♪♪ >> CATHY: LEGISLATION AND TARIFFS AND BUDGETS, OH, MY!

SO MUCH TO TACKLE WITH TONIGHT'S POLITICAL PANEL, SO LET'S JUMP RIGHT IN, STARTING WITH THE DEMOCRATS.

EMBER REICHGOTT JUNGE IS A FORMER ASSISTANT MAJORITY LEADER IN THE MINNESOTA SENATE.

ABOU AMARA IS BACK, A FORMER LEGISLATIVE STAFFER AND NOW AN ATTORNEY.

REPUBLICANS HERE TONIGHT: AMY KOCH IS A FORMER SENATE MAJORITY LEADER, NOW A LOBBYIST.

AND WE WELCOME BACK KALEY TAFFE, A FORMER LEGISLATIVE STAFFER AND NOW ALSO A LOBBYIST?

THANK YOU ALL FOR BEING HERE.

WELL, I DON'T KNOW.

WHAT DO YOU THINK HERE, SENATOR KOCH?

THERE'S A LOT OF LAME GOING AROUND AT THE STATE CAPITOL.

IS IT THE DFL TRIFECTA THAT GOT US INTO THIS PROBLEM WITH THE STATE BUDGET?

OR IS IT PRESIDENT TRUMP?

OR IS IT BOTH?

>> SO I UNDERSTAND WHY THE TRUMP TALKING POINT IS GOING AROUND.

BUT IT'S BEEN 40 DAYS AND ECONOMIC -- ANY ECONOMIST WILL TELL YOU THE LAG IS NOT POSSIBLE.

AND LSO NOTHING HAS BEEN ENACTED, AND SO THAT'S NOT FACTORED INTO THIS BUDGET AND THAT'S JUST THE FACTS.

WHAT HAPPENED IS, THERE HAS BEEN OVERSPENDING.

THERE WAS SPENDING THAT WAS DONE WITH AUTOMATIC INFLATORS.

AND THAT IS WHAT WE'RE SEEING AS A RESULT.

ALONG WITH, YOU KNOW, A NOT GREAT ECONOMY, WHICH ALSO CANNOT BE HUNG ON TRUMP AS HE JUST TOOK OFFICE AND IT HAS TO DO WITH BIDEN -- THE BIDEN ADMINISTRATION.

SO -- BUT EVEN STILL, THE POINTINGPOINTING FINGERS ISN'T G TO SOLVE WHAT NEEDS TO GET SOLVED HERE, WHICH IS A MASSIVE DEFICIT IN THE OUTYEARS.

A $6 BILLION.

IT'S NOT A ECORD.

BUT IT'S CLOSE TO IT.

>> Eric: CAN THEY KICK THE CAN DOWN THE ROAD?

JUST SOLVE THIS YEAR'S SITUATION?

AND COME BACK IN 2026 AND DO THE NEXT BIENNIUM, '28 AND '29.

>> WELL, THEY ACTUALLY DO HAVE A SURPLUS IN THIS BIENNIUM AND THEY ALSO HAVE A VERY FINE BUDGET RESERVE THAT HAS BEEN ESTABLISHED.

TWO THINGS HAPPENED BETWEEN THE FIRST REPORT AND THE SECOND REPORT, AND THAT'S INFLATION WENT UP.

AND THE ECONOMIC GROWTH WENT DOWN.

AND THAT'D ALL HAPPENED BECAUSE OF PRESIDENT TRUMP, NOW, I KNOW THERE ARE PEOPLE LIKE YOU WHO BELIEVE THAT IT WAS THE TRIFECTA.

BUT GUESS WHAT.

THE REPUBLICANS AT THAT TIME WERE ADVOCATING FOR MORE TAX RELIEF.

THAT WOULD NOT HAVE SOLVED THE BUDGET DEFICIT.

AND THAT REALLY HAS BEEN DRIVEN BY LONG-TERM -- >> EMBER, IT'S A 40% INCREASE IN THE STATE BUDGET.

THAT'S NOT MY -- [Overlapping conversations] >> I WAS JUST GOING TO ECHO AMY'S POINT.

A 40% INCREASE IN ONE BUDGET CYCLE.

I MEAN, IT IS CLEAR THAT THE CONSEQUENCE OF SPENDING EVERY SINGLE DOLLAR OF THE LARGEST SURPLUS THAT OUR STATE HAS EVER SEEN, 18 BILLION, PLUS RAISES TAXES WAS BEGUN HAVE NEGATIVE CONSEQUENCES.

