Thank you, everybody, it's very nice to be here.  Bill [Rutledge], thank you very much for such a thoughtful introduction.  Bill is a very dear friend.  I really want to recognize the Rutledge family.  They are true public servants.  And I also want to recognize Curtis Mack because everybody knows Curtis.  He also has been a great public servant. He's been somebody whose heart has been in the right place in so many different ways and I'd like you to publicly recognize Curtis as well. 

 It is two weeks now until the election, and on that day you're going to be faced with a lot of choices.  Not only choices among candidates but choices amongst issues.  Issues that will determine your future, issues that will determine, I believe, your children's future and when you take a look at the types of issues that are on the ballot this time, I just ask that you scrutinize them.  Give some thought to them, and when you take a look at the candidates for all the offices think about them, because in my estimate we are at a critical point in our state's history in so many different ways, whether it be internally or domestically. 

 I do think of California as a country in many respects.  You know, we are the world's sixth largest economy, so when you talk about foreign policy California has a foreign policy in terms of how it interacts not only with its neighbors and other states, but also with its neighbors in other countries.  There are so many important issues facing our state right now.  I'm so glad that we've got such great people, because if there’s one thing I've learned in 20 months of traveling and meeting tens of thousands of citizens, it’s that we have a great state.  We, indeed, have a Golden State.  We, indeed, have what I believe is one of the great countries in our Union.  Of anything I've ever seen – the people, the breadth and the diversity is really breathtaking and that's why, for me, it's been such an incredible privilege to travel this campaign trail.  I know it has been for my friend, Mark  [Iles], right here, who's running for the Assembly.

 As you look at all your legislative candidates, be grateful because you've got some great ones, on both sides of the aisle.  I have to be a little prejudiced in terms of Republicans, but the fact is that so many of these candidates have worked so terribly hard.  I know this because I see them every single day. 

 I was up in the Central Valley yesterday.  We got the endorsement of the Farm Bureau, and when you look in the eyes of people in the Central Valley and you see where their hearts are—they need more water, they need more power, they need to make sure they can make ends meet—these are the very same issues that all of you talk about, that are in your hearts and minds, and that's why I believe we can come together.  We can come together as long we have good leadership.  I believe at the moment, though, our vision is blurred because our leadership lacks decision.  Our vision of California as a world leader, I think, is in serious jeopardy. 

 Governor Davis has spent most of his time bragging about taking California from the seventh largest economy in the world to the fifth largest economy in the world.  When we slipped back to the sixth largest economy in the world two weeks ago, you didn't hear a word from the Governor's office.  Well, I have a way to get France from the fifth to the sixth largest economy in the world.  That's to have Governor Davis go run France.  We know that California for years has led the nation in exports until recently.  Now we're number 2.  We're losing film production to New York and to Canada.  We're losing new businesses and new jobs to Arizona, Nevada and Colorado. 

 I remember a time about two months ago, I was on my way to Arizona.  I was on an airplane with my wife, she was in the seat in front of me, and about half way through the flight a man next to me looked at me and he said, “Are you affiliated with the Bill Simon campaign?”  Later I said to my wife, “I think it's time to go on TV.”  I looked at this man and, being a budding politician, I said, “I am affiliated with the campaign,” not knowing exactly where he was heading and he said, “Well, you know I'm going to vote for that fellow, not because I know him but because I can't stand Gray Davis,” and I said, “I'm Bill Simon.”  I said, “Out of curiosity why don't you like our governor?”  He said, “Well, I'm a small businessman in Southern California.  I'm in the manufacturing business.  We make doorknobs.  Not exactly the most glamorous business, but I tell you it's put food on our table, it's educated our children for 40 years; four generations of my family.  We made money each and every year for 40 years until Gray Davis took office.  We broke even the first year, we lost a little bit the next year, we lost a lot the third year and this year, well, we're going to lose even more.  I'm on my way to Arizona to look to relocate my business.  Workers compensation costs, electricity bills, they're out of sight.”  

 I wish I could tell you, ladies and gentlemen, that that's an isolated conversation.  It's not.  It's a conversation I have almost every day all over the state regardless of the business.  We've got a million Californians out of work and the reason we do is that we are not putting into place the policies that will foster job growth.  We're not doing the very simple things that are necessary to create jobs, whether it is lowering the capital gains rates, streamlining regulations, streamlining workers compensation, all the things that are tried and true.  So, although I'll talk to you today about some of my ideas, they're not going to be revolutionary.  The revolutionary thing is going to be I'm going to get it done, because I've been a problem-solver and a builder all my life.  I've always been a team player and a team player who believes in getting things done.  That's exactly what I want to do as Governor of California. 

 One of the other areas that I look at right now that threatens our vision of world leadership is education.  We rank at the bottom in the nation in math and reading, and dead last in science.  We pride ourselves in being first in the nation in technology but how can we be first in the nation in technology when we're last in science?  There's no way.  We have to improve our educational system.

