1    PUBLIC FORUM MODERATED BY CONGRESSMAN XAVIER BECERRA

            2

            3                 "AMERICA'S JOBS & ECONOMY:

            4                    WHERE ARE WE HEADED"

            5

            6

            7

            8                    REPORTER'S TRANSCRIPT

            9

           10

           11

           12

           13  Date of Forum:      Tuesday, August 17, 2004

           14  Time:               1:40 p.m.

           15  Location:           LOS ANGELES TRADE TECH COLLEGE
                                   400 West Washington Boulevard
           16                      Grand Theater, Main Admin Building
                                   Los Angeles, California
           17
               The Moderator:      Representative Xavier Becerra
           18                      (CA-31)

           19

           20

           21

           22

           23
               Reported By:
           24
               Catherine Ponicsan, RPR
           25  CSR No. 8271
                                                                         1








            1                         ON THE DAIS

            2

            3  FROM THE UNITED STATES CONGRESS:

            4         SENATOR BARBARA BOXER (CA)

            5         REPRESENTATIVE XAVIER BECERRA (CA-31)

            6         REPRESENTATIVE GRACE NAPOLITANO (CA-38)

            7

            8  PANEL 1 - ECONOMIC ANALYSIS AND FORECAST:

            9         CHRISTOPHER THORNBERG

           10         JEAN ROSS

           11         JACK KYSER

           12

           13  PANEL 2 - THE PEOPLE'S PERSPECTIVE:

           14         LERON GUBLER

           15         DAVID RATTRAY

           16         MANNY DE LEON

           17         JOHN PEREZ

           18         NATASHA HUMPHRIES

           19

           20

           21

           22

           23

           24

           25
                                                                         2








            1                          I N D E X

            2  Prepared Statements By:                             Page

            3           SENATOR BARBARA BOXER                         6

            4           REPRESENTATIVE NAPOLILTANO                   16

            5           CHRISTOPHER THORNBERG                        25

            6           JEAN ROSS                                    30

            7           JACK KYSER                                   35

            8           LEON GUBLER                                  49

            9           DAVID RATTRAY                                52

           10           MANUEL DE LEON                               55

           11           JOHN PEREZ                                   58

           12           NATASHA HUMPHRIES                            61

           13

           14

           15  Questions from the Audience:                          85

           16

           17

           18

           19

           20

           21

           22

           23

           24

           25
                                                                         3








            1       Los Angeles, California, Tuesday, August 17, 2004

            2                          9:40 a.m.

            3                            -oOo-

            4

            5           PRESIDENT CASTRO:  Good afternoon.  Welcome to

            6  Los Angeles Trade Technical College.  My name is Daniel

            7  Castro, the president of the college.

            8           And we are very, very honored to have the

            9  distinguished guests that we have here, that will bring

           10  you some very important information at a very crucial

           11  time in the history of our country.

           12           Without further ado, I would like to introduce

           13  our Congressman from this district, Congressman Xavier

           14  Becerra.

           15           REPRESENTATIVE BECERRA:  Good afternoon, and,

           16  welcome, everyone, to this forum today on the economy

           17  and jobs.  We are pleased that you could take the time

           18  to be with us.

           19           I'd like to begin this forum today by

           20  introducing someone who really needs no introduction

           21  here in California, nor in the United States of

           22  America.

           23           When you talk about fighters, when you talk

           24  about champions, when you talk about people who know the

           25  interest of young people, those who are college-bound,
                                                                         4








            1  people who are trying to eke out a living, then you have

            2  to talk about Senator Barbara Boxer, who has been a

            3  Representative in Congress in the House of

            4  Representatives, and since 1992 since her election to

            5  the U.S. Senate has been one of California's premier

            6  Senators representing all of us so well here in the

            7  State of California.

            8           You know her as a fighter for a cleaner and

            9  healthier environment.

           10           You know her for her support for local after

           11  school programs.

           12           You have seen her be the advocate for medical

           13  research.

           14           You have seen her countless times stand up and

           15  defend a woman's right to choose.

           16           We know she defends the rights of older

           17  Americans.

           18           And certainly you have got to know her because

           19  of her work -- tremendous work on the issues of 9/11 and

           20  homeland security and making sure that we are safe here

           21  at home.

           22           And perhaps you have even saw her -- I hope you

           23  did see her -- be one of first to come forward and talk

           24  about the suffering, the plight of Afghan women, who did

           25  not have anyone representing them during these last few
                                                                         5








            1  years when times were very tough in Afghanistan.

            2           And like she usually has, she came out and

            3  stood, and those women in Afghanistan should know well

            4  that while Senator Boxer represents us in the State of

            5  California -- we intend to keep her here for another six

            6  years -- we also know that women in Afghanistan owe her

            7  a great deal of gratitude for what she has done to

            8  elevate their plight throughout the world, and certainly

            9  here in the Congress and the United States of America.

           10           So we want to, first and foremost sya to

           11  Senator Boxer:  Thank for your so many years of great

           12  service.

           13           Thank you for making the time to come visit us

           14  here in Los Angeles.

           15           Thank you, I know, on behalf of President

           16  Castro and all the faculty, staff, administrators and

           17  students of Los Angeles Trade Tech College -- thank you

           18  for coming to visit us and grace us with your presence

           19  and again impart the wisdom that we have grown to know

           20  over the many years of your service.

           21           I present to you now our Senator, Barbara

           22  Boxer.

           23           SENATOR BOXER:  Thank you.  It's very nice to

           24  be with you.

           25           Xavier Becerra, you are a great Congressman.
                                                                         6








            1           And you also have here a wonderful

            2  Congresswoman, Grace Napolitano, and I am just thrilled

            3  to be here with them.

            4           These are my friends, they are my advisors, and

            5  as you know, they fight every day for their districts --

            6  and believe me, they are always on the phone to me, and

            7  I know to Senator Feinstein as well, saying, "You need

            8  to help us, you need to get this bill passed."

            9           And therefore when Grace called and asked me to

           10  do an event such as this in her district, I said:

           11  Absolutely.

           12           And when Xavier offered me this opportunity, I

           13  did the same.

           14           Also, what a distinguished panel.

           15           President Castro, what a wonderful place you

           16  have going here.  I'm very pleased to be here.

           17           Well, the topic of the today -- and I should

           18  tell I just got off the plane because, of all things, we

           19  were supposed to be on a break, but the Congress

           20  committee on which I serve called us back for a hearing

           21  on the 9/11 Commission Report and how it relates to

           22  safety in terms of our transportation sector.

           23           We have been focusing on air, but there is

           24  rail, there are ports.

           25           So I got on a plane, I went back there for one
                                                                         7








            1  day, and I was very frank in my assessment of what this

            2  administration could be doing.

            3           We have seven bills sitting at the Senate desk.

            4           That means they have been passed through

            5  committees overwhelmingly bipartisanly support on rail

            6  security, on chemical plant security, on nuclear plant

            7  security, on transit security, on aid to first

            8  responders and on and on.

            9           And guess what?

           10           Those bills are not being brought forward.

           11           And I wanted to make that point, as well as

           12  make my point that they don't have enough air marshals,

           13  and they are not protecting our airplanes, our aircraft

           14  against shoulder fired missiles.

           15           Needless to say, if I sound a little jet

           16  lagged, I am a little jet lagged.

           17           But I want to get to the topic at hand.  And

           18  Mary Bell who is my wonderful -- one of my field reps,

           19  is here with me.  And she is going to put up a chart

           20  that shows the lost jobs.  Is that what you did, Mary

           21  Bell?  I can't see it.  Okay.

           22           I don't know if you can read the numbers, but

           23  we are talking about between 2001 and 2004, after coming

           24  off of the tremendous period of job growth -- I think

           25  it's 22 million in jobs under President Clinton -- we
                                                                         8








            1  saw a 2.7 million decline in manufacturing jobs, with

            2  hundreds of thousands of those jobs right here in

            3  California.

            4           And in the private sector, 1.8 million lost

            5  jobs altogether.

            6           And when you look at those lost jobs, and you

            7  realize that the jobs that are replacing them -- at

            8  least some of them -- pay nine thousand a year less,

            9  then you look at my next chart, rising costs, in this

           10  same time period.

           11           We see gas prices -- you know this -- up

           12  23 percent.

           13           We see college -- this is the national number;

           14  it's sometimes worse here.

           15           Gas prices up 23 percent.

           16           College tuition is up 28 percent.

           17           Family health care premiums up 36 percent.

           18           That adds up to what we call a middle class

           19  squeeze, not to mention what it does to our working

           20  poor.

           21           So we have a combination of lost jobs, the jobs

           22  that are coming in pay less, and we are facing -- our

           23  families are facing rising costs.

           24           Now, why is this?

           25           Well, I think there are two reasons.  I know
                                                                         9








            1  there are two reasons.

            2           We are looking at the fact that when the

            3  president cut taxes:  Who got the benefits?

            4           This is just to prove to you the middle class

            5  squeeze.  The middle 20 percent of Americans got about a

            6  thousand dollars back a year.

            7           The I would say working poor got nothing.  Got

            8  nothing.

            9           And the top one percent got $78,460 back a

           10  year.  A year.

           11           So you are looking at, again, the people at the

           12  top getting back all this money.  The middle class

           13  getting squeezed.  The lower echelons getting virtually

           14  nothing, and prices going up.

           15           Well, who does it hurt?

           16           It hurts most of our people, because most of

           17  our people are in the middle class or lower.  They are

           18  not in the upper class.

           19           Now, in the meantime, what's happened to the

           20  bigger picture?

           21           The budget deficit.  We used to have a surplus,

           22  and Xavier and Grace will say what a hard job it was to

           23  make that surplus occur.  We had people who lost their

           24  seats in the Congress, but we wanted to have a

           25  government that took in more than it spent every year.
                                                                        10








            1           We got to that point.  Before Bush, we had

            2  $236 billion surplus.

            3           We now have a $445 deficit.

            4           Why is this important?

            5           In the long range, it's going to put upward

            6  pressure on interest rates.

            7           In the short range, what happens?

            8           It ties our hands, and it doesn't allow us to

            9  do anything that we have promised the people we would

           10  do.

           11           Such as giving them good a transit system, a

           12  good highway system, a good education system, a decent

           13  health care system, et cetera, et cetera.  Create jobs

           14  with the government.  It has tied our hands.

           15           So in my closing moments -- because I promised

           16  Xavier I would go ten minutes.  It's hard for a Senator,

           17  but I'm going to do it -- and I was an economics major

           18  in college, so you can get into that whole speechifying.

           19           But I want to wrap it up this way:  We could

           20  complain about this -- and we should.

           21           And by the way, on November 2nd, we can do

           22  something about you it, but that's up to you.

           23           But the bottom line is:  What can we do now in

           24  the Congress to help?

           25           Well, I think what we need to do is take a look
                                                                        11








            1  at those tax cuts, and take a look at the tax cuts at

            2  top and say:  You know what?  We have got to rescind

            3  those tax cuts at the top.  And take some of that and

            4  give more tax relief to the middle class and businesses

            5  who will create jobs.

            6           That will get us moving.

            7           And to invest some of these funds.

            8           We also have to change our foreign policy.  It

            9  is literally killing our young people to go it alone in

           10  Iraq.  $200 billion have been spent over there, and if

           11  you take that $200 billion and you combine it with the

           12  loss of revenues from these tax cuts, we can't make it

           13  as a country.  We are falling apart.

           14           So we need dramatic change.  So once we do

           15  this, we will be able to get back on track.  Once there

           16  is burden sharing in the world.

           17           Now, transit systems and highway systems create

           18  great jobs.  There is a great bill that is sitting in

           19  the Senate and the House -- and I'm on the conference

           20  committee to try to get that bill out.

           21           If we get the bill out -- the Senate version of

           22  that bill -- California will create 89,000 new, good

           23  paying jobs.

           24           That's what we need to do now.

           25           The president won't do it because he says we
                                                                        12








            1  are spending too much.

            2           We are not spending too much.  That is a bill

            3  that is paid for by the gasoline tax.  That's the

            4  purpose of the gasoline tax -- to keep pace with the

            5  infrastructure.

            6           But that's one way to turn things around.

            7           In addition to giving tax breaks to the middle

            8  class.

            9           College tuition should be tax deductible.

           10           Health care premiums should be tax deductible.

           11           And we should pass the Invest in USA Act, which

           12  is in conference committee again.  I wrote it with

           13  Republican John Ensign.  The bill says we will give a

           14  one-year tax break to high tech companies who have

           15  parked their monies, billions of dollars off shore, let

           16  them bring it back at a lower tax rate if they put

           17  people to work.  And Allen Sinai said -- a very

           18  respected economist -- says that bill alone will create

           19  600,000 new jobs in our country, 60,000 here in

           20  California.

           21           So we also need to do something about the

           22  people at the bottom of the economic ladder.  It has

           23  been eight long years since we have raised the minimum

           24  wage.  I am  embarrassed to say that.

           25           And I have been working with Senator Kennedy in
                                                                        13








            1  trying to push that minimum wage increase through.  We

            2  believe we have the votes, but they are stalling it in

            3  the Senate.  We would take it from 5.15 to $7 an hour in

            4  three-year increments.

            5           We also need to help those who have lost their

            6  jobs extend their unemployment.

            7           We need to fully fund No Child Left Behind -- I

            8  wrote the after school piece of that -- we are leaving

            9  millions of kids out in the cold.

           10           That will help us move our economy forward and

           11  do things -- invest in our kids, invest in our work

           12  force, invest in our people.

           13           We need to open up the health care plans that I

           14  get -- Xavier and Grace -- we get a good health care

           15  plan.

           16           I'd like to open it up to anyone, so that you

           17  could get affordable health care.

