Iowa Public Television

Dean Borg: TAX REFORM: "HOW TO DO IT" AND "HOW MUCH" TOPS THE WASHINGTON AGENDA. WE'LL DISCUSS THE SO-CALLED TAX SURPLUS WITH THE CHAIRMAN OF THE U.S. SENATE'S FINANCE COMMITTEE, SENATOR CHARLES GRASSLEY, ON THIS EDITION OF IOWA PRESS.

Narrator: FUNDING FOR IOWA PRESS HAS BEEN PROVIDED BY FRIENDS OF IOWA PUBLIC TELEVISION; AND BY THE IOWA BANKERS ASSOCIATION... FOR PERSONAL, BUSINESS, AND COMMERCIAL NEEDS, IOWA BANKS HELP IOWANS REACH THEIR FINANCIAL GOALS; BY THE ASSOCIATION OF BUSINESS AND INDUSTRY... THE VOICE OF IOWA BUSINESS, REPRESENTING THE INTERESTS OF OVER 1,500 IOWA BUSINESSES EMPLOYING 300,000 IOWANS; AND BY THE ASSOCIATED GENERAL CONTRACTORS OF IOWA... THE PUBLIC'S PARTNER IN BUILDING IOWA'S HIGHWAY, BRIDGE, AND MUNICIPAL UTILITY INFRASTRUCTURE. THIS IS THE SUNDAY, FEBRUARY 18 EDITION OF IOWA PRESS. HERE IS DEAN BORG.

Borg: NOVEMBER'S GENERAL ELECTION BROUGHT A NEW ADMINISTRATION TO THE NATION'S CAPITAL AND WITH IT A SET OF CAMPAIGN PROMISES TO BE FULFILLED. ONE OF THE NEW PRESIDENT'S CAMPAIGN PROMISES IS NOW FRONT AND CENTER. PRESIDENT GEORGE W. BUSH WANTS A $1.7-TRILLION TAX CUT SPREAD OVER TEN YEARS. IT WAS CONTROVERSIAL AS A CAMPAIGN ISSUE AND, NOW AS PROPOSED LEGISLATION, IT HAS SHARPENED THE BATTLE LINES. IN FACT, SOME WHO SUPPORT THE IDEA SAY IT'S NOT ENOUGH. DETRACTORS, THOUGH, COMPLAIN THAT WEALTHY TAXPAYERS BENEFIT TOO MUCH; THAT THE FORMULA IS BASED ON SHAKY ECONOMIC PREDICTIONS; THAT THE MONEY ISN'T THERE, AND THAT OTHER PRIORITIES, INCLUDING DEFICIT REDUCTION, WILL GET HURT. THE NEW PRESIDENT ISN'T DETERRED THOUGH, BUT HE'S DEALING WITH A CONGRESS THAT HAS ITS OWN IDEAS AND PRIORITIES CONCERNING TAX REFORM. THE GENERAL ELECTION OF 2000 ALSO BROUGHT A NEW ASSIGNMENT FOR IOWA SENATOR CHARLES GRASSLEY. IOWA'S SENIOR U.S. SENATOR NOW CHAIRS THE SENATE'S FINANCE COMMITTEE WHICH, INCIDENTALLY, SITS AT THE CROSSROADS OF WHAT'S RAISED AND WHAT'S SPENT. SENATOR GRASSLEY, WELCOME BACK TO IOWA PRESS.

Grassley: OBVIOUSLY I'M GLAD TO BE WITH YOU.

Borg: NICE TO HAVE YOU HERE. ALSO WITH US, DAVID YEPSEN OF THE DES MOINES REGISTER" AND MIKE GLOVER OF THE ASSOCIATED PRESS.

Glover: SENATOR, AS DEAN'S OPENING MAY HAVE MADE CLEAR TO YOU, WE HAVE SEVERAL QUESTIONS ABOUT TAXES, SO LET'S GET RIGHT TO THAT. THERE SEEMS TO BE TO OBSERVERS SOME MOMENTUM IN CONGRESS TOWARDS SOME KIND OF A TAX CUT, ALTHOUGH MAYBE NOT THE ONE THE PRESIDENT HAS PROPOSED. WHERE DO YOU THINK CONGRESS WILL END UP ON TAX CUTS, AND WHERE DO YOU WANT TO END UP ON TAX CUTS?

Grassley: I'LL ANSWER BOTH QUESTIONS THE SAME WAY BECAUSE I THINK MY PERSONAL DESIRES AS A TAX RELIEF PERSON, ALSO BEING OF THE PARTY OF THE PRESIDENT, IS TO GET THE PRESIDENT AS HIGH A NUMBER AS WE CAN, AND HOPEFULLY INCLUDING 1.6 TRILLION FOR THE TEN-YEAR FIGURE. WE'RE HEADED IN THAT DIRECTION. I THINK WE WILL HAVE A BUDGET OUT OF THE UNITED STATES SENATE THAT WILL SAY UP TO 1.6 TRILLION, TO GIVE SOME PEOPLE THAT DON'T QUITE HAVE THEIR MIND MADE UP YET MORE LEEWAY FOR VOTING FOR A BUDGET BEFORE WE GET TO THE TAX BILL. BUT IT'S FULLY MY INTENTION TO REDUCE TAXES AND GIVE TAX RELIEF TO WORKING MEN AND WOMEN AS MUCH AS WE CAN.

Glover: AND YOU'LL GET TO THE PRESIDENT'S FIGURE?

