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Iowa Press #2906
October 12, 2001

Borg: STATE GOVERNMENT IN IOWA FINDS ITSELF ADJUSTING TO YET ANOTHER BUDGET CRISIS, AND SOLUTIONS ARE PROVING HARD TO COME BY. WE'LL DISCUSS THE PROBLEM AND POTENTIAL SOLUTIONS WITH MEMBERS OF THE IOWA LEGISLATURE'S APPROPRIATIONS COMMITTEES: SENATOR JEFF LAMBERTI OF ANKENY AND REPRESENTATIVE STEVE FALCK OF STANLEY ON THIS EDITION OF "IOWA PRESS."

Narrator: FUNDING FOR "IOWA PRESS" WAS 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.

STATEWIDE IOWA PUBLIC TELEVISION IS CELEBRATING THE 30TH ANNIVERSARY OF "IOWA PRESS," NOW SERVING THE STATE AS IOWA'S LONGEST RUNNING PUBLIC AFFAIRS PROGRAM. WITH THIS WEEK'S EDITION OF "IOWA PRESS," HERE IS DEAN BORG.

Borg: BUDGET CRISES ARE NOTHING NEW IN IOWA. UNFORTUNATELY, WE'VE HAD CHECKBOOK PROBLEMS BEFORE, AND WE'VE WORKED OUR WAY OUT OF THE RED INK. THIS TIME, THOUGH, THE BUDGET CRISIS COMES DURING A SAGGING NATIONAL ECONOMY, AND HERE IN IOWA TOO. AND THOSE CLOSE TO THE PATIENT SAY THE MEDICINE IS LIKELY TO BE PAINFUL. THE CURRENT BUDGET CRUNCH BEGAN LATE LAST SPRING WHEN REVENUE PROJECTIONS FELL SOME $300 MILLION SHORT OF BUDGET COMMITMENTS. TODAY REVENUE PROJECTIONS ARE COMING UP SHORT ONCE AGAIN, AND THIS TIME UP TO $60 MILLION SHORT, AND AGAIN ADJUSTMENTS ARE BEING MADE. THIS TIME ACROSS-THE-BOARD CUTS ARE SEEN AS A REALITY IN STATE GOVERNMENT. IN JANUARY, THE 79TH IOWA GENERAL ASSEMBLY RECONVENES, AND BUDGET EXPERTS ARE PREDICTING FURTHER CUTS TO RECONCILE REVENUES RECEIVED TO COMMITTED BUDGET OUTLAYS. IT'S A MESSY PROCESS AND IT'S PRODUCING QUITE A BIT OF HANDWRINGING, AS YOU MIGHT EXPECT, AT THE IOWA STATEHOUSE, AS BOTH ADMINISTRATIVE AND LEGISLATIVE BUDGET EXPERTS SCRAMBLE TO FIND A SOLUTION. JOINING US TODAY, TWO LEGISLATORS WHO ARE CLOSE TO THAT PROCESS. SENATOR JEFF LAMBERTI OF ANKENY CHAIRS THE APPROPRIATIONS COMMITTEE IN THE IOWA SENATE; AND REPRESENTATIVE STEVE FALCK OF STANLEY IS AN ASSISTANT MINORITY LEADER, AND HE ALSO SITS ON THE APPROPRIATIONS COMMITTEE IN THE IOWA HOUSE. GENTLEMEN, WELCOME TO "IOWA PRESS."

THANK YOU.

Borg: IT'S A DIFFICULT SUBJECT. WE'RE GOING TO SEE WHAT SOLUTIONS YOU MIGHT HAVE IN MIND TODAY. ACROSS THE TABLE: STATEHOUSE REPORTERS JENEANE BECK OF "KUNI PUBLIC RADIO," AND MIKE GLOVER OF "THE ASSOCIATED PRESS."

Glover: SENATOR LAMBERTI, THE GOVERNOR HAS SAID HE WANTS TO CUT SPENDING ACROSS- THE-BOARD BUT HE WANTS TO NEGOTIATE WITH LEGISLATIVE LEADERS TO FIND A WAY TO PLUG SOME OF THAT MONEY BACK INTO THE BUDGET. IN ESSENCE, HE SAYS HE WANTS TO CUT A DEAL WITH YOU GUYS RUNNING THE LEGISLATURE. WHAT DO YOU HAVE TO HAVE AS PART OF THAT DEAL?

Lamberti: WELL, FIRST OF ALL, I'D SAY WE'RE CERTAINLY INTERESTED IN SITTING DOWN WITH THE GOVERNOR. AS YOU KNOW, THE GOVERNOR'S ACROSS-THE-BOARD CUT WOULD RESULT IN ABOUT $200 MILLION, AND I THINK WE HAVE TO KIND OF BACK OUR WAY INTO WHAT WE'RE WILLING TO DO. WITH THE NEW REVENUE ESTIMATE, WE KNOW THAT WE HAVE TO CUT AT LEAST $150 MILLION, ROUGHLY 152, OUT OF THE BUDGET JUST TO GET AT ZERO. I'M CONCERNED ABOUT HOW MUCH DEALING WE CAN DO WITHIN THE CONFINES OF THE $200 MILLION IN TERMS OF HOLDING CERTAIN ITEMS HARMLESS BECAUSE THAT NUMBER DOES NOT INCLUDE ANY ROOM IF THE REVENUES DO COME IN UNDER THE 1.9 PERCENT THAT WE EXPECT, IT DOESN'T COVER AN ANTICIPATED MEDICAID SHORTFALL THAT WE'RE GOING TO HAVE, AND IT DOESN'T DO ANYTHING TO HELP US IN FISCAL YEAR '03. SO I THINK WE NEED TO SERIOUSLY TALK ABOUT WHAT WE CAN DO, BUT I THINK THE NUMBER NEEDS TO BE AT CLOSE TO $200 MILLION AS POSSIBLE. WE'RE CERTAINLY WILLING TO TALK ABOUT THINGS LIKE PUBLIC SAFETY, NATIONAL GUARD. WE'LL BE WILLING TO TALK ABOUT K-12 EDUCATION, AS WELL. BUT I THINK THAT NUMBER HAS TO BE CLOSER TO $200 MILLION THAN THE 150, BECAUSE WE JUST HAVE TO MAKE THOSE KIND OF FUNDAMENTAL CHANGES.

Glover: REPRESENTATIVE FALCK, AS A DEMOCRAT, WHAT DO YOU NEED TO SEE IN THIS PACKAGE BEFORE DEMOCRATS CAN GO ALONG WITH THIS?