           18           I think we need to invest in broadband.  You

           19  know what is.  That's that fast, quick connection to the

           20  internet.  In this time of communications, if you don't

           21  have that information when you need it, you are slowed

           22  down our productivity.  We can jump start that with some

           23  investment by the government.

           24           Finally, stem cell research.  There is a ballot

           25  measure.  I hope you will look at that.  It's very
                                                                        14








            1  important.  It would mean that we could find the cures

            2  to Parkinson's, to Alzheimer's, paralysis, juvenile

            3  diabetes -- these illness is that plague our grandmas

            4  and grandpas and our family.

            5           If we do this, that will also greatly jump

            6  start our economy here.

            7           So I think we have got to get past the idea

            8  that we just sit and complain, and have an action

            9  agenda.

           10           And that's what I love about your

           11  Congresspeople you have here today -- and, of course,

           12  Xavier doing this kind of panel.  Because we are three

           13  people who are elected to make things better for the

           14  people.

           15           That's what we want to do.

           16           And that means that you need to analyze why

           17  things go wrong, but you can't stop there.

           18           You've got to have an agenda to get it moving

           19  in the right direction.

           20           So thank you, Xavier, Congressman Becerra.

           21           Thank you all for being here.  I have really

           22  enjoyed this opportunity to share my thoughts with you.

           23  Thank you, very much.

           24           REPRESENTATIVE BECERRA:  Ladies and gentleman,

           25  I'd now like to continue with a colleague of mine who
                                                                        15








            1  was referenced by Senator Boxer as someone who has

            2  worked on this and any number of issues, especially with

            3  regard to small businesses, for quite sometime in the

            4  House of Representatives, as well.

            5           She is a representative for a portion of the

            6  County of Los Angeles.  She has been in the State

            7  Legislature as well.  She serves on the Interior --

            8  Resources Committee and Small Businesses Committee and

            9  Interior in the House of Representatives.

           10           And she is someone who has become renowned for

           11  her efforts constantly not just to support and promote

           12  small business creation in the United States of America,

           13  but also to try to help those small businesses expand,

           14  and have export opportunities throughout the world.

           15           So it's with great pleasure that I introduce at

           16  this point Congresswoman Grace Napolitano.

           17           REPRESENTATIVE NAPOLITANO:  Thank you.  Good

           18  afternoon, everybody.  Thank you.

           19           This is coming home to me, because I came to

           20  Trade Tech years ago to take specialized training in

           21  transportation.

           22           It is a pleasure to come at the behest of my

           23  colleague, and to hear Senator Boxer talk about the

           24  importance of small business and the generation of jobs

           25  that you will need when you go to work -- when you want
                                                                        16








            1  to have gainful employment or when you want to create

            2  your own entrepreneurship, your own business, to be able

            3  to make this state of ours further up the line, instead

            4  of fifth world largest economy, I say the first.  There

            5  is always a question, because the United States is the

            6  first, but

            7           There is always a question that you are the

            8  first.  California has that potential.  We are the fifth

            9  world's largest economy.

           10           And it's based on the entrepreneurship, on

           11  small business.

           12           And it's based on the fact that we have the

           13  ability to attract business of any qualified individuals

           14  and bring them to us from any other countries, because

           15  they see what California has done, and what it continues

           16  to do.

           17           I have unfortunately represented this

           18  district -- it is a working class district -- that has

           19  lost a lot of its business to maquiladores due to NAFTA.

           20           And so we have gone from coming a manufacturing

           21  and aerospace industry to service industry, although we

           22  still have six or seven major factors in California that

           23  provide us with that standing of fifth world's largest

           24  economies.

           25           And I'm going -- before I do that, let me tell
                                                                        17








            1  you that I have drug someone with me -- he has been with

            2  me all morning -- visiting employers and talking about

            3  the expansion of business, and that's the SBA director

            4  from Glendale, Alberto Verado.

            5           Where are you, Alberto?

            6           MR. VERADO:  Right here, Congresswoman.

            7           REPRESENTATIVE NAPOLITANO:  And the reason I

            8  brought -- well, we are attached to each other -- is

            9  that he provides help to small business for expansion

           10  and SBA programs.

           11           And that to me is important -- is how we

           12  visualize, how we work with the expansion of small

           13  businesses so they can grow, so they can provide that

           14  impetus to us having a better economy.

           15           One of the businesses we went to this morning

           16  is a Latino-owned business that four years ago started

           17  with ten employees.  Now employs 105.  Is looking for

           18  expansion.  His partner wants to go to Tijuana.  He

           19  says, "No, I am staying here."

           20           So we are working with him to keep that

           21  business here, because we need those jobs.  We want to

           22  continue to provide those avenues to our people.

           23           My area has an unemployment rate -- I represent

           24  East L.A. to Pomona, so it's a big long, elongated

           25  district -- that has an unemployment rate anywhere
                                                                        18








            1  between a low of 4.3 to a high of 10.6.

            2           My Hispanic unemployment is 6.7.

            3           To me, that's high.  And it's unacceptable.

            4           What we need to do is continue to work in

            5  forums such as the one provided by my colleague -- and

            6  we did our own, with Barbara coming in -- and talk about

            7  how you can become part and parcel of a solution that is

            8  going to get us to work with small business.

            9           We need to train employees -- students who

           10  become employees -- to jobs that are going to be

           11  available.  Not the other way around.  So that when you

           12  are finished with your education, you have a spot to go

           13  to.

           14           We need to begin the work of bringing

           15  businesses in to understand that they need to tell the

           16  educational institutions, "This is what we need, this is

           17  the training we need."

           18           And be able to help the education institution

           19  financially and with the brain trust that they have,

           20  because it's there.  We are not reaching out to them.

           21           One of the many areas that -- I sat on the

           22  small business -- many small business committees.  This

           23  is my sixth year.  And what I see this administration

           24  doing is criminal.

           25           Two years ago they wanted to cut the SBA budget
                                                                        19








            1  by 43 percent.  That's the only agency that helps small

            2  business.

            3           This budget for next year, they want to cut it,

            4  I believe, by 25 percent.

            5           They have cut the programs.  They deleted

            6  others. They have frozen others.  To me, that is the

            7  engine of our economy.  That is what's giving us the

            8  ability to stay afloat until the economy improves.

            9           And it will improve.  And California will rank

           10  among the highest in the nation.

           11           In Washington, everybody looks at California

           12  with a skewed eye.  It's like:  You have all you need.

           13  You have the world's fifth largest economy.  Why do you

           14  need money back there?

           15           Well, we provide it by the numbers, by the

           16  economy that you generate when you buy.  You go out and

           17  buy cars.  You buy food.  You buy clothing.  You are

           18  generating an economy.

           19           And because we have a large population that

           20  buys a lot of -- it's -- that's the everlasting circle.

           21           So what we would make sure that you understand

           22  is that we are continually pushing to try to make sure

           23  that they understand how important this is for

           24  everybody.

           25           It's a continuing of us helping small business.
                                                                        20








            1  Not major corporations.  They can hire their own

            2  attorneys.  They can could do all of that themselves.

            3           We need to help small businesses and give them

            4  tax incentives instead of to the large corporations.

            5           Of course, as you well know, monies for PELL

            6  grants, the assistance the students need -- you need to

            7  be vocal about it.  You need to talk, E-mail.  Don't

            8  write to Washington.  Anthrax has created a loophole,

            9  and we lose a lot of mail.

           10           But E-mail, fax, and let us know how you feel.

           11  Let your electeds know. Because I'm sure most of you

           12  don't come from my district, but from Xavier, all over

           13  L.A. County.

           14           You need to understand how important your voice

           15  is.  But unless you exercise that right, then we cannot

           16  have as effective a voice in Washington as we would like

           17  to have.

           18           With that, I'm going to tell I'm very pleased

           19  to be here, and I hope that some day one of you -- or

           20  more than one of you -- are interested enough that you

           21  want to make a difference and get elected to represent

           22  the constituency you have a passion about.

           23           Thank you very much.

           24           REPRESENTATIVE BECERRA:  Congresswoman

           25  Napolitano, thank you, very much.
                                                                        21








            1           As we get ready to proceed with our first

            2  panel, I'd like to make sure that I once again thank

            3  Dr. Castro and all of the folks from L.A. Trade Tech for

            4  letting us be here today.

            5           I'd like to acknowledge Dr. Peter Lansberger,

            6  who is the chancellor of the L.A. Community College

            7  District, who has joined with us.  I'd like to thank him

            8  for having made it here.

            9           I'd like to also thank Elizabeth Santiva, who

           10  is the student trustee with the L.A. Community College

           11  District, who is present as well.

           12           Make sure I acknowledge my staff, especially

           13  Gayle Greenberg, who has helped to put this event

           14  forward.  And I want to make sure we recognize that

           15  Channel 36 is here today.  And Steve Grace, thank you so

           16  much for making sure this forum would be broadcast on

           17  cable television, Channel 36, for those who are not able

           18  to be in attendance today so they can also hear the news

           19  about what's going on with the economy and jobs.

           20           To our Spanish translator, Delia Torres, our

           21  sign language interpreters, Bill Pugin and Mark Lloyd,

           22  our stenographer, Katie Ponicsan -- thank you so very

           23  much for being here to help make this forum something

           24  that can be recorded and used by others, and also for

           25  making it a success.
                                                                        22








            1           With that, let me now turn to our panelists.

            2           We have a distinguished group of individuals

            3  who are here to testify today.  I would love to start

            4  with questions, but first we want to hear from them.

            5           And I'd like to begin with our panel of

            6  economic experts who can tell us about their analyses

            7  and forecasts for the economy and for jobs.

            8           To my right, my far right, we have Mr --

            9  Dr. Christopher Thornberg, who is a senior economist

           10  with UCLA Anderson Forecast.  Dr. Thornberg authors the

           11  Anderson Forecast for the Los Angeles and East Bay

           12  regions.

           13           He has also been involved in a number of

           14  special studies measuring the impact of important events

           15  on the economy, including the NAFTA treaty and the

           16  California power crises and September 11 terror attack.

           17           Dr. Thornberg previously held a faculty

           18  position in the economics department of Clemson

           19  University.

           20           Seated to his left is Jean Ross, who joined the

           21  California Budget Project as its first executive

           22  director in 1995.

           23           California Budget Project is a non-profit, non-

           24  partisan organization established to promote a better

           25  understanding of state fiscal and economic policy issues
                                                                        23








            1  and their impact on low and middle income Californians.

            2           Ms. Ross is a frequent speaker on fiscal and

            3  economic policy issues, and has been published in

            4  numerous reports and -- sorry -- she has published

            5  numerous reports and articles.  She has authored

            6  articles that have been published in the Los Angeles

            7  Times, Sacramento Bee, State Tax Notes, San Diego Union

            8  Tribune, Cornell University Press, and other

            9  publications.

           10           And then seated to Ms. Ross' left is Mr. Jack

           11  Kyser, senior vice president and chief economist at the

           12  Los Angeles Economic Development Corporation, called the

           13  guru of the Los Angeles economy by the Los Angeles

           14  Business Journal.

           15           Mr. Kyser is responsible for interpreting and

           16  forecasting economic trends in the Los Angeles five

           17  county area that includes Los Angeles, Orange County,

           18  Riverside County, San Bernardino County, Ventura County,

           19  and for analyzing major industries of the area.

           20           Utilizing this information, Mr. Kyser helped

           21  develop job retention and creation strategies for Los

           22  Angeles County.

           23           Mr. Kyser's advice is frequently sought by

           24  business, government and the media.

           25           With that, let me ask our first panelist,
                                                                        24








            1  Christopher Thornberg, to please make his presentation.

            2           DR. THORNBERG:  I think.  I'm a little taller

            3  than the previous speakers.

            4           Thank you very much, Congressman, for having me

            5  here.  I will -- we have been told we are on a strict

            6  five-minute time line -- don't start yet.  Okay?  No,

            7  no.  Put the card down, don't do that to me yet.

            8           I guess I can speak for Jean and Jack and

            9  myself -- I guess it's difficult for a Senator to stay

           10  within ten minutes.  It's very, very difficult for an

           11  economist to stay within five minutes.  So I will hurry.

           12           Basically, we are looking at the economy.  I

           13  can tell you right now the economy is both better and

           14  worse than you might think, just reading sort the

           15  day-to-day articles that you find in the newspaper.

           16           To understand why the economy is both better

           17  and worse, you first have to understand why we ended up

           18  where we are today, and it goes back, really, to the

           19  late '90s period.  Of course, the late '90s period was

           20  the time of the Internet rush.

           21           We were all promised this new economy, and we

           22  were all going to be hard wired into the Internet, and

           23  we were never going to leave our houses, if I remember

           24  correctly.

           25           Of course, in the midst of all that hype, you
                                                                        25








            1  had businesses really spending unprecedented amounts of

            2  money on information technology and the infrastructure

            3  surrounding information technology.

            4           Of course, the big problem was:  The promises

            5  of the Internet never materialized.  And instead, the

            6  only thing these firms saw was stagnant profits for

            7  many, many years.

            8           By the middle of 2000, firms said enough was

            9  enough, and they started pulling back on their

           10  investment, that's what drove us into that 2001

           11  downturn.

           12           What we have been going through since then has

           13  been the recovery period from that 2001 tech downturn.

           14  And it was a very unusual downturn, because it was our

           15  first recession in the United States that was led by

           16  businesses rather than being led by consumer spending.

           17  We never had a downturn in consumer spending.

           18           So with that, let me tell you why the economy

           19  is better than what you might think.

           20           First of all, let's look at the long term.  We

           21  keep hearing about how our job growth or our job

           22  situation here inside the United States right now  is

           23  basically where it was back in March 2001.  But that's

           24  not the proper metric by which to measure employment

           25  now.
                                                                        26








            1           You see, in that late '90s period, there was

            2  over-investment by businesses on capital, but at the

            3  same time there was also over-investment by businesses

            4  on people.

