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Transition time. Iowa's Governor's Office focusing on maintaining momentum, seamless transition. We're questioning republican Governor and U.S. Ambassador nominee Terry Branstad on this edition of Iowa Press.

Funding for Iowa Press was provided by Friends, the Iowa Public Television Foundation. Iowa Community Foundations, an initiative of the Iowa Council of Foundations, connecting donors to the causes and communities they care about for good, for Iowa, for ever. Details at iowacommunityfoundations.org. The Associated General Contractors of Iowa, the public's partner in building Iowa's highway, bridge and municipal utility infrastructure. I'm a dad. I am a mom. I'm a kid. I'm a kid at heart. I'm a banker. I'm an Iowa banker. No matter who you are there is an Iowa banker who is ready to help you get where you want to go. Iowa Bankers, allowing you to discover the genuine difference of Iowa banks. Iowa Communications Network. The availability of high speed broadband service is essential to fulfilling the promise of a connected Iowa. ICN's Broadband Matters campaign showcases the importance of delivering broadband to all corners of Iowa. Information is available at broadbandmatters.com. UIeCare is helping provide access to health care services to more Iowans. By offering online visits with a University of Iowa health care provider, UIeCare helps Iowans seek medical care without leaving home. Learn more at UIeCare.com.

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For decades Iowa Press has brought you political leaders and newsmakers from across Iowa and beyond. Celebrating more than 40 years of broadcast excellence on statewide Iowa Public Television, this is the Friday, January 13 edition of Iowa Press. From the Iowa Statehouse, and for the final time as host, here is Dean Borg.

Borg: Elections are decisions and consequences are election offsprings. At the state level the past election giving Governor Terry Branstad an all-republican legislature, first time in 20 years he's had that, the nation's longest serving Governor. But republicans' sweep into the White House is also affecting Mr. Branstad's future. President-elect Trump wants him representing the nation at the U.S. Embassy in Beijing, China. It's the equivalent of winning twice in the same election. Governor Branstad, welcome back to Iowa Press. You've been a guest here many times and you're having us at your house, the Statehouse, where we're taping this. Thank you for having us here.

Branstad: Well, thank you very much, Dean. And I know you've covered the Condition of the State Address and you did that again this week. This is I guess the last time for you to do that and it's going to be the last time for me to deliver it after 22 years. But it's a great honor to serve the people of Iowa and to be in this beautiful House chamber where I had the opportunity earlier this week to give the Condition of the State Address.

Borg: And it's really a big month for you because the Condition of the State you're delivering here in Iowa and probably this month also going to Washington for confirmation hearings.

Branstad: Well, I'm not sure when that's going to happen. We're still working on the paperwork and I'm going to go in for the inauguration of President-elect Trump and Mike Pence of course as Vice President. And then I'm going to meet with the Senate Foreign Relations Committee and eventually have a hearing and go through the confirmation process. I don't know whether that's going to be February or March or when but I'm looking forward to it. It's a great honor to be chosen to serve the whole country. It's also going to be a big challenge. China is the biggest country in the world and obviously they're an economic and a military power and there are some issues between our two countries. But I hope I can play an important constructive role.

Borg: I'm going to bring a couple of other people that you know well into the conversation. That's the pattern of Iowa Press, as you know. Joining us are journalists covering the state politics of the Statehouse daily. That's James Lynch of the Gazette published in Cedar Rapids and Radio Iowa's News Director Kay Henderson. Kay?

Henderson: Governor, this may be the Iowa Press exit interview. So let us start with, what was the best decision that you've made in the 22 years you've been Governor?

Branstad: The best decision I think was to focus on diversifying the Iowa economy. I came in with the Farm Crisis in the 1980s. It was a very difficult, stressful time. We closed 38 banks. Land values dropped 63%. But we worked to diversify the economy and one of the things we focused on was renewable energy. Today we have 43 ethanol plants, I think 13 biodiesel plants, 35% of our electricity comes from wind. So we've come a long ways. In those days we were very dependent on foreign oil and on coal for our electricity and today we're much more diversified and those changes that we made, and also adding value to agriculture products, not just making ethanol but DDGs, which is great cattle feed, and all kinds of other things that now biorenewable chemicals replace petroleum based chemicals with biochemicals made from byproducts from corn, those are all good things that are creating good jobs in rural Iowa. Also we focused on insurance and financial services and we've had tremendous growth, not just in Des Moines, but throughout the state in those areas.