Falck: WELL, I AGREE THAT THE NUMBER HAS GOT TO BE CLOSE TO 200 MILLION. BUT YOU KNOW, MIKE, IN THE LAST 30 DAYS WE'VE SEEN SOME HORRIFIC EVENTS, AND THIS IS A DEFINING MOMENT FOR US IN THE NATION AND HERE IN THE STATE. HOW WILL HISTORY RECORD US AS A PEOPLE? I THINK -- I KNOW IOWANS. IOWANS, WHEN THEY RESPOND TO AN EMERGENCY, HAVE AN ATTITUDE OF "HOW CAN I HELP." AND RIGHT NOW WITH THE REVENUES COMING IN TO 18-YEAR LOWS, THAT ATTITUDE RIGHT NOW FOR OUR STATE EMPLOYEES, FOR THE CITIZENS, AND FOR LEGISLATORS NEEDS TO BE "HOW CAN I HELP." SO I THINK WE NEED TO SIT DOWN. AND AFTER YESTERDAY, WITH THE R.E.C. CONFERENCE AND ON A CONFERENCE CALL TO THE GOVERNOR AND LEGISLATIVE LEADERS, THE TONE WAS DIFFERENT. THE TONE WAS ONE OF WE NEED TO SIT DOWN AND TOGETHER, IN A BIPARTISAN MANNER, WORK THESE ISSUES OUT.

Glover: WHAT I SEEM TO BE HEARING FROM BOTH OF YOU IS: HE CUT $200 MILLION ACROSS-THE-BOARD AND WANTS TO STICK SOME OF THAT BACK IN. I HEAR RELUCTANCE TO STICK VERY MUCH, IF ANY, OF THAT BACK IN; IS THAT CORRECT?

Falck: WELL, EVERYTHING HAS CHANGED. WE DON'T KNOW IF 200 IS ENOUGH. WE HOPE THAT IT IS. IT MAY BE; IT MAY NOT BE. BUT I THINK IT'S A GOOD STARTING POINT. IF WE CAN COME BACK AND RESTORE SOME FUNDING, THAT'S WHERE WE'RE GOING TO HAVE TO SIT DOWN AND AGREE ON OUR PRIORITIES. IN EDUCATION, K-12, PUBLIC DEFENSE, PUBLIC SAFETY ARE SOME OF THOSE PRIORITIES.

Glover: SENATOR LAMBERTI, IS THAT AN ACCURATE ASSESSMENT?

Lamberti: I THINK SO, BECAUSE WE'RE WILLING TO SIT DOWN WITH THE GOVERNOR AND TALK ABOUT PUTTING SOME OF IT BACK, BUT I'M CONCERNED THAT THERE'S NOT MUCH ROOM. AND I THINK ONE OF THE THINGS THAT'S BEEN LEFT OUT OF THIS IS WE TALK ABOUT NEEDING TO TAKE 150 MILLION OUT OF THE FISCAL YEAR '02 BUDGET, THE CURRENT YEAR BUDGET. WE'VE RUN NEW PROJECTIONS BASED UPON THE REVENUE ESTIMATING CONFERENCE, AND THE NUMBER WE'RE SEEING THAT WE HAVE A SHORTFALL FOR '03 IS $450 MILLION. SO WE NEED TO START THE PROCESS AND THAT'S WHY I'M CONCERNED THAT WHILE WE'LL TALK WITH THE GOVERNOR ABOUT PUTTING SOME THINGS BACK IN, I'M NOT SO SURE THAT THE 4.3 PERCENT ACROSS-THE-BOARD WITH WHAT THE GOVERNOR WANTS TO PUT BACK IN IS GOING TO GET US THERE. WE NEED TO BE AS CLOSE TO $200 MILLION AS POSSIBLE.

Beck: DO YOU WISH, THEN, HE HAD GONE FARTHER THAN 4.3 PERCENT, THAT MAYBE HE HAD CUT ACROSS-THE-BOARD 5 PERCENT, 6 PERCENT SO THAT THERE WAS LEEWAY TO PUT MONEY BACK IN FOR PUBLIC SAFETY, FOR K-12 SCHOOLS?

Lamberti: I THINK IT WOULD HAVE MADE IT EASIER FOR US TO GO BACK IN AND PUT SOME OF THAT MONEY BACK IN. AND OF COURSE, IN SEPTEMBER THE GOVERNOR ANNOUNCED 7 PERCENT ACROSS THE BOARD FOR SELECTED AREAS, HOLDING K-12 AND SOME OTHER ITEMS HARMLESS. AGAIN, MY CONCERN IS THAT PEOPLE NOT GET TOO CAUGHT UP IN THE 4.3 PERCENT THIS YEAR. I KNOW, FOR EXAMPLE, I'VE SEEN NEWS ARTICLES COMING OUT OF THE REGENTS. THEY'RE KIND OF BREATHING A SIGH OF RELIEF THAT WE DON'T HAVE TO DO 7 PERCENT. WE'RE ONLY TALKING ABOUT 4.3; MAYBE WE WON'T RAISE TUITION AS MUCH AS WE WERE TALKING ABOUT. I THINK PEOPLE REALLY NEED TO FOCUS IN ON THAT '03 NUMBER OF $450 MILLION, BECAUSE IN THE BIGGER SCOPE OF THINGS, 150 LOOKS PRETTY SMALL COMPARED TO THE 450.

Beck: SHOULD HE HAVE GONE DEEPER THAN 4.3 PERCENT?

Falck: WELL, WE NEED TO SOLVE '02 FIRST. AND I THINK THIS -- WHERE WE'VE STARTED WITH 200 MILLION IS A GOOD FIRST STEP. WE'LL GET THAT SOLVED, BECAUSE WE'RE IN THE CURRENT BUDGET YEAR. WHAT SOUNDS LIKE 4.3 PERCENT IN A $4.8-BILLION BUDGET DOESN'T SOUND LIKE MUCH, BUT WHEN YOU ARE FOCUSED IN ONLY ON PART OF THE BUDGET YEAR, IT'S ACTUALLY MUCH LARGER THAN THAT. SO WE NEED TO DO WHAT WE CAN TO SOLVE '02, AND THEN WE'LL TAKE ANOTHER LOOK AT '03. THIS IS -- YOU KNOW, WITHIN THE LAST TWO BUDGET YEARS, WE WILL BE HAVING CUT OUT OVER ALMOST A BILLION DOLLARS OUT OF OUR BUDGET. SO IT'S NOT AN EASY -- IT'S GOING TO BE VERY PAINFUL.