THE REPUBLICANS HAVE BEEN BANGING THAT DRUM FOR YEARS WAY BEFORE PRESIDENT TRUMP WON THIS ELECTION.

>> SO A LOT OF THAT WAS ONE-TIME SPENDING FROM THE FEDERAL GOVERNMENT.

THESE WERE NOT MINNESOTANS PAYING THESE.

THESE WERE FEDERAL DOLLARS THAT CAME INTO MINNESOTA.

FIRST, WE HAVE A BUDGET SURPLUS RIGHT NOW.

$456 MILLION IN THE CURRENT BIENNIUM.

WHAT WE'RE TALKING ABOUT THE FUTURE.

THAT'S WHY IT'S CALLED A BUDGET FORECAST.

THEY'RE FORECASTING TRUMP DONALD TRUMP'S IMPACT ON THE ECONOMY.

"THE ECONOMISTS" AND THE EXPERTS ARE SAYING, THE NEGATIVE IMPACTS OF TARIFFS ARE GOING TO IMPACT US INTO THE FUTURE.

>> Eric: YOU'VE TRIED TO CUT THE DEAL.

DO YOU SEE A CLEAR CUT PATH TO A DEAL BASED ON WHAT WE KNOW RIGHT NOW?

>> YNLS IT'S GOING TO BE DIFFICULT FOR FOLKS, BECAUSE THIS IS BASED ON THE 2023 LEGISLATION, THERE WERE MANY THINGS THAT THE DEMOCRATS PRIORITIZED, THAT THEY ARE GOING TO BE VERY LOATHE TO GIVE UP.

IN FACT, ALL OF IT, RIGHT?

BECAUSE IT'S SORT OF HEIR BABY.

AND I GET THAT.

AND SO REPUBLICANS AND DEMOCRATS ARE GOING TO HAVE TO SIT DOWN TOGETHER AND FIGURE THIS OUT BECAUSE YOU CANNOT TOUCH -- YOU CANNOT TOUCH THE RAINY DAY FUND.

THIS ISN'T A RAINY DAY FUND.

THIS IS A SPENDING PROBLEM AND EVERYONE'S GOING TO HAVE TO SIT DOWN -- >> TWO THINGS ARE DRIVING THIS.

ONE IS THERE IS A HUGE INCREASE IN THE NEED FOR PEOPLE WITH DISABILITY TO HAVE LONG-TERM SERVICES.

AND SPECIAL EDUCATION.

NOW, LET'S OOK AT THE FEDERAL GOVERNMENT.

LET'S LOOK AT THE FEDERAL GOVERNMENT RIGHT NOW.

WHAT IS MOST AT RISK?

MEDICAID.

ONE OUT OF FOUR PEOPLE IN THE STATE HAVE MEDICAID.

NOW, THAT IS -- >> THAT'S NOT IN THE CONGRESSIONAL BUDGET -- >> JUST A SECOND.

IT'S 1/6 OF OUR BUDGET OF THE STATE OF MINNESOTA.

IF CUTS ARE IN MEDICAID -- >> THE HOUSE PASSED A BUDGET.

WE KNOW WHAT'S IN IT AND IT'S NOT MEDICAID CUTS.

>> WE'VE SEEN THIS FEAR-MONGERING AND THE SAME TALKING POINTS COMING OUT OF THE DEMOCRATIC PARTY, WHICH I DON'T BLAME THEM, BECAUSE THEY DON'T HAVE ANYTHING POSITIVE TO TALK ABOUT.

AND THEN ALL THESE CUTS ARE HYPOTHETICAL.

LOOK IN THE BILL.

IT DOESN'T SAY MEDICAID ONE TIME.

YOU CAN'T -- >> FACT OF THE MATTER IS, THE DYE TRIFECTA HAS DELIVERED A $3 BILLION RAINY DAY FUND.

WE SET A $3 BILLION SURPLUS TO WITHSTAND THE RAINY DAY.

POINT NUMBER TWO, WE HAVE A HALF A BILLION SURPLUS ON THE BOTTOM LINE RIGHT NOW, SO IF THE ECONOMY TAKES TURN, WE ARE IN A POSITION TO PROTECT OURSELVES AGAINST SOME OF THOSE THINGS.

