MR. KOJO NNAMDIFrom WAMU 88.5 at American University in Washington, welcome to "The Politics Hour," starring Tom Sherwood. I'm Kojo Nnamdi. Tom Sherwood is our resident analyst. He's an NBC 4 reporter and a columnist for The Current Newspapers. Are you now no longer on vacation?

MR. TOM SHERWOODI'm not on vacation, but I am planning one next month.

NNAMDIBut you just had a vacation last week.

SHERWOODThe show wears me out.

NNAMDII see. Well, he'll be with us at least...

SHERWOODI'm taking recommendations to where I might go for that week.

NNAMDIHe'll be with us at least for the time being. And because today we have a packed schedule, Tom and I will do away with our usual pre-guest banter and go straight to the guests. Our first guest today is Terry McAuliffe. He is a Democratic candidate for governor of Virginia. He's also the former chairman of the Democratic National Committee. Terry McAuliffe, thank you for joining us.

MR. TERRY MCAULIFFEKojo, it's great to be back with you.

NNAMDII have to begin with a tough question because...

MCAULIFFEPlease.

NNAMDI...you have violated one of the most important rules around here, certainly my rule. Why are you working on your birthday?

MCAULIFFEWell, actually, the birthday is tomorrow.

NNAMDIOh, good.

MCAULIFFESaturday. So if you want to come out, I have an office open in -- you can come out to it. We've got a couple of hundred folks tomorrow, if you want to come out. We love to have you in Roslyn tomorrow.

NNAMDII thought today was your birthday. We were about to...

MCAULIFFEFifty-six tomorrow.

NNAMDII'll show you out of the studio.

SHERWOODFifty-six, a young man.

MCAULIFFEI feel great.

SHERWOODYouth movement.

NNAMDIYou say belated birthday when it's too late. What do you say on the day before?

SHERWOODI'm sorry. I mention it.

NNAMDIHappy birthday, Terry McAuliffe.

SHERWOODYou're in your 57th year now.

MCAULIFFEYeah.

NNAMDIWell, he will be starting tomorrow.

MCAULIFFEI feel great, though.

NNAMDIYou have had a lot of good jobs over the years. You chaired the DNC. You chaired presidential campaigns. You've run an electric car company, but you're applying for the second time to be governor of Virginia. When you look at what's going on in Richmond and you look at everything that Bob McDonnell has been up against this week, for example, when it comes to his transportation plan, what makes you say "I want that job"?

MCAULIFFEWell, I think what we need in Virginia -- we've got some challenges coming up, obviously, the sequestration. I think we need a governor in the mold what he had with Mark Warner, Tim Kaine and Bob McDonnell, trying to reach out to both sides, trying to move the ball forward. My whole focus is going to be on economic development, job creation. I've done it my whole life. As you know, Kojo, you and I talked about it before.

NNAMDIYes.

MCAULIFFEI started my first business when I was 14 years old. Folks weren't going to be able to afford to send me to college, so I got to work early. I've been working ever since. It's been hard working. I love it. And I think we need sort of a very pro-business, mainstream commonsense governor in Virginia, not someone as involved in a social ideological agenda which is going to get us off the focus of creating jobs, bringing in new businesses, building small businesses we have here today. And that means focus on education and transportation.

SHERWOODVirginia has won accolades under Democratic and Republican governors for its business climate. I'm sure it can always do more. But transportation is kind of the rock, solid part that can make business do better or worse. Every governor since the early '80s has said I'm going to do something about transportation. What are the flaws now and the plan that you see McDonnell doing, and how would you do it differently to get the south-side Virginians and...

NNAMDIYep.

SHERWOOD...Virginians to agree with the Northern Virginians and Norfolk Virginians that something has to be done about transportation?

NNAMDIWell, just briefly for those of our listeners who may not know it, the plan put forward by Gov. McDonnell will call for an end to the gas tax and an increase in sales taxes plus a $100 fee for people...

SHERWOODRight.

NNAMDI...who drive alternative fuel vehicles? Your turn, Terry McAuliffe.

MCAULIFFEYeah. So great question. And Virginia is always rated one of the top five best states in the country to do business. We have historically been number one. We have dropped because this time you're exactly right because of transportation. CNBC, I think our rating was we were 33rd out of 50 states on transportation. I've lived in Northern Virginia for 21 years. When Dorothy and I moved out there and decided to start our family, it was pretty east to travel around.

MCAULIFFEToday, it is absolutely gridlocked. Every study will show that we're stuck in traffic. Seventy hours you're stuck in traffic. We waste $1 billion stalled in traffic. Hampton Roads, 43 hours stuck in traffic, $700 billion. So it is a tremendous waste. We have to deal with this issue. As governor, if you want me to bring in new jobs and build them, we've got to have a transportation system that works so that businesses can move their product around, so that people can get to work and families can go see their children play ballgames in the afternoon.

MCAULIFFESo we've got to deal with this issue. I commend Gov. McDonnell for putting a serious plan out. It is a serious plan. We needed a serious plan on the table, so I'll give the governor credit. And they're in -- dealing with these big issues, as I say, right now. I hope they get it resolved in this session. We've got till Feb. 22. If they don't, I will have a very serious plan to deal with it because the one thing that's coming down the pike that everybody who is listening should understand that Virginia in 2017 will no longer be able to apply for any federal highway matching funds.

MCAULIFFEIt is a $4 federal match to every dollar we put up in Virginia. The reason being is we have no money in the construction account. The idea that we would forfeit billions of dollars of our own federal taxpayer money because we have continually kicked the can down the road on transportation, is one reason when we're through the session, I don't want to get in the middle of it because they're dealing with it. I give the governor credit for putting one out. I need a very comprehensive plan out there of how we're going to pay for it, and I will put that plan.

NNAMDIIf you haven't already called, the number is 800-433-8850 to join the conversation with Terry McAuliffe, Democratic candidate for governor of the Commonwealth of Virginia.

SHERWOODI want to get to that indirect reference you just made to Ken Cuccinelli, your Republican opponent.

NNAMDIOh, noticed that, huh?