Borg: SENATOR LAMBERTI, YOU HAD SAID THAT PUBLIC SAFETY, NATIONAL GUARD; PUBLIC SCHOOLS, K-12, MAY NOT BE SUBJECT TO THE ACROSS-THE-BOARD CUTS. WOULD YOU ADVISE THOSE PEOPLE NOT TO DO ANY CUTTING YET? THE PHILOSOPHY IS THE EARLIER YOU CAN CUT IN FISCAL YEAR, THE LESS PAINFUL IT IS. WHAT WOULD BE YOUR ADVICE?

Lamberti: WELL, I THINK WHAT WE NEED TO FOCUS -- AND THE GOVERNOR HAS TALKED ABOUT CALLING US IN WITHIN ABOUT THE NEXT MONTH OR SO, AND I THINK WE NEED TO START HAVING SERIOUS NEGOTIATIONS WITH THE GOVERNOR SO WE DETERMINE WHICH OF THOSE ITEMS WE MAY BE ABLE TO PUT BACK IN. I THINK THERE'S SOME GENERAL AGREEMENT REGARDING PUBLIC SAFETY IN THE NATIONAL GUARD IN THIS ENVIRONMENT THAT WE WANT TO HOLD THEM HARMLESS. I THINK THE ISSUE OF K-12 IS REALLY ONE THAT WE NEED TO RESOLVE. AND SO I THINK IF YOU'RE IN THE NATIONAL GUARD OR PUBLIC SAFETY, YOU'RE PROBABLY OKAY. I THINK WE NEED TO PROVIDE SOME CERTAINTY TO K-12 HOPEFULLY WITHIN THE NEXT WEEK OR SO AS WE WORK THROUGH THESE ISSUES, AND WHEN WE COME IN, THEY KNOW WHAT WE'RE GOING TO DO, BECAUSE CERTAINTY IS A BIG PART OF THIS.

Glover: WHAT DOES THAT MEAN, I MEAN SOME CERTAINTY FOR K-12?

Lamberti: THEY NEED TO KNOW ARE WE GOING TO INCLUDE THEM COMPLETELY OR PARTIALLY WITHIN THE CONFINES OF THIS 4.3-PERCENT ACROSS-THE-BOARD CUT OR ARE WE GOING TO TRY TO HOLD THEM EXEMPT. THERE'S SOME LOGISTICS --

Glover: AND THE ANSWER TO THE QUESTION IS?

Lamberti: FROM MY STANDPOINT, I HAVE TO GET AS CLOSE TO $200 MILLION AS POSSIBLE, SO I THINK I'M GOING TO BE INCLINED THAT THEY'RE GOING TO HAVE TO BE INCLUDED. THAT'S MY POSITION ON THIS.

Beck: AND YOURS?

Falck: WELL, WHAT'S DIFFICULT IS THAT WILL MEAN TEACHERS AND STAFF LAYOFFS. AND WE HAVE KIDS RIGHT NOW IN THE CLASSROOM, SO IT'S HARD TO PLAN FOR. WHEN WE TALK ABOUT '03, WE CAN AT LEAST HAVE SOME TIME TO PLAN FOR AND SCHOOL DISTRICTS CAN PLAN FOR IT. BUT WHEN YOU'RE RIGHT IN THE MIDDLE OF A SCHOOL YEAR, THAT MAKES IT PRETTY DARN DIFFICULT.

Borg: I DON'T THINK THEY CAN LAY OFF, CAN THEY, IN THE MIDDLE OF A SCHOOL YEAR, TEACHERS?

Falck: AND THAT'S SOMETHING THAT WE'RE GOING TO HAVE TO TALK ABOUT, WHAT IS POSSIBLE.

Beck: COULD YOU INSTEAD TAKE AWAY THINGS LIKE THE TECHNOLOGY MONEY? YOU TRIED TO REDUCE THAT FUNDING, AND THE GOVERNOR VETOED THAT SO THAT THE FUNDING WENT BACK UP TO THE HIGHER LEVEL. COULD YOU REDUCE THINGS LIKE TECHNOLOGY FUNDING SO THAT TEACHERS ARE HELD HARMLESS BUT THERE ARE OTHER BLOCK GRANTS THAT ARE CUT?

Lamberti: I THINK WE HAVE TO LOOK AT THAT, AS WE TALK ABOUT TRYING TO GET TO THAT $200-MILLION FIGURE, WHAT WE CAN DO FOR K-12. AND I THINK THAT'S ALL ON THE TABLE.

Glover: THERE ARE DISCUSSIONS ABOUT WHEN THIS ECONOMY IS GOING TO TURN AROUND, BUT FOR RIGHT NOW WE KNOW THAT IT'S PRETTY MUCH IN THE TANK. WHAT'S WRONG WITH THE ARGUMENT THAT YOU JUST OUGHT TO TAKE ALL OF THIS $200 MILLION, STICK IT IN THE BANK, AND USE IT AS A PROTECTION AGAINST BAD TIMES DOWN THE ROAD?

Lamberti: I'M NOT SURE THAT WILL HELP DOWN THE ROAD, BECAUSE I THINK $200 MILLION WILL SIMPLY BE ADDRESSING THE CURRENT PROBLEM TO GET US TO ZERO. IT TAKES $150 MILLION JUST TO ZERO US OUT AND BALANCE FOR '02. THAT'S WHY I'M ARGUING IN FAVOR OF GETTING AS CLOSE TO $200 MILLION AS POSSIBLE, BECAUSE I DO EXPECT A SHORTFALL IN MEDICAID AGAIN. AND, ANY MORE THAT WE CAN CUT IN '02 WILL ONLY HELP OUR SITUATION IN '03. AGAIN, WE'RE TALKING ABOUT A $450-MILLION SHORTFALL IN '03.

Glover: REPRESENTATIVE FALCK, WHAT ABOUT NEXT YEAR? WHAT DO YOU SAY TO THE ARGUMENT THAT YOU OUGHT TO TAKE ALL $200 MILLION, WHAT YOU NEED TO COVER THIS YEAR, COVER, PUT THE REST IN THE BANK TO HELP NEXT YEAR?

Falck: I'M NOT SURE IF THAT WOULD BE ENOUGH. WE DO HAVE TO SOLVE '02 AND WE NEED TO KEEP ONE EYE ON THE ECONOMY TOO WITH THE THINGS THAT WE DO AT THE STATEHOUSE.

Glover: WOULDN'T IT BE A START, THOUGH?

Falck: AND THAT'S WHY WE HAVE THE RAINY-DAY ACCOUNTS. THERE'S GOING TO BE $405 MILLION IN THOSE ACCOUNTS RIGHT NOW, SO WE HAVE TO LOOK AT ALL THE OPTIONS WE HAVE AVAILABLE TO US. I'M NOT SAYING, MIKE, THAT'S A BAD IDEA. THAT'S AN OPTION. WE'RE AT A POINT NOW WE HAVE TO LOOK AT EVERYTHING.