Grassley: YOU'RE ASKING ME IF WE'LL GET THERE. I'M GOING TO GET AS BIG OF A TAX RELIEF AS I CAN FOR AMERICAN MEN AND WOMEN THAT WE CAN GET THROUGH THE UNITED STATES SENATE. NOW REMEMBER, IT'S DIVIDED 50/50. THAT MEANS ALMOST IT'S GOT TO BE A BIPARTISAN PROPOSITION OR WE WON'T HAVE A TAX BILL.

Yepsen: BUT, SENATOR, LAST WEEK JIM JEFFORDS AND LINCOLN CHAFEE, TWO REPUBLICANS, SAID THEY WEREN'T PART OF THE -- THEY DIDN'T WANT TO GO ALONG WITH THE PRESIDENT'S TAX PACKAGE. HE'S ONLY PICKED UP ZELL MILLER ON THE DEMOCRATIC SIDE. YOU'RE ONE VOTE SHORT, AREN'T YOU? Grassley: IF THE VOTE WERE TAKEN TODAY AND BASED UPON WHAT YOU SAID, THAT COULD PERHAPS BE THE CASE. BUT DON'T FORGET THAT THE PRESIDENT OF THE UNITED STATES -- IN FACT, JUST THIS WEEK AT THE WHITE HOUSE, AN HOUR MEETING AS A MEMBER OF THE SENATE BUDGET COMMITTEE, WE WERE DISCUSSING WITH THE PRESIDENT OF THE UNITED STATES HOW DO WE GO ABOUT DOING THIS. AND I THINK A GREAT DEAL OF THE RESPONSIBILITY AND THE ABILITY TO DO WHAT YOUR QUESTION ASKS IS DEPENDENT UPON PRESIDENTIAL LEADERSHIP. THE PRESIDENT SAID AT THIS MEETING THAT HE IS WILLING TO GO TO THE COUNTRYSIDE AND SELL IT TO THE AMERICAN PEOPLE. I THINK OUR ACCOMPLISHING WHAT HE WANTS IS BASED UPON HIS ABILITY TO DO THAT.

Glover: BEFORE YOU START TALKING ABOUT COMPROMISE, YOU'RE GOING TO GIVE THE PRESIDENT SOME TIME TO SELL HIS PACKAGE?

Grassley: THE CALENDAR FOR THIS IS PROBABLY MY SENATE FINANCE COMMITTEE, WORKING ON A BILL TO REPORT OUT THE FIRST HALF OF MAY, GET IT THROUGH THE SENATE THE LAST WEEK OF MAY, AND BE IN COMPROMISE BETWEEN THE HOUSE AND SENATE IN JUNE. SO THERE'S PLENTY OF OPPORTUNITY FOR THE PRESIDENT TO DO THIS.

Yepsen: SENATOR, THE ECONOMY IS SPUTTERING. WHAT SHOULD BE DONE ABOUT IT?

Grassley: TWO THINGS: ONE, THE EXTENT TO WHICH THE MOST IMMEDIATE IMPACT AND THE IMPACT THAT WILL HAVE THE MOST CREDIBILITY IS THE EXTENT TO WHICH GREENSPAN HAS AND WILL CONTINUE TO REDUCE INTEREST RATES. THERE IS JUST VERY LITTLE STIMULUS TO THE ECONOMY FROM TAX REDUCTIONS, EVEN IF WE MAKE IT RETROACTIVE TO JANUARY. BUT THE EXTENT TO WHICH WE DO TAXES EARLIER RATHER THAN LATER -- AND IT DOES CHANGE BENEFITS OR IT CHANGES DISCIPLINE OF PEOPLE SPENDING AND INVESTING. EVEN THOUGH THE MONEY IS NOT IN THEIR POCKET, THE SOONER WE DO IT, THE BETTER IT'S GOING TO HELP TO HAVE A MORE FULL RECOVERY. WE DON'T KNOW FOR SURE IF WE'RE IN A RECESSION. WE KNOW IT'S SLOWED DOWN AND WE HOPE, OBVIOUSLY, THAT IT DOESN'T. BUT WE HAVE FACTORED IN THESE ECONOMIC DOWNTURNS, WHETHER THEY'RE RECESSIONS OR JUST SLIGHT DOWNTURNS, IN OUR TEN-YEAR BUDGET

FORMULATION.

Yepsen: I'VE ALWAYS KNOWN YOU AS A MAN WHO WANTS TO SEE THE FEDERAL BUDGET DEBT REDUCED. A LOT OF CRITICS OF PRESIDENT BUSH'S PLAN SAY IT DOESN'T GO FAR ENOUGH TO REDUCE THE FEDERAL DEBT. WHAT DO YOU SAY TO THAT?

