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Iowa Press #2936
May 3 and 5, 2002

Borg: THE 107TH UNITED STATES CONGRESS CONTINUES ITS WORK AMID A WAR ON TERRORISM THAT'S COMPLICATED BY THE ARAB-ISRAELI CONFLICT AND A FRAGILE ECONOMY. WE'LL GET PERSPECTIVE FROM IOWA CONGRESSMAN JIM LEACH ON THIS EDITION OF "IOWA PRESS."

ANNOUNCER: FUNDING FOR "IOWA PRESS" HAS BEEN PROVIDED BY "FRIENDS" OF IOWA PUBLIC TELEVISION; BY THE IOWA BANKERS ASSOCIATION... FOR PERSONAL, BUSINESS, AND COMMERCIAL NEEDS, IOWA BANKS HELP IOWANS REACH THEIR FINANCIAL GOALS; BY THE ASSOCIATED GENERAL CONTRACTORS OF IOWA... THE PUBLIC'S PARTNER IN BUILDING IOWA'S HIGHWAY, BRIDGE, AND MUNICIPAL UTILITY INFRASTRUCTURE; AND BY IOWA NETWORK SERVICES AND YOUR LOCAL INDEPENDENT TELEPHONE COMPANY...IOWA NETWORK SERVICES, YOUR CLOSEST CONNECTION.

ON STATEWIDE IOWA PUBLIC TELEVISION, THIS IS THE FRIDAY, MAY 3 EDITION OF "IOWA PRESS." HERE IS DEAN BORG.

Borg: THE CONSIDERATION OF U.S. MILITARY ACTION ON FOREIGN SOILS, OF MEDIATING PEACE IN THE MIDDLE EAST, AND OF DOMESTIC SECURITY ARE PRIORITIES FOR THE 535 SENATORS AND REPRESENTATIVES OF THE 107TH UNITED STATES CONGRESS. IN PRACTICAL TERMS, THAT'S A CONTINUING MILITARY PRESENCE IN AFGHANISTAN, GETTING DIRECTLY INVOLVED IN WHATEVER IT TAKES TO STOP THE VIOLENCE AND START MEANINGFUL COMMUNICATION BETWEEN THE PALESTINIANS AND THE ISRAELIS, AND AT THE SAME TIME ASSESSING DOMESTIC VULNERABILITY AND COVERING IT. AND OF COURSE, THE TRADITIONAL CHALLENGES OF THE FEDERAL BUDGET -- MEDICARE, PRESCRIPTION DRUG BENEFITS -- ARE STILL THERE TOO FOR THE CONGRESS. AND JUST AS THE WEEKEND, THE HOUSE OF REPRESENTATIVES PASSED A NEW FARM BILL TO PROVIDE FOR THE NATION'S PRODUCTION OF FOOD AND FIBER. FOR PERSPECTIVE ON THAT LIST OF PRIORITIES, WE'VE INVITED CONGRESSMAN JIM LEACH, WHO REPRESENTS IOWA'S FIRST CONGRESSIONAL DISTRICT IN THE CURRENT CONGRESS AND IS SEEKING REELECTION IN THE NEWLY CONFIGURED SECOND DISTRICT OF SOUTHEAST IOWA. CONGRESSMAN LEACH, WELCOME BACK TOO "IOWA PRESS."

Leach: WELL, I'M HONORED TO BE WITH YOU AGAIN, DEAN.

Borg: AND ACROSS THE TABLE: "DES MOINES REGISTER" POLITICAL COLUMNIST DAVID YEPSEN AND "ASSOCIATED PRESS" POLITICAL REPORTER MIKE GLOVER.

Glover: CONGRESSMAN LEACH, YOU JUST VOTED, AS DEAN MENTIONED, AT THE END OF THIS WEEK FOR A NEW FARM BILL.

Leach: YES.

Glover: WHY IS THAT FARM BILL GOOD FOR IOWA?

Leach: WELL, IT'S GOOD BECAUSE IT PROVIDES A SAFETY NET THAT IS A LITTLE STRONGER, FRANKLY, THAN THE CURRENT ONE AND IT'S GOOD BECAUSE IT BRINGS CERTAINTY TO FARMING. A POLICY OF THIS WOULD BE THE WORST THING AT THIS PARTICULAR TIME. SO, AS MUCH AS THIS FARM BILL DIDN'T HAVE SEVERAL THINGS THAT MOST OF US SUPPORTED THAT WERE LED BY CHUCK GRASSLEY, THAT IS, A PAYMENT CAP AT A LOWER LEVEL, WHICH I THINK WOULD HAVE BEEN BETTER, AS WELL AS A PACKER OWNERSHIP OF LIVESTOCK, IT DOES CONTAIN A NUMBER OF PROVISIONS THAT WILL STABILIZE FARM PRICING AND INCREASE SOME ENVIRONMENTAL SAFEGUARDS.

Yepsen: MR. LEACH, GIVE US AN EXPLANATION OF WHAT THIS BILL IS ACTUALLY GOING TO PEOPLE. I FIND FARM BILL DEBATES INCREDIBLY ARCANE, DIFFICULT TO UNDERSTAND. SO COULD YOU HELP OUR VIEWERS BY JUST EXPLAINING TO THEM WHAT SOME OF THE PRACTICAL IMPLICATIONS ARE OF THIS FARM BILL?