SHERWOODYes, I did. I'm sure the listeners did too. It's very nicely done. But I want to ask about sequestration first. I mean every governor is worried that -- and the defense secretary yesterday was talking about on the Hill that if the Congress doesn't do something, state, federal government will all going to be hurt. How bad is it in your view?

MCAULIFFEIt's as bad as it could be for us in Virginia because we're the top recipient of federal dollars. Obviously, in Northern Virginia with all the defense-related industries that we have in Northern Virginia and then, of course, in Hampton Road -- I'm sure everybody saw on the paper yesterday that the USS Truman, our aircraft carrier, one of our task forces down in Hampton Roads, was not deployed yesterday because of the threat of sequestration and not the funds necessary.

MCAULIFFEAnd the idea that we're not sending one of our carrier task forces into a troubled spot in the world to help us stay safe here in America, the problem is the gridlock we have in Washington. We've got to get folks who can work together. We ought to be able to get these issues resolved. Democrats and Republicans, I mean both sides, Tom, will take some blame on this. We're not doing what we need to do to make ourselves competitive in the world. As governor of Virginia, I'd have to compete against 200 other nations around the world, 49 other states.

MCAULIFFEIt's got to be bipartisan. It's got to be both sides working together. But I know, Tom, you know it and, Kojo, same thing. I've already run into many people in Northern Virginia who have already lost contracts or have been told they are going to lose them. I have a very close friend of mine in the IT business. He just lost two of his biggest contracts. He's about to layoff 300 people.

MCAULIFFEThis is just the beginning of a rippling effect to our entire region -- Maryland, D.C. and Virginia -- and we've got to get people who are willing to work together. That's why I'm running for governor. I can work on both sides. I'm all about job development, all about economic activity. But this foolishness in Washington has got to stop. We have got to come together to do some economic development and do what we need to do to protect jobs. We have a very fragile economy today.

NNAMDIBefore we go onto the phones, there is one matter related to your electric car company we should discuss. PolitiFact Virginia reported last month that your claim that GreenTech decided to locate in Mississippi instead of Virginia because Virginia's Economic Development Partnership decided not to bid on the project is false. What they said is contrary to your claim. There is no evidence the state agency decided not to bid on the project.

NNAMDIEmails show VEDP took GreenTech officials on a tour of potential sites and contacted the company about coming to Virginia almost two years after GreenTech announced it was building a plant in Mississippi. We rate McAuliffe's statement false, to which you say what?

MCAULIFFEI mean, I disagree. Listen, the folks who are in charge of moving it, they had many meetings down there. How you decide to move a plant comes down to incentives and what you need to do. They made the decision. The company made the decision to go there. Nothing I can do about it today. They've talk about an expansion plans.

MCAULIFFEBut, you know, listen, that's water under the bridge. Businesses move here, there. I mean, that's what happens in the business world. Some states do certain things. Others do the others. Nothing they can do about it. It's exciting. But the point being is we need to do a very good job here in Virginia. I think one of the biggest areas that we need to improve on would be workforce development.

NNAMDIIndeed, the question I asked implies that we'd also like to know about your approach to making sure that jobs and projects come to the commonwealth instead of going to other states.

MCAULIFFEA lot of competition, Kojo. There's 200 nations you're competing against, 49 other countries. And when you talk about moving businesses here and moving around the world, it's got to come down to do you have the best workforce development? Do you have a good education system? One of my top priorities is going to be on the community college. Three out of five higher ed go to the community college system in Virginia. I've traveled to many of them. I continue to focus on the community colleges.

MCAULIFFEI was just in Rappahannock the other day and saw all these students in there getting their health care degrees, nursing degrees, which was spectacular. I recently was up at Piedmont Virginia Community College, training people to work in the defense intelligence agency. These folks are spending the time getting their degrees and have a pipeline to go out in getting jobs. We need to do more of that. We can't be having our children go through our four-year institutions, run up a lot of debt and there's no job for them.

MCAULIFFESo it's -- when we make a decision, when anyone makes a decision to move a business, it's got to be do I have the employees of the future who are willing and able to do what we need to do? Do we have a transportation system that works? They don't want to be stuck, Tom, in traffic for 70 hours a year. They don't want to do it. So we have to deal with those big issues. We have a great state. We have a great tax base. We've got a welcoming environment for business. But we've got to now move to the next level and deal with education and transportation.

NNAMDITom, then I got to go to the phones.

SHERWOODOK. Very -- In order to do anything, you have to get elected, of course, with the primaries in June, June 11, I believe.

MCAULIFFEYeah.

SHERWOODAll right. The Republicans have centered around Ken Cuccinelli. Bill Bolling, the lieutenant governor, wanted to be the nominee. He is still threatening to maybe run an independent campaign. He met privately with Cuccinelli. And more recently, he met privately -- Bill Bolling did -- with you. What did you discuss? And what -- do you expect that he will run an independent campaign? I'm sure you urged him not. I guess you'd want him to run.

MCAULIFFEYou know, I mean, I called him first. I just called him up. I said I'm going to be in Richmond. I'd like to come down. Listen, Bill Bowling and I have met and talked on issues for a long time. I talked to him in the past. I talked to Gov. McDonnell. I'm also, as you know, involved in building a wood pellet exporting manufacturing facility. We just leased about 18 acres in a dilapidated part of the port down in Portsmouth, brand new exciting business for Virginia, exporting wood pellets to Europe 'cause when you burn coal there, you have to (unintelligible).

SHERWOODThat's what you talked to Bill Bolling about?

MCAULIFFEI have for a while. But then I talked to the, obviously, lieutenant governor about, you know, what his thoughts are, about -- talked a lot about different issues. You've probably seen in the press that he and I spoke recently the other day together. He spoke before me. He said, you know, if I don't run, I still want to be involved in Virginia.

MCAULIFFEI still want to be involved in job creations. So I got up and said you know what, if I'm elected, governor, I'd like to offer you a job to help me because he's done a great job. This idea that Democrats and Republicans can't work together is bizarre. We all have to work together to create jobs. Job creation is not a partisan issue. He told me he'd make a decision in mid-March.

