Democracy in America | Bobby Jindal on America

What Obama gets wrong

The governor of Louisiana sits down with The Economist's US editor to discuss standing up to Russia, calling radical Islam the enemy and fixing America's broken immigration system

By Economist.com | NEW ORLEANS

THE governor of Louisiana sits down with The Economist's United States editor to discuss standing up to Russia, calling radical Islam the enemy and fixing America's broken immigration system. An edited transcript of the parts of the interview that were not filmed is available below, and this week's paper considers Mr Jindal's (undeclared) pitch for the top job.

The Economist: The population of [New Orleans] has changed a lot since the hurricane [Katrina]. It is smaller and there are more people who have moved here, who were not born here, who have come to run the charter schools and there are more hipsters cycling around in the streets. Do you think that is good for the city?

Bobby Jindal: …Katrina was an awful, awful disaster for New Orleans, for Louisiana, for the entire region. Over a thousand people died... it was an awful tragedy. It is also unfair, however, to blame all the problems that New Orleans had been experiencing on Katrina. The reality is…New Orleans had been losing population for quite some time even before Katrina. If you had come here 50 or 60 years ago people would have predicted that New Orleans would be the banking, business and cultural centre of the South; New Orleans would have been the gateway to Latin and Central America, New Orleans would have been the medical centre. And what happened was you saw Houston rise as the energy capital, you saw Atlanta rise through its airport as the travel capital, you saw Miami rise in terms of its connections with Latin and Central America. A lot of things that New Orleans had had at one time were no longer true about the city. And there are many reasons for that gradual decline, but I think that after Katrina the folks that live here and the folks that came back here had [to decide] how they wanted to rebuild.

And to their credit they didn’t simply rebuild exactly what was here before. They worked hard to preserve the historic elements of the city but there also were a lot of innovations. Just a few examples: a completely new approach to the city’s housing [and] a $2 billion investment in the VA [Veteran Affairs] and University Hospital complex. You’re going to have one of the most modern hospitals anywhere in the country. [And] not only was it new bricks and mortar; it was a new way of delivering those services. Instead of the old state-run charity hospital, Louisiana State University is partnering with Tulane [University], Children’s [hospital] with the private sector as well as partnering with the VA.

The most remarkable change has been obviously in our educational systems, and the K-12 system. You had a public school system that before Katrina was described by many as one of the worst urban school systems in America. It was filled with corruption, with stagnant student test scores, with dilapidated buildings; there were all kinds of indicators showing that it was not serving the students or the city well. Now you’ve got over 90% of those kids in charter schools, in five years, for example, after Katrina they’ve doubled the percentage in reading and math [of pupils performing] on grade level. The percentage of failing schools went down dramatically: it was over 60% and now it is less than 10%. And you’re right, folks from Teach for America and the Gates Foundation and all kinds of entrepreneurial individuals [came to New Orleans to] be a part of helping improve and innovate in this new educational system.

And the final example of where things have changed: you look at the economy. New Orleans historically has always had a strong port-based economy. It has had a strong energy- based economy, a strong tourism-based economy and it had a developing healthcare-based economy. Those elements are coming back but in addition New Orleans has done a better job of diversifying. For example, Gateloft and GE and some of these digital media companies that are now coming in to New Orleans and the film industry is growing here and so you’ve got high-tech, good paying jobs. These companies don’t have to be in New Orleans. They’re not here because of historical reasons, they’re not here because of the port or the river, they chose to be here and they could have easily gone anywhere else in the country and in some cases the world. This is the place they wanted to be. And so you’re right, for many reasons there have a been a lot of young people, a lot of entrepreneurial people, a lot of folks outside that want to come to New Orleans. And that’s reversing the out- migration that had been happening for so many years before Katrina.

And now you’ve got other cities coming to visit to learn: Detroit has looked to New Orleans for example to see what they can learn about the school district. Atlanta has looked down here and I know that the state of Tennessee has looked down here.

The Economist:You allude to the success of school choice in New Orleans. Why isn’t there more of that in the rest of Louisiana?