Leach: WELL, THE WAY FARM BILLS ARE STRUCTURED IS THEY AFFECT THE FARMER. THEY RELATE TO PRICING LEVELS FOR PRICING COMMODITIES, IN THIS CASE, CORN AND SOYBEANS. AND WHAT THEY IMPLY THROUGH A SYSTEM THAT GETS A LITTLE BIT ARCANE IS THAT A FARMER IS GUARANTEED, IN ONE METHOD OR ANOTHER, A GIVEN PRICE FOR A COMMODITY. THAT PRICING IS USUALLY A LITTLE BIT LESS AS A GUARANTEE THAN COST OF PRODUCTION, BUT AS YOU KNOW, EVERY SINGLE FARMER HAS A DIFFERENT COST OF PRODUCTION RELATED TO DEBT AND WHAT THEY PAID FOR THEIR GROUND. BUT THE EXACT COST OF A FARM BILL IS VERY CONJECTURAL, BECAUSE IF YOU HAVE HIGH MARKET PRICING, THE FARM BILL DOESN'T COME INTO EFFECT. IF THE MARKET PRICING IS SUBSTANTIALLY LOWER, IT CAN HAVE A GREATER EFFECT ON WHAT THE COST FOR THE PUBLIC WILL BE. ON THE OTHER HAND, JUST AS THERE'S A COST TO THE FARM BILL, THERE'S A SAVINGS TO SOCIETY IN TERMS OF GRAIN THAT MIGHT BE BROUGHT TO MARKET AT A LOWER PRICE THAN IT WOULD OTHERWISE BE. SO IN TERMS OF SOCIAL COST, IT MIGHT BE A LITTLE BIT LESS THAN WHAT APPEARS TO BE A GOVERNMENTAL COST TO THE FARM BILL.

Glover: EXPLAIN SOMETHING ELSE TO US. IOWA'S DELEGATION WAS EXTRAORDINARILY SPLIT ON THIS FARM BILL AND NOT EXACTLY ALONG PARTISAN LINES. WHY -- I BELIEVE FOUR MEMBERS OF THE DELEGATION HAVE VOTED FOR THE BILL, THREE MEMBERS VOTED AGAINST IT. WHY IS IT SUCH A SPLIT?

Leach: WELL, PART OF IT RELATES TO TWO ISSUES, AND BOTH ISSUES LED BY SENATOR GRASSLEY, AND ISSUES THAT I THINK VIRTUALLY ALL OF US IN THE DELEGATION SUPPORTED THE SENATOR. ONE, HE WANTED A LOWER CAP; AND I THINK THAT WOULD HAVE BEEN VASTLY PREFERABLE. AND SECONDLY, HE WANTED A BAN ON PACKERS OWNING LIVESTOCK. THE REAL DISAPPOINTMENT THERE WAS THAT NOT ONLY DID WE NOT GET A BAN WE DIDN'T GET A COMPROMISE. FOR EXAMPLE, IF ONE WOULD HAVE SAID THAT A PACKER HAD TO BUY EVERY WEEK AT LEAST 25 TO 50 PERCENT FROM OUTSIDE SOURCES, THAT WOULD HAVE BEEN VERY HELPFUL TO THE PRIVATE MARKET ECONOMY. AND I THINK WE'RE GETTING TOO MUCH CONCENTRATION IN AGRICULTURE. BUT NEITHER THAT BAN NOR COMPROMISE PREVAILED SO THAT WAS VERY DISAPPOINTING TO ALL OF US. ON THE OTHER HAND, IT ISN'T IN CURRENT LAW, SO IT'S NOT A STEP BACKWARDS. IT'S JUST AN ADDITION THAT WE WEREN'T ABLE TO ACHIEVE.

Glover: AND THERE ARE SOME CYNICS, CERTAINLY NOBODY AT THIS TABLE, BUT THERE ARE SOME CYNICS WHO SAY IT WAS JUST A REPUBLICAN EFFORT TO STICK IT TO TOM HARKIN, WHO WROTE MUCH OF THE FARM BILL COMPROMISE. IS THERE ANYTHING TO THAT?

Leach: NO, THERE ISN'T. IN FACT, TOM LATHAM AND JIM NUSSLE AND I MET WITH CHUCK MONDAY TO DISCUSS THE BILL. WE WENT THROUGH ALL OF THE PROS AND THE CONS, BUT THERE IS NO REFERENCE TO WHAT'S BETTER OR LESS GOOD FOR THE INCUMBENT SENATOR. IT'S JUST WHAT WAS GOOD IN THE BILL AND WHAT WAS LOUSY IN THE BILL. CHUCK CAME TO THE CONCLUSION, PARTLY BECAUSE HE LED THESE TWO CRUSADES THAT HE FELT HE'D BEEN STUFFED ON, THAT HE WAS OBLIGATED TO VOTE NO. BUT I LOOKED AT IT FROM THE PERSPECTIVE OF WHAT WAS BEST FOR THE STATE OF IOWA AND PARTICULARLY SOUTHERN IOWA. SOUTHERN IOWA HAS A LOT OF ROLLING LAND, AND I THINK THE ENVIRONMENTAL PROVISIONS WHERE WE'RE INCREASING THE CONSERVATION RESERVE ARE CRITICAL TO AREAS OF THE COUNTRY LIKE SOUTHERN IOWA. SO I CAME DOWN WITH THE JUDGMENT THAT IT WAS BEST FOR THE FARM COMMUNITY. BUT CHUCK HAS, AS DOES TOM LATHAM, SOME PHILOSOPHICAL DIFFERENCES WITH THE BILL, AND GREG GANSKE AS WELL; AND I THINK THOSE ARE TO BE RESPECTED. BUT WE JUST CAME DOWN UNBALANCED ON ONE SIDE OF THE LEDGER AND THE OTHERS UNBALANCED ON THE OTHER SIDE. BUT NO REFERENCE, TO MY KNOWLEDGE WHATSOEVER, TO ANYTHING THAT MIGHT RELATE TO A SENATE RACE.