Henderson: What would the nation's longest serving Governor like to tell the nation's youngest Governor back in 1983? What advice would you like to give to that young politician?

Branstad: Patience and perseverance pays off. So you can't do everything in one day or in one year.

Borg: Do you think you were impatient as a young Governor?

Branstad: Oh yeah. When you're younger you tend to be less patient than you are but I learned that. And of course I learned a lot by watching Governor Robert Ray. I followed a very long-term, successful Governor, Bob Ray. I was the Lieutenant Governor but that's back when the Lieutenant Governor was elected separately and was President of the Senate. So we were in a separate branch of government. But I watched the job that he did and the regular press conferences and his ability to relate to people. And I found that to be really helpful and I think made me better prepared. But obviously I had to learn a lot of patience and perseverance and I had to face a lot of tough choices, especially when I came in with the beginning of the Farm Crisis in the '80s.

Borg: There's a word for that, you know, it's called mellowing. Jim?

Lynch: Let's talk about some of those tough choice. You talked about your best decision. What are the decisions you regret or the decisions that you wish you could do over?

Branstad: Well, I'm not one to look back. But one of the things that I did was veto the lottery and that became pretty obvious that Iowans wanted it. And eventually after having vetoed the lottery twice I finally, in fact Ed Stanek came to me and said, Governor, if you change your mind -- and Illinois had a $50 million lotto prize and thousands of people in eastern Iowa bought lottery tickets and sent me their spent tickets -- the message was, we want it, if you don't let us do it in Iowa we'll spend our money out of state. So I finally said, okay, I want to see it strict, I want to protect against some of the corruption and problems in other states. And Ed Stanek came to me and said, you'll never have to worry about the integrity of it. And I would say between Ed Stanek and Terry Rich they have done a phenomenal job and we've had one of the best run, most efficient lotteries. And people have tried to cheat, we've caught and we've prosecuted successfully.

Lynch: Is that flexibility part of your success, the reason you've been successful is you've been able to go back and change your mind, listen to the arguments?

Branstad: I think it's important to be a good listener. I think a good leader is a good listener. Going to all 99 counties, meeting with people and listening to different viewpoints I think helps me be more effective as a leader. So I think that's one thing that you learn is you don't have all the answers. Even though you've been elected to the highest office in the state you can still learn a lot by visiting with ordinary people in all 99 counties and I've enjoyed that immensely. That's been one of the more fun parts of the job.

Henderson: Why did you say yes to Donald Trump when he invited you to be Ambassador to China?

Branstad: That's a great question. It's a huge question and I know it's a big and challenging job. But, well it all started in Sioux City when we had that rally the Sunday before the election when he called me back up on the stage and he said some kind of off the cuff remark like, well Governor Branstad can take care of China. Well, every time he'd come to Iowa I'd say, don't say anything bad about China. We sell them a lot of soybeans and a lot of work, we do a lot of business with them, we've had a longstanding friendship with our sister state. And so he knew that I had this longstanding relationship with China and the President of China calls me an old friend because of it. So obviously there started to be speculation after he won the election. I had already planned a trade mission to China and Japan and I'm gone and all this speculation is going on. I get home, initially I thought my wife will never agree to this. But my children had approached my wife while I was gone and said, you know, this could be an opportunity of a lifetime, we think the family should consider doing this. And so much to my surprise Chris was open to the idea and that's what really led to the possibility.

Lynch: Governor, I wanted to ask you about that. Who is going to go with you? And your wife, what is she looking forward to in China? What will her role be?

Branstad: Well, it's interesting. I just had somebody bring to my attention that there was a previous ambassador from Iowa who was ambassador to China. I think his name was Conger and he had been the county treasurer in Dallas County and then state treasurer and been a Congressman and his wife was really involved with the women's club here in Des Moines and I think she gave the first gift to what's now the Hoyt Sherman Place where they have all, the women's club has all these valuable pieces of art and I think she made the first donation. And they went to China 1898 and were there until 1905. This is during the -- revolt and it was a lot of anti-foreigner, anti-missionary viewpoint there.

Borg: Who else is going along in your family?

Branstad: Well, in addition to my wife we think my daughter Allison and her husband Jerry and their two little girls.

Borg: Living in the Embassy?