 Another area is manufacturing.  Right now California is rated as the most expensive industrial state in which to do business.  Our manufacturing costs are 32 percent higher than the national average.  The Wall Street Journal reported two weeks ago that California is the least friendly state in the nation to do business.  It was only three years ago that California was ranked second to the best in the country in which to do business.  What has changed?  We'll talk about that in a minute.  But once again it's the very same factors that this gentleman on the airplane talked to me about.  What's the governor's response been to the types of issues that we are talking about today?  Higher regulations, higher taxes, bigger deficits and an economic policy that's dictated to him by union bosses and trial lawyers.  He has settled employers with more than $4 billion in additional workers compensation costs, double digit increases in the price of water and electricity, and straitjacket regulations, as I call them, such as mandatory overtime and eight-hour days, which has killed flex time for our working mothers and our working employees. 

 The bottom line is lots of these regulations that Gray Davis has signed have a noble objective, such as flexibility in the work place, but when you actually look at the consequences of those regulations it's something completely different. 

 Talk about paid leave, for example.  A noble objective which will enable people to be with their families and loved ones when they're sick.  What is it really?  It's a tax on all employees, everybody, regardless of whether or not they want to be in the program or not, regardless of whether or not they want to take leave or not—a $3 billion tax.  Is it advertised as such?  No.  Gray Davis says Bill Simon wants to roll back all the improvements in terms of labor.  Ladies and gentlemen, Bill Simon looks out for employees, looks after workers, looks after the million people that are out of work.  

We talk about energy.  The bottom line is that Gray Davis has not prepared California for our future and has not provided the business climate that will support our future needs.  As a result, we are now following the rest of the world rather than leading it into the new millennium.  Take a look at where we are now.  Our reserve cushion is 11 percent.  Historically it's been 15 percent.  On average other states have 25 percent cushions.  The answer, purely and simply, is more supply.  Gray Davis says there's plenty of supply in the pipeline.  What he doesn't tell us is that over half of the companies that contracted to build plants in this state have decided not to build plants.  And you know why they decided not to build them?  Workers comp, higher taxes, higher regulations, burdensome regulations in general.  That's the direction that we're heading in.  That's why I've tried to run a campaign of ideas, to try to set before the people of California exactly where we stand in terms of business, in terms of schools, in terms of our quality of life. 

 I believe that I know what it takes to reverse our faltering economy.  I believe I know what it takes to reverse our faltering quality of life and I don't think it's a career politician who has spent his entire life running for political office.  I think you need somebody who has signed the front of the check as opposed to Gray Davis who has only signed the back of the check.  I believe it's going to take a leader like me who has built businesses, led charities and been a federal prosecutor.  Because I know that jumpstarting an economy requires lower taxes, that's why I have publicly proposed to reduce the capital gains rate from 9.3 percent to 5 percent.  I have publicly proposed to streamline workers compensation not to give less benefits to employees, but to get more benefits to employees.  But the way you do that is by streamlining.  Right now we've got the most expensive system in the country in terms of costs to employers, but less than 50 cents of every workers compensation dollar actually gets to employees.  So over 50 cents disappears and, with all due respect to my legal brethren, lots of it disappears in lawyers' pockets. 

 I think occasionally I should be allowed to be critical of my fellow brethren because I am a recovering trial lawyer and the fact is we need to curb harassing lawsuits.  One way to do it is by something I call the Winner's Rule.  The Winner's Rule means that losers pay the winner's legal fees.  I happen to think that's a good idea. That will chill the filing of frivolous lawsuits.  That rule, the Winner's Rule, has been in effect in England for over 200 years.  It's been in effect in Canada for over 100 years.  It's been in effect in other common law jurisdictions, with the exception of our own, for a very long time and it's worked. 

 I believe what we need to do is not only curb harassing lawsuits but reduce the mandates on our workers compensation system that will enable more of those dollars to flow to employees and actually reduce the cost to employers.  This package of stimulus, cutting taxes, reduction of regulations, and streamlining workers compensation could add as much as $2-3 billion to our tax revenue system every single year.  Right now, we are facing upwards of a $20 billion budget deficit.  It's not advertised, because what we hear in the newspapers is that the budget was just balanced.  The budget has not been balanced.  It was balanced for this year with rubber bands and other gimmicks.  Everybody knows in Sacramento that the budget is projected to be in deficit by $50 billion in the next five years, averaging $10 billion every single year.  The legislative analysts made that projection and, if anything, I think that’s on the low side because in the coming year I don't think it's going to be a $10 billion budget deficit, it's going to be closer to a $20 billion budget deficit, based upon tax receipts that have already come in.  They're slower than anticipated.  The fiscal year is June 30, tax receipts are already off by $1 billion in just three months.  Over the next year they could easily be off by $4-5 billion.  Gray Davis doesn't tell you this because he just wants to get beyond the election, but if we have a $20 billion budget deficit I'm going to make a prediction today—Gray Davis will raise taxes by over $10 billion, the largest tax raise in our history.  I will not raise taxes. 