            5           In fact, in that late '90s period during that

            6  incredible economic rush, businesses were really

            7  petrified that they might not be on that starting line

            8  when the new economy fianlly arrived.

            9           And just as they just invested a tremendous

           10  amount in new equipment, they also invested a lot in

           11  workers.  And of course, unemployment fell to

           12  unnaturally low levels, and we saw tremendous increase

           13  in wages relative to productivity.

           14           Just as the investment rush couldn't last, nor

           15  could the employment rush last.

           16           And really, that March 2001 figure is sort of

           17  reflecting an overheated employment market, just as much

           18  as it reflected an overheated investment market.

           19           Now, of course, if you go back to 1997, right

           20  now jobs are back on trend.  In fact, that

           21  productivity-wage gap has worked its way out of the

           22  economy, and jobs are starting to improve.

           23           That's the longwinded version of why things are

           24  better.

           25           In the short run, they are also better.
                                                                        27








            1           As you know, economists are always looking at

            2  numbers.  One of the problems we have is when we're

            3  looking at numbers, we have to pull out what sort of

            4  normal seasonal pattern jobs versus what's an actual

            5  economic trend.

            6           You might have heard a lot about the soft patch

            7  we are in.  Well, in fact, the soft patch is already

            8  over.  Last year at this time, between June and July,

            9  the State of California lost 200,000 jobs.

           10           The EDD, once it seasonally adjusted that, said

           11  the state overall had lost only 2000 jobs. That was a

           12  normal, seasonal variation.

           13           This time between June and July we lost 147,000

           14  jobs, yet the EDD is telling us that seasonally

           15  adjusted, we lost 17,000 jobs.

           16           When you look at that, something doesn't work

           17  too right.  In fact, the EDD and Bureau of Labor

           18  Statistics is having some problems with their seasonal

           19  adjustments, as far as we can tell at UCLA Anderson

           20  Forecasts.

           21           The soft patch was actually in May and June,

           22  and we are passed that.  July was, in fact, a very good

           23  month for job growth.  It was May and June that were

           24  weak.

           25           So it looks like not only are we sort of out of
                                                                        28








            1  this employment slump with you, but jobs are growing,

            2  and we are not even out of the soft patch.

            3           July was a very good month for jobs, once you

            4  corrected these kind of inaccuracies at the national and

            5  at the local level.

            6           That's why things are good.

            7           Now, why are things worse than we would

            8  imagine?

            9           Well, that goes back again to the Internet rush

           10  in the late '90s period.  That was a period of time not

           11  only with businesses spending too much, but consumers

           12  stopped saving.

           13           In fact, over last decade, the United States

           14  has seen a very alarming drop in both public and private

           15  savings.

           16           People are not saving.  And of course, as we

           17  know, the federal government is in deep, deep red right

           18  now.

           19           This is a problem because, you know, we are

           20  running this enormous trade deficit.  We have the baby

           21  boomers coming down us.  This is time when our nation

           22  need to be saving more, not less.

           23           Consumers, of course, have a lot of debt level

           24  going on right now, and again, this is creating a

           25  certain amount of stress in the economy.
                                                                        29








            1           We need to go through a period of soft consumer

            2  spending where we allow basically our balance sheets to

            3  get back to a more normal, long run sustainable level.

            4           We at Forecast are worried that because the

            5  government is not a pursuing a policy of encouraging

            6  more savings now, both because of the tax cuts -- on

            7  both sides of that particular fence -- we are worried,

            8  of course, as this imbalance continues to expand, that

            9  we may, in fact, very soon be running into a consumer

           10  led recession.

           11           In short, running into yet another consumer

           12  downturn.  This could happen in the next year or two.

           13  Again, because of the lack of policy.

           14           So that's sort of our view of what's better and

           15  what's worse inside the economy, and we'll see how

           16  things work you in the next year or so.

           17           REPRESENTATIVE BECERRA:  Well done.

           18           Jean Ross.

           19           MS. ROSS:  Thank you.  It's an honor to be

           20  here, and I can see it's a tough challenge to stay

           21  within our five minute allotment.  Dr. Thornberg has set

           22  the bar high.

           23           I think I would agree that the picture of

           24  the -- I'm going to speak to the California economy --

           25  is decidedly mixed.
                                                                        30








            1           My business is really public policy rather than

            2  the economic forecasting that my colleagues do.  So I'm

            3  always keen to note the difference.

            4           And I think that many of you probably heard him

            5  speak about what's good for the economy and how we need

            6  to see some softening.  And I would say that's probably

            7  not ideal from the perspective of the low and middle

            8  income Californians whose interests my organization

            9  studies and examines.

           10           I think if you look -- and I'm going to speak

           11  to also what's good news and bad news, a good framework

           12  for looking at the economy.

           13           If you look over the past year, California's

           14  job growth has actually exceeded that of the nation.

           15  That's certainly good news.

           16           Also -- and I think this is critical from the

           17  standpoint of how individual families and workers

           18  experience the economy -- I think part of the good news

           19  is that California's hourly wage growth has actually

           20  exceeded that of the nation between 2002 and 2003.

           21           And particularly good news within that is some

           22  of the strongest wage growth is actually at the bottom

           23  end of the labor market, the lowest paid workers.

           24           And a lot of that has to do with some of the

           25  increase in the state's minimum wage at the end of the
                                                                        31








            1  1990s, early part of this decade as well.

            2           And unemployment is down.  All very good news

            3  for California and for California's families.

            4           However, I think there are still a number of

            5  very troubling long term trends, both looking backwards

            6  and looking forwards.

            7           Between 1989 and 2003, California's wage growth

            8  actually substantially lagged that of the nation with

            9  wages, after adjusting for inflation, for the workers in

           10  the middle of the distribution rising 3.2, as compared

           11  to just over ten percent for the nation as a whole.

           12           And only for the very highest workers did

           13  California's wage growth approach that of the country.

           14  A lot of that had to do with the dot-com boom and some

           15  of the tremendous wages in the high end of wages.

           16           We have seen that temper off the last several

           17  years.

           18           California's economy -- again, I think this is

           19  another one of the troubling signs -- like that of the

           20  nation -- and this speaks to some of the comments made

           21  by Senator Boxer -- isn't providing the kinds of jobs in

           22  the long term that provide sufficient incomes that

           23  support a family.

           24           If you go back to 2001, nearly a fifth -- one

           25  out of five California workers earned less than the
                                                                        32








            1  average wage for the federal poverty line for a family

            2  of four.

            3           The percentage is even higher here in the Los

            4  Angeles area.

            5           If you a look at industries that are expanding

            6  as a share the economy, and compare those to industries

            7  that are contracting as a share of the economy, you will

            8  find that the pay level for expanding industries is

            9  actually substantially lower than that for the

           10  industries that are declining.

           11           And moreover, the expanding parts of our

           12  economy are less likely to provide health and pension

           13  coverage to their workers.  That adds additional

           14  financial stress to workers and their families.

           15           And if you look at the quality and what kinds

           16  of jobs our California economy is now beginning to

           17  create, I think one of most troubling indicators to me

           18  is that just under a third -- 32 percent of the jobs

           19  created in California in the past year -- are in

           20  temporary services, employment services, temp agency

           21  jobs.

           22           An additional 25 percent of the jobs are in

           23  retail, trade, leisure and hospitality, which again are

           24  at the low wage end of the wage distribution.

           25           Finally, if you look at the official state
                                                                        33








            1  forecast to the jobs that are to be created through the

            2  end of decade, you will find that a quarter of the job

            3  growth projected in California is in jobs that pay less

            4  than $10 an hour, which translates into a full-time

            5  annual income of just under $21,000.

            6           Why has that happened?

            7           A lot of it has to do with public policies.

            8           I think that's why we are here meeting with

            9  these officials today.

           10           Deterioration in the purchasing power of the

           11  minimum wage is down by a third since the 1960s here in

           12  California.

           13           Down even more nationally, because California

           14  is taking steps to increase our minimum wage above that

           15  of the country as a whole.

           16           Tax policies has shifted the burden of paying

           17  for public investment from our highest income households

           18  onto middle income families -- a dramatic shift over a

           19  very short period of time because of the tax policies

           20  enacted during this administration.

           21           And finally, we are seeing some of the cost

           22  squeeze on families.  That makes the very slow increases

           23  in wages particularly severe due to rising housing

           24  prices, tremendously so in California, with fuel prices

           25  and others.
                                                                        34








            1           I look forward to a spirited debate.  Thank

            2  you.

            3           REPRESENTATIVE BECERRA:  Thank you, Jean Ross.

            4           Mr. Jack Kyser.

            5           MR. KYSER:  Good afternoon, ladies and

            6  gentlemen.

            7           I'll start out with some bad news.  We just got

            8  word today that four different firms in Los Angeles

            9  County are going to be shut down.

           10           One out of Azusa, 200 jobs moving to Mexico.

           11           A firm in Glendora, 85 jobs moving to Las

           12  Vegas.

           13           A firm in Industry, 300 jobs, closing the

           14  plant.  No reason given.

           15           Then a firm close by, 220 jobs closing due to

           16  the cost of workers' comp insurance.

           17           So there are some interesting things going on.

           18           As Chris pointed out, we are still dealing with

           19  the fallout of multiple events, any one of them would

           20  significantinaudible] for the economy to cope with.

           21           And also, we have threats the terrorism.

           22           There was a new survey released today by a

           23  group of business that showed that terrorism was one of

           24  their biggest concerns, and of course, this soaks up

           25  resources.
                                                                        35








            1           The economy is growing.  It's growing in Los

            2  Angeles County.

            3           But what our representatives in the field that

            4  talk to businesses tell us is that they are hesitant to

            5  hire people.  It's expensive.  They are willing to

            6  invest in plant equipment.

            7           So I think when we are looking at the future

            8  growth rate of jobs nationally and in California and

            9  Southern California, both in terms of quantity and

           10  quality, we are going to have to start thinking in some

           11  new, innovative ways.

           12           Because we are in a global economy, whether we

           13  like it or not.  It's the real world.

           14           We have China out there, a very, very fierce

           15  competitor for manufacturing.

           16           But interestingly enough, we are finding the

           17  Chinese are interested in investing in Southern

           18  California.  So that's something we need to try to

           19  encourage.

           20           We have India taking in a lot of service jobs.

           21  Again, another interesting note -- that a lot of people

           22  who have service jobs in India are not happy with what

           23  they are seeing there.  So maybe we will start to see

           24  some of these come back.

           25           For California and for Los Angeles, we have to
                                                                        36








            1  acknowledge the size of the business base.  It's small

            2  to medium size businesses -- they don't have the

            3  resources of the Fortune 500 type of firm, and they are

            4  definitely feeling the pressure of import competition.

            5           One thing we have to look at is education, K

            6  through 12.

            7           We also have to look at the community colleges.

            8  I'm a big fan of community colleges, and very big fan of

            9  L.A. Trade Tech.

           10           And then as Senator Boxer pointed out, we have

           11  to look at transportation.  She was concerned about

           12  safety and security, but we have to look at just the

           13  whole transportation infrastructure, above the grids and

           14  people.  This is something we need to do in a holistic

           15  fashion.

           16           Another thing is:  I think government has to

           17  look at rules and regulations they are pass.  In many

           18  cases the individual piece of litigation is well

           19  intended, but it has unintended consequences.

           20           In California we are seeing what we call the

           21  piling on of legislation.  It makes it difficult to

           22  compete with these global competitors out there.

           23           The other thing is that we have to understand

           24  that business is not the enemy.  We just recently were

           25  dealing with a situation where a firm needed a permit.
                                                                        37








            1  The government agency wasn't willing to really work fast

            2  and get it out there.

            3           So we have to be very, very innovative.  We

            4  have to look at a lot of different things.

            5           We have a great economic base.

            6           We have creative minds.

            7           We have global connections.

            8           But what are firms telling us?

            9           Job training.  Very, very important.

           10           Work ethic.  Very, very important.

           11           Ability to reason.  Very, very important.

           12           And then also people getting an education --

           13  pick up some management skills, because you may find

           14  yourself in a management position.

           15           So we're optimist, but I think we need to break

           16  down a lot of old thought processes and a lot of

           17  different rules and regulations.

           18           If we can do that -- and I think we can -- we

           19  can create a quantity and quality of jobs that we'd like

           20  to see nationwide, as well as here in Los Angeles

           21  County.

           22           Thank you.

           23           REPRESENTATIVE BECERRA:  Before we move to the

           24  second panel, I'd like to ask a couple of questions of

           25  our first panelists, and I'd like to open this question
                                                                        38








            1  up to any of the three panelists.

            2           There is this phenomenon going around that I

            3  have read about that says we have an economy that's

            4  going in two different directions.

            5           In one case you have the Wal-Marts, the Targets

            6  of the world, where retail sales for them in the last

            7  couple months -- June report I think said Wal-Mart sales

            8  grew at about two percent.

            9           On the other side, we have the Neiman Marcuses

           10  of the world where evidently retail sales went up over

           11  12, 13 percent.

           12           I'm wondering if you could explain to the

           13  audience and to us, how you can-- assess the difference

           14  between a Neiman Marcus, which is very high end

           15  retailer, and Wal-Mart, which is a retailer to the vast

           16  majority of Americans, and what that means to the

           17  economy.

           18           MR. KYSER:  I will start.  Lower income

           19  households have been hurt by rising energy costs.  I

           20  think that's very, very important.  And in some cases

           21  their employers that may have been hurt by rising energy

           22  costs.

           23           People forget if you are operating a truck

           24  [inaudible] and then maybe working some shorter hours.

           25           But definitely there are some price pressures,
                                                                        39








            1  and rents and home prices have been going up rather

            2  dramatically.