Grassley: IT GOES SO FAR THAT, QUITE FRANKLY, WE'RE DEALING WITH THE ECONOMIC PROBLEM THAT IF THE FEDERAL -- AND I SAY "PROBLEM" -- WITH THE ECONOMIC PROBLEM THAT IF WE GET DOWN TO THE YEAR 2006, 2007, AND WE PAID OFF ALL OF THE NATIONAL DEBT EXCEPT ABOUT THE TRILLION DOLLARS THAT IS IN THIRTY-YEAR GOVERNMENT BONDS AND THEY'RE NOT CALLABLE AND PEOPLE DON'T WANT THEM CALLED BECAUSE THEY WANT THE SAFETY OF INVESTING IN GOVERNMENT DEBT, THAT WE'RE GOING TO HAVE TO TALK ABOUT INVESTING IN ASSETS. WELL, THE FEDERAL GOVERNMENT SHOULD NOT BE ACCUMULATING ASSETS, BUT THAT'S THE SITUATION. SO THE FACT OF THE MATTER IS, WE HAVE THIS TEN-YEAR PROJECTION OF $5.6 TRILLION OF INCOME COMING IN, WE TAKE OFF THE TABLE 3.1 TRILLION OF THAT, THAT IS FOR SOCIAL SECURITY, THAT'S OFF THE TABLE JUST FOR SOCIAL SECURITY. THAT LEAVES US 2.5 OF WHICH 1.6 TRILLION WOULD BE FOR TAX REDUCTIONS. THE OTHER -- THE REMAINDER, ABOUT 800- 900 BILLION, WOULD BE USED FOR NEEDED THINGS LIKE PRESCRIPTION DRUG FOR SENIORS, A MODERNIZATION OF MEDICARE AND OTHER EXPENDITURES THAT I WON'T GO INTO DETAIL ABOUT. REMEMBER, EVEN WHEN I SAY THAT THERE'S 5.6 TRILLION COMING IN -- SURPLUS COMING IN OVER THE NEXT TEN YEARS -- AND 3.1 OF THAT IS FOR SOCIAL SECURITY -- WE ALSO HAVE FACTORED IN ONE TRILLION DOLLARS OF EXPENDITURES THAT ISN'T EVEN TALKED ABOUT THAT WE WILL INCREASE EXPENDITURES 4 PERCENT FOR EACH OF THE NEXT TEN YEARS.

Yepsen: AND WHAT ABOUT CAPITAL GAINS? THAT'S NOT IN THE PRESIDENT'S PLAN. A LOT OF YOUR FELLOW REPUBLICANS WANT SOME CAPITAL GAINS RELEASED. WHAT HAPPENS?

Grassley: I'M COMMITTED TO NO MORE THAN $1.6 TRILLION IN TAX REDUCTION, SO CAPITAL GAINS WILL BE FAR DOWN THE PRIORITY LIST, AS FAR AS I'M CONCERNED. NOT THAT IT'S NOT LEGITIMATE. I'M NOT SAYING THAT TAX REDUCTION IS NOT LEGITIMATE, BUT TAX RELIEF FOR WORKING MEN AND WOMEN -- AND WE'RE GOING TO GIVE EVERY INCOME TAX PAYER TAX RELIEF. AND WE'RE GOING TO TAKE SIX MILLION PEOPLE OFF THE TAX ROLLS, AND PEOPLE WITH A FAMILY OF FOUR OF $35,000 A YEAR INCOME WILL GET A 100-PERCENT TAX DEDUCTION.

Glover: DON'T YOU FACE A PRAGMATIC PROBLEM HERE IN YOUR POSITION AS CHAIR OF THE FINANCE COMMITTEE? I MEAN, A GUY NAMED TRENT LOTT LIKES THE CAPITAL GAINS TAX A LOT. HOW DO YOU PREVENT THIS TAX BILL FROM BECOMING A CHRISTMAS TREE AS PEOPLE TRY TO ROUND UP SUPPORT? "YEAH, I'LL SIGN ON BUT I'VE GOT TO HAVE A LITTLE CAPITAL GAINS." "YEAH, I'LL SIGN ON BUT I'VE GOT TO HAVE THIS." HOW DO YOU PREVENT THAT?

Grassley: WELL, TRENT LOTT SHOULD WANT TO UNITE REPUBLICANS RATHER THAN DIVIDE REPUBLICANS. MY JOB IS TO KEEP THE REPUBLICANS TOGETHER, AND I HAVE A LOT OF DIFFERENCE OF OPINION WITHIN MY OWN CAUCUS OF TEN ON THE COMMITTEE. THEN I HAVE TO WORK SOME BIPARTISAN ARRANGEMENTS WITH THE DEMOCRATS TO GET A BIPARTISAN APPROACH. SO TRENT LOTT CAN TALK ABOUT IT, BUT HE'S GOING TO HAVE TO COOL IT. THE REAL GOVERNING FACTOR HERE IS, BEFORE THE PRESIDENT, I SAID THAT 1.6 TRILLION HAS GOT TO BE IT. WE AREN'T GOING TO LET THIS GROW LIKE TOPSY IN THE CASE THAT WE DID IN 1981 WITH THE REAGAN TAX CUT. SECONDLY, THE CHAIRMAN OF THE WAYS AND MEANS COMMITTEE SAID IT FOR THE HOUSE. A COUPLE WEEKS AGO WE HAD A MEETING AT THE WHITE HOUSE WITH THE PRESIDENT, AND THE PRESIDENT SAID THAT HE DID NOT WANT THIS TO GO OVER 1.6 TRILLION DOLLARS. THIS WEEK AT THE BUDGET MEETING WITH THE PRESIDENT, HE REITERATED THAT. SO I THINK THE PRESIDENT KEEPS POUNDING AT THAT. I THINK WE WILL PREEMPT ANY ADDITIONS LIKE CAPITAL GAINS.

Borg: THIS 3.1 TRILLION THAT YOU SAID WOULD BE SET ASIDE FOR SOCIAL SECURITY - FOR THE INTEGRITY OF SOCIAL SECURITY, THAT NEEDS TO BE DONE. IS THAT ALSO A SUBJECT TO POSSIBLE CUTTING AND COMPROMISE, AND IS THAT SUFFICIENT TO ENSURE THE INTEGRITY OF SOCIAL SECURITY?

