We estimated we were estimating about 21 billion in revenue state revenue when there are a Swiss federal money that comes in but that's because total spending for the -- -- when he -- yet that doesn't include on the authorities in all the off budget. Items does a lot of off button you know the turnpike to -- -- follows -- do we know Purdue would you know what that total number is when you -- all that stuff. I don't know -- -- top my tongue but it's north of fifty billion dollars total when you add that -- and tell us what I've heard no one. Happens when the state doesn't have the money we -- talk about state having deficit and level in this statement other states as well. -- come noon today Tim Ratajczak anyway. Well that we -- turned -- into that problem yet since I've been about we don't we have to do short term boring which we did last Sharon and -- some problems because the markets just froze him. In October. So we have up to about two billion dollars in short term barring that we can do to meet cash flow needs last year was the most difficult year cash flow. Because we just started running out of money early in the spending never slowed down so we were spending money faster than we were bringing in and and giving way behind in terms of our cash flow needs so we have not yet reached that point like California which are how did you do with LSU we borrowed money short term. So you can do that quickly like if today you don't have money and that's -- you know one of the things about this financial crunch is that the credit markets dried up that your original demand General Motors and the bankruptcy over that. So that he can -- just do you get access to credit that's a General Motors couldn't get. Well I think we we've always been -- access to credit very quickly -- you -- said if they told me tomorrow need to borrow money. To get through the next thirty days we can do that but in October of oh wait we couldn't do that we couldn't go to the markets it -- totally luckily we had enough cash. On hand to get through. And then we get another series of short term -- but eventually catches up to Asian or you can't just keep going to crash our -- and credit card yeah. And you can't keep doing that you pay a lot of interest on it we went -- is his story that I like to tell because it's -- indicative of the way the world change we went. To market in August of -- to bar some short term cash repeated -- eighty basis points less than 1%. We went a month later in September and it was six. And a half percent to -- seem sure turnkey thirty day paper. Was was more than thirty year mortgage rates it was just amazing how much the rates have gone up. We paid for that costs us a lot of money to borrow money short terms so it's. So I've been trying to stress since march of Norway which is when we started seeing the crisis start to hit. That we had to start to tighten our belts and and spend less money. It it kind of fell on -- fears the budget was passed between eight billion which was which was out of but you know which is out of balance even -- And now we're broke we're looking at about three billion maybe four billion dollars less in revenue. Of what is next you know alleged. Let me just severing Iran up to speed I -- Nelson is here filling in for Tom and also helping out a stage her shirt Tim -- Helen were taken the opportunity to. Not treat you like the cohosts for humans but let's aghast because its interest saying it. Two nuggets of the bottom of the stuff. I was gonna ask what how much you have been reserved as we showed you today how much how much is in the till which you can draw knowing you have to write a check. We have to borrow. We started the fiscal -- a lot this month with about 800 million dollars in -- that's down from two point three billion last year this is the rainy day fund you're talking about -- Yes we did we spent we we drew down. Almost. You know more than two thirds of the rainy -- as somebody is thinking about running for governor. New do you look at that and say this is mismanagement we shouldn't have gone so deeply into the rainy day fund so quickly yes absolutely especially if this is going to be and obviously it is going to be a long term recession we we went in it to wait too fast. And now we have much less flexibility if revenues continue to comments about if we're not gonna dip into the rainy day fund orchard we have done. We should the slowdown spending. We should have cut back on and on some of the programs earlier which the budget should have been his ties us apart from the stone zoo which does the had an incumbent in trouble. What programs from Japan. Well is as far as the specifics I don't control the budget so I don't have sort of at my disposal a specific budget cuts that would make but I think you have to look at the Big Three items. -- are controllable. You know maybe at least. And fixed costs are you know health care spending education spending in local -- those -- the Big -- and it's a locally has been cut this year -- But education is not an healthcare continues to really drive. Health -- of big discretionary area ten billion dollars a year roughly the state expense -- which out of a twenty billion dollar budget it's a shocking amount of money here. So your argument is that basically it's irresponsible management I I think -- you know I don't put words in your mouth but that's how I look at it. You what you should do when you're running an entity when you know the cash coming in is drying up. You should be eliminating budgets the political. The of the approach to Democrats have -- you never once you've established something you never pull back very hard to cut it so why is that. I I don't know it's just want to create a program or you know you open up sort of an eligibility to something. Generally what happens at least from what I've been opted for six years now so what I see happen is when you try to cut something. The building get swarmed with the cut costs of course people will get cut that come up the -- and what happens is the taxpayers who was sitting back home working. And don't come up they generally don't CD legislators and that's why it becomes an easier thing to raise taxes and make cuts I seen -- cycle was -- up the win when you making cuts. Everybody and they bring it will -- and neighboring I'm surprising animals on the there they donated his style you know a little. But on the news is