            3           When you get up to the Neiman Marcus level,

            4  they don't care.  They shop till they drop.  And they

            5  have a lot of disposable income.  Also probably they are

            6  looking for something new and inviting.

            7           If you go to Wal-Mart, a lot of people are

            8  afraid of -- you have to remember Wal-Mart is not for

            9  everybody.  It's sort of home for [inaudible].

           10           REPRESENTATIVE BECERRA:  One of the tax cuts

           11  that Senator Boxer mentioned, that the top one percent

           12  of tax earners earn a massive amount of -- in the tens

           13  of thousands dollars this year.

           14           I have an estimate that says those who were in

           15  the top one percent of income earners will receive a tax

           16  cut that averages around $52,000, while the majority of

           17  Americans receive somewhere perhaps approaching $850.

           18           Would that have an influence on our purchasing

           19  ability and the ability to go purchase at Neiman Marcus?

           20           MS. ROSS:  I think it certainly would.

           21           I think when you layer in all the different

           22  things that you see in the economy -- housing prices

           23  would be particularly squeezed for the bottom and the

           24  middle.

           25           When you look at the impact of the tax cuts and
                                                                        40








            1  the distribution of those -- that's one of the problems

            2  with the economy, is the largest tax cuts went to those

            3  households which are least likely to turn around and

            4  spend that money in the local community.

            5           And I think you see an added impact:  Not only

            6  did you not provide -- an extra shift of the greater

            7  share of the burden on the people in the middle and

            8  lower end, but you are not turning around and seeing the

            9  people who got the money spending as much.

           10           Thirdly, if you look at the impact of the

           11  rising deficit on interest rates, I think that's a

           12  particularly troubling and long time issue.

           13           Because again, the biggest impact on the

           14  interest rate by the federal deficit will be on mortgage

           15  rates will be to low and moderate income households in

           16  California.

           17           DR. THORNBERG:  And if we can look at certain

           18  tax cuts and talk about what's high income earners are

           19  making more because of the tax cut, being at that end

           20  versus the other -- of course, we also have to keep in

           21  mind that the high income earners are also paying the

           22  vast majority of the taxes into the system.

           23           You have to be careful to see both sides.  They

           24  are benefitting the most, but they are still carrying

           25  the larger burden and are still paying the most for
                                                                        41








            1  federal programs.

            2           Be that as it may, I would like to rail against

            3  tax cuts, period.

            4           As I mentioned, we are in a period right now in

            5  which we have dramatically low savings rates, both at

            6  public and private level.

            7           This is something that's coming go to come back

            8  and haunt us in the next couple years.

            9           If you look at tax cut at federal levels, you

           10  will see that translated almost perfectly into increased

           11  consumption.

           12           Again, just increasing this savings gap that we

           13  have inside the United States, and of course, starving

           14  our local and federal government of a lot of those

           15  resources that we need to move our economy forward.

           16           We talk about workers who are trapped, say, in

           17  those Wal-Marts.  The best cure to help workers who are

           18  trapped in a Wal-Mart is not to fight Wal-Mart or erect

           19  trade barriers.  It's education and training, and that

           20  means improving our high school, improving our community

           21  colleges, improving our universities.

           22           And again, the tax cut has really stripped both

           23  the local and state and national government from the

           24  ability to do that.

           25           So rather than worry about us versus them, I
                                                                        42








            1  rail against the idea, period.

            2           MR. KYSER:  Here's another aspect.  You have

            3  had local governments under great financial stress, and

            4  they have raised permits fees, all types, and it's

            5  probably had an impact on both small business and the

            6  lower income consumer.

            7           REPRESENTATIVE BECERRA:  You mentioned

            8  deficits.  The question has gone around:  Do deficits

            9  matter?

           10           The federal deficit for the fiscal year 2004 is

           11  projected to be about $445 billion by the office of

           12  management and budget -- that's the president's own

           13  office.

           14           That's a hundred billion dollars higher than

           15  the president projected at the beginning of the fiscal

           16  year, and it's $70 billion greater than the budget

           17  deficit of the previous year, which was a historic high.

           18           So we have now reached another high in our red

           19  ink spending.

           20           And my understanding is that these projections

           21  for a federal budget deficit are going to go on for

           22  quite some time totaling in the trillions that would be

           23  added to the national debt every year there's a deficit.

           24           You add up those deficits, and that gives you

           25  the amount of debt that the nation has.
                                                                        43








            1           Do deficits matter?

            2           DR. THORNBERG:  Yes.  You know, one of the

            3  things, of course, is that you -- we keep talking about

            4  the fact that we had this tax cut.

            5           We never had a tax cut in the United States.

            6  The tax cut is when you cut taxes and cut spending.

            7           When you cut taxes and don't cut spending,

            8  that's called a tax deferral.

            9           What we are now inside the United States is a

           10  massive tax deferral.

           11           Who we are deferring to is the next generation:

           12  Me, basically.  And really, there is a tremendous

           13  intergenerational transfer going on here, and it's just

           14  unwise.

           15           And like I mentioned in my talk with baby

           16  boomers who are five and ten years from retirement --

           17  it's going to put an incredible stress on the social

           18  support system, Social Security, MediCare, MedicAid,

           19  MediCal.

           20           And this is the time we need to be planning for

           21  that, and we are going in the exact opposite direction.

           22           We are creating a massive deficit in a period

           23  we should have massive surplusin order to plan for the

           24  future.

           25           Yes, deficits matter.
                                                                        44








            1           REPRESENTATIVE BECERRA:  So one final, easy

            2  question:  What's the solution?

            3           MS. ROSS:  I think certainly rolling back

            4  particularly the high end tax cuts is step number one.

            5           And looking at trying to bring the budget into

            6  long term balance.

            7           Certainly, beginning to invest more rather than

            8  cutting back funding for work force development, more

            9  federal investment, fiscal relief for the states.

           10           While the federal budget deficit has been

           11  mounting, we have seen the same thing is happening here

           12  in California.

           13           Again, it's a question of priorities.  We are

           14  seeing more and more pushing down to the state and local

           15  levels.

           16           Roll back the tax cuts, send monies to states

           17  which across the country are experiencing difficulties,

           18  some real investments in education.

           19           I think particularly given the demographic

           20  changes in California, all of us would agree that there

           21  is tremendous challenges the next decades in the terms

           22  of providing a kind of quality educational opportunities

           23  from preschool through higher education.

           24           And certainly immediately, increasing the

           25  minimum wage.  Again, I think it was California
                                                                        45








            1  angle,which we will be more competitive if the rest of

            2  the country has a minimum wage.

            3           So that's important in terms of our economy, as

            4  well as our wage workers.  I'll stop there.

            5           MR. KYSER:  I think the federal government cold

            6  go through and do some streamling.  I think there is

            7  still a lot of waste and mismanagement in the federal

            8  government.

            9           My mother passed away in early 2002.  I just

           10  got a letter from the IRS asking why she hadn't paid her

           11  taxes in 2003 taxes.

           12           DR. THORNBERG:  I would also -- if we are

           13  thinking about policies, we really ought to be as a

           14  nation thinking about revising our overall tax

           15  structure.

           16           Right now we have a tax structure that doesn't

           17  encourage private saving.  We need to change things.  Go

           18  more for consumer taxes, less savings taxes.

           19           And encourage people to work more, save more,

           20  and plan for tomorrow.

           21           Which is not where our system is now.  I'm

           22  talking about overhauling taxes both the federal and

           23  state level.

           24           REPRESENTATIVE BECERRA:  Jack, I have one final

           25  quick question for you, more to Los Angeles and the
                                                                        46








            1  people who are here today and maybe watching.

            2           My understanding is that at the federal level,

            3  the president's budget proposes that we eliminate

            4  funding for school dropout prevention programs.

            5           The president's proposal for education funding

            6  K through 12 called No Child Left Behind has been

            7  underfunded at about $8 billion by the president in his

            8  budget.

            9           We are cutting back on the funding that would

           10  provide MedicAid, which is MediCal in California.

           11  Obviously, Los Angeles being the largest area in the

           12  state would be impacted most.

           13           We have lots of folks who are modest folks or

           14  indegent.

           15           How do you reconcile what is being proposed at

           16  the federal level with what is needed at the local

           17  level?

           18           MR. KYSER:  I don't think there is a real

           19  recognition of what is needed.  The problem is --

           20  remember, first of all, California is a donor state.  We

           21  send more to the federal government than we get in

           22  various programs.  It's more for the various programs.

           23           And then you have to say Southern California,

           24  especially Los Angeles, is somewhat unique in its needs.

           25           And there is no recognition that.  But
                                                                        47








            1  definitely need to keep the children in the school and

            2  even graduating from high school -- it is going to be a

            3  very, very dismal future for them.

            4           Of course, the county health care system is

            5  under stress.  It's almost we -- believe it or not, you

            6  are busy trying to generate tax revenue.  Unfortunately,

            7  inaudible].

            8           REPRESENTATIVE BECERRA:  Thank you.  Let us

            9  move on now to our next panel, and I'd like to begin --

           10  I'm going to just make a quick introduction of these

           11  people, because I want to be sure we reserve our time

           12  for presentations and for questions.

           13           We will begin -- I will begin by introducing to

           14  my far left the president and CEO of the Hollywood

           15  Chamber of Commerce, Mr. Leron Gubler.

           16           We have also from the Los Angeles Area Chamber

           17  of Commerce the vice president of work force

           18  development, David Rattray.

           19           We have from the Teamsters Local 396 the

           20  business representative and political coordinator, Manny

           21  de Leon.

           22           And we have from the United Commercial Workers,

           23  we have Mr. John Perez here as well.

           24           Finally, we have the former senior software

           25  quality assurance engineer at a company by the name of
                                                                        48








            1  Palm, Incorporated, Ms. Natasha Humphries, who will also

            2  be testifying.

            3           Why don't we first begin with Leron Gubler.

            4           MR. GUBLER:  Good afternoon.  Because of the

            5  time constraints, I'm going to limit my remarks to the

            6  employment sector in the Hollywood entertainment.

            7           Also, in my outline to the Congressman included

            8  information including our other two major employment

            9  sectors of health care and tourism.

           10           Entertainment is a largest employee in

           11  Hollywood.  Since 1999 we have lost 29,000 job.

           12           According to job Jack Kyser, we are going to

           13  looks another 1500 this year, and 2500 next year.

           14           I'm going to talk a little bit where these jobs

           15  are going and are there opportunities to turn things

           16  around.  The information we have collected is from our

           17  business members of the Chamber who work in the

           18  entertainment field.

           19           First of all, let's talk about some of the

           20  items that are causing this loss of jobs.

           21           One of the major factors is the movement to

           22  smaller film crews.  Reality television, for example, is

           23  an area that does not require large crews compared to

           24  sitcoms or dramas.

           25           We have also in recent years seen a
                                                                        49








            1  proliferation of new cable networks.  Many of these

            2  cable networks do require programming, and they operate

            3  on budgets that are substantially lower than regular

            4  networks, and therefore these productions have to be

            5  done on a shoe string.

            6           Feature films -- we have also noticed the

            7  production of feature films is up this year 12 percent,

            8  but down 43 percent from 2001.

            9           In addition to off-shore filming as our

           10  competition, new filming incentives have been passed by

           11  other states such at Hawaii, New Mexico and Louisiana,

           12  all designed to take jobs away from Hollywood.

           13           A recent poll in the Hollywood Reporter shows

           14  as of that particular date, 24 feature films were

           15  filming in Los Angeles County, six elsewhere in

           16  California, 38 in other states, and 24 in foreign

           17  countries.  So our problems are by no means just

           18  foreig,n, alone.

           19           Another factor contributing to the decline of

           20  the employment in the entertainment industry is the

           21  recent wave of mergers and acquisitions, we are seeing

           22  elimination of permanent positions and increased hiring

           23  of freelancers.

           24           So let's talk about now:  What are some

           25  opportunities?
                                                                        50








            1           In the major studios, we have seen a flattening

            2  of their employment, with the exception of perhaps one

            3  area.  That's the home entertainment divisions, which

            4  are involved in the production of DVDs.  We all know how

            5  those have exploded in recent year.

            6           The video game industry poses another

            7  opportunity for Hollywood.  A few years ago many of the

            8  studios jumped into this sector, and then immediately

            9  jumped out when they couldn't figure out a way to make

           10  money.

           11           But it appears the direction now of the video

           12  industry is towards sophistication, a realistic look,

           13  characters and plots, all areas in which Hollywood

           14  excels.

           15           All the people I have spoken to do not

           16  anticipate like the dot-com boom.  They do see this as a

           17  growth area for Southern California.

           18           Finally, I'd like to point out another

           19  opportunity area with digital cinema.  Up to this point,

           20  work in this field has been primarily research and

           21  development with the digital cinema initiative based

           22  here in Hollywood trying to determine some industry

           23  standards.

           24           Now we have reached a point where digital

           25  cinema is close to a rollout.  Currently, there are
                                                                        51








            1  36,000 movies screens in the United States, with another

            2  100,000 worldwide.

            3           There are less than 100 screens at this point

            4  that are digital.  So you can see the potential that

            5  exists.

            6           I'm told that deployment is anticipated to

            7  begin within the next six months in a serious way, and

            8  will grow some great opportunities, and will possibly

            9  create thousands of jobs worldwide.

           10           So those are areas where there are some

           11  opportunities, where we are looking to have a upside and

           12  turn the entertainment employment around.

           13           And with that, my time is up.

           14           REPRESENTATIVE BECERRA:  Thank you, Mr. Gubler.

           15           Now we will have Mr. Rattray.

           16           MR. RATTRAY:  Good afternoon.  First of all,

           17  our Chamber members in the L.A. Area Chamber tell us

           18  what's always been true, but it's even more true today,

           19  and that is what matters most for building in their

           20  business is the human capital, or as Nordstroms calls

           21  it, people power.