Grassley: NO, IT ONLY ASSURES THE INTEGRITY OF SOCIAL SECURITY PROBABLY UNTIL THE YEAR 2035. WE MIGHT GET ESTIMATES THIS YEAR THAT WOULD RAISE THAT TO 2040. BUT MY OBLIGATION AS CHAIRMAN OF THE COMMITTEE THAT ALSO HAS JURISDICTION OVER SOCIAL SECURITY IS TO RESTRUCTURE SOCIAL SECURITY SO IT'S GOOD FOR THE FULL 75 YEARS THAT WE'RE SUPPOSED TO PROJECT AHEAD, AND THAT'S MY GOAL BUT THAT WILL BE LATER ON.

Borg: I SEE.

Glover: YOU MENTIONED EARLIER THAT YOU FAVOR A PRESCRIPTION DRUG BENEFIT UNDER THE MEDICARE PROGRAM. SHOULD THAT PRESCRIPTION DRUG BENEFIT PROVIDE THE BENEFIT TO ALL SENIORS OR ONLY SENIORS WHO FIT INCOME REQUIREMENTS? SHOULD IT BE MEANS TESTED?

Grassley: I WOULDN'T WANT TO SAY THAT VERY WEALTHY AMERICANS WOULD NOT GET MUCH OF A BENEFIT FROM IT, BUT WE'RE STARTING OUT THAT IT'S COMPREHENSIVE, INCLUDING EVERYONE. THERE MIGHT BE SOME BASIS OF ABILITY TO PAY, BUT EVERYBODY IS ENTITLED TO IT. IT WILL BE ALL INCLUSIVE AND IT WILL BE PART OF MEDICARE. I HOPE TO ACCOMPANY THE PRESCRIPTION DRUG PROPOSAL WITH SOME CHANGES IN MODERNIZATION OF MEDICARE BECAUSE THE PRACTICE OF MEDICINE IN 1965, WHEN WE STARTED MEDICARE, WAS TO PUT EVERYBODY IN THE HOSPITAL. TODAY THE PRACTICE OF MEDICINE IS TO DO WHAT YOU CAN TO KEEP PEOPLE OUT OF HOSPITALS. THAT'S WHY IT'S LEGITIMATE TO BRING PRESCRIPTION DRUGS INTO THE MEDICARE PROGRAM.

Glover: RUNNING THROUGH ALL OF THESE GOVERNMENT RETIREMENT HEALTH PROGRAMS IS THAT SAME QUESTION ON MEANS TESTING. DON'T YOU LEAVE YOURSELF OPEN TO THE ARGUMENT ABOUT WHY SHOULD THE GOVERNMENT PROVIDE A BENEFIT FOR SOMEBODY WHO HAS GOT 10-, 20 MILLION DOLLARS IN THE BANK?

Grassley: WELL, YOU DO BUT I THINK WE'VE COMPROMISED THAT TO SOME EXTENT IN 1983 WHEN WE STARTED HAVING SOME OF HIGHER INCOME PEOPLE'S SOCIAL SECURITY PUT IN FOR DOUBLE TAXATION. THE SECOND YOU KNOW, ROUND. IF YOU'RE OVER A CERTAIN INCOME, YOU CAN HAVE UP TO 85 PERCENT OF YOUR INCOME NOW HAVE TO BE REPORTED FOR TAXATION. THERE'S NOTHING BLACK AND WHITE ABOUT A LOT OF GOVERNMENT PROGRAMS. NONE OF THEM CAN CLAIM TO BE TOO PURE.

Yepsen: SENATOR, WHEN YOU LOOK AT THIS TAX CUT, ONE OF THE MAJOR CRITICISMS THAT DEMOCRATS ARE MAKING IS THAT MOST OF THE BENEFIT WILL GO TO THE RICH AND THE WELL-TO-DO. HOW DO YOU RESPOND TO THAT?

Grassley: WELL, LET'S LOOK AT THE FACTS. THERE ARE SEVERAL. I PROBABLY WON'T GIVE THEM ALL TO YOU. BUT NUMBER ONE, DON'T FORGET THAT THIS IS A TAX RELIEF FOR EVERY TAXPAYER IN AMERICA. SOME PEOPLE WILL GET 100-PERCENT TAX REDUCTION. THERE WILL BE SIX MILLION LOWER INCOME PEOPLE THAT WILL NEVER PAY INCOME TAX AGAIN. WE HAVE A 33-PERCENT REDUCTION FOR PEOPLE THAT ARE NOW IN THE 15-PERCENT BRACKET THAT ARE GOING TO BE ABLE TO BE IN THE 10-PERCENT BRACKET. THAT 5 PERCENTAGE POINTS IS A 33-PERCENT REDUCTION IN THEIR RATE. COMPARED TO REDUCING FROM 39 PERCENT DOWN TO 33 PERCENT, THAT'S ABOUT A 16-PERCENT REDUCTION IN RATE. ANOTHER FACT IS THAT MIDDLE INCOME FAMILY OF 50,000 WOULD GET A 50-PERCENT REDUCTION IN TAXES. A FAMILY OF FOUR AT 35,000 WILL GET A 100-PERCENT REDUCTION. ADDITIONALLY, THE JOINT TAX COMMITTEE, WHICH IS NONPARTISAN, PROFESSIONAL PEOPLE FOR THE CONGRESS TO FIGURE IMPACT OF TAXES. WHEN THIS TAX PROGRAM IS PASSED, THE TAX STRUCTURE WILL BE MORE PROGRESSIVE THAN IT PRESENTLY IS. THAT MEANS THAT WEALTHY PEOPLE WILL BE PAYING A HIGHER PERCENTAGE OF THE INCOME INTO THE FEDERAL TREASURY THAN THEY DO TODAY.