Beck: WHEN WILL THIS TURN AROUND, REPRESENTATIVE FALCK? THE LEGISLATIVE FISCAL BUREAU DIRECTOR, DENNIS PROUTY, HAS SUGGESTED MAYBE BY EARLY SPRING OR SUMMER THINGS SHOULD START TO PICK UP. DO YOU SEE THAT HAPPENING OR ARE YOU WORRIED IT WILL LAST LONGER?

Falck: AND THEN THAT BEGS THE QUESTION "WHAT CAN THE STATE DO TO HELP THE ECONOMY." WELL, I THINK THE RESOURCES THAT WE HAVE AVAILABLE TO US RIGHT NOW, IT'S ABOUT PUBLIC SAFETY AND SECURITY. THE BEST THING WE CAN DO -- AND EMERGENCY MANAGEMENT NEEDS ABOUT $20 MILLION TO UPGRADE OUR SAFETY AND SECURITY AT THE LOCAL LEVEL WITH TRAINING FOR FIREFIGHTERS AND EMTs AND DOCTORS AND NURSES. I SAW A POLL LAST NIGHT ON TELEVISION. ONE OF THE LOCAL STATIONS SAID 66 PERCENT OF IOWANS DON'T FEEL THAT IOWA CAN HANDLE A TERRORIST ATTACK. THE BEST THING I THINK WE CAN DO IS, WITH OUR RESOURCES THAT WE DO HAVE, THE LIMITED RESOURCES, TRY TO HELP OUT THE SAFETY AND SECURITY SO PEOPLE DO FEEL SAFE TRAVELING, GOING TO THE SUPERMARKET, SENDING THEIR KIDS TO SCHOOL. THAT'S A VERY BASIC --

Beck: MEANING THEY'LL SPEND MORE IF THEY FEEL SAFE?

Falck: RIGHT NOW THE ANXIETY LEVEL IS PRETTY DARN HIGH.

Beck: WHEN WILL IT TURN AROUND?

Lamberti: WELL, I'M CERTAINLY NO EXPERT ON ECONOMIC MATTERS IN TERMS OF BEING AN ECONOMIST, BUT WE TRY TO LISTEN TO THESE FOLKS. AND I THINK THAT IS THE GENERAL CONSENSUS THAT SOMETIME MIDWAY THROUGH THE CALENDAR YEAR OF '02 THAT WE'LL START TO SEE A TURNAROUND. WHAT THAT MEANS IS THAT FOR OUR CURRENT FISCAL YEAR, WHICH WILL END JUNE 30, WE'RE NOT GOING TO SEE -- IT'S GOING TO BE TOO LATE TO HELP US. SO WE'VE REALLY GOT TO LOOK AT OUR FISCAL YEAR BEING 2003 BEFORE WE'LL GET ANY HELP. BUT I THINK AS YOU LOOK AT THE ECONOMY, THERE'S A LOT OF FUNDAMENTALS THROUGHOUT THE STATE AND THE NATIONAL ECONOMY THAT ARE STILL PRETTY STRONG, SO WE'RE HOPING, ONCE WE COME OUT OF IT, IT'S A FAIRLY QUICK REBOUND.

Glover: SENATOR LAMBERTI, THERE'S TALK IN CONGRESS THAT CONGRESS IS GOING TO DO YET ANOTHER ECONOMIC STIMULUS PACKAGE, MEANING A TAX CUT PACKAGE. WHAT ABOUT THE ARGUMENT THAT THE STATE OUGHT TO DO SOMETHING TO HELP THIS ECONOMY TURN AROUND AND CUT TAXES AGAIN? IS THAT GOING TO BE A DISCUSSION?

Lamberti: I THINK IT WILL BE A DISCUSSION ON SEVERAL FRONTS, AND I THINK THE GOVERNOR HAS EVEN INDICATED SOME OF THAT ON THE VENTURE CAPITAL FRONT, WHERE WE DO VERY POORLY IN TERMS OF HAVING VENTURE CAPITAL FOR START-UP BUSINESSES. AND OF COURSE, MOST OF OUR BUSINESSES THAT CREATE JOBS IN IOWA ARE SMALL BUSINESSES. AND IF WE CAN DO SOMETHING IN THE VENTURE CAPITAL AREA TO HELP THOSE BUSINESSES GROW, I THINK WE'LL SERIOUSLY LOOK AT THAT. I DON'T THINK WE'RE GOING TO BE LOOKING AT TAX CUTS OF A GENERAL NATURE. I THINK WE'RE GOING TO BE LOOKING AT ONES THAT HAVE A STIMULATING POTENTIAL, SUCH AS VENTURE CAPITAL, POSSIBLY SOME INVESTMENT-TYPE INCENTIVES FOR BUSINESS. I THINK THAT'S SOMETHING WE WILL LOOK AT, BECAUSE I THINK WE DO HAVE AN OBLIGATION TO HELP TRY TO STIMULATE THIS ECONOMY AS WELL.

Glover: SO TAX CUTS ARE ON THE AGENDA?

Lamberti: I THINK THEY CAN BE, YES.

Glover: REPRESENTATIVE FALCK, WILL DEMOCRATS GO INTO THAT DEBATE? DO YOU THINK TAX CUTS AS A STIMULUS TO THE ECONOMY IS SOMETHING THAT'S HELPFUL?

Falck: WELL, THAT'S ALWAYS BEEN A POINT OF DISCUSSION WITHIN THE DEMOCRATIC PARTY AND ALSO WITH REPUBLICANS, JUST EXACTLY HOW WELL DO TAX CUTS IMPACT THE ECONOMY. AT A TIME WHEN WE'RE SEEING THE BUDGETS CUT TO THE AMOUNT THAT WE ARE, WE'RE GOING TO HAVE LIMITED RESOURCES. WILL WE HAVE ENOUGH RESOURCES TO REALLY MAKE A DIFFERENCE? I THINK WE DO HAVE TO RELY MORE ON PRESIDENT BUSH AND HIS STIMULUS PACKAGE THAT HE'S COMING UP WITH IN CONGRESS. I THINK HOW WE CAN HELP -- AND REALLY, THE GOOD TIMING RIGHT NOW IS "VISION IOWA." AND NOT THAT IT'S GOING TO CREATE TOURIST DESTINATIONS FOR THE STATE, WHICH IT WILL, BUT IT'S GOING TO PUT PEOPLE TO WORK. WE'RE GOING TO HAVE MAYBE $200 MILLION THAT'S GOING TO BE LEVERAGED MANY MORE TIMES THAN THAT, AND THAT'S GOING TO CREATE JOBS. CREATING JOBS IN THIS STATE IS REALLY WHAT'S GOING TO GET THIS ECONOMY BACK ON TRACK.