           22           That's especially true now in our

           23  knowledge-based and global economy.

           24           Attracting and retaining attractive employees

           25  and attracting their families or retaining their
                                                                        52








            1  families is directly correlated to the real and

            2  perceived effectiveness of our educational system.

            3           People want to live -- and especially we find

            4  the middle class want to live where they believe they

            5  can send their kids to school in a great school system.

            6           And the more disturbing thing that we all know

            7  here in Los Angeles is that we not only do we have an

            8  achievement gap, but it's growing.

            9           Our biggest concern then is really addressing

           10  the education and work force development system,

           11  especially our public education system, here in Los

           12  Angeles.

           13           The tragedy that too often we don't talk about

           14  is that in many of our L.A. high schools, more than 50

           15  percent of our Latino and African-American students do

           16  not graduate.

           17           If you just stop and think about that -- 50

           18  percent do not graduate from high school.

           19           That's a crime that we need to be confronting

           20  and talk about, because we are all accountable for that.

           21           And that really is what sets the framework for

           22  what I think -- and we think -- is the future of our

           23  economy and the wellbeing of our citizens, themselves.

           24           Further, we know that the old factory model

           25  high school that has 5,000 kids and sorts and segregates
                                                                        53








            1  kids based on perceived ability in ninth and tenth grade

            2  is a crime as well.

            3           It's a model that doesn't work -- it probably

            4  never did work, and it certainly doesn't work now.

            5           We are pleased the superintendent and school

            6  board got bonds passed to build and open new schools --

            7  the new orthopedic high school right next to the campus

            8  here is an example of that -- and that the

            9  superintendent wants to open and reinvent high schools

           10  into small learning communities to make them intimate,

           11  and to connect every student with a caring adult.

           12           In addition, our community college system is

           13  massively underfunded and undersupported.

           14           And we believe at the Chamber of Commerce that

           15  we need to have a whole new emergence of the importance

           16  of community college system of Los Angeles, and

           17  California.

           18           L.A. also needs to start speaking out much

           19  louder.

           20           And I think we need to support you,

           21  Congressmen, and all of our delegation into get the

           22  Dream Act passed.

           23           For those of who don't know, the Dream Act

           24  would help our undocumented students get access to get

           25  federal financial aid.
                                                                        54








            1           Again, it's just a crime we bring kids to this

            2  country, we put them in public education, and say, "Do

            3  well."   And as they do well and they reach ninth,

            4  tenth, eleventh and twelfth grade, we suddenly really

            5  turn the doors closed to these kids.

            6           So I urge all of us to get behind the

            7  Congressman and our delegation from Los Angeles, and get

            8  the Dream Act passed.

            9           REPRESENTATIVE BECERRA:  Thank you, David.

           10           We now have Mr. Manuel de Leon from Teamsters

           11  Local 396.

           12           MR. DE LEON:  Good afternoon.  I'd like to

           13  express my sincere appreciation of being given this

           14  opportunity to participate in this forum as a panelist.

           15           My name is Manuel de Leon.  I'm an a business

           16  representative for Teamsters Local 396.

           17           Many studies have bene conducted by various

           18  entities on the subject of today's forum.  Some of these

           19  reports stemming from these studies paint a dismal

           20  picture in the current state of the our economy and the

           21  possibility of a portentous future.

           22           In testimony given by Angie Wei, legislative

           23  director for the California Labor Federation, AFL-CIO

           24  before a joint Senate committee, she states that nearly

           25  three million jobs in the United States have been lost
                                                                        55








            1  during the Bush administration.

            2           Job losses continue, and unemployment is

            3  lasting longer than it has for decades.

            4           Yet corporate stocks, profits and worker

            5  productivity are climbing.

            6           We are suffering a jobless economic recovery.

            7           I had prepared a written statement here, but

            8  having listened to some of these experts here, I wanted

            9  to share a little bit with you about my personal

           10  experience.

           11           I, too, am a community college graduate, and I

           12  empathize with you.  And I wholeheartedly support in

           13  your endeavors and the tasks that are undertaken to

           14  improve the quality the education here in California.

           15           Going back to the reports produced -- by the

           16  report mentioned studies that they are subject to a lot

           17  of criticism.  Those who disagree quickly move to

           18  discredit the substance of these record.

           19           Today I would like to share with you a brief

           20  report of some of my life experiences.

           21           After fulfilling my four-year enlistment, I was

           22  honorably discharged from the United States Marine

           23  Corps.

           24           I then began the quest of the middle class

           25  dream as a young man of 22 in 1979.
                                                                        56








            1           The day after my discharge, I was hired as a

            2  technician at the rate of $8 an hour.  Indexed for

            3  inflation, those 1979 dollars are now worth $21 in

            4  today's economy.

            5           I was able to accomplish that with just a high

            6  school education and the training I had received from

            7  the United States Marine Corps.

            8           During the subsequent years I was able to

            9  provide for my family that grew to four daughters and

           10  one son, purchase a home, and raise my family without

           11  the need for my wife to leave my children to go to work.

           12           I did this on a union wage in a manufacturing

           13  environment that is now rapidly disappearing.

           14           One of my daughters graduated from Cal State

           15  San Bernardino with a bachelor's degree in psychology

           16  this past June.  I have always inculcated education to

           17  them.

           18           It has been two months since her graduation,

           19  and the current job market does not hold much promise or

           20  many opportunities, not only for her, but also for the

           21  thousands of other college graduates and the rest of the

           22  under-employed looking for work.

           23           Today I see a ray of hope in this forum for my

           24  children, most of whom who are grown, and the others who

           25  are growing, right down to the newest addition who is
                                                                        57








            1  two months old, my grandchildren, and for the rest of

            2  the community.

            3           I applaud and commend the efforts of

            4  Congressman Becerra in reaching out and searching for

            5  answers.

            6           Once again, I thank you for this opportunity.

            7           REPRESENTATIVE BECERRA:  Thank you, Manuel.

            8           Let me now turn to Mr. John Perez from UFCW

            9  United and Commercial Workers, Local 324, director of

           10  legal affairs.

           11           MR. PEREZ:  Thank you, Congressman.

           12           In thinking about what we were going to discuss

           13  today, there were was really two ways to approach this,

           14  discussing where we are economically as being a question

           15  of a crossroads, or being a question of a crisis.

           16           And since others on the panel have expressed a

           17  little more optimism than I think I'm prepared to do, I

           18  think I'll talk about the situation we are in from the

           19  point of view of a crisis.

           20           Today the Bureau of Labor Statistics released a

           21  report talking about the consumer price index for the

           22  last year.

           23           And what it showed is that there is an absolute

           24  a middle class squeeze affecting people throughout the

           25  country.
                                                                        58








            1           Skyrocketing costs in health care, energy --

            2  and as you know too well -- in the area of education.

            3  Tuition and fees have risen by three percent this last

            4  year, and wages have only gone up 1.9 percent.

            5           At the same time, our current administration's

            6  policy is to shift the tax burden from those who can

            7  afford it most to those who can afford it least.

            8           And just in the last week our president

            9  announced a plan to discuss moving towards a national

           10  sales tax model, further burdening average working

           11  people.

           12           In reality, we have lost 1.8 million jobs in

           13  the last several years.

           14           When you talk about the jobs that have been

           15  created -- and Jean Ross mentioned some of the

           16  differences in the quality of the jobs that have been

           17  created versus those that were here before -- 25 percent

           18  of those are jobs in the industries I represent, the

           19  retail industry and the hospitality industry.

           20           Lower paying jobs than those that were lost --

           21  and now jobs that -- while they started off lower

           22  paying, are in further decline.

           23           In the grocery industry, we had a 141 day

           24  strike to protect quality health insurance, and to

           25  protect future wages.  Unfortunately, we weren't able to
                                                                        59








            1  gain all we were looking to, and we had to make

            2  concessions.

            3           But these weren't concession because companies

            4  were struggling to make do, day-to-day.

            5           These are companies whose profits had increased

            6  between 180 and 240 percent over the last several years.

            7           What they said is:  They needed relief because

            8  they were competing with the bogeyman of our industry,

            9  Wal-Mart, the largest corporation in the world, a

           10  corporation who, while it succeeds economically, costs

           11  the State of California $86 million on an annual basis

           12  to provide emergency financial and health benefits to

           13  its employees.  A company that really can afford to

           14  provide those services themselves, but have figured out

           15  a way to game the system and creating a tax burden for

           16  the rest of us.

           17           In an effort to be brief, I will say this:

           18  There are two areas of structural relief that we need to

           19  look for.

           20           On a national level we need to look to do away

           21  with incentives of off-shoring jobs, the jobs that we

           22  have been off-shoring too much across this country.

           23           Here in California, we need a structural

           24  approach to de-fiscalize land use.

           25           We need to give local governments a system by
                                                                        60








            1  which they can create income for themselves without

            2  having to go to the lowest wage job creators, and really

            3  create a system by which they can incentive high wage,

            4  high paying jobs.  Thank you.

            5           REPRESENTATIVE BECERRA:  Thank you, John.

            6           Let me ask Natasha Humphries to come forward, a

            7  former quality assurance engineer for Palm, Inc.  And

            8  she is a member of TechsUnite.org, an alliance of

            9  technical workers to protesting off-shoring and other

           10  workers' rights issues.

           11           MS. HUMPHRIES:  Thank you, Congressman Becerra.

           12  And good afternoon.  I'm not sure if I'm going to

           13  maintain this three minute time limit.  But they'll have

           14  to rustle me off the mike.  Quite a story.

           15           During my undergraduate studies at Stanford

           16  University, I developed an interest in computer

           17  software, landing my first job at Apple Computer.

           18           Over the years I have continued to acquire new

           19  skills through classes, seminars and self study in order

           20  to adapt to the fast-paced technological changes in

           21  Silicon Valley.

           22           As a senior software quality assurance

           23  engineer, I have over six years experience testing U.S.

           24  and international software applications, most recently

           25  in the handheld device industry and the wireless
                                                                        61








            1  communication stage.

            2           After more than three years of service, I was

            3  laid off from Palm, Inc. due to a workforce reduction of

            4  realignment.

            5           Palm, as you know -- as probably most of you

            6  know -- is the global leading provider for handheld

            7  computing devices, with total revenues of $871.9 million

            8  in the fiscal year 2003.

            9           Since the dot-com bust a few years ago, Palm,

           10  as well as many other companies in Silicon Valley, were

           11  struggling to reduce their R and D and other costs in

           12  order to meet Wall Street's as well as shareholders'

           13  fiscal expectations.

           14           Palm's software testing organization

           15  definitively began an aggressive campaign to outsource

           16  all testing assignments to India and China.

           17           After securing pay rates for as low as $2 to $5

           18  an hour, executive management made a decision to

           19  outsource all testing overseas, achieving a considerable

           20  savings of 50 to 70 percent on salaries alone.

           21           My software project was one of the first ones

           22  at Palm to use an off-shore team in India.

           23           And after several weeks of mounting project

           24  difficulties, including but not limited to language and

           25  geographical barriers, cultural differences, downed
                                                                        62








            1  E-mail servers and weak network and telephone

            2  infrastructure, immature software development knowledge,

            3  lack of familiarity with Palm software and hardware

            4  products, management quickly identified a solution,

            5  which was to send in-house Q and A engineers to

            6  Bangalore, India in order to train software Q and A

            7  engineers.  I was one of those designees.

            8           After returning from my trip in India -- I

            9  spent two weeks in Bangalore, traingin software Q and A

           10  engineers to basically do my job function.

           11           After my return in January of '03, I repeatedly

           12  met with my Q.A. manager and director to ascertain the

           13  new direction of the company and any new skill that were

           14  required to remain competitive as the off-shore team

           15  began performing more of my job functions and to quickly

           16  advance up their learning curve.

           17           And at each individual or organizational

           18  meeting was unable to learn any specific new

           19  requirements of my position, and was discouraged to even

           20  enhance my professional skillset either through poor

           21  direction, or denied approval of tuition reimbursed for

           22  course work.

           23           The Q.A. director also indicated that his

           24  organizational structure was in flux, and that his

           25  strategy to increase the group's technical expertise in
                                                                        63








            1  alignment with new business objectives would be revealed

            2  soon.  Moreover, he assured the group that no one was to

            3  lose their job to off-shoring.

            4           On August 20, 2003, I was terminated, along

            5  with 40 percent of my group.

            6           Although it technically represented 14 people

            7  during that layoff, statistically it seems like an

            8  insignificant number, but we represented the talented

            9  tenth remaining after scores of layoffs over a

           10  three-year period.

           11           Most of the terminated Q.A. individuals in this

           12  layoff held senior positions, and commanded much higher

           13  salaries than our counterparts in India at $5.00 a hour.

           14           And although most of the software Q.A.

           15  engineers in India are master's degree holders, they

           16  were only paid $2 to $5, as Palm is only required to pay

           17  home country wages commensurate to living standards in

           18  India.

           19           So it's -- as you can see, I have a personal

           20  anecdotal experience as far as off-shoring, and in

           21  conclusion, it has created a devastating economic

           22  effect, not just in Silicon Valley, but nationwide.

           23           Although the public and media have faulted H1B

           24  and L1 guest worker visa programs for the massive job

           25  losses, companies are finding a new back doors, which is
                                                                        64








            1  off-shoring large volumes directly and displace

            2  technical workers like myself.

            3           REPRESENTATIVE BECERRA:  Thank you, Natasha.

            4           Let me ask a question of our second panel, and

            5  open it up to anyone to answer.

            6           We have been hearing more and more reports

            7  about off-shoring of jobs, and Natasha, you have justs

            8  testified about how your job was off-shored.