Yepsen: SENATOR, WHAT DOES ALL OF THIS MEAN FOR IOWA? WE'VE TALKED ABOUT TAX CUTS. WE'VE TALKED ABOUT SOCIAL SECURITY, PRESCRIPTION DRUGS. ALL OF THOSE PROGRAMS AFFECT ALMOST ALL OF US IN IOWA. WHAT ARE THESE GOING TO MEAN FOR IOWANS?

Grassley: FIRST OF ALL, LET'S MAKE IT CLEAR, I MAY BE CHAIRMAN OF THE SENATE FINANCE COMMITTEE AND HAVE SOME NATIONAL LEADERSHIP, BUT EVERY MORNING I GET UP, I'M CONCERNED ABOUT WHAT I DO FOR IOWA AND I'M FOCUSED ON IOWA. AND EVERY ONE OF THESE THINGS ARE FOCUSED ON IOWA. THE FINANCE COMMITTEE IS KIND OF THE QUALITY-OF-LIFE COMMITTEE. IF I GIVE YOU MORE MONEY FOR YOU TO SPEND, IT'S GOING TO ENHANCE YOUR QUALITY OF LIFE. I SHOULDN'T SAY I'M GIVING IT TO YOU. YOU OUGHT TO BE ABLE TO KEEP MORE OF YOUR HARD WORK MONEY FOR YOU TO SPEND YOURSELF INSTEAD OF MY SPENDING IT. THAT ENHANCES YOUR QUALITY OF LIFE. FOR SENIORS THAT CAN'T AFFORD PRESCRIPTION DRUGS AND THEY GET HELP ON BUYING PRESCRIPTION DRUGS, THAT OUGHT TO MAKE THEIR RETIREMENT A LITTLE MORE SECURE. MY COMMITTEE HAS JURISDICTION OVER INTERNATIONAL TRADE. WHETHER IT'S PRINCIPLE FINANCIAL, COLLINS RADIO, JOHN DEERE, THEY'RE INVOLVED IN THE EXPORT BUSINESS. WHEN YOU EXPORT, YOU CREATE JOBS. THOSE JOBS PAY 15 PERCENT ABOVE THE NATIONAL AVERAGE OF JOBS. THAT'S QUALITY OF LIFE. WHEN WE WORK ON WELFARE REFORM, WE MOVE PEOPLE FROM WELFARE, ON THE FRINGE OF SOCIETY, TO WORK. IN THE MIDDLE OF SOCIETY, SO THEY CAN ADVANCE. WE'RE ENHANCING THE QUALITY OF LIFE FOR THE PEOPLE ON WELFARE. OR SOME PEOPLE WOULD SAY THE IRS IS HARASSING ME. I'VE GOT JURISDICTION OVER THE INTERNAL REVENUE SERVICE. IT'S MY JOB TO MAKE SURE THAT IT'S A BUREAUCRACY THAT'S CUSTOMER FRIENDLY.

Glover: LET'S GET BACK TO SPEAKING OF IOWA. THERE'S A FARM BILL THAT'S UP NEXT YEAR. WHERE ARE WE HEADED WITH THAT FARM BILL? ARE WE GOING TO TINKER WITH FREEDOM TO FARM ACT? IS THERE GOING TO BE A NEW APPROACH? HOW IS IT GOING TO PLAY OUT?

Grassley: WELL, I THINK IT WILL BE MORE TINKERING BECAUSE, ACTUALLY, FREEDOM TO FARM IS TINKERING OVER WHAT WE HAD BEFORE, JUST A LITTLE BIT DIFFERENT WAY OF PAYING OUT, A LITTLE MORE FREEDOM FOR FARMERS TO PLANT WHAT THEY WANT TO WITHOUT BUREAUCRATS TELLING THEM WHAT TO PLANT. I THINK THERE'S THREE THINGS THAT ARE IN THE BILL NOW WE WILL KEEP. ONE, THE ABILITY OF FARMERS TO PLANT, ACCORDING TO THEIR OWN MANAGEMENT DECISIONS, THE NUMBER OF ACRES OF CORN AND SOYBEANS, ET CETERA. I THINK WE'LL KEEP THE LDP SO THAT WE CAN CONTINUE MOVING GRAIN TO MARKET RATHER THAN HAVING IT STORED BY THE GOVERNMENT. MARKET CLEARING IS PRETTY IMPORTANT, AND THAT'S ALSO A FARMER'S DECISION RATHER THAN A POLITICIAN'S DECISION TO MARKET. AND LASTLY, WE'LL KEEP THE ANNUAL AMTA PAYMENTS. I THINK WHAT WILL BE NEW IS THAT SOMETHING WE DIDN'T ANTICIPATE IN '96 WAS THREE YEARS LOW OF GRAIN PRICE AS WE HAVE NOW, AND NOW IT LOOKS LIKE FOUR YEARS. WHEN WE HAVE TO HAVE EMERGENCY PAYMENTS TO SUPPLEMENT THE SAFETY NET THAT WE PROMISED FARMERS, THE FARMER IS DEPENDENT UPON CONGRESS MAKING A DECISION. WE OUGHT TO HAVE A COUNTER-CYCLICAL PROGRAM THAT WOULD AUTOMATICALLY KICK IN WHEN PRICES ARE LOW SO THAT THEY DON'T HAVE TO DEPEND UPON THE FARMER -- OR THE CONGRESS MAKING A DECISION -- WHEN PRICES ARE LOW.