 That's a clear difference between the two of us.  Gray Davis won't shrink the government as much as it needs to shrink.  That's where we are today.  That's why I think we need to tell the people of California the truth. That's why I believe the people of California deserve an honest discussion of the issues that face us because we do, indeed, face a very bleak future unless we are realistic about our financial needs. 

 Right now we are the second worst in the country in terms of our fiscal health.  Our credit rating is second to worst in the country, so any money that we do borrow is going to be roughly one to two percent more expensive because of our fiscal health.  So, when we talk about our fiscal plan we talk about the fact that we're $175 billion behind in our roads, water, and power.  Everybody agrees with that whether it be Republicans, Democrats, conservatives or liberals.  Some say, “Well, how can you get elected, Bill, when you're a Republican and you've even said occasionally that you're a conservative, which I am.”  The fact is this election is not about Republicans or Democrats, it's not about conservatives or liberals, it's really about California, it's really about all of you.  It's really about the truth.  It's about the fact that we have about $175 billion in needs over the next ten years and we couldn't even borrow $10 billion over the last 12 months to finance energy needs.  As my dear friend Frank Baxter—he's my finance chairman and one of the great financial minds in L.A.—said, “We don't believe that this bond issue they're talking about to finance the energy purchases is really going to fly because they postponed it beyond the election.”  So if we have trouble borrowing $12 billion in the credit markets, how are we going to borrow $175 billion?  The fact is we have to rely on the private sector. So when you hear talk that Bill Simon wants to privatize things and, “private companies can't own water facilities” type of talk, please remember we don't talk about privatization, we talk about solving problems.  We don't talk about private companies necessarily even owning these things.  It could be a bond that was financed by a private company.  I want to deal in solutions. 

 The only place we can go to pay for this $175 billion is the private sector, and I happen to think that's great.  I’d like to rely on all of you who have been so successful, all of you who have invested, like Gabriel Brener, a very successful investor.  He looks at projects and if they make good sense he puts the money out and that's great.  That's the discipline of the market place that we need and that's the discipline that, once we have it, the credit rating of California will improve.  The budget will improve.  Once we put discipline in our spending growth, we agree that we will only grow at the rate of population plus the rate of inflation instead of what we grew the last three years, which was triple that rate.  Now they have that rule in Colorado that they'll only grow at the rate of inflation plus the rate of population growth and you know where they are today?  They have a surplus.  You know where we'd be today if we had that rule starting at the beginning of Davis's administration?  We'd have a surplus. 

 But these are the kinds of things that business people understand.  These are not the kind of things that bureaucrats understand.  These are not the kind of things that people understand who spend their whole day fundraising, as Mr. Davis does.  These are not the kinds of things that people understand when they're not interested in the people of California first and foremost.  We all like to say that on November 6, whether I win or Gray Davis wins, one of us is going to form a transition team.  The difference is the transition team formed by Mr. Davis if he wins will be focused for running for the White House.  The transition team that I form, if I win, will be focused on the people of California, all of you. 

 The first thing we'll do is tackle the budget, that very first day on November 6.  I promise you we're going to put together that transition team to look at the budget, then we’re going to focus on education, because education is crucial.  We have two million children trapped in failing schools.  We need accountability with real teeth in it that's mandatory and we need more charter schools, more magnet schools, we need new schools period and physical facilities.  Then the next thing I'm going to do is have a master plan, because we have the makings of one right now for our fiscal plan, for our housing in California, with roads and water and power that we can be proud of.  Our roads rank last in the nation now.  We've got a power crisis which is not over. 

 We have a water crisis.  I spent yesterday in the Central Valley and I guarantee you as sure as I'm standing here the bureaucrats will tell us next year at this time that we have a drought and everybody will say, "We have a drought?"  We have a drought right now.  We need to be truthful with our people.  We have a water crisis right now.  Davis has ignored it but if you look at all these needs you need somebody that will look at them honestly.  I believe I will, and just as I've tried to be honest with you today and set forth ideas, specific solutions rather than symbols, rather than fear talk, we can address all these challenges. 

 None of these challenges are unsolvable.  All of you, your parents, your grandparents, your great-grandparents, have been solving problems like these for generations.  There is no reason that we can't solve them, but we can't solve them unless we have leadership that's willing to address them.  That's what I represent, that's what I want to be, that's the type of governor that I will be for you.  Someone whose door is always open.  And I promise you this:  there won't be a tollgate out in front of it.

 So, I'm glad to be here today.  I'm from Los Angeles, as I'm sure many of you know.  It's great to be home, it's great to have at least a little time in my house.  I can see my wonderful children and wife who, by the way, I think will be a great first lady of California.  I spent a little time with my dear friends and neighbors, the Rutledge family and Frank Baxter and saw some old friends like Gabriel Brener and Katrina Leung and Caroline Ahmanson, all dear friends of mine, and so many good friends as we come down to this final two weeks.  Having done this now for two years, I do get a little nostalgic.  I have to admit to you I'm grateful to the people of California for affording me this opportunity and I feel so deeply the obligation to set forth the truth before you today.  I wish you the very best of luck for the next two weeks and on November 5 I hope I earn your vote and thereafter.

 God bless you and may God bless California.