Yepsen: MR. LEACH, WHAT ABOUT THOSE TWO ISSUES THAT SEEM TO CAUSE THE MOST ANGST: PACKER OWNERSHIP OF LIVESTOCK AND LOWER PAYMENT LIMITS? ARE THOSE ISSUES NOW OFF THE TABLE FOREVER AND EVER IN CONGRESS? IS THERE ANY REALISTIC HOPE OF GETTING SOME ACTION ON EITHER ONE OF THOSE?

Leach: WELL, FOREVER AND EVER IS A LONG TIME. I WOULD HOPE THAT THEY COULD COME UP. I WOULD THEY COULD COME UP INDEPENDENT OF A FARM BILL, AS WELL AS IN RELATIONSHIP TO FURTHER FARM BILL APPROACHES. BUT IT IS A DEFEAT FOR THOSE OF US THAT ADVOCATED THAT KIND OF RESTRICTION. AND THERE'S NO DOUBT ABOUT IT; IT'S A VERY SERIOUS SETBACK.

Glover: BUT AS A PRACTICAL MATTER, APPROVING A SIX-YEAR FARM BILL TAKES A LOT OF THOSE ISSUES OFF THE TABLE.

Leach: IT TAKES OFF THE PRINCIPAL LEVERAGING POINT TO RAISE THAT ISSUE. THERE IS NOTHING THAT STOPS IT BEING LOOKED AT IN OTHER FORMATS, BUT THE LIKELIHOOD IT WOULD BE IS CERTAINLY DIMINISHED.

Borg: THE BILL THAT THIS REPLACES WE'VE CALLED THE FREEDOM TO FARM ACT, AND THAT DEPENDED VERY HEAVILY ON OPENING FOREIGN MARKETS AND LESS ON GOVERNMENT UNDERPINNING OF THE FARM ECONOMY. NOW WE ARE GOING BACK. DOES THAT MEAN THAT WE FAILED TO OPEN FOREIGN MARKETS, WE CAN'T DEPEND ON THEM ANYMORE? THE EUROPEAN COMMON MARKET DOES NOT LIKE THIS NEW FARM LEGISLATION.

Leach: PHILOSOPHICALLY THIS FARM BILL IS VERY DIFFERENT THAN THE FREEDOM TO FARM ACT. BUT AS A PRACTICAL MATTER, IT'S NOT THAT DIFFERENT THAN THE LEGISLATION THAT SUPPLEMENTED THE FREEDOM TO FARM ACT. THAT IS, THE FREEDOM TO FARM ACT WAS POSITIVE IN THE IDEA OF DECLINING FARM SUPPORTS BASED UPON OPENING MARKETS AND INCREASING MARKET SHARE INTERNALLY AS WELL AS EXTERNALLY. OBVIOUSLY, WE'RE PRODUCING MORE THAN MARKET OPENINGS ARE OCCURRING, SO IT'S MEANT THAT THE UNDERLYING PREMISE OF THE FREEDOM TO FARM DIDN'T COME TO PASS, AND SO CONGRESS EVERY YEAR SUPPLEMENTED FREEDOM TO FARM WITH AN ANCILLARY PAYMENT LATER IN THE YEAR, WHICH HAD THE EFFECT OF BEING QUITE EXPENSIVE. SO THE COMBINATION OF FREEDOM TO FARM PLUS SUPPLEMENTARY LEGISLATION IS VERY MUCH SIMILAR TO THIS APPROACH, ALTHOUGH THIS APPROACH HAS THE POSSIBILITY OF GREATER CERTAINTY. NOW, THERE IS AN ARGUMENT THAT IF YOU CONTINUED THE FORMER APPROACH, IT COULD BE AS, IF NOT MORE, GENEROUS. BUT THAT'S BASED UPON MAKING TWO VOTES A YEAR FOR THE FARMER, AND I THINK THAT WOULD HAVE BEEN INCREASINGLY DICY AS TIME GOES ON. SO I THINK THIS IS A FAR BETTER APPROACH TO HAVE A SINGLE BASIS FOR A FARM BILL.

Glover: THE EUROPEAN COMMUNITY, AS DEAN MENTIONED, IS NOT VERY HAPPY WITH THIS FARM BILL. IN FACT, THEY JUST ADOPTED A RESOLUTION IN THE EUROPEAN UNION CONDEMNING THIS BILL BECAUSE OF THE INCREASES IN SUBSIDIES FOR FARMERS. WHAT'S YOUR MESSAGE TO THEM: WE DON'T CARE ABOUT TRADING IN YOUR MARKET; WE'RE GOING TO SUBSIDIZE OUR FARMERS AND PUT THEM AHEAD OF YOUR INTERESTS?