Glover: THERE ARE SOME PROJECTIONS OUT THERE THAT FARM INCOME COULD BE DOWN AS MUCH AS 20 PERCENT NEXT YEAR FOR A VARIETY OF FACTORS. WILL THIS FARM BILL FIX THAT?

Grassley: THIS FARM BILL WILL NOT TAKE EFFECT UNTIL THE YEAR 2003, BECAUSE THERE'S 2001, 2002 FOR THE '96 FARM BILL.

Glover: LET ME REPHRASE: IF THIS FARM BILL DOESN'T FIX IT, WILL THIS CONGRESS FIX IT?

Grassley: THE ANSWER IS YES. BUT, REMEMBER, IT'S STILL WITHIN THE CONCEPT OF THE FACTS OF FARM PROGRAMS FOR 60 YEARS, WHETHER THEY WERE THE OLD ONES OR THE NEW ONES. THERE'S TWO SOURCES OF FARM INCOME. ONE IS THE MARKETPLACE WHERE THE FARMER WANTS TO GET IT AND WHERE THEY OUGHT TO HAVE A RIGHT TO GET IT, BUT IT DOESN'T ALWAYS HAPPEN BECAUSE THERE'S THINGS BEYOND THEIR CONTROL. THERE'S EVEN THINGS THAT PEOPLE IN WASHINGTON DON'T ANTICIPATE THAT ARE BEYOND CONTROL THAT REDUCE PRICES. THE SECOND PLACE IS THE FEDERAL TREASURY. THAT'S A SAFETY NET. WE PROMISED A SAFETY NET FOR ANY FARM PROGRAM FOR THE LAST SIX YEARS, INCLUDING THIS ONE, AND WE'RE GOING TO KEEP A SAFETY NET FOR FARMERS.

Yepsen: WHAT IS THE FUTURE OF ETHANOL? YOU'VE GOT A NEW CONGRESS. GOT A NEW PRESIDENT. WHAT'S THE FUTURE OF ETHANOL?

Grassley: CAN I SUGGEST TO YOU WHAT THE FUTURE OF ETHANOL IS MAYBE FROM THE FACT THAT THERE WAS A LOT OF FEAR EXPRESSED IN THE LAST ELECTION THAT THIS PRESIDENT MIGHT NOT BE CONCERNED ABOUT ETHANOL BECAUSE HE'S FROM TEXAS? THREE OR FOUR -- I'VE HAD FIVE OR SIX MEETINGS AT THE WHITE HOUSE SINCE BUSH HAS BEEN PRESIDENT. AT LEAST TWO OF MEETINGS, ETHANOL CAME UP NOT BECAUSE I RAISED IT BUT BECAUSE HE RAISED IT. SO I THINK WE'VE GOT A PRESIDENT THAT THIS IS SOMETHING HE REMEMBERS FROM THE IOWA CAUCUSES. SECONDLY, THE FUTURE IS GOOD BECAUSE THE TAX CREDIT -- OR THE TAX EXEMPTION DOESN'T RUN OUT TILL THE YEAR 2008. SO WE'RE PROTECTED THERE FOR A WHILE. AND THE OTHER MAJOR ITEM IS THIS: THE CLINTON ADMINISTRATION, MUCH TO MY SURPRISE, DIDN'T GRANT A WAIVER TO CALIFORNIA FROM THE MTBE POISONOUS SITUATION OUT THERE, SO THAT ETHANOL NOW HAS A MONOPOLY IN CALIFORNIA. AS LONG AS THIS ADMINISTRATION DOES NOT GRANT THAT WAIVER -- AND I'VE TALKED TO PEOPLE IN THE WHITE HOUSE, THE DEPARTMENT OF AGRICULTURE AND EPA, ABOUT THIS JUST SINCE JANUARY 20, THAT WE DON'T WANT THAT WAIVER GRANTED IN CALIFORNIA. I HAVE NOT HAD AN ANSWER TO THAT, BUT I KNOW ENOUGH THAT IT'S ON THE MINDS OF PEOPLE HIGH UP IN THIS ADMINISTRATION THAT THEY'RE GOING TO CONSULT US FIRST.

Yepsen: I WANT TO SWITCH GEARS. THIS PRESIDENT IS COMMITTED TO INCREASING MILITARY SPENDING. IN THE PAST, YOU HAVE BEEN A CRITIC OF PENTAGON SPENDING. HOW DO YOU FEEL PRESIDENT BUSH IS HANDLING MILITARY SPENDING ISSUES? WILL YOU BE WITH HIM ON QUESTIONS OF INCREASING THE PENTAGON BUDGET?