MCAULIFFEWhatever he decides to do, he decides to do. But no matter what that is, Bill Bolling has served as lieutenant governor for eight years. He's had a distinguished career. What I love about Bill Bolling, he has been focused on job creation, which is what I am. So he and I have a special relationship because I think both of us, our focus is on economic development.

SHERWOODSo the calendar is that he'll -- the Republicans -- he'll make his decision in March. The Republicans have their convention in Richmond in the middle of May. The Democrats have their primary in June. And then it'll be on, one way or another.

MCAULIFFEYeah. And we happen to know I'm the only one in the Democratic side. I'll be the nominee. We do have two candidates running for lieutenant governor and two candidates running for attorney general. But, you know, I'm out traveling every single day. You know, I ran before. I didn't win. I got up. To be honest with you, I dusted myself off as Virginians do. I got up ready to go. And I've done -- traveled all the over the commonwealth listening to folks. I've spent hours, thousands of events. I love doing it...

NNAMDIWe'd like you to listen to some more folks right now...

MCAULIFFEIn the room, sure.

NNAMDI...so, please, don your headphones...

MCAULIFFEOK.

NNAMDI...so we can start with Susan in Alexandria, Va. Susan, you are now on the air with Terry McAuliffe. Go ahead, please.

SUSANOK. My question is about the Affordable Care Act and Medicare expansion that it involved. Over the past couple of weeks, we've seen governor after Republican governor decide that it was in the best interest of their state and their people to involve their faith in the Affordable Care Act Medicare provisions. Not Virginia. My question is to Mr. McAuliffe. If you were governor, would you do that, and what do you see that people of Virginia are going to suffer because we did not -- because the state did not enter this Medicare provision?

MCAULIFFEYeah. That's a great question. And this is a real difference by opponent and myself. I am for the expansion. He is against the expansion. First thing you should understand that it would cover four to 500,000 Virginians would now have access to health care that presently don't have it. So in morally, socially, it is the right thing to do to keep our citizenry healthy, to help prevent illnesses. It is the absolute right thing to do. But let's look at the other side of it from a business perspective.

MCAULIFFEAnd this is why as I said I have been involved in many businesses. I would bring my sort of mainstream pro-business ideas to the governorship. If we don't take the Medicaid expansion, then what will happen is our hospitals will incur, most of the studies out say, somewhere around a billion to a billion two in cost today that they presently don't have to pay for. So that would cost us as taxpayers in Virginia.

MCAULIFFESecond, the Richmond Times-Dispatch just wrote a report, in over the next seven years, we would receive $21 billion. So $21 billion of federal taxpayer money, which I remind all of us in Virginia, this is our money. This is the money we paid in to the federal taxes. That money would come back to us. If we don't do the expansion, then that money, our federal tax dollars, will go to 49 other states. It is totally irresponsible. It is the right thing morally and socially to cover four to 500,000 folks.

MCAULIFFEBut if we don't it, there is a tremendous economic burden that we'll have. Our hospitals will incur a billion two, which they can't afford today, and we would forfeit over the next seven years $13 billion. It would run through our economy, through our doctors, through our nurses, our health care providers. We need that money. It's our money. It should come here to Virginia. And that is a clear -- it's a great question, Susan, because it is a clear difference between the two of us who are running for governor.

NNAMDISusan, thank you very much for your call. The president is pushing forward on gun violence. Gov. O'Malley in Maryland is pushing plans of his own. But in Virginia, that climate has moved in the opposite direction in recent years. The commonwealth has lifted a one gun a month limit on gun purchases, passed a law that allows gun owners to carry them into bars and restaurants. With that in mind, what do you think is actually achievable at the state level in Virginia when it comes to guns?

MCAULIFFEWell, and obviously, it's because of our sad experience that we had with Virginia Tech. So we talk about Newtown, Conn. But before that, obviously, was a tragedy that we had in Virginia Tech. And you're speaking to someone who is a hunter. I take my two sons hunting. And I've loved it. And I understand...

SHERWOODWhat kind of hunting 'cause I don't do any of it?

NNAMDIHe just bought a shotgun at Dick's Sporting Goods store in Virginia for skeet shooting.

SHERWOODSkeet shooting.

MCAULIFFEYeah. I thought that it was interesting. Before...

SHERWOODThat's not for hunting, is it?

MCAULIFFEBefore I'd even walked out of the store, somehow the press had already had it. But it was a surprise for my son who is at the United States Naval Academy. And it was his Christmas present. But, yeah, we've been -- I've been bird hunting. I just...

NNAMDIThat's what we do: We spoil surprises. Yes.

MCAULIFFEExactly. In fact, I just went -- two weeks ago, did some geese hunting with Haley Barbour, who's a good friend, the former chairman of the Republican National Committee, and so bird and skeet and so forth. But we need some common sense, obviously, the tragedies that went on in Newtown and what we had in Virginia Tech. What I've called for, and I've said this from day one, is everybody who buys a gun, buys a weapon, ought to have a background check.

MCAULIFFEYou use the example of Dick's where I just purchased a shotgun for my son. The background check, no more than three to four minutes. Everybody who buys one ought to go through a background check. People who are going to go out and use them for the right reasons do not have to worry about it. We ought to go and have the background checks. I thought what Gov. (word?) had done, one gun a month, was sensible, common sense proposal, and it was the law here.

MCAULIFFEBut they obviously went and changed it. And we ought to make sure on the issues of assault weapons that people shouldn't have these multi-clips out there and people who have mental illnesses. And we do a very good job after Virginia Tech of now, you know, handing the requisite information over. But when there are mental illness issues, the diagnosis and treatment and so forth, we need to be involved in all that. All common sense approaches to gun control.

MCAULIFFEWhen a parent takes their child to a school and drops them off -- I still have two in elementary school. I have one about to college and two in college. Every parent wants to know that their child is going to be safe. And we should -- all of us, all of us, not only elected officials, ought to do everything that we possibly can to make sure that we have a safe environment. As you know, I called for -- I was the first one last December to call to more safety resource officers, SROs.