Bobby Jindal:In 2008, our first year, we removed a lot of the caps on charter schools [and] we started a scholarship programme so that students could now not only go to charter schools but [also] to private schools, online schools and other schools as well. We started that in New Orleans back in 2008; in 2012 we expanded that statewide. We added a third component which is called “course choice". Now statewide students can start their day in a public school but then can take courses from a variety of providers. Whether that’s provided by employers, universities, private course content providers, online providers, dual enrollment programmes, and the dollars will follow the student rather than making the student follow the dollars. Statewide we have over 90,000 students enrolled in some sort of choice [programme]. So it has seen tremendous growth.

The I-10 corridor has been described as a “charter school corridor” and you’re seeing more charter schools going up in Baton Rouge, you’re seeing more charter schools looking into Lafayette and south-west Louisiana. A lot of it started in New Orleans out of necessity, but now we were able to grow statewide. And by the way, I believe that across the country this is relevant for communities that haven’t had a Katrina, that don't have disasters. Allowing the dollars to follow the child opens up choice [and] competition. It allows mums and dads to select the best learning environment for their children.

The Economist:How is that working out for children? Louisiana still ranks near the bottom in terms of educational attainment.

Bobby Jindal:Sure, [but] look at the growth rates. We led the country in terms of a percentage increase in AP [Advanced Placement] credit hours, with students taking the AP exam. We’ve got more students doing well on the ACT [American College Testing exam]. Our graduation rate and retention rates are at all time highs. And you’ve seen [a dramatic] decrease in the percentage and number of failing schools and kids at those failing schools. So we’ve got a lot more work to do, and one of the things I continue to tell our legislature and our school boards is that we can never be complacent.

We started lagging in a country that, by the way, is lagging internationally. And there are a lot of implications from that. There are economic implications, [Professor] Hanushek at Stanford [University] shows that if you have a great teacher in the classroom that can increase a child’s earning power by thousands of dollars over their careers, and could mean trillions of dollars over several years for our national economy. Good teachers decrease the chance that kids will become pregnant as teenagers, increase the chances that they’ll go to college, increase the chances that they’ll be gainfully employed. And so there are a lot of economic and practical reasons to care about this but you should also care about this [for moral reasons].

Every child deserves equality in educational opportunity. But that’s not the reality in our country. For too many children if you’re born in a wealthy zip code, chances are you’re likely to go to a good school. If you come from a poor zip code, chances are you’re more likely to be trapped in a failing school… So we’ve [overhauled] our [teacher] tenure laws. Our compensational laws [and] our hiring and firing laws [were] all just based on seniority. [Now], instead they’re based on student achievement. And I think that is a very important reform, to make sure that you’ve got better teachers in the classroom. So you’re right, we still have more work to do but when you look at the steepness of the growth and change I think we’ve done much better than those around us and even national averages.

[Roughly] 70% of the companies that want to move to or expand in Louisiana tell us that one of their top two concerns is finding skilled workers. [The] estimates are today that we need 86,000 skilled construction and industrial workers, for example. We’ve got low taxes in Louisiana, we’ve got a friendly regulatory environment, we’ve made some port changes. [But] we’ve gotta make sure that we have the best skilled workers [too].

The Economist:You’ve got a budget coming up this week. The oil price is down which is good news for motorists but maybe not quite such good news for the Louisiana state budget. Maybe you can say something about the principles [that will determine how you balance the books]?

Bobby Jindal:Certainly, two things. For seven years now we’ve made it a priority to shrink the size of state government and to grow the private sector economy. So our budget is 26% smaller than when I first took office, $9 billion smaller. We’ve got over 30,000 fewer state government employees than when I took office. We’ve not raised taxes. I made a commitment that we’re not going to raise taxes, we’re going to make government live on less and do more with less. And as a result we’ve seen our private sector economy has grown nearly twice as fast as the national economy, job growth is nearly three times as fast, we’re a top five state for private sector job growth, our per capita income rank is the highest it’s ever been. After 25 years of out-migration we’ve had seven years of more people moving into the state than are leaving.