Grassley: I'M SO PLEASANTLY SURPRISED AND SHOCKED, IN A SENSE, OF THE APPROACH HE'S TOOK. AND AS THE BUDGET MEETING THIS LAST THURSDAY THAT I REFERRED TO ALREADY IN THIS MEETING, AT THE END OF THE MEETING I SAID TO HIM THAT I WAS REALLY PLEASED WITH HOW CAUTIOUS HE IS APPROACHING THE INCREASE IN DEFENSE EXPENDITURES. HE'S NOT GOING TO DO ANYTHING FOR A YEAR, UNTIL HE GETS THIS STUDY BACK, SO HE KNOWS HOW TO SPEND IT WISELY. BECAUSE REAGAN CAME IN AND AS ASSISTANT SECRETARY OF DEFENSE SAID WE RAMPED UP THE DEFENSE EXPENDITURES, PUT THE MONEY BAGS ON THE DEFENSE OF THE PENTAGON AND SAID TO THE DEFENSE INDUSTRY, "COME AND GET IT." THAT'S WHAT I HONESTLY THOUGHT WOULD HAPPEN WITH THIS PRESIDENT. I HAD TALKED ABOUT IT AS I TRAVELED WITH HIM IN IOWA IN JANUARY. AT THE END OF MY COMMENT THIS LAST THURSDAY, HE SAID, "WELL, WHAT DO YOU THINK WE TALKED ABOUT IN THOSE IOWA CORNFIELDS?" SO I DON'T KNOW WHETHER MY -- I HAD ANY IMPACT ON THAT OR NOT, BUT HE IS RAMPING UP VERY SLOWLY AND I WILL BE SUPPORTIVE OF SOME INCREASE IN DEFENSE EXPENDITURES.

Glover: ONE OF THE HOTTEST TOPICS IN WASHINGTON -- PARDON THE PUN -- IS HEATING BILLS. HEATING BILLS ARE GOING OUT OF SIGHT, AS EVERYONE KNOWS THROUGHOUT THE UPPER MIDWEST. A LOT OF PEOPLE IN CONGRESS HAVE COME UP WITH PROPOSALS TO DO SOMETHING ABOUT A TAX CREDIT FOR HEATING BILLS, EXPLORING, DRILLING IN THE ARCTIC. WHAT DO YOU THINK OUGHT TO BE DONE THAT CONGRESS CAN DO TO RESPOND TO HIGH HEATING BILLS, AND DO YOU FAVOR OPENING UP THE ARCTIC WILDERNESS TO DRILLING?

Grassley: WELL, IF WE OPEN UP THE ARCTIC, THERE'S A LOT OF NATURAL GAS UP THERE, BUT IT'S NOT GOING TO BE A SOLUTION TO OUR ENERGY PROBLEMS. IT'S GOING TO HELP WITH THE MARGIN FOR THE NEXT 30 YEARS. BUT THERE'S ONLY MAYBE TEN YEARS OF SUPPLY THERE, BUT IT'S GOING TO BE BENEFICIAL AS A MARGIN FOR THE NEXT TEN YEARS, AND I HAVE VOTED FOR THAT IN THE PAST. WHAT WE'RE GOING TO HAVE WITHIN THE NEXT WEEK OR TEN DAYS IS THE INTRODUCTION OF A VERY COMPREHENSIVE REPUBLICAN PROGRAM THAT INCLUDES MORE EXPLORATION IN DRILLING. IT'S GOING TO INCLUDE TAX CREDITS FOR ENERGY EFFICIENCY, FOR ALTERNATIVE ENERGY. IT'S GOING TO HAVE MY WIND ENERGY TAX CREDIT IN IT RENEWAL AGAIN. I'M PROPOSING THE BIOMASS ENERGY TAX CREDIT AS AN EXAMPLE. WE'RE GOING TO ENCOURAGE PEOPLE, THROUGH TAX CREDITS, TO BUY THE MORE EFFICIENT MAYTAG APPLIANCES THAT ARE COMING OUT NOW, THINGS OF THAT NATURE. BUT LET ME SAY THAT THE MOST IMPORTANT THING IS FOR THE PEOPLE, PROBABLY LOWER INCOME THAT HAVE TO CHOOSE BETWEEN FOOD AND HEAT, THEY SHOULDN'T HAVE TO MAKE THAT CHOICE. WE'RE GOING TO INCREASE THE LOW INCOME, HOME-ENERGY HEATING ASSISTANCE PROGRAM TO HELP THEM OUT. THEN LONG-TERM WHAT WE HAVE TO DO IS GET MORE NATURAL GAS INTO PRODUCTION. AND THAT BASICALLY IS UNDOING ALL THE BAD POLICIES OF THE PREVIOUS ADMINISTRATION THAT DID NOT ALLOW DRILLING UNDER PUBLIC LAND, AND THAT DOES NOT EVEN TAKE INTO CONSIDERATION ANWAR. THAT'S RIGHT HERE IN THE CONTINENTAL UNITED STATES OR ON THE CONTINENTAL SHELF. ONE-THIRD OF OUR KNOWN RESERVES OF NATURAL GAS ARE THERE, AND WE CAN EXPLORE THERE IN AN ENVIRONMENTAL WAY AND WE SHOULD DO IT. THE ECONOMICS OF NATURAL GAS IS LOWER SUPPLY, HIGHER PRICES. IF YOU WANT TO BRING PRICES DOWN, YOU ENHANCE SUPPLY.

Yepsen: SENATOR, ONE OF THE HOTTEST ISSUES IN WASHINGTON RIGHT NOW, ANOTHER THING MIKE RAISED, WERE PRESIDENT CLINTON'S PARDONS. A LOT OF REPUBLICANS ARE VERY CRITICAL OF PRESIDENT CLINTON'S PARDONS. THEY WANT TO INVESTIGATE. OTHER REPUBLICANS ARE SAYING LET'S MOVE ON. WHERE DO YOU COME DOWN ON THIS QUESTION OF WHAT SHOULD BE DONE ABOUT PRESIDENT CLINTON'S PARDON?