Leach: WELL, OUR SUBSIDY IS SUBSTANTIALLY LESS THAN THE EUROPEAN UNION SUBSIDY, SO WE START WITH THAT AS A PREMISE. SECONDLY, ONE SHOULD UNDERSTAND THAT PART OF THE SUBSIDIZATION THAT GOES IN THE AMERICAN FARM BILL THAT'S NOT DONE IN EUROPE IS A SUBSIDIZATION TO TAKE LAND OUT OF PRODUCTION. THIS BILL ACTUALLY TAKES THREE MILLION MORE ACRES OUT OF PRODUCTION, WHICH IS PRO EUROPEAN UNION, NOT ANTI-EUROPEAN UNION. THIS BILL IS A LITTLE MORE EXPENSIVE THAN THEY WOULD HAVE WANTED, BUT THE EXACT PRICE IS STILL A LITTLE UNCLEAR. THAT RELATES TO WHAT IN HEAVEN'S NAME THE DOMESTIC PRICE WILL BE AT ANY POINT IN TIME IN THE FUTURE, WHICH IS VERY CONJECTURAL. IT DEPENDS ON WEATHER AND ALL SORTS OF OTHER FACTORS. BUT I WOULD SAY THIS IS SOMETHING THAT WE HAVE TO TAKE VERY SERIOUSLY IN A TRADE SETTING, BECAUSE TRADE DISCUSSIONS ARE IMPORTANT TO IOWA AND IOWA FARMERS AND IOWA MANUFACTURERS, FOR THAT MATTER.

Glover: LET'S STOP ON A DIME AND GO OFF IN A DIFFERENT DIRECTION. THE MIDDLE EAST... THERE'S BEEN A LOT OF CONTROVERSY ABOUT U.S. POLICY IN THE MIDDLE EAST. AND ONE OF THE FUNDAMENTAL CRITICISMS OF PRESIDENT BUSH HAS BEEN THAT HE WAS DISENGAGED AND DID NOT CHOOSE TO ENGAGE IN THE MIDDLE EAST UNTIL THINGS HAD ALMOST SPUN OUT OF CONTROL. IS THERE ANYTHING TO THAT?

Leach: WELL, I LOOK AT IT A LITTLE DIFFERENTLY. THE BUSH ADMINISTRATION CAME IN WITH TWO PREMISES. ONE WAS THAT TIMING WAS AS IMPORTANT AS SUBSTANCE IN THE MIDDLE EAST. AND THE SECOND WAS THAT PRESIDENT CLINTON HAD PRESSED, ON HIS TIMETABLE, AN EFFORT TO GET A SETTLEMENT AT THE END OF THE ADMINISTRATION JUST BEFORE AN ELECTION. AND SO THEY ARGUED THE ADMINISTRATION WAS PREMATURE, THAT IS, THE CLINTON ADMINISTRATION. MY VIEW IS THAT THE FIRST PART OF THE THEIR PREMISE WAS RIGHT: TIMING IS AS IMPORTANT AS SUBSTANCE. BUT THE SECOND PART WAS WRONG, THAT PRESIDENT CLINTON WAS TOO LATE RATHER THAN PREMATURE, THAT IF ALL OF THIS HAD COME TO PASS IMMEDIATELY AFTER PRESIDENT BUSH'S PUSHING OF THE -- FIRST PRESIDENT BUSH'S PUSHING OF OSLO, I THINK WE MIGHT WELL BE IN A VERY DIFFERENT POSITION IN THE MIDDLE EAST TODAY. NOW, HAVING SAID THAT, THERE WAS A BIT OF DISENGAGEMENT AT THE VERY BEGINNING OF THE BUSH ADMINISTRATION, ALTHOUGH SECRETARY POWELL WAS IN FAIRLY STEADY CONTACT WITH MOST OF THE PARTIES IN THE MIDDLE EAST. BUT AS FAR AS I'M CONCERNED, SETTLING THE MIDDLE EAST ISSUE SHOULD BE PRIORITY NUMBER ONE, TWO, AND THREE IN FOREIGN POLICY. AND IF WE DON'T GET IT RIGHT IN THE VERY NEAR FUTURE, WE COULD HAVE RAMIFICATIONS FOR DECADES, IF NOT CENTURIES. THE UNITED STATES HAS TO RECOGNIZE THAT THERE IS A HUGE WORLD OUT THERE, A BILLION PEOPLE THAT CONSIDER THEMSELVES MUSLIM. AND IF WE DON'T START TO RESPECT THEIR CONCERNS, WE'RE IN A VERY DIFFICULT CIRCUMSTANCE. AT THE SAME TIME, WE HAVE TO TOTALLY, COMPLETELY, AND UNEQUIVOCABLY SUPPORT THE VIABILITY OF THE STATE OF ISRAEL. BUT THE TWO AREN'T IN CONTRADISTINCTION, THAT IS, THE ONLY THING THAT IS GOING TO BE SECURE FOR ISRAEL IS IF WE ESTABLISH A PALESTINIAN STATE WITH EQUITABLE BORDERS. IF WE DON'T DO THAT, THE ACTION/REACTION CYCLE, THE STATUS QUO, WHICH IS ANYTHING BUT A NONACTION SITUATION, WILL JUST CONTINUE FOR YEARS TO COME, SO WE HAVE TO RESOLVE THIS. WE HAVE TO PUT AS MUCH EFFORT TO LEADING FOR PEACE AS OUR COUNTRY HAS BEEN ACTIVELY INVOLVED IN FIGHTING AL QUAEDA.