MCAULIFFEIf an elementary school would like one, don't force it on the school. But if they would like one, a trained officer -- I'm not for teachers and principals being armed -- but a real SRO in the elementary schools and if the school requests it, it's a federal match that federal will give us money, then that elementary school ought to be entitled to have one.

NNAMDITom?

SHERWOODWell, a school resource officer -- Ken Cuccinelli has opened the door to possibly arming school personnel, all right, but not teachers. I don't think. I'm just -- I want to ask about personality politics here because that's what we do best in the medium. And I'm going to quote my friend Jeff Shapiro from The Richmond Times-Dispatch who characterized Ken Cuccinelli as this ultra conservative who's, "Tea Party attorney general for Virginia" and suggest he might be out of the mainstream for this election.

SHERWOODAnd then he said of you, he said fairly nice things. But he says, "Terry McAuliffe comes across as the car salesman that he is." How much does personality play in Virginia politics? You know, you guys are...

MCAULIFFEYeah.

SHERWOOD...significantly different. And Shapiro noted you -- you've toned yourself down from four years ago where you kind of blew in and took over every room that you walked in. Now, my father was a car dealer, so I understand some of this.

MCAULIFFEOfficially, I'm a car manufacturer, that's, you know...

SHERWOODOK.

MCAULIFFE...it's a big difference, but whatever. In order to...

SHERWOODNo. Well, Shapiro always says there something wrong with the stories.

MCAULIFFEOK. I'm a manufacturer, but, you know, in fairness, it's a pretty unique thing. I actually went to China and bought their most advanced electric car company, moved it back to America. Those jobs are now here in America.

SHERWOODBut the personality aspects of that.

MCAULIFFEWell, listen, everybody has got their own personality, and the voters ultimately are going to have to make the decision. I think people who have known me for 56 years -- I got to say as of tomorrow -- know that I'm a very hard worker. I'm very intense about what I do. I -- people say he's got a lot of energy. I want a governor with a lot of energy that's going to go in and fight for you every single day. I'm very focused.

MCAULIFFEI will be focused on this economy like a laser beam. For me, a very important family value, Tom, is a job. If you have a job, you can take care of your family. In every second we spend on these socially divisive issues, which my opponent wants to talk about, is not helpful to a governor who wants to bring businesses to Virginia. We should not be putting walls up in dividing people. I want to make us open and welcoming to everybody.

MCAULIFFEIf you want to come in to Virginia and bring thousands of employees, they got to feel like they're going to a place that is open and welcome. That's my personality. I love being with people, I love people. I love listening to folks every single day. I get my ideas from talking to folks, and I get my energy from folks. And I think, as governor, I'm going to be so focused, jobs, economic development because I think that's...

NNAMDIPlease know you only have about three minutes left.

SHERWOODOK. Have you read Ken Cuccinelli's book?

MCAULIFFEI have not, but I have read the excerpts in the paper and the idea that now on social security and Medicare where folks have paid into it their entire life, that he demonizes these two programs and says this is politicians trying to buy off voters I find reprehensible. I'm sorry. Going to my point, I just read in the paper today that he wants to shut every public pool on Virginia. Well, where are these children going to...

SHERWOODWhere did they say that?

MCAULIFFEThat's in the paper today. It's in the (word?). He wants to shut pools down because they compete against schools, I guess, are pools that charge -- I don't know. But the -- you know, in a 103 degree day sitting down in -- wherever you may be in Petersburg or wherever else in Virginia, we ought to have pools, OK. But it's this idea that we're not helping people. We're not moving things along. We're not focused on economic development, the redistricting plan, the Electoral College.

MCAULIFFEEvery second, Tom, we spent on those issues in Richmond diverted us from where we ought to be as folks who are elected to create jobs, and it hurts us. It doesn't help the economy move up. It's not going to help my five children when they come here and look for a job. I want my children close to me. I want them to have their children here. I want my grandchildren. I'm being selfish like everybody else. We want our families close, but they need a job to do that.

NNAMDII'll have Jim in Manassas, Va., ask the last question because it has to do with both health care and immigration. Jim, you're on the air. Go ahead, please.

JIMYeah. I have a comment for both of them. If I go into an emergency room in Fredericksburg, Va. on a Saturday, I cannot get waited on because of the illegals, which I call them, not undocumented, who was sitting around waiting for attention, and none of them speak English. And yet I have insurance, but I have to wait until every one of those are taken care of. Something needs to be changed in the system.

NNAMDIWe don't know how Jim identifies people as being in the country illegally. Nevertheless, I guess his point is whether you feel people who are undocumented should have health care, and in general, what you feel about immigration in Virginia. It's going to be a hot issue in the Congress should that be a hot one in the Commonwealth of Virginia.

MCAULIFFEWell, and hopefully the federal government. I do believe that it will be -- I think on the president's agenda, immigration is at the top of that. I think immigration, gun controls, climate change and then three gigantic, obviously, budget issues are going to be on the table. But listen, we've got to do pathways to citizenship for folks that are in this country. We should not be stigmatizing these children and through no choice of their own that they're here.

MCAULIFFEWe ought to make sure that they get an education, and they become productive citizens here in the United States of America and in Virginia. I go back to my point. We've got to stop demonizing folks, and we've got to learn to work together, Democrats, Republicans, everybody. I have a very good relationship with Gov. McDonnell, as well as Lt. Gov. Bolling. Mark Warner was a spectacular governor, as was Tim Kaine, reaching across the aisle, working together with mainstream ideas.

MCAULIFFEBut we've got -- and I think the federal government will deal with the immigration reform. But you know, we've got, Kojo, so many big issues to deal with on this economic front. Let us stay focused. Let us try and help people. And that's why I'm running for governor. I want to help middle class. I want to help folks. I want to have economic activity. I want to have jobs growing. Dorothy and I have lived in the same house for 21 years. We've gone to the same church for 21 years. This is our home. We want our children and grandchildren here.

NNAMDITerry McAuliffe, he is a Democratic candidate for governor of Virginia. He's also the former chairman of the Democratic National Committee, and tomorrow, he gets to be, well, an old man, 56.

MCAULIFFEThank you.

NNAMDITerry McAuliffe, thank you very much for joining us.