>> Cathy: AS YOU WERE SAYING, YOU'VE BEEN IN THESE DISCUSSIONS, ABSOLUTELY, RIGHT?

SO WITH THE VOL VOLATILITY OF TE TARIFFS, THE STOCK MARKET ISN'T LOOKING TOO GOOD RIGHT NOW.

SO WE'RE ASKING, HOW DO YOU COME UP WITH A TWO-YEAR BUDGET WHEN YOU HAVE IMPORTANTLY REALLY, A VOLATILE STOCK MARKET, AND THE ECONOMY GETS SHAKY, OW DO YOU LOOK AT THIS WAITION?

SITUATION?

>> SO YOU HAVE TO GO FORWARD WITH GREAT CAUTION.

THE NUMBERS THAT YOU'RE LOOKING AT RIGHT NOW ARE NOT BASED ON THAT.

THAT'S NOT HOW THEY BUDGET.

THAT'S NOT HOW M.M.B.

DOES IT.

BUT GOING FORWARD, FIRST OF ALL, THE 50 MILLION, IT'S ONE-TIME DOLLARS.

IT'S NOT TO SAVE ON -- SO IT'S NOT A SOLUTION.

AND SECOND OF ALL, YOU REALLY HAVE TO APPROACH THIS WITH LIKE, YOU HAVE TO FIGURE OUT WHAT IS DRIVING THIS BECAUSE IT OES FROM A $3 BILLION STRUCTURAL DEFICIT IN THE FIRST BIENNIUM TO $6 BILLION.

IT'S DOUBLING EVERY TWO YEARS.

SO WE HAVE TO FIGURE OUT WHAT'S DRIVING THAT.

AND WE HAVE TO MAKE SOME, YOU KNOW -- WE HAVE TO MAKE SOME CHANGES.

>> HERE'S HOW I THINK THE BUDGET ENDS UP LOOKING.

YOU SLOW THE GROWTH ON SOME OF THE DRIVERS, THE HEALTHCARE COSTS WE WERE TALKING ABOUT.

>> Cathy: MEDICAID?

>> THAT'S COMING FROM THE FEDERAL GOVERNMENT.

SECOND, I DO THINK THOUSAND GOING TO BE COST SAVINGS IN THE FRAUD AND IEWZ CATEGORY.

BUT I THINK THERE'S A COMMITTEE, YOU'RE GOING TO SEE BIPARTISAN AGREEMENT ON SOME REFORMS OR CUTS IN THAT AREA TO SAVE.

I THINK IN EXCESS OF $100 MILLION.

>> I WOULD SAY TOO AS WE TALK ABOUT TARIFFS THAT OBVIOUSLY TRUMP IS USING THEM AS NEGOTIATION TOOL.

SO JUST BECAUSE HE SAYS IT, DOESN'T NECESSARILY MEAN THAT'S EXACTLY WHAT'S GOING TO HAPPEN.

BUT HE HAS BEEN BRINGING PEOPLE TO THE TABLE, AND WE HAVE SEEN POSITIVE OUTCOMES.

CANADA AND MEXICO ARE NOW WITH US AT THE BORDER.

>> I THINK YOU SHOULD TALK TO OUR FARM YEARS.

ETHEY DON'T HAVE AN EXPORT MARKET ANYMORE.

THE PEOPLE IN KENTUCKY.

THERE ARE TENS OF THOUSANDS OF JOBS THAT WILL BE LOST.

>> HE NUMBER ONE THING THAT AFFECTS OUR ECONOMY IS UNCERTAINTY.

AND PRESIDENT TRUMP IS ALL ABOUT THAT.

HE CHANGED HIS MIND TODAY TWICE ON UKRAINE.

HE CHANGED HIS MIND ON TARIFFS IN THE LAST TWO DAYS.

I MEAN, WE DON'T KNOW.

BUSINESSES DON'T KNOW.

THEY CANNOT PLAN.

NO ONE PLAN.

THE STATE CANNOT PLAN.

AND THAT, TO ME, IS THE WORST PART OF LOOKING FORWARD AND TRYING TO PROJECT.

>> Eric: SHOW OF HANDS, WHO THINKS THE GOVERNOR IS AUDITIONING FOR PRESIDENT?

>> WELL, HE SHOULD BE.

>> Eric: YOU THINK HE IS?

>> I THINK HE SHOULD BE.

I MEAN, HE WAS ON THE TICKET LAST TIME.