Yepsen: IRAQ... SHOULD WE TRY TO DISPLACE SADDAM HUSSEIN? SHOULD WE ATTACK IRAQ? IF SO, WHEN?

Leach: WELL, I BEGIN WITH ASSUMPTIONS THAT ARE THAT SADDAM HUSSEIN IS AS CLOSE TO A HITLERITE FIGURE AS THERE IS IN THE WORLD TODAY, AND THIS IS A MAN FOR WHOM WE SHOULD HAVE NO SYMPATHY. ON THE OTHER HAND, IT'S NOT ALWAYS CLEAR THAT ACTIVE MILITARY INTERVENTION IS THE MOST EFFECTIVE WAY TO GO. THERE ARE POTENTIALS FOR COUNTERPRODUCTIVITY THAT ARE JUST MASSIVE. THERE ARE DIFFICULTIES FROM THE MILITARY POINT OF VIEW THAT ARE ASTONISHINGLY LARGE. AND THEN THERE ARE GREAT QUESTIONS OF JUDGMENT INVOLVED IN WHETHER OR NOT YOU ATTACK A FOREIGN STATE WHEN THAT STATE IS NOT INVOLVED IN ACTIVE INTERVENTION AGAINST A NEIGHBOR. SO I'M ON THE RATHER CAUTIOUS SIDE OF THE EQUATION OF HOW YOU DEAL WITH THEM. I WOULD RATHER EDUCATE, ISOLATE, AND CIRCLE. BUT I AM RIGHT NOW PRONE TO BE VERY SKEPTICAL OF AGGRESSION AGAINST IRAQ AT THIS TIME.

Borg: I'LL LET YOU TAKE A DRINK OF WATER THERE WHILE I ASK THIS NEXT QUESTION, CONGRESSMAN. "THE NEW YORK TIMES" EARLIER THIS WEEK REPORTED AN AGREEMENT BETWEEN SAUDI ARABIA AND THE UNITED STATES ON A DIVISION OF LABOR. SAUDI ARABIA WILL WORK ON THE ARABS; THE PALESTINIANS WILL CONCENTRATE HEAVY PRESSURE ON THE ISRAELIS. IT SEEMS TO ME THAT'S ELBOWING OUT A ROLE FOR THE UNITED NATIONS. IS THE U.N. INEFFECTIVE IN SOLVING THIS?

Leach: WELL, THE UNITED NATIONS IS IN AN INTERESTING POSITION. THERE ARE ASPECTS OF THE U.N. THAT ARE VERY APPROPRIATE AND ASPECTS THAT AREN'T ON EVERY GIVEN PARTICULAR ISSUE. AT THIS TIME THE U.N. IS NOT AN ACTIVE PLAYER IN THE NEGOTIATING PROCESS BECAUSE THEY'RE TOTALLY UNACCEPTABLE TO ONE OF THE TWO SIDES. AND THAT BEING THE CASE, FRANKLY, IT'S THE OBLIGATION OF THE UNITED STATES TO PLAY THE PRINCIPAL BROKERING ROLE FOR PEACE HERE. THE CIRCUMSTANCE OF SAUDI ARABIA, THIS IS A VERY SERIOUS ISSUE, ONE FOR WHICH I THINK WE OUGHT TO UNDERSTAND THAT PARTICULARLY IN THE CONTEXT OF THE LAST CAMP DAVID ATTEMPTS WITH PRESIDENT CLINTON, THAT IS, THE POSTMORTEM ON THEIR FAILURE AND PARTIAL MEASURE RELATES TO THE FACT THAT THE UNITED STATES DIDN'T GET THE OTHER PARTIES, PARTICULARLY SAUDI ARABIA, BEHIND THE PEACE INITIATIVE UNTIL AFTER THE DISCUSSIONS. THERE SHOULD HAVE BEEN A GREAT DEAL OF EFFORT PRIOR, AS WE'VE NOW COME TO CONCLUDE. SO TO HAVE SAUDI ARABIA ABOARD AS AN ACTIVE PARTICIPANT IMPLYING (A) THAT IF THERE IS AN AGREEMENT THAT THERE WILL BE A UNIVERSAL MUSLIM WORLD RECOGNITION OF THE STATE OF ISRAEL IS VERY IMPORTANT. IN ADDITION, THERE ARE SOME EXPENSE IMPLICATIONS, NOT ONLY SUPPORTING A PALESTINIAN STATE BUT ONE OF THE REALLY SENSITIVE BARGAINING ISSUES IS THIS QUESTION OF THE RIGHT TO RETURN. AND IT IS THE ONE THING THAT THE ISRAELIS CANNOT ACCEPT, THAT IS, THE IDEA OF BOTH THE PALESTINIAN STATE AND PALESTINIANS COMING BACK INTO THE STATE OF ISRAEL, POTENTIALLY FORMING A BLOCK OF PEOPLE LARGER THAN THE JEWISH POPULATION OF ISRAEL. BUT GIVEN THAT THERE ARE CERTAIN VALID CLAIMS THAT PEOPLE HAVE BEEN DISRUPTED, MIGHT THERE NOT BE CERTAIN COMPENSATION, AND ISN'T IT APPROPRIATE THAT THAT COMPENSATION MIGHT COME FROM COUNTRIES LIKE SAUDI ARABIA? THAT MAKES A VERY INTERESTING WAY OF RESOLVING A SITUATION AND BRINGING A SENSE OF FINALITY TO THE POSSIBILITY OF A PEACE AGREEMENT IN TERMS OF THAT PARTICULAR ISSUE. BUT SAUDI INVOLVEMENT IS VERY IMPORTANT AND SHOULD NOT BE DISCOUNTED.