            9           Give me a sense of how real you see it in the

           10  film and TV industry, how we see the off-shoring of, in

           11  a sense, our movie production when it goes to Canada or

           12  Australia or other countries as well?

           13           How palpable, how real is it for the average

           14  person who works day-to-day, whatever the field may

           15  be -- whether service, engineering or manufacturing?

           16           Anyone can answer.

           17           MR. GUBLER:  Maybe I can give one example I

           18  didn't in my comments.  And actually, I thought it was a

           19  little alarming.

           20           Up to this point, what we have seen in the off-

           21  shore film industry was primarily on the filming end of

           22  things, not post production.

           23           Generally speaking, they film outside the

           24  country.  They come back to L.A. and in the

           25  post-production houses and finish the editing.
                                                                        65








            1           The reason it's done here is because we have

            2  excellent workers, skilled workers, and usually the

            3  directors like to have access to watch editing as it's

            4  done.

            5           Because of the advances in technology, that has

            6  now charged.

            7           In fact, I was told yesterday by a company that

            8  Canada is now putting out the pitch not only to film in

            9  Canada, but to finish the work in Canada.

           10           And not only Canada, but now Eastern Europe is

           11  also appealing for jobs.  One company has told me they

           12  lost six contracts in the last year to Prague in the

           13  Czech Republic.

           14           What does convert to in means of jobs?

           15           In the last year their work force is down

           16  40 percent.  They now have 110 employees.  They have

           17  laid off about 50 employees in the last year.

           18           This is alarming, because particularly in

           19  Hollywood, as you know, most of our employment is in the

           20  post production field.  I think that's an alarming

           21  development.

           22           So what does that mean to an individual?

           23           That's 50 people who made a good living in

           24  Hollywood, and are now out and probably freelancing.

           25           REPRESENTATIVE BECERRA:  Ron, do you have an
                                                                        66








            1  idea how much those types of jobs pay on the average?

            2           MR. GUBLER:  I do not.  I can get it that for

            3  you.

            4           REPRESENTATIVE BECERRA:  Anyone on the question

            5  of out sourcing because of costs?

            6           MR. PEREZ:  I guess I view the current wave of

            7  off-shoring similarly to previous waves of moving other

            8  manufacturing jobs out of the country, and historically

            9  to Mexico and the maquiladores.

           10           Congressman, you dealt with this issue a lot in

           11  the '90s.

           12           The reality is:  What we are seeing is wave

           13  after wave of high quality jobs moving someplace else.

           14           When it happened in the auto industry, when it

           15  happened in other manufacturing, people said it was

           16  because it could be done cheaper somewhere else and

           17  would create higher skill level jobs here.

           18           So now that we are seeing it happening in the

           19  highest skill level jobs available in the tech industry

           20  and other industries, really, I think it forces us to

           21  revisit some of the questions that you and some of your

           22  colleagues raised in the last decade about what kind of

           23  tax structures are in place that incentivize some of

           24  these off-shorings, and whether or not there isn't

           25  something you and your colleagues can do in tax reform
                                                                        67








            1  to create the incentive to keep those jobs here and to

            2  create the opportunities for folks that have these high

            3  level jobs after they are done with their eduction.

            4           REPRESENTATIVE BECERRA:  David, did you want to

            5  add anything?

            6           MR. RATTRAY:  I want to add to the comments

            7  made earlier looking at tax incentives for investing in

            8  the United States and other structural components are

            9  crucial.

           10           But I think, as Jack said earlier, the global

           11  economy is here to stay.  We can't escape the fact that

           12  the global economy is here to stay.  And we are just

           13  going to change at faster rates tomorrow than we did

           14  yesterday.

           15           So our biggest defense, to me, is offence.

           16  That is having the best education training system in the

           17  history of this universe.

           18           The only way to empower our people is to truly

           19  empower them with knowledge and skill and talent,

           20  notwithstanding the experience of what was just shared

           21  with us.

           22           In the long term, that's the greatest offensive

           23  weapon that we have in the country -- we have always

           24  had.

           25           I think that's added on top of the structural
                                                                        68








            1  things mentioned.  You need to do that.

            2           But you can't put up the walls that we kind of

            3  thought about with trade tariffs years ago on products

            4  against people movement move.

            5           You can only do it with great talent and a

            6  response to the economy.

            7           MS. HUMPHRIES:  I wanted to add to that.

            8           I think off-shoring is a very complicated

            9  problem, but education is not the silver bullet.

           10           My said education did not inform my company's

           11  decision to separate me from the company.

           12           I think off-shoring is just increased

           13  profiteering, and we need to find a line between a true

           14  survival need and profit, just pure profit and corporate

           15  greed.

           16           REPRESENTATIVE BECERRA:  On that point, I think

           17  most of us recognize Palm as a very universal

           18  product,the  Palm Pilot and other devices that --

           19  electronic devices manufactured by Palm.

           20           Palm still has sites, factories, offices in the

           21  U.S.?

           22           MS. HUMPHRIES:  Yes.  Global headquarters are

           23  in Milpitas in Northern California.

           24           REPRESENTATIVE BECERRA:  Did they explain to

           25  you all as they were dismissing you the reasons for your
                                                                        69








            1  being let go?

            2           MS. HUMPHRIES:  Oh, yeah.  It was couched in

            3  terms of a skillset swap.  They claimedthat these

            4  individuals in India had a superior skillset.

            5           Which totally begged the question:  Why was I

            6  training them?

            7           So once the knowledge transfer took place, I

            8  didn't feel that was the -- a very truthful statement.

            9  But that was the official statement.

           10           And I think a lot of companies are hard

           11  pressed.  I mean, I'm a business person.  I understand

           12  the cost of legitimate financial concern.

           13           But I think there is a humanistic aspect that's

           14  missing in all of this off-shore strategy planning.

           15           That day and a half notice I got before I was

           16  laid off?  Was not enough time to refinance my mortgage.

           17           So it has a personally devastating impact on me

           18  and my family, and my own financial planning.

           19           REPRESENTATIVE BECERRA:  Do you happen to know

           20  what Palm is paying those employees in India who

           21  replaced you and others at the Northern California site?

           22           MS. HUMPHRIES:  Oh, absolutely.  Q.A. engineers

           23  at my level can earn anywhere from 75 to $125,000 a

           24  year.  So that's roughly $30 to $65 a hour.

           25           Versus individuals in India -- I know what the
                                                                        70








            1  budgets were, because I managed a project team and a

            2  small part of the budget, so they were being paid $2 to

            3  $5 an hour.  That is a competitive wage in India.

            4           I will tell that you these individuals are very

            5  ambitious.  They are driven to succeed.  They are very

            6  talented, and the U.S. does not have a monopoly on

            7  engineering computer science talent.  That must be

            8  acknowledged.

            9           It is difficult for me -- I have mixed

           10  reactions to the off-shoring.  I think it could have

           11  been planned a little more carefully where maybe

           12  employees could have repointed themselves within Palm,

           13  or at least polished up the resume so you can market

           14  yourself to another company.

           15           REPRESENTATIVE BECERRA:  The acoustics are not

           16  the best.  Let me make sure I understood you correctly.

           17           I believe I heard you say that the salary that

           18  you could expect here in the U.S. from Palm for your

           19  position was somewhere between $35 to $65 a hour.

           20           And that the individuals who replaced you and

           21  your co-workers in India were being paid $2 to $5 an

           22  hour.

           23           MS. HUMPHRIES:  That's correct.  And I

           24  understand -- I have recently been in contact with my

           25  counterpart in Bangalore, India -- she has since
                                                                        71








            1  received a promotion and has moved onto another project,

            2  and is working for somebody in Singapore and may be

            3  coming to the U.S.

            4           But yes, that is a competitive wage.  $10,000 a

            5  year is the middle class.  It will get you a car and a

            6  servant in India.

            7           REPRESENTATIVE BECERRA:  Anyone have any

            8  comment, including our first panel, talking about how we

            9  succeed in retaining jobs when India offers skilled

           10  workers at less than one tenth of the cost of what we

           11  pay or skilled workers here?

           12           DR. THORNBERG:  Well, there are a number of

           13  issues here that can be addressed -- not to take away

           14  from your personal problems --

           15           REPRESENTATIVE BECERRA:  One second, because

           16  going to what Jack -- or David said earlier, even if we

           17  get them that great education, we still can't hold them

           18  because someone else -- India, China -- will pay them

           19  far, far less or require a pay that's far, far less, and

           20  that means someone very skilled here still would not be

           21  able to compete at all.

           22           DR. THORNBERG:  First of all, we have to keep

           23  in mind the sort of -- the coming out of the tech

           24  sectors in India, Singapore, so on and so forth really

           25  occurred in the late '80s, early '90s, and they grew
                                                                        72








            1  rapidly all the way through the '90s, and we never heard

            2  any complaints about it.

            3           That was because in the process of

            4  commoditization of a lot of these skills and

            5  off-shoring, at the same time the tech sector was

            6  expanding elsewhere.

            7           So people who lost their jobs here were quickly

            8  moved on to other places and continued at that time with

            9  a job.

           10           You can't blame outsourcing for the hiccups

           11  the technology sector is going through right now.

           12           The reality is:  The technology sector grew too

           13  fast in the late '90s.

           14           In the last few years, the technology sector

           15  has been declining to a more proper or longer level.

           16           And so -- again, not to take away from personal

           17  difficulties -- and it sounds like Palm didn't handle it

           18  very well -- but outsourcing has been with us for years

           19  and years and years.

           20           Also, again, not to take away -- there are

           21  definitely a lot of people who have been displaced.  We

           22  always have to be worried about them and help them get

           23  back on their feet.

           24           But the reality is:  Jobs are coming back, and

           25  incomes are growing in the U.S. at the average level.
                                                                        73








            1  The biggest issue we face here in California and the

            2  U.S. is not the average wage.  It's the high end.

            3           Because at the high end particularly

            4  [inaudible].

            5           The real issue, as far as I can see, is the

            6  widening income distribution, the gap between those who

            7  are educated and those who are uneducated.

            8           For the most part, people who are educated,

            9  have solid degrees, are doing very, very well right now.

           10  Incomes have been growing on a year-to-year basis.

           11  Didn't really slow down in 2001 downturn.

           12           Did you want to add something to that, Jack?

           13           MR. KYSER:  There is another phenomenon we have

           14  overlooked, and that's called in-sourcing, where you

           15  have foreign companies coming in to the United States.

           16           For example, we have an auto industry in Los

           17  Angeles County.  Mazda and Nissan and Toyota of the

           18  world.  They don't do any manufacturing here, but a lot

           19  of their decisions are made here [inaudible].

           20           They do have plants in the U.S. Southeast.

           21  Unfortunately, the UAW has never been able to crack

           22  those.

           23           And right now we have a lot of Chinese firms

           24  coming into Southern California, and this is something

           25  that we are looking at to see if we can entice Chinese
                                                                        74








            1  firms to come in and consider Los Angeles the first stop

            2  in Southern California for creating some interesting

            3  jobs.

            4           But Chris used a wonderful term,

            5  commoditization.  Any time you have a job that processes

            6  something or is doing a something [inaudible] we are in

            7  dangerous territy, what we do a again going back to this

            8  education to always stimulate [inaudbile] and also be a

            9  couple steps ahead.  Within six months we'll come up

           10  with something.  And because they still don't play by

           11  all the rules.

           12           REPRESENTATIVE BECERRA:  Anyone else?

           13           MR. GUBLER:  Going back to the example of the

           14  post production house, I don't know the hourly wage, but

           15  I think I did give an example of wages of the price

           16  differential in these projects that are going to

           17  Czechoslovakia.

           18           Generally, post-production is about ten percent

           19  of the cost of the movie.

           20           In particular, some of the examples -- gave me

           21  a job they would normally bid for $500,000.

           22           In Prague, companies were bidding $50,000.

           23           So one tenth of the cost.  There is no way they

           24  can compete with that.

           25           I said, "What about the quality?"
                                                                        75








            1           He said, "Well, unfortunately, I have to tell

            2  you their quality is very good."

            3           Technology is moving, particularly in Europe

            4  and other places, and catching up with us.

            5           So staying that one or two steps ahead is not

            6  as easy as it once was.

            7           There is a challenge:  How do we save those

            8  jobs there?

            9           REPRESENTATIVE BECERRA:  Mr. de Leon?

           10           MR. DE LEON:  Mr. Kyser probably recalls the

           11  downturn of the aerospace industry, specifically General

           12  Dynamics and more in California where thousands of good

           13  paying jobs were initially moved to Arizona and after

           14  that was purchased by Hughes Aircraft.

           15           A lot of that work was done at Pomona,

           16  California, then turned to Mexico, with the

           17  maquiladores.

           18           Now we have a situation where those jobs are

           19  now being done with products, of all places, Russia.

           20  Some of the things.  That's --

           21           How do you explain that?

           22           At what cost, you know, do we go out to save

           23  money -- at any cost?

           24           The second part is:  We have talked about

           25  outsourcing, how is it unconscionable that we have the
                                                                        76








            1  food stamp program being administered off-shore by

            2  workers either in India or Mexico with our own state

            3  dollars.

            4           Those are jobs that can be done here locally to

            5  help out the people.

            6           DR. THORNBERG:  Two things.  First of all, the

            7  decline of the aerospace industry in the early '90s was

            8  not due to outsourcing.

            9           It was due to a dramatic cutback on spending on

           10  both civilian and military aircraft by the federal

           11  government, and also by civilian airlines.

           12           There was a big runup in purchases of planes

           13  that created a big gap.

           14           So most of that was decline in demand.  It

           15  wasn't an off-shore phenomenon.

           16           Also, when you talk about manufacturing, keep

           17  in mind that right now in the United States in real

           18  terms we produce twice as many or twice as much -- I'm

           19  not sure of the terminology -- manufactured goods than

           20  we did 30 years ago.