SHERWOODThank you for your time.

MCAULIFFEThanks, everybody.

NNAMDIYou, too, can join us when our next comes in to the studio. He is the mayor of the District of Columbia. You can call us at 800-433-8850. Tom Sherwood, I noticed in you column in The Current Newspaper this week, you talked about District of Columbia's statehood being introduced once again into U.S. House of Representatives by Delegate Eleanor Holmes Norton.

SHERWOODYes. Actually, that's a couple of weeks old because I didn't have room for the column when I was ranting last week. But, you know, four members of the Senate introduced a bill of statehood and Miss Norton did in the House. And if those four senators would just, you know, do a little more than do the, you know, perfunctory of introduction, that'd be great.

SHERWOODBut we just don't know where that's going to go. I said in my column I'm not real sure of just seeing some guests being brought in there. I'm not sure if that's legal or not. But we'll find out. OK. But anyway, so I don't know. I'm always worried that the people who are for voting rights and for statehood need to be less polite and more aggressive but...

NNAMDITom Sherwood, he's our resident analyst. He's an NBC 4 reporter and a columnist for The Current Newspaper. And we mentioned that Terry McAuliffe's birthday is tomorrow, but apparently Vince Gray thought it was today because it looks like he's brought some kind of beer into the studio here. Vincent Gray is the mayor of the District of Columbia. He is a Democrat. He comes bearing gifts. Mayor Gray, thank you very much for joining us. What you got?

MAYOR VINCENT GRAYThank you. This is a great segue. I want to thank Tom for that nexus. This is D.C. Bräu. We were there this morning to announce the appointment of our business regulatory reform task force, and I want you to see the message on there. I'm going to let you read that, Mr. Sherwood.

SHERWOODOh, it says, "New Columbia is the name of the proposed state that will be created if the District got statehood."

NNAMDIYes.

SHERWOODThat's all. I can't read the whole thing, but we don't have time for questioning...

GRAYOf course, you have time to read that.

SHERWOODI'm going to...

GRAYYou just said people should be more aggressive, and I'm giving you the opportunity to get that started.

SHERWOOD"According to the legislation (word?) starting the 98th Congress in 1983." It's been a long fight. You were a young man then.

GRAYIt's been a long fight. Yeah, still am.

NNAMDISo it's a statehood beer? Is that what it is?

GRAYIt is. You know what...

SHERWOODIt's a beer.

GRAY...it's the first brewery that we've had in the District of Columbia in 50 years. And they are doing a fantastic business. We selected them because they obviously went through the regulatory process. They had some stories to tell -- some positive, some not so positive. But when I got over there and saw this, I said, I have to take this with me to the show today.

NNAMDIWe beat you to it. We have had that brewer on this broadcast before.

GRAYThat's what I heard.

NNAMDIIf you have questions or comments for Mayor Vincent Gray, you can call us at 800-433-8850. Earlier this week, you delivered your annual speech on the state of the District, a subject were there has been conflicting opinion during the past month. The New York Times magazine and Sean Hannity have dedicated space to describing D.C. as a boom town benefiting from federal dollars due for an economic reckoning. You said the city is doing well but it's not clear. It's clear that not everyone is getting a piece of it. Where does that divide between the haves and the have-nots seem starkest to you?

GRAYWell, I think it continues to be in certain areas of the city, and it's one of the things that we focused on, Kojo. When I came into office, we had, very soon thereafter, an unemployment rate of 11.2 percent which obviously is enormous. I indicated that we were going to work hard to get people back to work, and our unemployment rate today is down to 8.5 percent. What I'm proud of, and I know is a continuing challenge, is that the drops in unemployment in the city have been very significant in Wards 5, 7 and 8 which are the highest areas of unemployment in the city.

GRAYWhen I got here, unbelievably, the unemployment rate in Ward 8 was 30 percent. Now, I'll say it's down to -- "down to 20.7" at this stage going in the right direction. But still, we have one out of five people who are out of work in Ward 8. We brought it down by 3 percent in both Wards 5 and Ward 7. So I think the challenge continues in some of the areas that are traditional, but there's a renewed focus. Our one city one hire program, which we started very soon after I came into office, has now gotten 5,300 people jobs and almost 900 employment sect areas, employers in the District of Columbia.

GRAYSo to answer your question, again, it really is in the same areas that we've seen overtime, but there really is a renewed focus. We are, too, working hard to get people, move them, offer the TANF program which is the welfare program and the jobs. We've got a new assessment program. We got to new effort to get people jobs. We've -- since I came into office, we moved 3,350 people off of...

NNAMDITom Sherwood.

SHERWOODHow many?

GRAYThree thousand three hundred and fifty -- 3,300, excuse me.

SHERWOODThere are so many issues, but I want to just go to one. Ms. Norton today -- we have a new election next year, and I'm not going to talk about your election. We're going to elect our first attorney general for the District of Columbia. Ms. Norton today introduced legislation in the Congress that would give the District of Columbia attorney general the power to prosecute crimes like they do in other states.

SHERWOODAll right. Now, everything is done here by the U.S. attorney who's our de facto prosecutor. Would you support that to give -- make our U.S. -- our D.C. attorney general a more powerful position?

GRAYI would because I think if we're going to be a state, I think we should have the same functions and responsibilities as any other state would. So I absolutely wholeheartedly support that.

SHERWOODWould that include also paying for and -- I think when the great deal with the federal government took over some of the city's pension liabilities -- I don't want to get too caught in the details. But the feds also pay for part of our court system. They pay a lot about our court system. The state is -- could the city, financially as good as it's going now, be able to pay for all of that?

GRAYWell, I think if we are a state, we're going to have additional, you know, roles and responsibilities and authority that we haven't had before that will generate additional dollars for the city. For example, we don't have the authority to tax income and its source.

SHERWOODRight.

GRAYAnd right now, we have only 30 percent of the jobs in the city are filled by people who actually live here, which means that 70 percent of the people who work in the District of Columbia live somewhere else. There's nothing that we can do about that revenue at all. That...

SHERWOODAll that money goes to Maryland and Virginia.