Glover: TO MOVE ON TO ANOTHER ISSUE, IF THERE'S ONE THING THAT WE'VE SEEN THAT THERE'S A CONSISTENCY OVER THE PAST FEW MONTHS IN, IT'S BEEN THAT ECONOMISTS HAVE PREDICTED THE END OF THE RECESSION. THE ECONOMY IS IMPROVING; THINGS ARE GETTING BETTER. HERE IN IOWA WE'RE ABOUT TO HAVE A SECOND SPECIAL SESSION TO CUT THE BUDGET AGAIN BECAUSE THE ECONOMY IS SO BAD. WHAT'S THE EVIDENCE THAT THIS ECONOMY IS TURNING AROUND?

Leach: WELL, THERE'S ALWAYS THE DISTINCTION BETWEEN MACRO ECONOMICS, THE BIG PICTURE, AND WHAT AFFECTS EITHER A PARTICULAR PART OF THE COUNTRY GEOGRAPHICALLY OR THE INDIVIDUAL FAMILY. IN THE CASE OF THE BIG PICTURE, THE FIRST QUARTER SAW 5.8 PERCENT REAL GROWTH IN THE ECONOMY. THE FOURTH QUARTER OF 2001 SAW 1.5 TO 2 PERCENT REAL GROWTH IN THE ECONOMY, SO IT APPEARS THAT THE GROWTH IS PICKING UP. ON THE OTHER HAND, IN IOWA, IT ISN'T SO MUCH. AND IN IOWA, WE ARE PARTICULARLY DEPENDENT AT THE STATE LEVEL FOR STATE RESOURCES ON THE SALES TAX. AND THE SALES TAX HAS NOT PICKED UP TO THE SAME DEGREE AS ONE WOULD HAVE EXPECTED WITH THAT CHANGE IN GNP NUMBERS. WE SAW IN THE '80S THE COUNTRY AS A WHOLE GROW SUBSTANTIALLY -- OR IN THE EARLY '80S IOWA DECLINE SUBSTANTIALLY. SO YOU CAN HAVE DIFFERENCES IN THE ECONOMY. A LOT DEPENDS ON IOWA. NOT ONLY THE FARM ECONOMY, BUT ONE OF THE THINGS THAT OUTSIDERS DON'T REALIZE IS THIS IS A BASIC MANUFACTURING STATE. WE HAVE AN ENORMOUS AMOUNT OF MANUFACTURING, WHETHER IT BE AMANA, MAYTAG. LOTS OF KINDS OF COMPANIES MAKE THINGS IN THIS STATE. AND ITS MANUFACTURING THAT HAS NOT BEEN KIND OF GOING LIKE THIS; IT'S MANUFACTURING THAT'S BEEN IN DECLINE IN AMERICA. AND IT'S THE MANUFACTURING PART OF AMERICAN ECONOMY THAT IS THE MOST HIT OVER THE LAST DECADE.

Glover: SO CAN YOU HOLD OUT ANY HOPE THAT THE ECONOMY FOR THIS STATE -- LET'S GO TO THE MICRO FOR A SECOND -- IS GOING TO TURN AROUND ANYTIME SOON, OR ARE WE IN FACT ON A DOWNWARD TREND?

Leach: WELL, WE HAVE TWO ISSUES IN IOWA. ONE IS THE BASIC ECONOMY, WHICH IS HEAVILY MANUFACTURING AND PRODUCING. IT'S A MAKING/PRODUCING STATE, BOTH OF WHICH ARE NOT DOING AS WELL AS WE WOULD LIKE WITH EXCEPTIONS; HON INDUSTRIES IN MUSCATINE IS DOING QUITE NICELY. BUT AGRICULTURE HAD A WEAKER YEAR THAN WE WOULD HAVE LIKED LAST YEAR. THIS YEAR IT'S DIFFICULT TO PREDICT, BUT I THINK THE FARM BILL WILL BE HELPFUL. I DON'T THINK ONE CAN PREDICT WITH CONFIDENCE THE IOWA ECONOMY, BUT I THINK ONE CAN EXPRESS SOME HOPE THAT WE'RE NOT IN A SLIDE THAT'S STEEP, THAT IS, IT APPEARS THAT THE ECONOMY IS STABILIZING IN IOWA AND HOPEFULLY WILL PICK UP. FINALLY THERE IS A DEMOGRAPHIC ISSUE AND IOWA AS A STATE IS A LITTLE BIT OLDER THAN THE AVERAGE POPULATION, AND THAT IS A DIFFICULTY WE HAVE TO DEAL WITH.

Yepsen: AND, MR. LEACH, THAT LEADS ME RIGHT INTO MY NEXT QUESTION.

Leach: YES, SIR.

Yepsen: PRESCRIPTION DRUG BENEFITS. WHAT'S GONNA -- THERE'S A LOT OF TALK IN CONGRESS, BOTH REPUBLICANS AND DEMOCRATS HAVE PLANS. WHAT'S GOING TO HAPPEN WITH THAT ISSUE? WILL AMERICANS -- WILL IOWANS SEE SOME SORT OF PRESCRIPTION DRUG BENEFIT OUT OF THIS CONGRESS?