volume is you know so that's I think -- -- -- -- and you can't take away people's goodies when you give themselves very hard and then as soon as you said a union on here I'm entitled to this anymore but be warned title in the first place. And what happens is from what I gather and again I've I've been up there long enough to really studied that closely but. -- when times are good we usually it seems like budget -- you know we expand eligibility. So what becomes 200% probably level becomes 300% which means you eligibility goes. And then when times get tough it's really hard to to bring that back on that's really one of the problems your health care is that we have made everyone eligible required everyone to get in. -- Minister why I think on the federal level they're so eager to get universal health care passed is because they've basically. Exploded these programs that exist already to an unsustainable level. So they need everybody Pena and in order to make sure what's there now can be support there's another thing to and that is it's a way of buying votes in rhetorical question of the time you come up with a program and you're gonna and someone else. Some some money from someone else's tail. Then you get yourself friends overweight and -- describing those a diseased political system in which the leadership only is looking for ways to take more money. In in so they can create new programs to give out so they controller resource collection is the talk villain. He said this one in this somewhere in the nineteenth century warned about that that the democratic system in America was gonna work only. As long as you could sustain it where you didn't have more people. Who were living off the public trough right then contributing to it are living -- the public up. And worked Gary getting very close of that crossover point we're going to be -- and and once you have an electorate in whose interest it is to vote ever increasing collage us. Former treasury that they think someone else. He's going to contribute to. And then it spirals out of control and I sustain our system at that. Yeah if you keep taxing people to the point where they leave the state especially the most successful people. And you generally going to then be taken more money from middle class people and we see in cities all the time. With a tax policies get out of control and then what you left within a city and you look at cities like Springfield in Lawrence and Brockton and some of the really hard pressed. Former industrial cities as they have no middle class left. So there's nobody -- and they have no business. So basically -- -- have a bunch of of poor people who were trying to be sustained in the government has to step in and sustain them. And the spiral keeps going down and and I think we're gonna see this in states that try to balance it budget. By raising taxes is people will leave those states and you'll be creating jobs and then the people what trying to help. We're not gonna deal helped them anymore. You also see this effect at the national level factory that debate going on national health care -- proposals for national health care reform. The talk about wolf pay forward by taxing the rich yeah and they're on an effort people then I have enough money this business and it's always my neighbor was gonna pay for it. Class warfare well practiced by the Democrats envy and hate that wealthy neighbor but it just not gonna be sustainable in terms of the political program has. Charger Tim Cahill is here and in Tim you're sounding like a conservative kind of guy but I don't think you are you're just conservative fiscally which -- him the conservative meaning responsible yet but you're not conservative otherwise right. I'm not not tremendously more moderate -- conservative I think on social issues but -- fiscally and and -- it's my job as treasurer. -- in I think have always been pretty much. On the fiscal conservative side and he's. You commented when you were announcing your departure from the Democratic Party Larry your intention to do it last week. That you weren't -- an object to all these programs into the health care measures you just objected to them being funded when we don't have any money to pay for them. But aren't they always what we just described is that these are political tricks they're always financial time bombs whenever you create a social program. It's going to grow. And it's gonna grow to appoint were crushes us so why would new beef that conservative across the board and say don't start the program that's got a crush us. Well I have said that in the past I happened and once you once she created and you have to manage it as best you can I mean it's a reality if you're not gonna have the ability to cut it. Which I don't as treasurer you have to try to manage it as best she can so. But philosophically -- just say we shouldn't have this universal health care -- burn messages that said that I've said that we can't sustain it and and I think the numbers don't. -- Six AD WRKO atomic talk time is on vacation Avi Nelson here and state treasurer Tim -- health -- -- the treasures brain. It's very exciting to have him we can learn something sound knowledgeable in the slow Pickens I think learn about how the government works a little bit because nobody knows what the chartered analyst. And the treasures also thinking of are running for governor. And a band he quit the Democratic Party did and hallelujah and a -- is one less Democrat here. Last Wednesday I think it was a neat and and world did you have a band there and time now I just did it quietly his -- do your thing of becoming a Republican. Now no idea -- It's interesting when I went down to do mighty you know the un and world I was in Quincy which is where I first registered where I live today. And actually I and I didn't know this 'cause I thought I was always a Democrat but it went down there and realize that in 197780. G eighteen I'd actually enrolled as an under rules vote. In the -- the first ballot I picked up was in the in 1980 as a Democrat and that's how you and I got game client that I'd be in those -- -- didn't date the would have repel you picked his what you became -- switch you back yeah. So so your becoming a Democrat was about -- mindless is everybody else as well at eighteen it was just to show us how we -- it and you know and and I ran for around I started out in local politics in queen's -- -- ran for City Council. In in in Massachusetts all city government is nonpartisan. So it doesn't matter what party ran in it that you don't run as a party run as the individual. So and I was in the City Council fifteen years and that's really kind of how I grew up so it wasn't until 2002 really. That they had to get involved in party politics that while the convention and in all that stuff and so I never really fit in with the party structure at least that the senior party structure. I'm gonna it was felt constrained. Excuse -- -- secular fifteen years your City Council yeah because I'm looking here Wikipedia -- city 87 to 96 does that nearly 72003. They got Iraq again the idea I did run and I was in 96 served as nor for county treasurer -- both jobs. That was parked on city councilor fulltime Connie treasure -- they must assume the news you stopping -- city councilor Padilla. Yet but I served right up until I was elected treasurer. Fifteen years. Now -- you love the Democratic Party obviously you're thinking about running for governor correct decision to be made. Might have to -- anybody leaves the Democratic Party has probably more on his way to having already made the affirmative decision. Because you burned some bridges when you have something like yeah yeah so the likelihood is you're going around. I think it's it's certainly more likely I wasn't exactly sure how people would take. The move especially people that have supported me over update these last six she -- in and actually since I began. And it didn't talk to a whole lot of people about it and take a poll or anything like that so. I wanted to get a sense -- once I made the move whether or not people would still be with me and so far you know the response has been it's been pretty good as far as the I don't think people always surprised because -- always had -- issues with the party and and have always stood is more -- more independently than most people. Are telling me where you stand that's different from let's say the Republicans you you have some issues with the Democrats -- More fiscally conservative and then and then Democrats the Democrat party where you're not a Republican in terms of sentiment and -- -- registered. Right I you know I don't know began the parties -- so. Split you know some Republicans are very socially conservative which I am not on terms of the standard perception. Republicans are committed to smaller government. And it towards being -- fiscally responsible so if your into the fiscal responsibility but -- into the social programs or you are. -- world would -- to -- and I. It is a place for them I just think you gotta make them work better I think in and you can't commit to things that you can't pay for just to be good guy. Leadership he liked your regular socially and fiscally conservative but socially or not conservative Europe -- what does that mean well it means that I'm not. Although personally -- pro life in and feel very strongly vote against abortion I wouldn't. Changed the rules and change the law so I guess that puts me in the pro choice on world by distinctive needs to via a separation church and state and my feelings are. Religious. Are there other areas where you don't your personal feelings you know reflecting your policy ideas. With. Death penalty. You know again religiously I don't. Feel it's the target goal to do our job to do it but I would I would be open I think there are times when death penalty is necessary. So you think it's wrong personally but you think it's right. If other people wanna -- I think it's I mean religiously I feel that it's not consistent with my values we July's import you he -- yeah I'd be open I'd be open to death penalty legislation that was that was well written and and and I would give the again I would give the jury's. The decision. On certain cases that you know I have a clear in this be open to is different from would you -- -- -- a platform support the death yeah yeah absolutely absolutely -- show why would you support something your personally opposed to in that case. Because I think there's certain times where it's necessary to do the wrong thing. Note to do what juries and courts feel is the right thing in in certain cases that distinctive people. You know I think he needs to be on the table. As a as a punishment. So. Ice you know I think dead in those areas -- problem probably split from the party I think a lot of Republicans believe in the death penalty -- or support it. And I would not veto it if I was governor and in I would support a law that I thought was reasonable I mean I can't say right now this is what I would support because I don't know what would come forward. Governor Romney proposed something back in 20032004. That I thought was pretty reasonable. He tried to be all encompassing so that we could guarantee that no innocent person would ever be executed. And off if that's possible but I think it's -- it's it's a worthy goal anyway it's. So but in terms of the big social infrastructure as long as it's responsive believe budgeted you're finally -- I'd like to be able I think it's a goal to try to insures many people as possible health. For health insurance. But not breaking the bank to do it clear for universal health care. I don't think we can make it work I mean. In theory I'd love to see it happen I just don't think without raising taxes to an astronomical level we can do so philosophically you think it's that government's responsibility to take care of everybody I know I don't. I don't because I know we can't afford to take care what you should Florida I believe more. In in personal responsibility then seeing the party establishment. And you know I think you have to strike a balance a distinct you have to strike about sending. Obviously we can't afford the kind of expansive government that we have right now so in effect I am for smaller government -- but maybe not. You know small you're not against the programs and make a -- Found some I am you know comes down to the program in the values and and and whether or not they're effective I think sometimes we just throw money you know on a question about the four Charter Schools I think Charter Schools in the sense that's -- that's a good. I hang out we've got to go to our top of the hour news state treasurer Tim -- hill is here as is -- -- Nelson -- -- vacation stay tuned for more. Files won't talk radio. Person. You know.