GRAYYeah, and wherever people may live. So that would then were down to the benefit of the city.

NNAMDIYou, nevertheless, have a budget surplus of over $400 million, and you have said you're going to dedicated $100 million of that to affordable housing. Some people would say, in the grand scheme of things, that's not that much because a lot else needs to happen. I have seen people who've been writing that there has to be a significant buy-in from the private sector in the city. There has to be a significant buy-in also from -- for non-profits. Can you talk in more specific terms about what can be accomplished with that $100 million?

GRAYYeah. Let me show you, first of all, Kojo, there's no taking here from the surplus. We're not doing that. The surplus...

SHERWOODAnticipated revenues.

GRAYAnticipated revenues. We'll get new revenue estimates really in about a week and a half, two weeks from the CFO. And we've looked at the trends also, and we think that there will continue to be significant revenue coming into the city over and above what was been budgeted for this year. So first of all, the $100 million that I'm proposing would come from the new revenues that will be reported on in about a week and a half.

GRAYI have indicated that I believe we can do 10,000 units of housing, which is a huge down payment on the need that exists in the city. But what I'm really hopeful for and I want to commend Oramenta Newsome for the message that she sent out.

NNAMDIThat's what I was reading. Yes.

GRAYYeah. She sent out a message challenging the private sector to step up and use this as a challenge to match what the city is doing. I would love to see us have the possibility of $200 million because the private sector has jumped in and said, we're going to make this happen as well.

NNAMDIWell, is there anything you can do to nudge the private sector in than direction?

GRAYI think I am nudging them with $100 million on the table, and I don't have difficulty saying to anybody in the city that the city now has major skin in the game, and others need to step up. I think, again, people know this, but it's worth saying, and that is the government can't do everything, but we certainly can provide leadership and catalytic, you know, investments. And that's exactly what we're doing here -- leadership and a catalyst to improve housing in the city.

SHERWOODThis would be moderate, low-income housing, not the classic public housing, but just moderate...

GRAYNo, no. I think...

SHERWOOD...market-rate housing in some cases.

GRAYAbsolutely, Tom. That's a great point. I think that this is a flawed decision made seven, eight decades ago in this country to congregate public housing the way we did because there are so many other social problems that were created as a result of that. This would be housing that would be integrated across the city. We're seeing that with the HOPE VI projects, for example. You know, you go down -- we were down at Arthur Capper for a dedication recently, and you couldn't pick out one unit from the other.

SHERWOODRight. That's the property near the baseball stadium.

GRAYAbsolutely.

SHERWOODNow...

NNAMDI800-433-8850 if you'd like to join the conversation with District of Columbia Mayor Vincent Gray. You can also send email to kojo@wamu.org.

SHERWOODIn your State of the District speech, you talked about how well the city is doing. That's a matter, not opinion, but a fact in many respects. I was unable 'cause I was out of town on vacation yet again last week, went to a...

NNAMDISo again last month.

SHERWOODI didn't get to go to a forum on gentrification in Southeast. I think East of the River Group had it. But there's a real concern that all these good things that you're talking about -- the 50-plus cranes, the increase in population of the city, the dynamics of the economy -- as a downside in the gentrification is forcing some people out. Either they're foolishly selling their homes too cheaply and moving or their properties are being taken away.

SHERWOODRental housing is turned into condos, those types of things. How serious is an issue of gentrification in town? Tony Williams sat here two weeks ago or a week ago and said he likes what's happening in the city, but you have to be aware of some of the negative aspects. So what is gentrification? Is it as serious as some people think?

GRAYI think it is. It is a huge challenge, I think, Tom. And we -- and even -- you know, as I said in the State of the District, we don't want to wake up and be a city only of the haves, that people who really have modest means and are economically challenged don't have a place any longer in the city. That's one of the reasons why -- that I proposed the investment in affordable housing to the extent that I did.

GRAYIt's yet another reason why we're trying to look at the other side of the issues, too, and that is some of the reasons why people can't afford the housing here is because their work skills may be, you know, hugely deficient or they haven't been -- haven't had a chance to upgrade them to a point where they can earn more money.

GRAYThat's why we have the community college, which I want to see further developed, aggressively and quickly developed in the city as a place where people can develop skills and get the jobs that are being created here in the city. Secondly, we're starting to bring back career and technical education to our public education system.

SHERWOODAnother major mistake made a couple of decades ago.

GRAYIt was. It really was, Tom. You know, the occupations that people were being trained for at the time were becoming obsolete, but it doesn't mean that they shouldn't have been then converted into what was more contemporary. For example, Spingarn High School is one of the schools that we are closing temporarily, but will be brought back in a year as a career and technical education high school, and it will focus on transportation occupations.

GRAYWe know that they're jobs. I just met with Rich Sarles of Metro yesterday, and we talked about the jobs that we know are -- exist within the Metro system that we can fill with people who are coming out of our high schools. Some of those mechanics jobs pay, you know, 20, $30 an hour for people. The other thing is, too, that I've been a huge proponent -- I think as, you know, you know and anybody who listen to me will know -- and that is of early childhood education.

GRAYIf we can get our children into a formal education program sooner than we have in the past -- five years of age is just much -- is much too late -- that to get them in at three and four years of age gives them a much greater chance to be successful educationally. And if they are successful, especially in our STEM programs -- our science, technology, engineering and math programs -- they will have a chance to be able to earn their way effectively.

NNAMDIAllow me to go to the phones. Gentlemen, please don your headphones because Kilfani (sp?) in Washington, D.C., wants to talk about the housing issue. Kilfani, you're on the air. Go ahead, please.

KILFANISure. And thank you for taking my call. I'm calling in particular about Barry Farm, which I know the mayor, you're quite familiar with, the development or the proposed development there. And I'm not sure where to begin, but I'll say this. The first concern I have is about the historical preservation. All these people who come east of the river never talk about the need to preserve black culture and black history.

KILFANIFor example, Barry Farm, the first three plaintiffs for the Brown v. Board of Education come out of that community. The second concern I have is that I agree with you. Barry Farm needs to be modernized, needs to be developed. The earthquake that just happened a couple of years ago caused the actual stucco to fall from the external parts of the buildings, exposing the lead-based paint and the fact that the modernization program that happened in '89, '90 only covered up the problem.