Leach: WELL, I THINK THE GOOD NEWS IS THAT IN THE POLITICAL SENSE, WASHINGTON HAS COME TO THE CONCLUSION THAT THIS IS THE SINGLE ISSUE THAT THE AMERICAN PUBLIC WANTS THE UNITED STATES WANTS TO DO SUBSTANTIALLY MORE ABOUT. IT IS A HUGE HUMAN ISSUE FOR THOUSANDS AND THOUSANDS OF IOWA CITIZENS, AMERICAN CITIZENS.

Yepsen: SO SOMETHING IS LIKELY?

Leach: SO YOU ARE LIKELY TO HAVE THE HOUSE OF REPRESENTATIVES, IN THE NEXT MONTH, PASS A PLAN. YOU'RE LIKELY TO HAVE THE SENATE PASS A PLAN. AND MY PREDICTION IS THAT THIS IS ONE OF THESE ISSUES THAT ONE WILL TAKE SOME TIME. THAT YOU'LL HAVE A MEASURED PLAN THAT WILL GROW OVER THE NEXT FOUR OR FIVE YEARS TO BE MORE SUBSTANTIAL. THE GREAT QUESTION IS WHETHER OR NOT THERE'S ENOUGH POLITICAL GOODWILL AT WHAT IS LIKELY TO BE TWO PLANS THAT ARE SOMEWHAT DIFFERENT, TO REACH A COMPROMISE BETWEEN THEM.

Yepsen: SO WE COULD SEE DEADLOCK ON THIS ISSUE LIKE MANY OTHERS.

Leach: SO YOU COULD SEE LOTS OF PEOPLE IN FAVOR OF DOING MORE AND THE FINAL RESULT NOT REACH FRUITION, OR YOU CAN SEE GOODWILL COME TO PLAY A BIGGER ROLE THAN IS CURRENTLY THE CASE IN AMERICAN POLITICS AND SOMETHING SIGNIFICANT HAPPEN. MY OWN VIEW IS THAT -- THE LIKELIHOOD IS BOTH THE DEMOCRATIC AND REPUBLICAN PLANS WILL BE CREDIBLE, ALTHOUGH BOTH WILL BE DESCRIBED BY EACH SIDE AS BEING PRETTY AWFUL. BUT EACH ARE STEPS IN THE RIGHT DIRECTION SO THEN THE QUESTION BECOMES CAN YOU REACH CONSENSUS, AND THAT'S GOING TO BE HARD.

Glover: ONE OF THE THINGS THAT'S CAPTURED AMERICAN ATTENTION IN THE PAST FEW MONTHS IS THE ENRON COLLAPSE --

Leach: YES.

Glover: -- AND THE FALLOUT FROM THAT. STEP BACK FOR A SECOND. WHAT DOES THE COLLAPSE OF ENRON AND ASSOCIATED OTHER SCANDALS, PROBLEMS IN THE PRIVATE SECTOR, HAVE TO SAY ABOUT AMERICAN GOVERNMENT REGULATION OF PRIVATE BUSINESS? HAVE WE BEEN TOO LAX?

Leach: WELL, IT'S A VERY INTERESTING QUESTION. CLEARLY THE WEAKNESSES OF ENRON, IT'S INEXCUSABLE AND, CERTAINLY IN THE ACCOUNTING PROFESSION, ABSOLUTELY INEXCUSABLE WITH REGARD TO HOW IT REGULATED ENRON. THEN YOU ASKED SOMETHING IN A BIGGER WAY, AND THE BIGGER WAY IS HAVE WE BEEN TOO LAX IN GENERAL. AND IN GENERAL, IT'S STILL IMPRESSIVE THAT WE HAVE THE MOST HONEST SYSTEM THAT -- THE BEST ACCOUNTING PRACTICES IN THE WORLD. BUT WHEN YOU HAVE WEAKNESSES APPEAR, YOU CAN'T IGNORE THEM. YOU HAVE TO LOOK AT THEM AND SEE WHAT LESSONS CAN BE DRAWN. I THINK THERE ARE A NUMBER OF LESSONS FROM ENRON WE'RE ALL WORKING ON AND, ACTUALLY, SOME OF THEM HAVE HAD IMMEDIATE REPERCUSSIONS. THERE ARE COMPANIES IN THE LAST MONTH AND TWO MONTHS THAT HAVE REPORTED EARNINGS OF A VERY DIFFERENT NATURE THAN I THINK THEY WOULD HAVE BEEN REPORTING PRIOR TO ENRON BECAUSE THE ACCOUNTANTS REALIZE THAT THEY'RE GOING TO BE HELD TO A DIFFERENT KIND OF STANDARD. AND BASICALLY ACCOUNTANTS SIGN OFF ON ONE STATEMENT, THAT THIS IS A TRUE REFLECTION OF THE STATE OF THE COMPANY. IN ENRON, THEY FOLLOWED CERTAIN ACCOUNTING PRACTICES, EACH OF WHICH WERE MORE OR LESS CORRECT POSSIBLY, BUT THE TRUE PICTURE WAS NOT. AND SO WE HAVE TO MAKE SURE THAT THE TRUE PICTURE IS REAL, AS WELL AS THE SPECIFIC ACCOUNTING PRACTICES ARE VALID.