Branstad: There is a special guest house. We have visited with Abby Huntsman who is the daughter of former Ambassador Huntsman who was Governor of Utah before that, she and her husband lived over there. In fact, the Huntsman's have seven children, one of them is an adopted Chinese girl. So we're trying to learn as much as we can from previous ambassadors and whatever and we're hopeful that they can come over and maybe Marcus and his wife and kids can come at some later date as well.

Borg: Iowa staff at all going along with you?

Branstad: I think there is an opportunity to maybe bring a few staff with. It's a huge embassy, 2,000 employees. There are five consulates. So I still have a lot to learn and to find out  how many can go. But I think somebody that would be the chief of staff and maybe a couple of other staff people are possibilities.

Borg: One more quick question here, Kay, before we get too far into this, what troubles you most about leaving Iowa right now and going to China?

Branstad: Well, I love this state. And it's a tough -- I think Governor is the greatest job in the world.

Borg: But what I'm really asking, what is left undone that you wish that you could have done before you left?

Branstad: Well, I'm going to try to get a lot done here in this session of the legislature. So we're going to try to accomplish as much as we can. The good thing is I think Iowa is one of the best managed states. We made some of the tough decisions. I've been disturbed by what the federal government has done to us with not maintaining the robust Renewable Fuel Standard and what that has done to farm income and its impact to the state's budget. That's why now we have to do some deappropriations in this fiscal year. But the good news is we are following the Iowa Taxpayers Association guidelines in terms of fiscal management and we have our reserve accounts full. So it's going to be tough and we're going to have to make some difficult decisions but I'm proud to say we're not going to do across-the-board cuts like Governor Culver did and we're going to exempt K-12 education, Medicaid and property tax credits from any reductions.

Henderson: Your son Eric was Donald Trump's campaign manager in Iowa.

Branstad: He was state director, yeah.

Henderson: He's now in Washington, D.C. working on the transition. What do you hope is next for Eric Branstad?

Branstad: Well, I understand that he's going to be the liaison between the Department of Commerce and the White House. So Mr. Ross is going to be the new, well he's got to go through confirmation to be Commerce Secretary. But my son is very excited about the opportunity to serve the country in that manner as well. He did a phenomenal job. Not only did he help Trump carry Iowa, 93 of the 99 counties, but he also was sent to Wisconsin three times and they pulled off Wisconsin too. So he has learned a lot. I think he did a great job. And I'm real proud of him.

Lynch: Do you have any sort of regrets about leaving at this time when you have a new republican majority and probably your best opportunity to complete the Branstad agenda?

Branstad: Well, yes, that is not an easy thing to do. We work so hard. Lieutenant Governor Reynolds and I went to over 100 different events all over the state to support republican legislative candidates. We raised over a million dollars. I like to say that I ran vicariously this time. I wasn’t on the ballot but I was out there campaigning as if I were and I had a lot of fun and I was really pleased with the success, defeating six incumbent democrat Senators, winning two more House seats as well as the six in the Senate. So it was a great year. Our three Congressmen, all of them won very substantial margins and of course Senator Grassley, my longtime friend, was re-elected by an overwhelming margin, carried 98 of the 99 counties.

Henderson: Earlier this week you expressed concern about the recent increase in traffic deaths in Iowa and you made some recommendations for legislation. How far do you want them to go? Do you want legislators to forbid the use of a cell phone while driving?

Branstad: Well, I think it should be hands free because if you just say okay you can't text and drive, then you've got to prove the person was texting. So I really think to be effective and enforceable you need to say that you don't have a device in your hand that you're looking at whether you're texting or whatever while you're driving. So yes. We had a task force that I put together that included, a working group I guess you'd call it, that includes people from public safety and the Governor's Highway Safety Council and others and I think they have made a lot of recommendations. I've asked the legislature to review all of those and we're supporting some things to dramatically crack down on both distracted driving and impaired driving. It has cost a lot of lives. We saw the death rate go up from 315 in 2015 to 402 in 2016. That is just unacceptable. We need to really do dramatic things that are going to make a difference to improve the safety on our roads for bicyclists, for motorcyclists, for passengers as well as just the general pedestrian.

Henderson: You talked about 24/7 monitoring of some of the state's habitual drunken drivers. How would that work? And what sort of an investment would that require?

Branstad: South Dakota has done this and it has been effective. So I think we ought to look at the result they've had in South Dakota. This is for the most severe individuals that are really a danger and so you want them to go into the Sheriff's Office every day to make sure that they're sober if they're going to be driving, even to go to work and back. So we don't want to take people’s ability to go to work away from them but we want to make sure that even if they have a work permit that they're sober.