In terms of this year’s budget challenge, on Friday [February 27th] we will be unveiling a balanced budget that doesn’t raise taxes. Dropping oil prices [are] good for consumers and families but cost the state treasury hundreds of millions of dollars. In addition, we’ve seen tremendous growth in refundable tax credits. There are companies out there, and some individuals, that are getting money back from the state in excess of any tax liability. Many of them don’t have any tax liability. There’s been rapid growth in some of these expenditures and one of the things that I’ve said is: how do we reform these tax credits so that some of those dollars might be invested in higher education or healthcare instead?

The Economist:When you say "reform" refundable tax credits, do you mean cut them?

Bobby Jindal:It can be. Some of them there are cases where there may be some fraud in some of these programmes.

The Economist:There have been some reports in the news of quite big frauds…

Bobby Jindal:Absolutely. Some of these tax credits have ballooned far beyond the initial [forecast]. They’ve not generated a return on investment for the state. I tried a couple of years ago to get rid of a lot of these credits in return for also getting rid of the [state] income tax. I look at it as crony capitalism, where you’ve got winners and losers in the tax code. And the winners tend to be those that have lobbyists. I think a lower, flatter, simpler tax code is better for taxpayers [and] also for our economy.

The Economist:You’ve said in the past that you want to get rid of state income and corporate taxes and replace them with something else like a sales tax. Is that politically possible?

Bobby Jindal:It is. I still think it’d be a good idea, to get rid of the income tax. I think it’d be good for growth. We looked at the tax code as a way to help grow the private sector economy. Others in the legislature viewed it as a way to generate more revenue for government. So many of them came to us and said, “we’d be happy to work with you to get rid of the income tax if that means more money for us to spend.” But that’s not why we’re doing this. We have enacted, since I’ve been here, the largest income tax cut in the state’s history. We’ve also got rid of the taxes on debt, new equipment and utilities. These were unorthodox, those last three. Those were taxes our neighbouring states didn’t have, [and] that discouraged investment. We would literally have companies tell us that their newest equipment in Louisiana was older than their oldest equipment elsewhere because we had these taxes.

For too many years Louisiana had this mentality that businesses had to come here. We have oil, we have gas, we have ports and I think you trace that back to Huey Long [Louisiana's charismatic governor from 1928-32, immortalised in several novels and films]. He genuinely felt that businesses had to be here and that you could treat them however you wanted. [But] capital is mobile in today’s economy. Companies will go where there is a friendly business environment. They’ll go where they’re wanted and where they can be competitive. And so we felt that we needed to make big changes to bring back that investment. Now, in the state, we’ve got over $60 billion of private capital investment; we’ve got 90,000 jobs coming in.

The Economist:The regulatory system here is interesting. Thumbtack did a survey where they rated Louisiana with an ‘A’ for its friendliness to small business. But if you look at the Institute for Justice rankings of the proportion of low-wage occupations that require a licence, in Louisiana 70% of low-wage jobs require them, including barbers and bartenders and tour guides in New Orleans. Why is that still the case?

Bobby Jindal:That is a great point. Three things: one, we do get favourable attention from businesses, we’ve heard that overall about our state regulatory environment. For example, our environmental department, on average we’re about six months faster at processing permits than Texas. We still protect our environment, but we have done that in a predictable and a fair fashion. And we’ve won several large projects because of that. Secondly it is however true that Louisiana has too many of these boards and commissions [and] rules. I would argue that they are just trying to protect themselves. Every year we try to get rid of as many of these boards as we can. Every year we submit a bill to try and get rid of duplicate boards, boards we no longer think we need. This is not a perfect solution. One of the things our surveys show is that the barriers aren’t particularly high but is still not good to have those barriers in the first place.

In the last few years one of the things we’ve prioritised is making it easier for military veterans who are coming back home to go into these professions. A lot of them already have the training, they’ve already operated large equipment for the military but it shouldn't be hard for them to get a commercial driver’s license when they come back to the States. And that’s just one example, there are many more like that.

The Economist: The national growth rate is picking up this year, unemployment is down, wages are starting to rise. Things are looking better than they have for some time. What do you think should be done at the national level to accelerate the growth rate?