Grassley: WELL, I THINK IT'S PERFECTLY LEGITIMATE TO INVESTIGATE AND MAKE SURE WHAT WAS DONE WAS DONE RIGHT, BUT AS FAR AS THE PARDON ITSELF IS CONCERNED, MY BELIEF IN READING THE CONSTITUTION IS THAT THE PRESIDENT'S POWER IS ABSOLUTE. THERE'S NOT ANYTHING YOU CAN DO ABOUT THE PEOPLE WHO HAVE BEEN PARDONED UNLESS THEY COMMIT ANOTHER CRIME, AND THEN YOU CAN CHARGE THEM WITH THOSE CRIMES. Yepsen: WHY HAVE THESE HEARINGS -- IF THERE'S NOTHING THAT CAN BE DONE ABOUT IT, WHAT'S THE PURPOSE IN WALLOWING IN THE PAST? AREN'T YOU DISTRACTING FROM PRESIDENT BUSH'S AGENDA-SETTING ABILITY WHEN YOU KEEP PRESIDENT CLINTON ON THE NATION'S FRONT BURNER?

Grassley: PRESIDENT BUSH OBVIOUSLY KNOWS THAT BECAUSE HE'S NOT GOING TO TALK ABOUT THIS. HE'S LOOKING TO THE FUTURE AND I THINK IT WOULD BE A GOOD THING IF THE CONGRESS WOULD LOOK TO THE FUTURE. ON THE OTHER HAND, ONE OF THE COMMITTEES DOING THE INVESTIGATION IS THE COMMITTEE OF JUDICIARY THAT I SERVE ON IN THE UNITED STATES SENATE.

Glover: SENATOR, I'LL KEEP THE HOT THING GOING. ONE OF THE HOTTEST ELECTIONS IN THE STATE NEXT YEAR WILL BE THE RACE AGAINST SENATOR HARKIN. IT LOOKS LIKE CONGRESSMAN GANSKE IS GOING TO RUN AGAINST HIM IN A PRETTY TOUGH ELECTION. WHAT ROLE WILL BE PLAY IN THAT ELECTION?

Grassley: WELL, FIRST OF ALL, I HOPE THAT WE HAVE A VERY, VERY GOOD CANDIDATE BECAUSE OBVIOUSLY SENATOR HARKIN HAS BEEN VERY SUCCESSFUL IN BEATING SOME VERY QUALIFIED PEOPLE WHO HAVE RUN AGAINST HIM, AND THAT MEANS WE'VE GOT TO HAVE SOMEBODY THAT'S MORE QUALIFIED AND A BETTER CAMPAIGNER THAN WE'VE EVER HAD BEFORE. IT'S HARD TO BEAT SOME OF THOSE PEOPLE THAT WE'VE HAD OUT THERE. I THINK CONGRESSMAN GANSKE OBVIOUSLY FITS INTO THAT. I DON'T KNOW WHETHER HE WILL HAVE A PRIMARY. IF HE DOESN'T HAVE A PRIMARY, I WILL BE HELPING HIM VERY EARLY. IF HE HAS A PRIMARY, I WILL STAY OUT OF THAT PRIMARY UNTIL JUNE, BUT I WILL BE AS A REPUBLICAN LEADER, OBVIOUSLY, RAISING MONEY AND HELPING HIM AS BEST I CAN. I'M GOING TO BE CAMPAIGNING FOR HIM. IT'S MY TRADITION NOT TO CAMPAIGN AGAINST A COLLEAGUE.

Glover: AND THE OTHER RACE NEXT YEAR IS THE GOVERNOR'S ELECTION. ARE YOU INVOLVED IN TRYING TO RECRUIT OR HELP CANDIDATES ON THE REPUBLICAN SIDE IN THAT ELECTION?

Grassley: I HAVE NOT DONE ANYTHING ALONG THAT LINE, BUT I'M GOING TO ENCOURAGE STRONG CANDIDATES. I THINK THERE AGAIN, GOVERNOR VILSACK IS GOING TO BE VERY DIFFICULT TO RAISE. HE RAISED A MILLION DOLLARS AT HIS BIRTHDAY PARTY. I LOOK AT THAT AND SAY, I'VE NEVER RAISED $200,000 IN IOWA, SO I'VE GOT TO START RAISING A LOT OF MONEY FOR THE REPUBLICAN PARTY. I'M THEIR TOP ELECTED OFFICIAL. I'M GETTING A LOT OF HEAT FROM REPUBLICANS. I'VE GOT TO DO BETTER AT FINANCES IN ORDER TO BE ABLE TO COMPETE. SO OBVIOUSLY, I'M GOING TO BE DOING THAT PART OF IT.

Borg: YOU'VE GOT TO HAVE A BIGGER BIRTHDAY PARTY. THANKS FOR BEING WITH US TODAY, SENATOR. ON OUR NEXT EDITION OF IOWA PRESS, BACK TO THE SPOTLIGHT AT THE IOWA STATEHOUSE AND THE BUSINESS OF THE 79TH IOWA GENERAL ASSEMBLY. THAT'S IT FOR THIS WEEK'S EDITION OF IOWA PRESS. I'M DEAN BORG. THANKS FOR JOINING US.

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