           21           We have doubled our manufacturing output in the

           22  last 30 years.

           23           The issue is:  We are doing it with many fewer

           24  workers, and there are few high tech workers with either

           25  two-year degrees or four-year degrees earning a lot of
                                                                        77








            1  capital equipment.

            2           Unfortunately, a lot of these good jobs went

            3  away, but they are not being replaced by Mexicans or

            4  Indians.  They are being replaced by machines and

            5  computers.

            6           It's productivity and technology training

            7  that's replacing a lot of those jobs, which again goes

            8  back to what Jack said:  That the solution to this is

            9  education and training for this next generation coming

           10  up.

           11           Because, again, it's a new world, different

           12  kind of world, and you got to have those skills if you

           13  are going to succeed.

           14           REPRESENTATIVE BECERRA:  Let me ask if I can,

           15  because I'm not quite sure I'm connecting all this.

           16           Ms. Humphries has given us a clear example of

           17  someone who has gotten herself well educated, skilled,

           18  gone through the education that we'd like to have many

           19  of our young people go through, and yet she is still

           20  finding herself at the short end of stick.

           21           And so at the same time we have right now a

           22  budget that's put forward by the Bush administration

           23  which cuts funding for a lot of those educational

           24  programs that you are talking about pushing forward to

           25  try to make it possible for those who haven't gone to
                                                                        78








            1  college to get there.

            2           So it sounds like on both ends of this stick,

            3  people are on the short end.

            4           One:  You get well trained, as Ms. Humphries

            5  did, and you still lose your job.

            6           Two, those who are trying for the first time to

            7  get an education, this administration is cutting money

            8  for education programs.  Tell me where I'm wrong.

            9           MS. ROSS:  What is so different about this

           10  recession than the early 1990s is the fact that it has

           11  had a very disproportionate impact at the high end,

           12  unlike the early '90s, which was sort of low to mid end.

           13           If you look at what the unemployed population

           14  in California looks like, if you go back to 2000 which

           15  my colleague tells me again which is probably as good as

           16  it will ever get -- 14 percent, 15 percent of the

           17  unemployed population was individuals with bachelor's

           18  degree or educations higher than that.

           19           Last year it was 30 percent.

           20           Again, if you look at who is getting jobs and

           21  who and is not getting jobs, this has been a recession

           22  that has really hit exactly the people -- the kind of

           23  people that we are talking about here.

           24           And I think the question in terms of education

           25  and training in part to get to:  When you lose your job
                                                                        79








            1  do you have the skills that can help you go out and get

            2  another job, as well as the issue of job creation.

            3           I think there are some very very significant

            4  challenges here.

            5           I think we have talked a lot about investing in

            6  education.

            7           I think it's also a question of investing in

            8  infrastructure.

            9           I was in rural China last fall, where every

           10  small village I went to had high speed Internet anywhere

           11  you went.

           12           I can't get that in my neighborhood in

           13  Sacramento.

           14           I think we have seen a tremendous investment,

           15  public investment in India and in China in terms of

           16  making their infrastructure world class.

           17           And we are not seeing that kind of investment

           18  here in the U.S.

           19           REPRESENTATIVE BECERRA:  I want to announce to

           20  the audience we are going to have a little bit of time

           21  for public comment or questions, so I would ask those

           22  who are interested to please approach the microphone.

           23  We will only have time for a few questions, so I will

           24  ask you -- whoa, oh my gosh.

           25           We are going to stay until 3:30, and then we
                                                                        80








            1  are going to have to close.  We might not have a chance

            2  to get everyone who is lining, but it's great to see you

            3  are interested in participating.

            4           Before we go to those in the audience, just to

            5  confirm something here -- I probably want to pose it to

            6  the panelists from our first panel.

            7           I did a newsletter recently where I collected

            8  some data -- please correct me in I'm wrong -- because

            9  as you talk about this recovery, job recovery and so

           10  forth, I keep wondering whose it is.

           11           My information tells me that work productivity

           12  -- I think this was mentioned earlier -- and by work

           13  productivity, we mean the amount of time and labor a

           14  worker needs to produce a good or service -- that worker

           15  productivity improved by about 5.4 percent over the last

           16  year.

           17           Yet workers' real wages -- in other words, your

           18  pay minus inflation -- has actually declined during the

           19  past year by about 1.3 percent, and is declining faster

           20  over the last five or six months.

           21           So your productivity as a worker has gone up,

           22  you are producing more with an hour's worth of labor,

           23  but at the end of the day, after inflation is factored

           24  in, you are making less money than you were a year ago.

           25           At the same time, corporate profits since March
                                                                        81








            1  of 2001 have skyrocketed some 55 and a half percent.

            2           And the information I saw recently was that the

            3  average salary of a CEO, a corporate executive officer,

            4  in America's largest corporations, now exceeds $8

            5  million annually.

            6           That's about 300 times greater than the average

            7  worker's salary.

            8           Whose recover is this?

            9           DR. THORNBERG:  Congressman, I'm sorry, but our

           10  numbers don't agree with your number on that.

           11           We have seen incomes rising in the last couple

           12  years in the United States.

           13           Unemployment right now -- excepting the

           14  overheated labor market in the late '90s --

           15           REPRESENTATIVE BECERRA:  Real wages?  Or wages?

           16           DR. THORNBERG:  Real wages have increased.

           17           And unemployment in the United States right now

           18  is -- except for the overheated economy of the late

           19  1990s, unemployment right now is lower than it's been at

           20  any time since 1970.

           21           UNIDENTIFIED MEMBER OF THE AUDIENCE:  That's a

           22  lie.

           23           MR. KYSER:  That's begs the question --

           24           DR. THORNBERG:  Sorry.  These aren't lies.

           25  These are statistics.  If I'm wrong, then the census
                                                                        82








            1  bureau is feeding me wrong information, so --

            2           REPRESENTATIVE BECERRA:  Chris, let's make sure

            3  I understand.

            4           They are lower than 1970, but they are higher

            5  than they were up until the year 2000 --

            6           DR. THORNBERG:  Unemployment is lower right now

            7  than it was during any time during the '80s.

            8           REPRESENTATIVE BECERRA:  How about in the '90s?

            9           DR. THORNBERG:  Except for the late '90s when

           10  unemployment went down to four percent,  and that was

           11  reflective, again, of that overheated economy.

           12           A lot of jobs -- you talk about we have

           13  productivity growth but not a lot of wage growth, but

           14  the last three years, which I agree with.  But that's

           15  because in late '90s period we had a lot of wage growth

           16  without productivity growth.

           17           REPRESENTATIVE BECERRA:  My understanding is

           18  that 5.5 percent unemployment rate, what we have is

           19  about 8.4 of so million people unemployed.

           20           On top of that my understanding is that there

           21  are some four and a half million people who are under-

           22  employed -- they are working less than a full-time job

           23  even though they may be seeking full-time work.

           24           And if you add the four and a half or so

           25  million other Americans who have stopped looking because
                                                                        83








            1  they became so discouraged, you are looking at something

            2  over 17 million Americans who are either unemployed or

            3  underemployed.

            4           DR. THORNBERG:  The percen of the work force

            5  who are working age work force right now is higher than

            6  it's been at any point before 1995.

            7           So, actual number people of with jobs in the

            8  United States right now is higher as a percent of the

            9  working age population from 16 to 65 than it's been at

           10  any point before 1995.

           11           So again, I keep hearing about lack of jobs,

           12  but the reality is:  There are a lot of jobs out there

           13  in the U.S. economy.

           14           UNIDENTIFIED SPEAKER FROM THE AUDIENCE:  Where

           15  are they?

           16           REPRESENTATIVE BECERRA:  That's -- I do want to

           17  go to the audience.

           18           Did you want to -- Jean did you want to say

           19  anything before we go on?

           20           And I want to actually get to the audience, so

           21  we will close with you and then go the audience, to try

           22  to take a few questions.

           23           MS. ROSS:  Again, I think we have seen -- and I

           24  think the most recent information will be out next week

           25  in terms of income which I thinnk in California, have
                                                                        84








            1  been fairly flat, if not falling behind, depending which

            2  years you hit.

            3           Again, I think it comes from if you look at the

            4  economy as sort of something that has an independent

            5  life or how it impacts individual workers and families,

            6  I don't think in an economy with four to five percent

            7  unemployment is necessarily overheated.

            8           I think that's the good thing for workers and

            9  their families.

           10           I think certainly now we are at a level of

           11  unemployment that is higher than much of the past decade

           12  and higher than the late 1980s, which I think was a more

           13  reasonable period.

           14           REPRESENTATIVE BECERRA:  Let me go to

           15  questions, and I know the panelists want to chime in --

           16  we are going to go run out of the time real quickly.

           17           If you can be very brief with your questions

           18  and your comments, we will see if we can get a quick

           19  response from the panelists if it's appropriate.

           20  Otherwise, we will move on.

           21           Your name, please?

           22           MR. KHAN:  My name is Nezra Khan, and I'm a

           23  constituent of yours.  I'm also a Pakistani.

           24           I'm a community college student, and I found

           25  this all very informative.  I think Proposition 72 is a
                                                                        85








            1  step in the right direction concerning health coverage

            2  for the entire state of California, and I want to thank

            3  you very much.

            4           REPRESENTATIVE BECERRA:  Thank you very much.

            5           Let's go over here to my right.  Yes, sir, give

            6  us your name.

            7           MR. CARLTON:  My name is Robert Carlton, and I

            8  am an American, served in World War II, shot down in a

            9  B-17, spent a year as a prisoner of war in Germany.  Got

           10  an purple heart, which was legitimately awarded, if you

           11  get the meaning.

           12           REPRESENTATIVE BECERRA:  Mr. Carlton, I need

           13  you to be brief.

           14           MR. CARLTON:  Okay.  I appreciate it. All I can

           15  say is:  It's sort of like a society that is an

           16  alcoholic.

           17           If you are elected by a government of alcohol

           18  producers, they will tell you:  Let's switch from

           19  whiskey to gin.  When you are done, you willb be an

           20  alcoholic.

           21           We today live in a society that unfortunately

           22  has been misinformed as to what the problem is.

           23           If you read your letter, the first three of the

           24  first our paragraphs, the problem is money and the way

           25  we utilize it, obviously.
                                                                        86








            1           In other words, we have been told that

            2  capitalism is the answer.

            3           That's like the alcohol producers saying "Let's

            4  switch from whiskey to gin."

            5           REPRESENTATIVE BECERRA:  Mr. Carlson, I want

            6  you to voice the question.

            7           MR. CARLSON:  The answer is socialism.

            8           If you want a GNP, if you back to Jesus

            9  Christ's example, he had the perfect GNP at the loaves

           10  and fishes situation.

           11           And what was the result?

           12           It was distributed.  They all were fed and

           13  happy.

           14           REPRESENTATIVE BECERRA:  Thank you.  Gentleman

           15  on my left?

           16           MR. WATKINS:  I just want to say, first of all,

           17  it's really frustrating to travel so far and wait so

           18  long to get a chance to say just so little.

           19           My name is Tim Watkins.

           20           I represent the Watts Labor Community Action

           21  Committee in Watts.  My motto is:  The little community

           22  with the biggest name in the world -- that's Watts.

           23           Unfortunately, we can't have this kind of

           24  gathering in our community because federal standards

           25  that are providing for redistricting have compromised us
                                                                        87








            1  thoroughly.

            2           We have no less than three congressional

            3  representatives in a one-mile square area.

            4           As you know as a member of Congress, it's very

            5  seldom they all get together on anything very often.

            6           We need to have a solution for that.  It does

            7  not need to be left in the bailiwick of the three

            8  representatives that are currently there.

            9           It needs to be brought into the scope of

           10  Congress because federal redistricting principles have

           11  been violated.

           12           REPRESENTATIVE BECERRA:  Thank you for your

           13  comment, Jim.  Ma'am, will you give us your name?

           14           MS, KALTON:  My name is Cynthia Kalton.  I'm

           15  commissioner of student services here at Trade Tech, and

           16  I'm just astounded.

           17           What gives me the incentive to stay on the

           18  president's list, go to higher education, vie for these

           19  Fortune 500 jobs, to one day train my replacement in a

           20  third world country?

           21           Please tell me what gives me the incentive?

           22           Why don't I just roll over and get a job over

           23  there and just wait for it to come to me?

           24           REPRESENTATIVE BECERRA:  I don't know if the

           25  panel wants to answer.
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            1           MS. ROSS:  We talk about individual stories,

            2  and we talk statistics about the economy.

            3           Because you're fitting every piece of data that

            4  I think certainly all of us know about -- would tell you

            5  that your best chance of making a good living, getting a

            6  job that will provide health coverage, pension coverage,

            7  and security for the family is education.

            8           Again, I think everything we know is because if

            9  you lose your job, the more education, the quicker you

           10  are able to get back on your feet and hopefully find

           11  another one.

           12           REPRESENTATIVE BECERRA:  I'll just add that

           13  policymakers make decisions on how they spend trillions

           14  of dollars that you give us through your taxes.

           15           Come November, you can make a decision about

           16  who are the policymakers who get to deal out those

           17  dollars.  So don't forget to vote.

           18           Yes, sir?

           19           SPEAKER ID INAUDIBLE:  My name is [inaudible]

           20  I'm a student at Los Angeles Trade Tech Center.

           21           I was wondering what have you been doing to

           22  toughen our foreign policies?

           23           And second of all, why would anyone go anywhere

           24  in a third world country to train somebody else knowing

           25  you were training your replacement?
                                                                        89








            1           REPRESENTATIVE BECERRA:  I'm hoping that people

            2  who are coming to ask a question or comment would try to

            3  stay to the subject matter, because we have several

            4  people who are here.