Glover: SENATOR LAMBERTI, THAT'S ANOTHER POINT OF DISCUSSION. "VISION IOWA" IS A BIG CONSTRUCTION PROJECT. THERE'S BEEN DISCUSSION ABOUT EXPANDING THAT. IS THAT PART OF THE ECONOMIC STIMULUS PACKAGE, PUTTING MORE MONEY INTO "VISION IOWA"?

Lamberti: I DON'T KNOW. I DON'T THINK THAT THE CONCERN ABOUT "VISION IOWA" -- ALTHOUGH WE CERTAINLY HAD OPPONENTS TO THAT, AND IT WAS NOT AN EASY PIECE OF LEGISLATION TO GET DONE. I THINK AS WE LOOK IN THE SHORT TERM, THE ISSUE REALLY FOCUSES ON DO WE HAVE THE RESOURCES TO ADD MORE MONEY. AND THAT MONEY IS GAMBLING MONEY, AND I DON'T THINK PEOPLE SHOULD FAIL TO RECOGNIZE THAT. OF COURSE, WE HAVE GAMBLING REFERENDUMS COMING UP THROUGHOUT THE STATE NEXT YEAR. MY BIGGEST CONCERN IS HAVING A GAMBLING REFERENDUM GO DOWN AND PUT A STRAIN ON WHERE THAT MONEY COMES FROM. THE CURRENT MONEY IS SAFE, REGARDLESS. PERSONALLY, I WOULD LOVE TO SEE SOME MORE MONEY PUT INTO "VISION IOWA," BUT I THINK WE'VE GOT TO LOOK AT WHAT IT DOES TO THE OTHER PROGRAMS THAT ARE FUNDED OUT OF GAMBLING REVENUE, INCLUDING SOME ENVIRONMENTAL PROGRAMS AND DO WE WANT TO PUT THOSE AT RISK?

Glover: ONE OF THE THINGS THAT THE LEGISLATURE DID IN THE LAST SESSION WAS THEY PROTECTED THE STATE TAXPAYERS FROM A WINDFALL THE STATE WOULD GET FROM FEDERAL TAX CUTS. IS THAT IN DANGER?

Lamberti: I DON'T BELIEVE SO, BECAUSE I THINK WHAT WE WANT TO DO IS MAKE SURE THAT THE MONEY GETS INTO THE HANDS OF THE PEOPLE, AND I THINK THAT'S A GOOD THING. AND AS WE'RE TALKING AT THE FEDERAL LEVEL ABOUT SOME STIMULUS, WE DON'T WANT TO USE THAT AS AN OPPORTUNITY TO JUST HELP GOVERNMENT. WE WANT TO GET IT TO THE PEOPLE IN THE SMALL BUSINESSES TO GROW THE ECONOMY.

Glover: REPRESENTATIVE FALCK, THE STATE IS BROKE. WE'RE SHORT OF MONEY. WE HAVE BUDGET DEFICITS LOOMING UP. AT WHAT POINT IS A TAX INCREASE ON THE TABLE?

Falck: I DON'T THINK WE'RE THERE, AND THE REASON IS THAT OPTION HAS BEEN TAKEN OFF THE TABLE. BUT ALSO, IT'S BECAUSE OF THE CONSUMER CONFIDENCE IN THE ECONOMY. NOW IS NOT THE RIGHT TIME TO BE THREATENING TAX CUTS. THAT ISN'T GOING TO HELP THINGS.

Beck: YOU MENTIONED EARLIER CONSTRUCTION ON "VISION IOWA" PROJECTS MIGHT HELP US SPUR JOBS. ARE WE GOING TO SEE MASSIVE LAYOFFS WITHIN STATE GOVERNMENT BECAUSE OF THIS 4.3-PERCENT ACROSS-THE-BOARD REDUCTION? IF SO, DO YOU KNOW WHERE THOSE WILL BE, AND WILL YOU AS LEGISLATORS OFFER ANY DIRECTION TO WHERE THESE DEPARTMENTS SHOULD CUT? SHOULD THE GOVERNOR OR SHOULD WE LET THE DIRECTORS DECIDE THEMSELVES?

Falck: THAT WAS AN ARGUMENT LAST SESSION ABOUT GIVING SOME DIRECTION, AND WE DIDN'T GET IT, QUITE FRANKLY. BUT I THINK NOW WITH THE WAY THINGS ARE GOING, I HOPE THE LEGISLATURE CAN STEP UP AND GIVE THE DIRECTOR SOME GUIDANCE. YES, I DO THINK THERE WILL BE LAYOFFS.

Beck: HOW MANY, DO YOU KNOW?

Falck: I DON'T KNOW WHAT THAT NUMBER COULD BE, WHAT IT WILL BALANCE OUT TO BE. BUT SOME THINGS THAT WE CAN DO TO HELP IS AN EARLY RETIREMENT PACKAGE, AND THAT'S ONE THING THAT WAS TALKED ABOUT A LITTLE BIT ON THE CONFERENCE CALL YESTERDAY. AND WE'RE GOING TO WORK TOGETHER ABOUT WHAT THAT RETIREMENT PACKAGE -- EARLY RETIREMENT PACKAGE COULD LOOK LIKE, BECAUSE THAT WOULD GET SOME OF THE MOST EXPENSIVE STATE EMPLOYEES, HELP THEM WITH THAT GAP UNTIL THEY'RE AT THE AGE WHERE THEY CAN TAKE OVER WITH SOCIAL SECURITY.

Beck: DO YOU HAVE A NUMBER? HAVE YOU SEEN ANY INDICATION OF HOW MANY EMPLOYEES WILL HAVE TO BE LET GO?