Yepsen: MR. LEACH, WE'VE ONLY GOT A FEW MINUTES LEFT AND WE ALWAYS LIKE TO TALK A LITTLE POLITICS AROUND THIS TABLE. ANALYZE YOUR OWN RACE. THE DEMOCRATS ARE SAYING YOU'RE IN TROUBLE AND THEY'VE GOT A SHOT. IT'S A 56-PERCENT DEMOCRATIC DISTRICT. DR. JULIE THOMAS, YOUR OPPONENT, IS WELL FINANCED. ARE YOU IN DANGER OF LOSING HERE?

Leach: DAVID, I NEVER PREDICT PERSONALLY. THAT IS FOR ANYONE ELSE TO DO. OBVIOUSLY, I'VE REPRESENTED A DEMOCRATIC DISTRICT MY ENTIRE LIFE IN POLITICS, AND I RECOGNIZE THAT. I'M FORTUNATE THAT THE CURRENT STATISTICS ARE VERY POSITIVE ON THE PROSPECT OF REELECTION, BUT I PREDICT NOTHING, DAVID. THAT'S FOR THE PUBLIC TO DECIDE.

Yepsen: FAIR ENOUGH. WHAT ABOUT HER ARGUMENT, WHICH IS REALLY TWO-FOLD: JIM LEACH IS A NICE GUY, BUT VOTING FOR HIM IS VOTING TO ALLOW A WHOLE BUNCH OF RIGHT-WINGERS TO RUN THE U.S. HOUSE AND, SECONDLY, THAT YOU IN FACT HAVE LOST SOME CLOUT IN WASHINGTON, THAT YOU DID NOT BECOME CHAIRMAN OF THE INTERNATIONAL RELATIONS COMMITTEE, SO IT WOULD BE FINE FOR VOTERS OF SOUTHEAST IOWA TO MAKE A CHANGE?

Leach: WELL, YOU KNOW, POLITICAL PARTIES HAVE PEOPLE RIGHT/LEFT IN THE REPUBLICAN SIDE AND CENTER; MAINLY RIGHT AND CENTER DEMOCRATIC SIDE, LEFT AND CENTER. BUT IT'S INTERESTING TO ME THAT ON THE REPUBLICAN SIDE, THE RIGHT IS A BIT DOMINANT. ON THE DEMOCRATIC SIDE, THE LEFT IS A BIT DOMINANT. WHAT'S LEFT OUT IS THE CENTER. AND I ARGUE THAT'S PROBABLY THE MOST UNDERREPRESENTED PART OF THE AMERICAN POLITICAL PROCESS. AND I THINK AN OPPONENT WILL HAVE TO MAKE A CASE THAT ANOTHER MEMBER OF THE MORE LIBERAL SIDE OF THE DEMOCRATIC PARTY REALLY WILL HELP THE COUNTRY. THAT'S THE CASE THAT THE PUBLIC MIGHT BUY. I BELIEVE THAT MODERATE REPRESENTATION IS WHERE THE STATE OF IOWA IS.

Glover: LET'S LOOK AROUND THE STATE. THERE ARE A COUPLE OF HIGH PROFILE REPUBLICAN PRIMARIES. THERE'S A REPUBLICAN PRIMARY FOR THE U.S. SENATE, BILL SALIER RUNNING AGAINST GREG GANSKE, AND THERE'S A THREE-WAY REPUBLICAN PRIMARY FOR THE GOVERNOR'S NOMINATION. DO YOU HAVE A FAVORITE IN EITHER ONE OF THOSE RACES?

Leach: WELL, I HAVE A VERY HARD TIME NOT WANTING TO BACK MY GOOD FRIEND GREG GANSKE. I PERSONALLY RESPECT A GREAT DEAL OF BILL SALIER, WHO IS MAKING A VERY FORMIDABLE CHALLENGE AS AN ARTICULATE CONSERVATIVE. BUT GREG IS A FRIEND AND A DECENT MAN, AND I'VE ENDORSED HIM. ON THE GUBERNATORIAL SIDE, WE HAVE THREE VERY SOLID CANDIDATES, AND I WOULD BE COMFORTABLE WITH ANY OF THE THREE. I THINK EACH BRINGS SOMETHING VERY POSITIVE TO THE RACE, AND I'M PLEASED THE REPUBLICANS HAVE THAT STRONG OF AN ALIGNMENT.

Yepsen: SO YOU WON'T PICK A FAVORITE?

Leach: NO, I WON'T.

Borg: AND THAT'S -- OUR TIME IS UP. THANK YOU VERY MUCH FOR TAKING TIME TO BE WITH US TODAY. ON OUR NEXT EDITION OF "IOWA PRESS," THE SPOTLIGHT'S ON THE CAMPAIGNS OF THE 2002, THE ONES WE'VE JUST BEEN TALKING ABOUT, SPECIFICALLY THE JUNE 4 STATEWIDE PRIMARY ELECTION AND THE GENERAL ELECTION ON NOVEMBER 5. JOINING US NEXT WEEK, TWO MAJOR-PARTY INSIDERS: MONTEZUMA REPUBLICAN MIKE MAHAFFEY AND DES MOINES DEMOCRAT JERRY CRAWFORD. THAT'S ON "IOWA PRESS" NEXT WEEK, FRIDAY AS 6.30, SUNDAY AT NOON. I HOPE YOU'LL WATCH. I'M DEAN BORG. THANKS FOR JOINING US TODAY.

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