            5           I will briefly say the whole situation abroad

            6  is a very difficult and sticky situation, not one that I

            7  supported from the get-go.

            8           But at this stage what I'm hoping we do is find

            9  we can find leadership that will try to get us

           10  extricated from Iraq as quickly as possible but without

           11  making the situation any worse.

           12           Let me move to the next speaker.  Please if I

           13  can ask you to try to address the questions -- or excuse

           14  me -- the subject matter of the forum.

           15           MR. BROWN:  Real quick, my name is Larry brown,

           16  and I would just like to make a comment on the jobs

           17  going overseas.

           18           Out-source -- Senator Kerry was at Cal State

           19  Dominguez last week, and he proposed a tax credit for

           20  businesses that keep jobs in the United States.

           21           Also, real quick, the guy that is saying jobs

           22  are coming back -- we didn't see the jobs.

           23           Where are the jobs?

           24           If the jobs are coming back, why is

           25  unemployment so high and people can't get a job?
                                                                        90








            1           Also, real quick, Trade Tech has a tremendous

            2  labor studies program.  I encourage all members to look

            3  at Trade Tech's labor studies program, which I am an

            4  alumni.

            5           Also, sir, on that advisory committee:  Where

            6  are the jobs?

            7           MR. KYSER:  Aerospace is starting to hire

            8  again, but they require very specific skills.

            9           You are seeing jobs in construction.

           10           Unfortunately, it seems to be jobs in

           11  retailing.

           12           But there are a lot of things around.  You just

           13  have to be alert.

           14           What I tell people is to look at the help

           15  wanted ads in the Wall Street Journal.  That gives us an

           16  indicator of who is thinking about hiring out there.

           17  You have to be aggressive in this market.

           18           REPRESENTATIVE BECERRA:  We will take four more

           19  questions, two from each side.

           20           I apologize for having to limit it to that, but

           21  we are very close to concluding, and I want to make sure

           22  we close on time.

           23           So sir, give us your name, and brief comment or

           24  question.

           25           MR. MAVIS:  Yeah.  My name is John Mavis, and I
                                                                        91








            1  want you to know -- I am a native of Los Angeles since

            2  day one.  I graduated off that stage 52 years ago, where

            3  you are at right now.

            4           My problem is transportation for all disabled

            5  people.

            6           The MTA is saying they don't have money, and

            7  they are trying to cut out access services in Los

            8  Angeles County.

            9           They have cut it from same day service to next

           10  day service.

           11           Now we are going to have to make up our mind up

           12  today if we want to go to McDonald's tomorrow to get a

           13  hamburger.

           14           And it's ridiculous to knot know when you are

           15  able to go and do anything.  It's supposed to be a

           16  freedom.  They freed the slaves.  Now the ADA went

           17  through this to try to free us, but we are not really

           18  free.  We can't go where we want to go.

           19           Secondly, I want to ask the committee if you

           20  would please recognize nine months from now that this

           21  school here originally was Polytechnic High School, and

           22  I would like to see some kind of certificate or diploma

           23  given to a bunch of us students who are still alive and

           24  kicking and have an alumni group.

           25           If you would please recognize that, I would
                                                                        92








            1  appreciate it.  Thank you very much for having me and

            2  letting me speak.  Thank you.

            3           REPRESENTATIVE BECERRA:  Mr. Mavis, if you --

            4  there are people, representatives of Trade Tech here.

            5  You may want to approach them.

            6           MR. MAVIS:  I'm talking about Polytechnic High

            7  School.

            8           REPRESENTATIVE BECERRA:  Thank you very much.

            9           MS. STRAUB:  I'm Mrs. Valjean Hotchkiss Evans

           10  Straub, and I used to work in the Wilshire District for

           11  Texaco and Shell Oil companies.

           12           And I have received three AA degrees from the

           13  community colleges, ins business administration and real

           14  estate management.

           15           But what -- the question I want to ask to the

           16  panel and Mr. Becerra is:  How do you think our -- how

           17  do you think we he can get our jobs working better in

           18  Los Angeles?

           19           I have been filling out applications left and

           20  right now for -- oh, gosh -- over 20 or 30 years.

           21           And the issue is that I -- they just refuse to

           22  hire me.  Somebody is trying to punish me about my jobs.

           23           I had no alcohol problems, no drug problems,

           24  and I worked with my husband -- he got his degrees from

           25  USC while we were married.  He got his bachelor's degree
                                                                        93








            1  from USC.  Bachelor's degree, and even passed the L.A.

            2  bar exam.  You see, he tried to do me wrong when we went

            3  to divorce --

            4           REPRESENTATIVE BECERRA:  Let me see if we can

            5  focus on a question --

            6           MS. STRAUB:  The question I'm addressing this

            7  question to the panel, is:  How do you think we can get

            8  our jobs working again?

            9           I know education helps people get better

           10  professional jobs, but -- I don't want to be punished

           11  about my jobs.

           12           REPRESENTATIVE BECERRA:  Let me pose the

           13  question to the panelists, and perhaps Mr. Kyser would

           14  like to responded because he is someone who knows well

           15  about Los Angeles, I think you talked a little bit about

           16  this, Jack, and I don't know if you add anything more in

           17  terms of what L.A. needs to do.

           18           MR. KYSER:  We are trying to find the answer.

           19           We are working right now --

           20           UNIDENTIFIED SPEAKER:  Louder!

           21           MR. KYSER -- trying to develop a strategy for

           22  growth in L.A. County, and we are looking at good

           23  quality jobs.

           24           But it's going to take some very significant

           25  changes in the way that we all operate and do business
                                                                        94








            1  and think about things.

            2           REPRESENTATIVE BECERRA:  I really have to move

            3  on --

            4           MS. STRAUB:  I just don't want to be punished

            5  for my jobs --

            6           REPRESENTATIVE BECERRA:  -- I have to move over

            7  here.  And we have just two more questions for the

            8  panel.

            9           MS. STRAUB:  I have been --

           10           REPRESENTATIVE BECERRA:  Folks, I hate to tell

           11  you, but we really have run out of time, so two more

           12  questions, one from each side of the auditorium.

           13           Sir?

           14           MR. REYES:  Yes.  My name is Eddie Reyes.  I'm

           15  a proud member of the south central Los Angeles

           16  community.

           17           I have a question maybe perhaps for Ms. Ross.

           18  Maybe two questions.

           19           One of them deals with of small businesses

           20  and -- in our community, there is lot of small

           21  businesses.

           22           And we -- the ownership of our community

           23  is necessay in order to improve all aspects of life.

           24           So what incentives are offered at the federal

           25  level and state level and local level to improve small
                                                                        95








            1  businesses and help them grow?

            2           The second part is this:  What does the

            3  economic development taking place downtown mean for our

            4  community?

            5           We are south of the 10 freeway designated as a

            6  redevelopment zone.

            7           How does the big operations that are going to

            8  be constructed there in downtown affect our smaller

            9  community, our small businesses?

           10           MS. ROSS:  I think it's maybe a better question

           11  for Mr. Kyser and also for Congresswoman Napolitano and

           12  her staff that may be here in terms of what specific

           13  programs are available.

           14           I think there it's always a question when you

           15  have a downtown investment, what does this mean for

           16  areas surrounding downtown.  I think a lot of that is

           17  local public policies.

           18           MR. KYSER:  If you go to our office, 444 South

           19  Flower, and ask for a business resource guide that we

           20  published with all the incentive programs for the

           21  business community, everything from government programs

           22  to educational programs.

           23           REPRESENTATIVE BECERRA:  We have one final

           24  question before the gentleman -- we will move forward

           25  with this question.
                                                                        96








            1           I'd like to add on that one point that we could

            2  do a lot more for small businesses if we get the SBA's

            3  budget fully funded.

            4           Right now, the administration is planning to

            5  cut a substantial amounts of funding for the SBA which

            6  would include money to provide business loans at a

            7  reduced interest rate to entrepreneurs who are trying to

            8  begin their businesses.

            9           So there are things we could do that wouldn't

           10  cost a lot of money that would open the doors to small

           11  business owners here in Los Angeles.

           12           Sir, you get to ask the final question.

           13           MR. KELLEY:  Yeah, my name is Patrick Kelly.

           14  I'm with Teamsters Local 952.

           15           The greater Los Angeles area is on the verge of

           16  losing tens of thousands of more jobs due to the opening

           17  of the border with Mexico.

           18           This is a fact, and it's going to happen, and I

           19  would urge everybody to write their Congressman.

           20           I want to thank Congressman Becerra for his

           21  activities on behalf of working people.

           22           But once the border is open, there are going to

           23  be tens of thousands of distribution jobs that will go

           24  across the border.

           25           There are going to be Mexico domiciled truck
                                                                        97








            1  drivers bringing those goods up here, and returning to

            2  Mexico.

            3           This is the result of NAFTA and the lack of an

            4  industrial policy.

            5           And I would like to ask the panel, particularly

            6  Mr. Kyser, if he would join with labor in pushing for --

            7  not necessarily Prop 72, because that may not be the way

            8  he wants to go -- but I think this country needs to

            9  develop an industrial policy that retains jobs here.

           10           And I don't think we have that.

           11           I think there are steps that could be done that

           12  we could do that on a national basis.

           13           I'd like to get his comment, because we are

           14  continuing to lose jobs, not just to Mexico, but to

           15  China and other places -- California, we are losing jobs

           16  to other states.

           17           And I think that Prop 72 is probably a small

           18  step towards doing some things in California, but that

           19  doesn't fix the issue beyond the State of California.

           20           I'm interested if you would be interested in

           21  working, joining with labor to develop an industrial

           22  policy so we don't have a situation we now only have one

           23  auto plant in California, Mexico has 15.  We had 14.

           24           And we can go step by step throughout the

           25  industrial sector and we can see that our country is
                                                                        98








            1  being de-industrialized to a large extent.

            2           We from labor would like to work with the

            3  employers and figure out a way to come to a consensus to

            4  go forward.

            5           If we don't come to consensus, I don't see us

            6  getting any kind of a fix on these larger jobs.

            7           But anyway, Congressman, I want to thank you

            8  for your sponsoring this, and I want to thank L.A. Trade

            9  Tech and all the students for coming here today.

           10           REPRESENTATIVE BECERRA:  Mr. Kyser, would you

           11  like to respond?

           12           MR. KYSER:  As I need we need policies on all

           13  types of things.

           14           We need an overall education policy.

           15           We need a transportation policy.

           16           We need an economic development policy.

           17           I don't see that coming out of D.C.

           18           Remember Inaudible], and California is a --

           19  [inaudible].

           20           I think the Congressman is trying to change

           21  that.

           22           REPRESENTATIVE BECERRA:  It's a tough one.

           23  It's us against the world on that one.

           24           Let me ask Mr. John Hernandez,  the student

           25  body president here, to please step forward a help us
                                                                        99








            1  close this forum.

            2           MR. HERNANDEZ:  Thank you.  First off, I want

            3  to say:  Thank you, Senator Barbara Boxer -- even though

            4  she is not here -- thank you Barbara Boxer.

            5           Thank you, Congresspersons Xavier Becerra,

            6  Sherman, and Napolitano.

            7           Thank you all the delegates as well for

            8  choosing Trade Tech to speak about America's economy and

            9  jobs.

           10           The information that the Senator and the

           11  Congresspeople and the delegates as well provided is

           12  important to this community, and THE college as well.

           13           At this moment, I would like to thank the

           14  students at Trade Tech for attending this public forum,

           15  and I would thank you -- I would also like to thank all

           16  the residents for making the effort to attend this

           17  historic public forum as well.

           18           Lastly, I would like to thank all the Trade

           19  Tech professors and the staff for their support and

           20  participation in education and information and informing

           21  the students.  Thank you.

           22           REPRESENTATIVE BECERRA:  Thank you, very much.

           23           Let me also add to all those who prepared this

           24  forum, to thank President Castro, L.A. Trade Tech, the

           25  staff, the faculty, the student all who made the
                                                                       100








            1  possible for us to host this event here.

            2           I want thank all of our panelists for their

            3  instructive comments and their guidance and advice on a

            4  very important issue about jobs and the economy.

            5           To all of those who asked questions or made

            6  comments from the audience, I want to thank you for

            7  that.

            8           To those who were not able to ask questions, I

            9  thank you for your indulgence and patience.

           10           And I want to make sure to thank all those who

           11  helped put this together and their staff --

           12  Congresswoman Grace Napolitano and her staff, Senator

           13  Barbara Boxer and her staff, and to all who made it

           14  possible at Channel 36, and the other media, I want to

           15  that say:  Thank you very much for helping us to hold a

           16  forum to disucss jobs and the economy and where we go

           17  from here.

           18           With that, we have concluded the forum, and I

           19  thank everyone for having participated.

           20           (Whereupon at 3:35 p.m., the.

           21           Forum adjourned.)

           22

           23

           24

           25
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            1                  CERTIFICATE OF REPORTER

            2

            3                I, Catherine Ponicsan, C.S.R.

            4  No. 8271, do hereby certify:

            5                That the foregoing proceedings were taken

            6  down by me in shorthand, to the best of my ability,

            7  within the confines of difficult acoustics and audience

            8  response overlapping speakers, at the time and place

            9  therein named and was hereafter reduced to typewriting

           10  under my supervision;

           11               This transcript, with the above caveat, is

           12  a true record of the proceedings and contains a report

           13  of the proceedings which took place at the time and

           14  place set forth in the caption hereto, as shown by my

           15  original stenographic notes.

           16               I further certify that I have no interest

           17  in the event of the action.

           18               WITNESS my hand this 26th day of August,

           19  2004.

           20
                                 _______________________________
           21                                 C.S.R. No. 8271

           22

           23                    (Certified Transcript Requires
                                  Original Signature of Reporter)
           24

           25
                                                                       102