Lamberti: NO, AND I THINK IT'S TOO EARLY BECAUSE I THINK WE'RE DEALING BOTH WITH THIS YEAR AND NEXT YEAR. AND I THINK, CERTAINLY, THERE'S GOING TO BE SOME. BUT I THINK THE IMPORTANT POINT HERE IS WE ALL HAVE A RESPONSIBILITY IN THESE BUDGET TIMES TO TRY TO MAKE THINGS BETTER. AND EVEN THOUGH IT'S A TOUGH TIME, WE ACTUALLY HAVE AN OPPORTUNITY TO, AS THE GOVERNOR SAYS, REINVENT GOVERNMENT A LITTLE BIT, BECOME MORE EFFICIENT, BUT THAT TAKES EVERYBODY. IT TAKES THE LEGISLATURE, IT TAKES THE GOVERNOR, AND IT TAKES THE GOVERNOR'S PEOPLE. ONE OF THE THINGS WE RAN INTO THIS YEAR AS WE WERE PUTTING THE BUDGET TOGETHER IS THAT WE GOT VERY LITTLE COOPERATION. SO IT'S VERY DIFFICULT FOR A LEGISLATURE TO TRY TO MAKE CUTS IN A WAY THAT ARE THE MOST EFFICIENT, THAT WE TRY TO WORK WITH THE DEPARTMENTS WHERE WE'RE GETTING NO COOPERATION. I BELIEVE THAT'S CHANGED. I THINK THE GOVERNOR, THROUGH HIS DIRECTIONS TO HIS DEPARTMENT HEADS, THEY'RE GOING TO SIT DOWN WITH US AND, RATHER THAN JUST MAKE MAKING ACROSS-THE-BOARD CUTS OR ARBITRARY CUTS, PARTICULARLY IN THE FUTURE, WE WILL ACTUALLY TRY TO LOOK AT SERVICES, ELIMINATING THINGS THAT WE DON'T NEED, AND TRY TO BECOME MORE EFFICIENT.

Glover: REPRESENTATIVE FALCK MENTIONED AN EARLY RETIREMENT PROGRAM AS PART OF THE DISCUSSION. SHOULD WE ASSUME THAT EARLY RETIREMENT INCENTIVES WILL BE A PART OF THIS PACKAGE?

Lamberti: I THINK SO. I THINK EVERYBODY THINKS THAT'S SOMETHING WE NEED TO WORK ON, AND I THINK THERE'S BROAD AGREEMENT ON THAT. WE'RE GOING TO SIT DOWN AND SEE WHAT WE CAN DO.

Glover: HOW WOULD THAT WORK? THE LAST TIME THEY DID AN EARLY RETIREMENT PACKAGE, THEY DID INCENTIVES BY PAYING FOR SOME OF THE HEALTH CARE BENEFITS. THE RETIREMENT WOULD BE STRUCTURED LIKE THAT?

Lamberti: POSSIBLY. I DON'T KNOW THAT WE KNOW THE DETAILS AT THIS POINT. WE'VE GOT SOME LEGISLATORS WORKING ON THAT, AND I KNOW THAT THE GOVERNOR'S OFFICE IS WORKING ON IT AS WELL. YOU'VE GOT TO PROVIDE THE INCENTIVE TO GET THE RETIREMENT, BUT YOU'VE GOT TO SHOW THE SAVINGS ON THE BACK END AS WELL.

Glover: THE LAST SESSION THE LEGISLATURE DID THE FIRST STEP IN A BIG TEACHER PAY INCREASE. IS IT TIME TO TAKE A MORATORIUM ON THAT?

Lamberti: POSSIBLY. THAT'S UNFORTUNATE BECAUSE I THINK WE ALL -- ALTHOUGH IT WAS A VERY DIFFICULT THING TO GET ACCOMPLISHED, BECAUSE THERE WERE A LOT OF OPINIONS, AT THE END OF THE DAY I THINK WE WERE COMFORTABLE THAT WE WERE MOVING FORWARD ON INCREASING THE TEACHER PAY AND THE QUALITY OF TEACHERS AND QUALITY OF EDUCATION. UNFORTUNATELY, AS YOU LOOK AT THE PRICE TAG, BECAUSE IT WAS $40 MILLION THIS YEAR. THE REAL PRICE TAG ON THAT RANGES ANYWHERE FROM $80- TO $120 MILLION FOR FISCAL YEAR '03. WHEN I'M LOOKING AT A $450-MILLION SHORT-FALL IN '03, IT'S GOING TO BE VERY DIFFICULT TO FIND THOSE FUNDS.

Glover: REPRESENTATIVE FALCK, TAKE A TIME-OUT FOR TEACHER PAY INCREASES?

Falck: I SAW SOME PRELIMINARY NUMBERS YESTERDAY, AND THERE WAS $60 MILLION FOR THAT STUDENT ACHIEVEMENT BILL THAT WE PASSED, WHICH WAS FOR TEACHERS. SO I THINK THERE'S WAYS WE CAN WORK INTO THIS YET. I'M NOT READY TO PULL THE PLUG YET BUT, LIKE I SAY, WE'RE GOING TO HAVE TO WORK TOGETHER AND REACH SOME AGREEMENTS. THIS HAS GOT TO BE A BIPARTISAN MOVE, WHATEVER WE DECIDE TO DO.

Beck: AS A DEMOCRAT, THE TEACHERS UNION TYPICALLY SUPPORTS DEMOCRATIC CANDIDATES. IS THERE -- YOU'VE SAID EARLIER THAT IOWANS HAVE TO STEP UP AND SAY "WHAT CAN I DO TO HELP." WOULD YOU ASK TEACHERS TO STAND BACK AND WAIT ANOTHER YEAR OR TWO FOR THIS INCENTIVE PROGRAM TO TRY TO HELP THE STATE OUT? DO YOU THINK THAT WOULD BE FAIR?

Falck: WELL, I THINK THERE WERE SOME TEACHERS ON ALL SIDES OF THAT ISSUE, SO THERE WOULD BE SOME THAT WOULD BE PLEASED THAT WE PULL THE PLUG AND SOME THAT WOULDN'T. BUT I THINK, YEAH, WE'RE IN SOME NEW TIMES. THINGS HAVE CHANGED AND I THINK EVERYBODY HAS TO KEEP IN MIND -- WITH THE ATTITUDE "HOW CAN I HELP."

Glover: SENATOR LAMBERTI, NOT LONG AGO THE REPUBLICAN LEADERSHIP IN THE HOUSE HELD A NEWS CONFERENCE WHERE THEY CALLED THE GOVERNOR A LIAR AND A BUMBLER. GIVEN THAT THAT'S THE TENOR AT THE STATEHOUSE, HOW DO YOU EXPECT TO NEGOTIATE ANYTHING? IS THAT APPROPRIATE RHETORIC TO BE USING AT THIS TIME?