HE'S A NATIONAL FIGURE, AND I THINK THERE'S A MOMENT WHERE DEMOCRATS ARE TRYING TO GET THEIR FOOTING UNDER THEM A LITTLE BIT, AND I THINK IT MAKES SENSE FOR SOMEONE TO HELP US MOVE US FORWARD.

I THINK HE'S A NATIONAL FIGURE AND HE SHOULD BE THINKING ABOUT IT.

>> HE'S BEEN THERE.

HE KNOWS THE INSIDE STORY, AND HE CAN BE THE ONE -- ONE OF THE EST COUNTERS TO PRESIDENT TRUMP RIGHT NOW.

I THINK HIS MIND IS ON THIS LEGISLATIVE SESSION.

WE NEED TO BRING PEOPLE TOGETHER AND HE HAS TO BE IN THAT CENTER OF THAT.

AND I THINK HE WILL BE.

>> I THINK AS THE CONVERSATION HAS LARGELY WRAPPED AROUND FISCAL RESPONSIBLE, AFTER THE FRAUD AND ABUSE THAT WE'VE SEEN IN OUR STATED, I THINK HE'S PROBABLY THE LAST SPOKES PERSON?

>> Cathy: WHAT DO YOU THINK, SENATOR KOCH?

>> I THINK HE'S RUNNING, BUT I THINK HE'S GOING TO HAVE A HARD GO OF IT.

>> Eric: WHAT DID ERIN MURPHY, THE LEADER IN THE SENATE, SHE USED A MILD FOUL LANGUAGE.

YOU KNOW, GET YOUR HEAD OUT OF YOUR -- >> Cathy: I THINK REAR END WAS WHAT WAS SAID.

>> DID SHE COME UP WITH THAT HERSELF.

OR DID THE CAUCUS -- >> KNOWING ERIN MURPHY, SHE'S A FIGHTER.

>> Eric: BUT THAT'S NOT HER PUBLIC PERSONA, ANYWAY.

>> I'M NOT SO SURE THAT'S TRUE.

SOMEONE WHO CARES ABOUT HER COMMUNITY -- >> Cathy: BUT I'M WONDERING, IS DECORUM, THOUGH, COMPLETEDLY GONE.

YOU LOOK AT CONGRESS, THE OVAL OFFICE, AND IT STATE CAPITOL.

YOU'VE BEEN AROUND FOR A LONG TIME, SENATOR.

>> IT'S VERY DIFFERENT WHEN WE ACTUALLY GOT ALONG AND COULD WORK TOGETHER OVER THE PARTY LINE, AND ACCOMPLISH MAJOR ACCOMPLISHMENTS.

THAT'S NOT HAPPENING.

AND I AM CONCERNED ABOUT THE OUTCOME OF THIS SESSION.

IT WILL BE VERY MINIMAL.

WHICH MIGHT BE GOOD AT THIS POINT.

WE NEED STABILITIES.

WE NEED MINIMAL-NESS.

BUT BOTTOM LINE IS WE NEED TO WORK TOGETHER.

AND YOU KNOW WHAT, AMY?

YOU KNOW THAT E DID THAT BACK THEN AND IT'S GOT TO COME BACK.

>> Cathy: WHAT DO YOU THINK ABOUT THIS LACK OF DECORUM?

>> A LITTLE BIT, AND ALSO, IT'S LIKE, AS EACH INSTITUTION GETS BROKEN DOWN, THE NEXT PHASE IS TO GO FURTHER, AND TO TAKE IT TO THE NEXT LEVEL.

AND SO THAT'S WHY IT'S REALLY IMPORTANT FOR LEADERS TO STEP UP AND EVEN THOUGH IT WOULD BE EASY TO SAY, WELL, THEY DID THIS LAST TIME, YOU NEED TO STAND AGAINST THAT AND SAY, NO, I'M GOING TO DRAW A LINE IN THE SAND AND WE JUST DON'T HAVE LEADERS THAT HAVE BEEN BEEN DOING THAT.

JOE WILSON YILZ AT OBAMA, YOU LIE, AND THE NEXT THING WE KNOW, WE GOT THIS LAST NONSTATE OF THE UNION ADDRESS WHERE DEMOCRATS ARE WALKING OUT AND SHAKING CANES AND HOLDING UP SILLY SIGNS.

>> BUT I HONESTLY THINK THAT THE DISRESPECT STARTED AT THE YEAR.