Bobby Jindal:Well a couple of things. One: we need to raise our expectations. I know the President likes to say that we are in the middle of a recovery, but he doesn’t like to comment on the fact that we have [one of the lowest] workforce participation rates [for] over three decades. A lot of people have dropped out the workforce, many in the middle class have not seen significant income increases, many of this President’s promises haven’t been kept. He told us he was going to cut our average family [health-insurance] premiums by $2,500 and that hasn’t happened. So yes, we’re doing better than we were [but this is] certainly not the kind of recovery you would expect after such a protracted and deep recession.

Several things we can do nationally to accelerate the growth. One of the things we’ve seen in Louisiana is we’ve seen a resurgence in good-paying manufacturing jobs with the shale revolution, with the falling price of natural gas, the increase in the production of oil here in the United States. We have the ability to bring back good-paying manufacturing jobs that left our shores so for example, you see steel companies, fertiliser companies or chemical companies are willing to invest in our country and they’re willing to create jobs that pay $50, $60, $70, $80,000 a year. These are blue collar jobs, technical jobs, they don’t necessarily require four-year college degrees but they do require trained workers. This President takes credit for rising energy production but he has stood in the way of that production on federal lands and water, [and] he has stood in the way of the Keystone pipeline.

Secondly our tax code. We’ve got the highest corporate tax rate in the developed world. [Yet] because of this crony capitalism in terms of the tax loopholes, rebates, credits and exemptions that’s not the rate that many folks end up paying. We need to reform our tax code and to lower the rates, make ourselves more competitive.

A third thing is to look at the regulations coming out of the EPA [Environmental Protection Agency] in terms of how they’re slowing down our economy, look at the taxes and the regulations coming out of HHS [the federal department of Health and Human Services] and Obamacare, we need to have a more business-friendly approach when it comes to encouraging people to create good-paying jobs here in America.

The most important opportunity we must not miss right now is this energy renaissance because this is potentially a game-changer for our economy. When you look at where energy prices and supplies are today compared to where they were, for example, when I first took office, nobody predicted this rapid of a decline in prices. Nobody expected this rapid of an increase in supply, even those in the middle of the show that’s fracking. We need to make sure we don’t miss this opportunity because many of these companies are thinking about making once-in-a-generation investments. Nucor Steel, for example, is now in the process of a five-phase project in south-east Louisiana. They’ve built the first phase and if they do all five phases that’ll be over $3 billion, over 1,000 jobs, over $70,000 on average a year in compensation. And this was a company that was looking to build this steel mill in Brazil.

We have a President that says to business leaders: "you didn’t build that.” And he looks at businesses and piles on more regulations, more taxes and makes it harder for them to create jobs and chances and that’s not good for the middle class. The American dream has always been that the circumstances of your birth don’t determine your outcomes as an adult. This President seemingly wants to make the American dream about redistribution and more government spending and borrowing. To me that’s a very dangerous trend and one we’ve got to reverse.

The Economist:You mentioned Obamacare. You’re a health [policy expert] by training and you have a detailed plan for repealing and replacing Obamacare. How would you describe that plan in a way that might make Americans think “yes, that’s better than what we’re getting at the moment?”

Bobby Jindal:Yes we want to repeal all of Obamacare. There are some Republicans that don’t want to do that. They want to keep some of the tax increases, some of the entitlement spending. We say that we need to repeal it all.

The most important part of our plan is that it focuses on what the American people care about the most, which is reducing costs so that their healthcare can be affordable. We empower the patient and their doctor and their provider to be in charge instead of putting government bureaucrats in the way. The whole point of our plan, and there are several detailed policies, from tax code changes to being able to buy insurance across state lines and voluntary purchasing pools, so that individuals own their insurance. They can keep it when they move across jobs or move across states.

In 2008, when then Senator Obama was running for office, he sounded like a conservative. He told then Senator Clinton “we don’t need an individual mandate because the issue is affordability.” He then told Senator McCain “we don’t need a Cadillac tax on more generous healthcare plans”—two elements by the way that are actually in his legislation, in Obamacare. Then candidate Senator Obama said that “we need to focus on reducing costs.” He was right as a candidate, he’s been wrong as a president.

[According to] independent analysis of some of the components of our plan it could reduce costs for families, it could reduce premiums by $5,000 compared to where we are today. It would cover the expanded coverage by, again according to independent estimates, as many as 9m people. There’s more flexibility in the states, more accountability in return for less red tape.

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