Lamberti: NO, BUT I THINK THERE WAS A LOT OF CONCERN. AS YOU KNOW, THE GOVERNOR'S OFFICE ANNOUNCED A $59-MILLION DEFICIT FOR FISCAL YEAR '01, AND WE TO THIS DAY BELIEVE WE WERE KEPT OUT OF THE LOOP. BUT, NO, I DON'T THINK THAT KIND OF RHETORIC IS HELPFUL. BUT I THINK WE HAVE TO UNDERSTAND THAT ON THAT ISSUE OF THE GOVERNOR USING OUR ECONOMIC EMERGENCY FUND TO PAY A DEFICIT OFF IS CLEARLY OUTSIDE THE INTENT OF THE LAW. WE CAN QUIBBLE ABOUT THE LEGAL ARGUMENTS, AND I DON'T KNOW THAT WE GAIN MUCH BY GOING TO A LAWSUIT WITH THE GOVERNOR, BECAUSE IT IS TIME FOR US TO PUT THAT ASIDE AND WORK TOGETHER. BUT IT'S NOT PARTISAN POLITICS FOR US TO SAY, GOVERNOR, "THIS WAS WRONG. IT WAS OUTSIDE THE INTENT OF THE LAW." IT WAS OUTSIDE PAST PRACTICES AND, MOST IMPORTANTLY, IT'S BAD POLICY. BECAUSE IF THE GOVERNOR IS ALLOWED TO TAP INTO OUR ECONOMIC EMERGENCY FUNDS TO BALANCE A BUDGET AT THE END OF THE YEAR WHEN THAT'S CLEARLY NOT THE INTENT, THEN ALL OF THE GOOD BUDGET PRACTICES THAT WE'VE PUT IN PLACE OVER THE YEARS TO PUT IOWA IN A PRETTY GOOD POSITION AS FAR AS RATING AGENCIES AND SO FORTH, SUCH AS HAVING A BALANCED BUDGET OR 99-PERCENT SPENDING LIMITATION LAW, THOSE ARE ALL THROWN OUT THE WINDOW. SO THAT'S NOT PARTISAN POLITICS TO SAY THIS WAS WRONG AND WE NEED TO FIX IT. I THINK PART OF THIS NEEDS TO BE THE FIX ON THAT SO THAT THIS NEVER HAPPENS AGAIN, BUT THAT DOESN'T PREVENT US FROM WORKING TOGETHER NOW ON THE BUDGET. I THINK IT'S UNFORTUNATE THAT HAPPENED. I THINK IT'S UNFORTUNATE WE WEREN'T KEPT IN THE LOOP. I DON'T FEEL LIKE I WAS LIED TO. I JUST DON'T FEEL LIKE I WAS GIVEN ALL THE INFORMATION I NEEDED IN A TIMELY FASHION.

Glover: REPRESENTATIVE FALCK, LAST SESSION OF THE LEGISLATURE WAS MARKED BY CONSTANT PARTISAN BICKERING, CONSTANT PARTISAN FIGHTING. THE NEXT SESSION IS AN ELECTION YEAR. WHY SHOULD WE ASSUME THAT IT WILL BE ANY DIFFERENT, IF NOT WORSE, NEXT YEAR?

Falck: WELL, I THINK THE TONE WAS SET YESTERDAY AFTER WE GOT THE NEWS FROM R.E.C. AND ON THE CONFERENCE CALL WITH THE LEGISLATIVE LEADERS. THE ISSUES OF THE EMERGENCY MANAGEMENT ACCOUNT -- EMERGENCY ECONOMIC ACCOUNT WERE ADDRESSED, THE ISSUE OF LYING AND INCOMPETENCE WAS ADDRESSED, AND I THINK IT WAS RESOLVED. CLEARLY, THE GOVERNOR'S OFFICE HAD NOTHING TO GAIN BY KEEPING ANYBODY IN THE DARK. THIS IS SERIOUS. SO THEN IT COMES TO: DO WE NEED TO TAKE A LOOK AT CHANGING THE LAW, BECAUSE THE TIME LINE ON THIS, WITH THE ANNOUNCEMENT OF WHAT WAS COMING INTO THE RECEIPTS FROM THE DEPARTMENT OF REVENUE AND FINANCE, DEPARTMENT OF MANAGEMENT, FOLLOWED THE LAW. AND IT WAS JUST IN KIND OF HOW THINGS ARE RECONCILED AND PUT TOGETHER. THIS HAPPENS EVERY YEAR THE SAME WAY. IT'S JUST THAT BECAUSE WE'RE IN AN EXTREMELY STRESSFUL BUDGET SITUATION, IT BECAME VERY DIFFICULT AND IT GREW INTO A HUGE DEFICIT. BUT THAT'S WHY WE HAVE ECONOMIC EMERGENCY IS JUST FOR REASONS LIKE THIS.

Beck: BUT EVEN IF YOU REACH AN AGREEMENT ON THE CURRENT BUDGET YEAR AND YOU COME INTO SPECIAL SESSION AND YOU ACT IN A BIPARTISAN MANNER, CAN THAT REALLY LAST WHEN YOU COME BACK IN JANUARY, WHEN YOU START TO TRY TO FIGURE OUT WHAT'S GOING TO GET CUT IN 2003? I MEAN, YOU HAVE A MEMBER OF THE LEGISLATURE WHO IS GOING TO BE RUNNING FOR GOVERNOR AND YOU HAVE A GOVERNOR WHO IS RUNNING FOR REELECTION. DOESN'T THIS JUST SET IT UP FOR A BATTLE?

Falck: WELL, OF COURSE, WE'RE ALL VERY SENSITIVE TO WHAT THE PEOPLE BACK HOME ARE SAYING. AND FOR THE LAST 30 DAYS, I'VE HAD MORE THAN MANY, MANY PEOPLE COME UP TO ME AND SAY, "STEVE, YOU GUYS HAVE GOT TO GET ALONG," FROM BOTH SIDES OF THE AISLE TELLING ME THIS. AND I TAKE THAT VERY SERIOUSLY. IT'S TIME THAT WE DO GET DOWN TO BUSINESS. THESE ARE EMERGENCY TIMES; THINGS HAVE CHANGED.

Beck: ARE YOU AS CONFIDENT AS HE IS THAT YOU CAN PUT PARTISAN BICKERING ASIDE?

Lamberti: ACTUALLY, I AM. YOU CAN'T TAKE THE POLITICS OUT OF THE LEGISLATURE. WE ARE POLITICIANS, AFTER ALL. YOU'RE NOT GOING TO ELIMINATE IT ALL, AND CERTAINLY IT'S GOING TO BE AN ELECTION YEAR. BUT I THINK SOMETIMES DIFFICULT TIMES -- CERTAINLY WE'RE DEALING MORE WITH ECONOMIC TIMES AT THE STATE, WHEREAS, AT THE NATIONAL LEVEL, WE'RE DEALING WITH A TRAGEDY, WITH A TERRORIST ATTACK. AND WE'VE SEEN HOW THAT'S BROUGHT THE COUNTRY TOGETHER, HOW IT'S BROUGHT THE CONGRESS TOGETHER. NOW, MOST OF OURS ARE ECONOMIC PROBLEMS, BUT WE HAVE NO CHOICE AS WE GO IN IN JANUARY TO DEAL WITH A VERY DIFFICULT '03 BUDGET. WE HAVE TO CUT, AS I SAID, $450 MILLION OUT OF OUR BUDGET, AND WE DON'T HAVE ANY CHOICE BUT TO WORK TOGETHER. I THINK SOMETIMES WHEN TIMES ARE MORE DIFFICULT, IT'S EASIER TO DO THAT.

