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updated 7/20/2013 6:16:58 PM ET 2013-07-20T22:16:58

Despite eight cities and counties around the United States declaring bankruptcy since 2010, San Antonio, Texas, ranks as the only American city with over a million people to have a perfect "AAA" bond rating.

Despite eight cities and counties around the United States declaring bankruptcy since 2010, San Antonio, Texas, ranks as the only American city with over a million people to have a perfect “AAA” bond rating.

Mayor Julian Castro explains why his city’s economy is robust. San Antonio’s diversified economy has thriving health, military, and education sectors. In addition to growing public and private sectors, San Antonio has benefited from effective management.

The mayor points to education as vital to the restoration of faltering American cities. “There is not a single city or suburb out there that if it has a great education system, a great school district will not prosper,” he said.

Video: What are the makings of a thriving city?

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    >>> when detroit filed for bankruptcy this week it became the largest city in u.s. history to do so, but it's hardly alone. since just 2010 eight cities and counties from rhode island to california declared bankruptcy. what role should the federal and state government play? at what point are cities too big to fail? joining me now the san antonio mayor. it's nice to see you. thanks for joining me.

    >> thanks for having me.

    >> as all of this was happening in detroit , it must be marked here that your own city was just recertified with a triple-a bond rating as the only city with over a million people to have this perfect rating. of course i don't want to imply at all that san antonio and detroit face the same issues. what are you doing to keep your economy so healthy?

    >> well, san antonio like other texas cities, austin, dallas, houston, has been growing tremendously. that has helped. but for san antonio , part of the story is also that its economy is very well diversified and the local economy is anchored in sectors that have been growing compared to other sectors even during this recession, like health care and education. we have a very young city. we have a city that has more than 110,000 students enrolled in college and graduate school . and like the military, we have fort sam houston that has grown tremendously and a couple other military bases . so san antonio in the private sector and in the public sector has been doing well all things considered and it's also been well managed and that's why we've been able to achieve that kind of bond rating .

    >> indeed. you guys also have the benefit of being a wonderful tourist destination with that charming city and the riverwalk.

    >> that's true.

    >> beautiful.

    >> we had a river walk and the alamo. sure.

    >> steven rattner who oversaw the government bailout of the auto industry , he's got a new column in the "new york times" in which he calls for the federal and state government to step in with financial assistance . give me your thoughts on that.

    >> i definitely believe it's an idea worth considering. it has merit. folks will remember what happened with new york. we've seen this before in the 1970s . we bailed out the auto industry . i think the first plan of action is to see what happens in this bankruptcy proceeding but state governments and the federal government i believe also do have a responsibility to help ensure that when a city reaches this kind of situation that the residents of the city and the students, folks relying on a pension are not left out in the cold. if our banks sometimes are too big to fail, certainly our cities that are the bread and butter , the lifeblood of many american states , our cities ought to be considered for some sort of federal and state assistance as well. so i think it has merit.

    >> you know, you talk about the diversity there in san antonio and the success of the business community and, of course, juxtapose that with detroit , which is really seen as a one industry town, autos, and you know the trouble that's had. what would you say as a mayor that you can do to attract diverse businesses to a city like detroit ? are there tools you can use to do that?

    >> oh, absolutely. there are the usual incentives that all cities and states use. we live in a 21st century economy that is more global than ever, more competitive, where capital is more mobile. but let me focus on something that hasn't been focused on as much in the last couple days. that's education. there is not a single city or suburb out there that if it has a great education system , a great school district , will not prosper or at least be stable. and so what's happened in detroit is not just a reminder about the issue of pensions and managing a city budget well. it's also a reminder about these urban school districts and how much at the local level the federal level and the state level we need to focus on urban education to lift up the quality of those schools to be creative, to include things like charters, so that folks will want to live in many of those neighborhoods that, frankly, in places like detroit , for many years, have been abandoned.

    >> i want to switch gears though and talk to you about this cover story in the new issue of " texas monthly ." they ask if your brother and the state senator wendy davis can return democrats to power in texas . what do you think?

    >> well, i do think the democrats are going to return to power in texas . the question is not if. the question is when. there is a strong effort right now through battleground texas to make that more possible. i think the point of the story in texas monthly is that you need both things. you need the spade work, the ground work of an effort like battleground texas . you also need the candidates to actually come up and run good races. and so who knows what'll happen, when it'll happen? but i do think in the next couple of years that it is going to happen and it needs to.

    >> do you think it's possible, though, we have five decades of texas being pretty much a red state . do you think this could happen by 2016 , 2020 , turn blue?

    >> sure. that's what they said about virginia and north carolina and a couple other states, that in the 2008 and 2012 cycles went blue. texas is a bigger state. so it's going to take a little bit longer. if you look at the demographic trends, if you look at the fact that because of texas 's success you've had a ton of people move into the state from other places that are having a moderating impact on it especially in the suburbs of big cities like austin, houston, dallas, and you look at how far to the right many of the republican elected officials have gone, like ted cruise, those things add up to the democrats if they play their cards right being able to seize the middle, business folks, folks who are independent. that's what you hear in the air in texas right now but there is a ton of field work to do and still a need for great candidates.

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