Borg: This is a time of transition for you with Governor Kim Reynolds, but it's a time of transition also for Iowa's Medicaid program and you're leaving her with a Medicaid program that isn't quite on its feet right yet in that transition. Do you regret that that hasn't been more smooth than you had hoped?

Branstad: Well, actually I think it has gone quite well. We're I think the 39th state to do it and it's long overdue, frankly. We need to focus on things that are going to improve health and reduce the health care costs, prevent people from going back to the hospital again and again. And she has been involved, as I have, our staff, people like Nick Pottebaum on our staff has worked closely with the Department of Human Services as well as with the MCO's on this and I feel we have the most transparent and I think one of the most effective programs. We're getting national compliments on it.

Borg: You can't deny though that you're leaving her with a lot of unhappiness with that transition.

Branstad: Well, let's really look at this. Democrats made that a big issue, they attacked us again and again. They lost six members of the Senate. Republicans didn't lose anybody. They may be making a lot of noise and the Des Moines Register and the Hospital Association doesn't like what we've done. But what we've done is not dissimilar to what democratic governors have done in New York and California and all throughout the country. But I think we've done it better. And I'm glad to defend and support a better system that is focused on improving people's health instead of just reimbursing providers for more and more procedures. And that is the old way of doing things. I'm telling you, even the federal Medicare system is moving to this kind of an outcomes based approach.

Lynch: Governor, another change that you made or proposed regards public employee's health insurance. You want to create sort of one large pool for all state, school, local government employees --

Branstad: Yeah, county, city, schools.

Lynch: And you say this will save money. Do you have a price, do you have a dollar figure how much the state and the local governments will save?

Branstad: I have been told that this could save in excess of $100 million a year, annually. The reason for it is this, just think of this, we have over 500 different contracts today, every county, city, school district has to negotiate this. And if you have just a couple of people in a small district or small city that have health problems it sends the premium through the roof and it can destroy the budget. But if you spread that risk among all county, city, schools and state, just like a big company is able to spread the risk, it's a lot better than individual insurance or small business. That's the reason why it makes so much sense. The system we have today is an antiquated system based on a collective bargaining law passed in the '70s. Health care wasn't that expensive then. Today it's horrendous. We need to have a modern system that spreads the risk and that is competitive and that encourages people to do things like, to take ownership of their own health, do health risk assessments and things like exercise and nutrition to reduce their risks.

Lynch: Does this come at the expense of mom and pop local insurance agencies that are now handling insurance for the local school district or city hall? Are they going to have a role in this insurance plan?

Branstad: Well, we're looking at one big statewide contract, much like IPERS is. IPERS has never been subject to bargaining but it has been an effective retirement tool. I think most state employees, county, city and school districts also feel it has been good. And so that's what we're trying to do is have a modern, competitive, cost-effective system and one that will actually give more flexibility to local governments to be able to do more with wages and other benefits.

Lynch: But it might mean that the local agency doesn't play a role anymore.

Branstad: Yeah. And I'm not sure that a lot of local agencies are playing a role in that anyway. Right now it's all subject to collective bargaining and you've got 500 and some different plans around the state. But many of them are very costly and very inefficient.

Henderson: Governor, for the past six years republicans here in the Iowa House have wanted to cut taxes. They passed an across-the-board income tax cut as high as 20%. This past week you told legislators that you're not going to recommend tax cuts and the state isn't in a financial position to cut taxes. That disappoints a lot of republican voters. What do you say to republicans who put republicans in control at the Statehouse because they want to see their taxes reduced?

Branstad: Well, I think we can reduce taxes but I think the first order of business is got to get our state financial house in order. Now, the problem is not nearly as big as it was when Lieutenant Governor Reynolds and I and the republicans in the House were elected in 2010. We faced a $900 million projected budget deficit. We had all kinds of one-time money that had been used for ongoing expenses. We had to straighten all of that out and it took some time. And now because of the problems that have been caused by the federal government not enforcing the Renewable Fuel Standard and farm income being down we're faced with some budget problems. The first thing we have to do is do some deauthorization of money that was appropriated last year to make sure the budget is balanced and we're required to do that by law. And unlike what Culver did, a massive 10% across-the-board cut that was so disruptive, I've recommended selective reduction. But those are tough decisions and they're going to reduce many of our administrative agencies in state government, their budgets. And it has an impact on the Regents and the community colleges. But we're exempting K-12. So I think that is the first order of business. I think in the future, maybe next year, they can do some major tax reform and reductions. But I don't think we really have the capacity to do that in light of the need to make these budget reductions now. So they can make changes, but I don't think it's going to make the kind of impact that many Iowans would like to see until we're in a stronger financial position.