Glover: YOU MENTIONED THIS EARLIER, SENATOR LAMBERTI. THERE WAS TALK AROUND THE REGENTS ABOUT AN 18.5-PERCENT TUITION HIKE. THINGS HAVE CHANGED A LITTLE BIT WITH THE GOVERNOR'S PROPOSAL. SHOULD THEY PROCEED WITH THAT TUITION HIKE?

Lamberti: WELL, I THINK THEY'RE ULTIMATELY GOING TO HAVE TO DECIDE THAT, AND THE ONLY ADVICE THAT I CAN GIVE THEM IS DON'T LOOK ONLY AT ONE YEAR. DON'T TAKE A SNAPSHOT AND SIGH A RELIEF FROM 7 PERCENT TO 4.3 PERCENT. THEY NEED TO LOOK A LITTLE MORE LONG TERM.

Glover: YOU'RE IN CHARGE OF THEIR MONEY. WHAT'S YOUR ADVICE TO THEM?

Lamberti: THAT THEY PROBABLY PROCEED.

Glover: REPRESENTATIVE FALCK, SHOULD THEY PROCEED WITH AN 18.5-PERCENT TUITION INCREASE?

Falck: I KNOW THAT'S VERY DIFFICULT AND WE'RE SEEING INCREASES THAT WE'VE NEVER HAD TO EXPERIENCE BEFORE. AND IT IS KIND OF SHELL SHOCK TO EVERYBODY INVOLVED. MY ADVICE WOULD BE, YES, YOU'VE GOT TO DO WHAT YOU'VE GOT TO DO BECAUSE WE HAVE EXCELLENT UNIVERSITIES HERE IN THIS STATE AND IT'S A GREAT OPPORTUNITY AND IT'S STILL A GREAT VALUE FOR OUR CHILDREN TO GO TO COLLEGE HERE IN THIS STATE, AS WELL COMMUNITY COLLEGES.

Glover: SENATOR LAMBERTI, HOW HAS THE GOVERNOR HANDLED THIS WHOLE BUDGET CRISIS? GIVE HIM A GRADE.

Lamberti: WELL, I THINK I HAVE TO TAKE DIFFERENT SNAPSHOTS. EARLY ON, I THINK IT WAS VERY POOR. I THINK HE'S COMING AROUND. I'M NOT CONVINCED THAT HE'S COMPLETELY THERE YET. CERTAINLY, AS WE WENT INTO SESSION THIS PAST JANUARY, WE ACTUALLY KNEW WE HAD A REVENUE PROBLEM, AND WE TRIED TO DO SOMETHING ABOUT IT. AS YOU KNOW, WE PASSED A BILL TO DEAPPROPRIATE MONEY OUT OF THE '01 BUDGET. THE GOVERNOR VETOED MOST OF THAT. AS WE WENT THROUGH THE YEAR AND WE CUT AND PUT A FINAL BUDGET TOGETHER, THE GOVERNOR AT EVERY BILL SIGNING ACCUSED THE REPUBLICANS OF NOT SPENDING ENOUGH MONEY.

Borg: I HAVE TO INTERRUPT; WE'RE OUT OF TIME. THANK YOU VERY MUCH.

Lamberti: THANK YOU.

Borg: AS WE NOTED PREVIOUSLY, "IOWA PRESS" NOW AIRS TWICE A WEEK ON STATEWIDE IOWA PUBLIC TELEVISION. OUR NEW AIR TIME IS FRIDAY AT 6:30 AND SUNDAY AT NOON. AS WE CLOSE TODAY, WE'RE NOTING, TOO, THAT "IOWA PRESS" IS NOW CELEBRATING ITS 30TH ANNIVERSARY, AND WE CLOSE WITH A SNAPSHOT FROM OUR PAST. GEORGE BUSH HAD A NUMBER OF SESSIONS WITH US HERE AT THE "IOWA PRESS" TABLE. AND IN APRIL OF 1979, FORMER PRESIDENT BUSH JOINED US AS A CANDIDATE FOR THE REPUBLICAN NOMINATION FOR PRESIDENT, AND HE MADE HIS CASE BY SAYING THAT THE ADMINISTRATION OF THEN-PRESIDENT JIMMY CARTER HAD LOST ITS EFFECTIVENESS. I'M DEAN BORG. THANKS FOR JOINING US TODAY.

Bush: I THINK THAT'S THE NUMBER ONE ISSUE ON THE MINDS OF EVERY AMERICAN, WHETHER IT'S THE PERSON YOU TALK ABOUT LIVING IN THE GHETTO STRUGGLING TO GET OUT OF IT; THE FELLA IN THE LABOR UNION WORRYING ABOUT MAKING ENDS MEET; THE AVERAGE GUY STARTING IN BUSINESS, EVERYONE IS CONCERNED ABOUT INFLATION, AND I THINK THAT'S THE PRIME. COMING ALONG WITH IT, THOUGH, NOT YET, BUT AN ISSUE THAT'S GOING TO COME THIS WAY FOR THE GENERAL ELECTION AND THE PRIMARIES TOO IS THE U.S. CREDIBILITY ABROAD. WHEN YOU HEAR PEOPLE IN WASHINGTON BEGIN TO SAY, "LOOK, FOREIGN POLICY IS GOING TO BE AN ISSUE," THEY GO HOME, THESE CONGRESSMEN AND SENATORS. THEY FEEL THAT THE PEOPLE ARE WORRIED ABOUT WHAT THEY SEE AS AN AGGRESSIVE SOVIET UNION AND OUR IMPOTENCE TO DO ANYTHING ABOUT IT. SO I THINK FOREIGN POLICY WILL BE AN ISSUE. IT ALWAYS IS IN A PRESIDENTIAL CAMPAIGN, BUT IT'S NOT THE ISSUE THAT THAT POCKETBOOK ISSUE IS, IN MY VIEW. THE OTHER HALF OF THE CARTER FORMULA, THE OUTSIDE, TRUST ME, THAT HALF IS GONE. THAT HALF IS DIMINISHED. NOW IT LOOKS LIKE, REGRETTABLY I'D HAVE TO SAY, INCOMPETENT, NOT ENOUGH EXPERIENCE IN THESE THINGS.

Narrator: FUNDING FOR "IOWA PRESS" WAS 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.