WASHINGTON - As he begins his tenure facing a $2 billion budget gap, struggling schools, and aging bridges and roads, Gov. Wolf said there's another key area to improve: his state's self-esteem.

"I think one of the responsibilities that leadership in Pennsylvania [has] to address head on - not only the structural issues in education, transportation, all those things, but also the psychological issues that keep us, hold us, back," Wolf told other governors during a panel discussion of their states' economic challenges. "So low self-esteem actually is a big problem."

His comments came during a Saturday afternoon roundtable at a governors' conference, and on Monday had Harrisburg buzzing. State Republicans poked fun at the Democratic governor, saying he should focus his attention elsewhere.

Wolf stood by his words Monday, though he didn't use self-esteem. Instead, he cited an "excess of modesty."

"The only people that really don't believe that Pennsylvania should be the dominant state are Pennsylvanians," Wolf said in an interview. "We have an excess of modesty, and in a lot of ways, modesty is a wonderful trait, but I think it keeps us from recognizing the amazing things that we are capable of, so I think we are an underachiever."

At one point during Saturday's panel at the National Governors Association conference, Wolf called self-esteem the state's biggest economic problem.

When Massachusetts Gov. Charlie Baker chuckled and pointed to Pennsylvania's highly touted universities, Wolf said he wasn't aiming for a laugh. "We're an underachiever," Wolf said.

He also said Pennsylvania "could do a lot better with the resources it has" and should "tout our own potential."

State Republicans said the comments denigrated workers.

"Good leaders do not blame the people of Pennsylvania and their 'self-esteem' for the economic challenges in the state," Senate Majority Leader Jake Corman (R., Centre) said in a news release Monday. "It is insulting to Pennsylvanians who get up every day and work hard for their families."

Instead of "psychological issues," Corman said, Republicans are focused on pension reform and improving the state's business environment.

In the 30-minute interview Monday at a Washington hotel, Wolf addressed some of those more tangible challenges, such as the search for a new state treasurer and the latest push to privatize the state's liquor sales.

On the same day a Republican liquor privatization bill advanced past a House committee, he said this isn't the right time.

"It's an underperforming asset; we'd essentially be giving something away that has great potential value, and that would be wrong, I think, from the point of view of the citizens of Pennsylvania," Wolf said.

The improvements many residents want, and that Wolf said he supports - such as lower prices, Sunday hours, and being able to buy liquor in grocery or convenience stores - don't depend on privatization, he said.

Asked to elaborate on self-esteem, Wolf demonstrated his new role as the state's top cheerleader.

He said that if a space alien visited the United States and was given a list of the assets of each state, "that alien would look at the 50 sheets of paper and say, 'Pennsylvania must be the dominant state. Obviously it's the dominant state.' "

The strengths include "two great cities, institutions of higher education, a size that's wonderful, scenic beauty, the history - the country was founded here, two constitutions that were drafted were drafted in Pennsylvania, the Gettysburg Address was delivered in Pennsylvania, the Declaration of Independence was drafted and signed in Pennsylvania."

As governor, Wolf said, part of his job is to emphasize those strengths, much as he said he did when he rescued his family's struggling cabinetmaking business.

"The biggest thing I did was call attention to how good we really were, and say, 'We can actually do this.' That's part of what leadership is," he said. "What it's not is sort of sitting back and saying, 'Let's just let this drift into something and see where it goes.' That doesn't work. With Pennsylvania, you're starting with really good attributes, and I'd like to call attention to that."

Inquirer staff writer Angela Couloumbis contributed to this article.