NNAMDIOK, Barry. (sic) You got to get to a question.

KILFANISo they're still -- I guess -- are you aware of the disconnect, Mr. Mayor, between those who are implementing the New Communities branch and the way in which they're carrying it out in terms of how they're treating the people, misleading the people, especially both of the actual redevelopment proposals?

NNAMDIMr. Mayor?

GRAYWell, I really like to hear and, you know, if he can leave his number so we can get back to him. I'd like to hear more concrete examples of where people are being mistreated because the first commitment that was made is that anybody who lives in Barry Farm, you know, as the New Communities project starts, then they will have a right to come back. We've done that in Northwest One as well, and that's true of every New Communities project in the city.

NNAMDIKilfani, I'm going to put you on hold so that we can get your number so that the mayor can call you back. But please go ahead, Mr. Mayor.

GRAYIn any event, we certainly have no intention of mistreating anybody. This is not an effort to remove people from a development and then will be something else in terms of who would be able to live there. The idea is to have an economically integrated community, and that's what the New Communities concept is about, the philosophy, and that's what we're intending to do there.

GRAYIn fact, we have budgeted for and will start construction in just, you know, a matter of months on a new recreation center at Barry Farm, a $23 million center that will complement what's already there. So the idea really is to remove some of the physical problems of the development there to create new housing and to make sure that the people who live there historically will have a chance to come back.

SHERWOODSpeaking of -- quick question on economic development. I meant to mention it earlier. The Washington Blade columnist, who I think is Mike -- oh, I've lost his name now. He writes a weekly column. He talked about economic development. He said -- talked about the surplus. He says what about doing something for taxes on businesses?

SHERWOODThe city has the highest tax levy in the region. He says small businesses could use some breaks -- even maybe large businesses, he said -- to help them fund jobs and to do more rather than giving taxes to the city. And I apologize. His name went right out of my head.

GRAYWell, it's a good question.

SHERWOODInteresting column.

GRAYIt's one of the things that motivated us to put the Tax Revision Commission together in the first place.

SHERWOODAnd when is that -- that's Terry -- that's Tony Williams.

GRAYTony Williams, yeah. He's chairing it.

SHERWOODAnd he just delayed the -- they're going to do it this fall instead of the summer?

GRAYYeah, it would be September when the report would be available. So any further action on changes in our tax scheme in the District of Columbia I would want to defer until we get a chance to look at the report. We, for example, as you probably know, Tom, we referred the proposal that I made to the Council around a reduction in the capital gains tax for angel investors. I proposed to reduce it from 9 percent to 3 percent, which we thought would catalyze investments.

GRAYI still believe firmly that we're right, but we asked the Tax Revision Commission to look at this and come back with a recommendation. So the issue you just raised I don't doubt they'll look at, and if not, we'll raise it with them. We hope that they will take a comprehensive look at the whole, you know...

SHERWOODAnd his name is Mark Lee. He's a columnist for the Washington Blade...

GRAYOK.

SHERWOOD...and he's a businessman in town. He writes about issues in town like that.

GRAYOK.

NNAMDIAnd, Kilfani, thank you very much for your call. A lot of people look at the city's homicide stats as obvious evidence that the city is on the right path when it comes to crime. But robberies are up, and the police department is under fire because of a recent report about not approaching dozens upon dozens of rape cases with due diligence. What conversations have you had with Chief Cathy Lanier about that Human Rights Watch report, and where do you think the city needs to make progress most urgently when it comes to crime?

GRAYWell, first of all, I'm not sure I agree with you the observation that the robberies are up. Last year, robberies went up in the early part of the year because of the theft of smartphones. With the leadership of Chief Lanier and Deputy Mayor Quander, we stepped in, developed a new policy. We involved the Federal Communications Commission. We involved police commissioners from the cities of Philadelphia and New York and other places and developed a new policy.

GRAYIn fact, I talked about it in the state of the District speech. It's called brick it. And essentially what it is, is a policy that renders useless smartphones very soon after they've been stolen so that they basically have no street value. Once we implemented that, we saw the robberies go down. So by the end of the year, we were essentially where we had been in 2011. Now, if you look at robbers, I look at the crime data every morning.

GRAYI get a report every morning, and I look at the crime data. The robberies are actually down thus far in 2013 through the first, what, five or six weeks. Now, the Human Rights Watch report, I've talked extensively to Chief Lanier about that, and she has done an enormous amount of research on this issue. She has, you know, as she ask when they were doing this report for input from them, I think there were 171 reports that they claimed or didn't exist.

GRAYThe chief has already found 157 of those reports. Now, she could have found them before. If they've given her the information on who they were talking about, and she could have been able to give them the information that they required. So I think that there are some enormous methodological flaws in this report, and the chief will be responding to those.

NNAMDIHere is Jim.

SHERWOODI would say she's responded pretty aggressively about...

GRAYYeah.

SHERWOOD...a couple times now, saying that...

GRAYAnd she's right.

SHERWOOD...this report has a lot of flawed research in it.

GRAYMm hmm.

NNAMDIHere is Jim in Southwest Washington. Jim, you're on the air. Go ahead, please.

JIMThanks, Kojo. I would like to ask the mayor an environmental question, but let me preface it by congratulating him on his forthcoming sustainable D.C. plan. This is an important environmental initiative that's going to enable us to reduce our pollution of the waterways.

SHERWOODIs this the Sierra Club calling?

JIMYes, there's no flying under...

SHERWOODYou cannot hide your voice, Jim.

SHERWOODWe would tell people who you are. I mean, you're an incredible person, but go ahead, tell them who you are, then ask your question.

JIMI'm guilty as charged. I'm with the Sierra Club.

SHERWOODJim Dougherty. Jim Dougherty. Yeah.

SHERWOODDon't remind him Southwest.

GRAYI know Jim.

NNAMDIPositive, Jim, go ahead, please.

GRAYHe has a great job.

SHERWOODBut go ahead, Jim, before you forget what you're going to ask.