Lynch: Governor, as you said when you were elected in 2010, you made some promises. You were going to create 200,000 jobs, you were going to increase family incomes by 25%, reduce the cost of state government by 15%. In your Condition of the State speech you claimed success on all of those.

Branstad: We've worked on all of those.

Lynch: That's widely disputed, especially the job creation numbers. And so I guess I'm wondering, if you've been successful why is there a budget shortfall? Why are state revenues going down? Why are we in this pickle?

Branstad: Well, first of all, we made great success. I told already about $900 million projected deficit. We wiped that out. We fully restored the cash reserve and economic emergency account. We're presenting a two-year budget and it's a full two-year budget, it's balanced for both years and the cash reserves are full. We're one of the best managed states. The unemployment rate has gone down from 6.2% to 3.8%. We're not satisfied. We want to do even more. We have attracted companies like Facebook, Google, Microsoft, a couple of new fertilizer plants, we've got a couple of new pork plants being built in the state, a lot of companies expanding. But companies like John Deere and Kenzie have been hurt by what the federal government has done to the Renewable Fuel Standard and that has driven down the price of corn and soybeans, corn, beans, eggs, cattle, hogs were all below the cost of production this year. Now, livestock prices have come back some. But yeah, I'm pretty passionate when it comes to agriculture. I think we've got a new administration that's going to be more favorable.

Henderson: Governor, this is your perhaps final Press, this is Dean's final job here as host and leader of our show. It has been a privilege to sit here by you for 30 years asking questions of newsmakers. I understand you and the Governor have a 70 year history.

Branstad: Well, it's true. Dean's father was our 4-H leader. We both grew up farm kids in Winnebago County, Forest Township. I learned a lot from his dad. His brother Lyle and I were about the same age and were involved in 4-H together. And then of course I worked with Dean in this capacity. In fact, he moderated one of my debates for Governor and he and I wore exactly the same tie. So we've got some things in common. But also I want to say today that just recently Congressman Young, David Young, did a wonderful tribute in the United States House of Representatives to Dean Borg and his wonderful service on Iowa Press and service as a journalist in our state. I'm certainly proud that he's a native of Forest Township, Winnebago County and he has made us all proud.

Borg: Thank you, Governor, and thank you for having us here in the House Chamber of the Iowa Statehouse today where we're taping this program. It's been good working with you and a nice visit. Thank you.

Branstad: Thank you.

Borg: Well, this is my final edition moderating Iowa Press. After thinking a lot about what I'd say closing this program, I'm concluding it has already been said during the past 45 years. Iowa Public Television entrusting me with hosting major newsmakers, such as Governor Branstad, and many others, and top journalists providing Iowans with unique insights. You who have been watching over those past 45 years, thank you for your splendid support. With Governor Terry Branstad, Kay Henderson, James Lynch and the entire Iowa Press production staff here at the State Capitol today, I'm Dean Borg.

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Funding for Iowa Press was provided by Friends, the Iowa Public Television Foundation. Iowa Community Foundations, an initiative of the Iowa Council of Foundations, connecting donors to the causes and communities they care about for good, for Iowa, for ever. Details at iowacommunityfoundations.org. The Associated General Contractors of Iowa, the public's partner in building Iowa's highway, bridge and municipal utility infrastructure. I'm a dad. I am a mom. I'm a kid. I'm a kid at heart. I'm a banker. I'm an Iowa banker. No matter who you are there is an Iowa banker who is ready to help you get where you want to go. Iowa Bankers, allowing you to discover the genuine difference of Iowa banks. Iowa Communications Network. The availability of high speed broadband service is essential to fulfilling the promise of a connected Iowa. ICN's Broadband Matters campaign showcases the importance of delivering broadband to all corners of Iowa. Information is available at broadbandmatters.com. UIeCare is helping provide access to health care services to more Iowans. By offering online visits with a University of Iowa health care provider, UIeCare helps Iowans seek medical care without leaving home. Learn more at UIeCare.com.

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