JIMActually, I'll get right to the question. It involves this power plant on Capitol Hill that's operated by the Congress. For over 100 years, they've been burning coal there, and it's dangerous to the health of the nearby residents and bad for the climate. They promised us four years ago that they'd stop burning coal, but they broke that promise.

JIMThey're still doing that, and we know that because we are taking surveillance photos of the plant. We've gotten fuel data. My question is, Mr. Mayor, would you join with Delegate Eleanor Holmes-Norton and Councilmember Tommy Wells and the residents and the environmental community in calling on Congress to quit burning coal there once and for all?

NNAMDIHold on a second, please, Jim, because I got to do this. Jane, does that in fact cover your issue?

JANEWell, partially, it certainly hits the point, but I'm one of the 230,000 residents in a three-mile radius of this plant. I live literally across the street. My house is on the corner of 1st Street and a little side street. I stare at the towers, and it is unbelievable. They don't even have scrubbers on the...

NNAMDISo you too would like to know what the mayor is going to do about this? Mr. Mayor?

GRAYWell, of course, the mayor doesn't have the ultimate authority on this and because it's a congressional decision. I think it's the architect of the Capitol who has the final authority on this. I think first and foremost I've been very clear. I stood up for the closure of a coal-burning plant that we know the residue from was coming into the District of Columbia.

GRAYThat was in Alexandria. And we've been working with this issue as well. Our Department of the Environment has been collecting comments on the approach to this. I think we've gotten some 700 comments. We've extended the comment period for some who may not have had a chance to comment. I think it would be pretty mature to say where we're going to come out on this until we're ready to come out on this.

GRAYBut I think those who know my track record know that I've been a strong advocate for a clean environment. And, you know, we want to do everything we can to work with the architect of the Capitol. But at the end of the day, we certainly want to have as clean an environment as we possibly can.

NNAMDIJane, thank you very much for your call. Jim wanted to know if you would specifically do some of the things he requested.

SHERWOODSupport with Mrs. Norton. She's -- she has a new proposal to the letter to the architect of the Capitol.

GRAYYeah. I haven't seen Mrs. Norton's proposal as yet. I look forward to seeing that. But I think we better let our own process unfold with the Department of the Environment at this stage as well.

SHERWOODSo we don't end on this subject. Let's get -- let me get it out of the way. The ethics committee has said that Jim Graham, the councilmember from Ward 1, appears to have -- well, says he violated ethical rules but he did not...

NNAMDIViolated basic standards of how public officials are supposed to behave in a public's interest.

SHERWOOD...won't move again because of -- the panel wasn't in place to govern. And then The Washington Post in its latest, I might say, but strongest editorial says, Jim Graham should resign. I'm just wondering, have you paid much attention to this yet or the commingling of Metro and city contracts? And do you have any thought about Jim Graham's behavior?

GRAYWell, you know, again, there's a pending investigation involved in this, by, I guess, law enforcement officials. So, one, I think we should let that investigation, you know, continue to unfold. Secondly, this is an issue for the Council to deal with. Having been the chairman of the Council, I certainly know that, you know, I don't want to step in to the Council's business. And I'm sure Chairman Mendelson will have an approach to this as well.

SHERWOODAnd just to wrap up the ethics issues since, you know, you acknowledge your -- well, we all know the federal investigation of your 2010 campaign is continuing. I was surprised when you stated in the District speech -- unless you adlibbed it and I missed it -- you didn't mention ethics, although you have proposed an ethic -- reintroduced ethical changes of banned corporate contributions or bundled contribution.

SHERWOODYou've got several things you've proposed. The Council's moving slowly on ethics issues. Where are we in the city on this? What can you -- is there anything new you can say about the investigation? And how aggressively are you going to push the ethics, in that order?

GRAYWell, I think you've asked two questions, Tom.

SHERWOODYes.

GRAYThe first one is I've turned everything over to my attorney and asked him to deal with it. And anybody is welcome. And I think you have -- you've talked to him and...

SHERWOODI haven't turned anything over to the...

GRAYYou turned your questions over to him.

SHERWOODI've got some, I would ask him.

GRAYYeah. And anybody -- as he has indicated to me, he's welcome to talk to anybody about it. And I've let him deal with this. And I deal with my role with the city. Secondly...

SHERWOODJim Graham.

GRAYYeah. Well, you asked about campaign reform over that.

SHERWOODRight. Oh, that's right.

GRAYYeah. On campaign reform, I have introduced -- we had introduced -- the Council didn't move on it. I reintroduced the legislation. It was the first bill that I transmitted to the Council at the beginning of this Council session. I have spoken everywhere or anywhere that, you know, people will let me talk about it. I think this is overdue. I think the Council should move on it. There's not a necessity for another hearing to be held.

GRAYThey could mark up this bill. They could make whatever changes they think are important in it. But I think it's time to move on. I think the proposal that we've put together, which our attorney general has played an enormous role in, he has appeared before the Council. He's been very eloquent in talking about this proposal. I think it's a sound proposal, and it needs to be moved on.

NNAMDIWe're almost out of time. Do you plan on running for re-election next year?

GRAYHaven't made that decision yet, Kojo. What do you think?

SHERWOODWell, we think you don't want to make it the last minute and rush to a campaign.

GRAYWould you have any particular reason for saying that, Tom?

SHERWOODWell, just one or two thoughts on that. But, you know, it is in April. April -- Muriel Bowser, one of your potential opponents if you run, said, you know, she'll make a decision fairly soon 'cause she understands that she has 400 days or so. So do you have a timetable of making the decision?

GRAYNo, I don't. I'll make the decision, as I said to someone the other day, when the spirit moves me. I think, also, there's a hugely, you know, a compelling case about (unintelligible)...

NNAMDIWe're out of time. Mayor Vincent Gray is mayor of the District of Columbia. Tom Sherwood is our resident analyst. He's an NBC 4 reporter, a columnist for The Current Newspapers and my spokesperson whenever the mayor asks me what I think. Thank you all for listening.

GRAYNew Columbia, guys.

NNAMDII'm Kojo Nnamdi.

GRAYNew Columbia.