Iowa Public Television

Borg: HIGH PROFILE ISSUES LINGER ON THE IOWA GENERAL ASSEMBLY AGENDA AS LEADERS IN THE LEGISLATIVE AND EXECUTIVE BRANCHES NEGOTIATE COMMON GROUND. PERSPECTIVE FROM GOVERNOR TOM VILSACK ON THIS EDITION OF "IOWA PRESS." FUNDING FOR THIS PROGRAM WAS PROVIDED BY "FRIENDS," THE IOWA PUBLIC TELEVISION FOUNDATION... GENERATIONS OF FAMILIES AND FRIENDS WHO FEEL PASSIONATE ABOUT THE PROGRAMS THEY WATCH ON IOWA PUBLIC TELEVISION. AND BY THE IOWA BANKERS ASSOCIATION... FOR PERSONAL, BUSINESS, AND COMMERCIAL NEEDS, IOWA BANKS HELP IOWANS REACH THEIR FINANCIAL GOALS; AND BY THE ASSOCIATED GENERAL CONTRACTORS OF IOWA... THE PUBLIC'S PARTNER IN BUILDING IOWA'S HIGHWAY, BRIDGE, AND MUNICIPAL UTILITY INFRASTRUCTURE. ON STATEWIDE IOWA PUBLIC TELEVISION, THIS IS THE FRIDAY, APRIL 18 EDITION OF "IOWA PRESS." HERE IS DEAN BORG.

Borg: MAY 2 IS THE TARGET DATE FOR COMPLETING THE 110-DAY FIRST SESSION OF THE 80TH IOWA GENERAL ASSEMBLY. IN THE FOURTEEN DAYS BETWEEN NOW AND THEN, LEGISLATORS ARE CRAFTING A STATE BUDGET AND CHARTING A COURSE FOR IOWA'S FUTURE. DURING THE PAST TWO WEEKENDS, WE'VE QUESTIONED LEGISLATIVE LEADERS ABOUT DEVELOPING LEGISLATION SUFFICIENTLY ALIGNED WITH THE PRIORITIES OF GOVERNOR TOM VILSACK TO WIN HIS SIGNATURE. WELL, TODAY WE'LL GET AN ASSESSMENT FROM THE GOVERNOR HIMSELF. THANKS FOR TAKING TIME TO BE WITH US, GOVERNOR VILSACK.

Vilsack:IT'S GREAT TO BE BACK.

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

Glover: GOVERNOR, YOU HAD A SERIES OF FAIRLY HIGH PROFILE PROPOSALS YOU ASKED THE LEGISLATURE TO ACCOMPLISH THIS SESSION. WITH A COUPLE OF WEEKS TO GO, THEY HAVEN'T ACCOMPLISHED ANY OF THEM. ARE YOU WORRIED THAT NONE OF YOUR PRIORITIES ARE GOING TO EMERGE?

Vilsack:NOT AT ALL, MIKE. I THINK ACTUALLY THERE HAS BEEN PROGRESS MADE ON A NUMBER OF FRONTS. I THINK WE ARE VERY CLOSE TO GETTING CONSENSUS ON THE IOWA VALUES FUND AND A FINANCING MECHANISM FOR THAT. I THINK THAT THERE WILL BE SOME VERY SUBSTANTIVE DISCUSSIONS ABOUT TAX REFORM THIS WEEK, WHICH WILL SHOW THAT THERE'S PROBABLY GREATER CONSENSUS THAN A LOT WOULD ASSUME. SO I THINK WE'RE VERY CLOSE TO ACCOMPLISHING A GREAT DEAL OF VERY IMPORTANT LEGISLATIVE PROPOSALS.

Glover: WELL, TELL US ABOUT THIS IOWA VALUES FUND. THIS IS THE BIG FUND THAT WOULD BE USED TO CREATE INFRASTRUCTURE THAT WOULD LURE NEW BIOTECH COMPANIES. WHERE ARE WE ON THAT?

Vilsack:WELL, FIRST OF ALL, WE ARE AT A POINT WHERE WE MUST DO THIS. WE HAVE NO OPTION. THE MOST RECENT ECONOMIC DATA AND THE DEMOGRAPHIC DATA ABOUT OUR STATE CONTINUES TO MAKE THE CASE THAT WE NEED TO TRANSFORM IOWA'S ECONOMY. WE NEED TO ENCOURAGE LIFE SCIENCES TO BE PART OF OUR FUTURE. WE NEED TO CONTINUE TO AGGRESSIVELY PROMOTE INSURANCE AND FINANCIAL SERVICES DEVELOPMENT IN OUR STATE, AND WE NEED TO BEGIN HELPING SOME OF OUR OLD-TIME MANUFACTURING FACILITIES TO TRANSFORM INTO ADVANCED MANUFACTURING FACILITIES. TO DO THAT, WE NEED RESOURCES AND THAT'S WHAT THE VALUES FUND IS ALL ABOUT. THE HOUSE -- CLARENCE HOFFMAN, REPRESENTATIVE DANDEKAR, REPRESENTATIVE PETERSEN, SENATOR DOTZLER, AND OTHERS HAVE WORKED VERY HARD TO CREATE A PACKAGE THAT RESPONDS TO THE CONCERNS FOR TRANSFORMING THE ECONOMY AND ALSO RESPONDS TO A NUMBER OF OTHER NEEDS THAT HAVE BEEN IDENTIFIED BY THE LEGISLATURE, INCLUDING ASSISTANCE FOR SCHOOLS. I'M SUPPORTIVE OF THAT PACKAGE. SPEAKER RANTS HAS DONE A GOOD JOB OF COMING UP WITH AN INNOVATIVE AND CREATIVE WAY OF FINANCING IT. SENATOR LAMBERTI HAS TALKED ABOUT ANOTHER PROCESS FOR FINANCING. EITHER ONE OF THOSE WOULD BE ACCEPTABLE TO ME. SO NOW IT'S TIME TO GET THE LEGISLATION DRAFTED AND GET IT THROUGH THE SYSTEM.

Glover: AND THE FIRST PROPOSAL WOULD USE SOME GAMBLING PROFITS TO PAY BACK SOME BONDS, REPLACING THAT MONEY WITH THE SALES TAX ON INTERNET TRANSACTIONS. WHAT'S THE OTHER FINANCING MECHANISM?

Vilsack:WELL, THE OTHER FINANCING MECHANISM WOULD BE TO USE TOBACCO TAX INCREASES, WHICH IS WHAT SENATOR LAMBERTI HAS SUGGESTED. EITHER ONE OF THOSE WOULD BE ACCEPTABLE. I THINK THE SPEAKER'S PROPOSAL PROBABLY HAS A GREATER CHANCE OF PASSAGE IN THE HOUSE. I WOULDN'T BE SURPRISED IF THEY COULDN'T GARNER 80 VOTES FOR THAT. AND SO NOW IT'S UP TO THE SENATE TO RESPOND IN KIND, AND I THINK WE CAN GET THAT JOB DONE.

Glover: AND WHAT ROLE DO YOU PLAY IN GETTING THAT TO FRUITION? I MEAN I KNOW IT'S THE LEGISLATURE AND YOU'RE THE GOVERNOR, A SEPARATE BRANCH OF GOVERNMENT. BUT WHAT CAN YOU DO TO ADVANCE THAT?

Vilsack:WELL, THE FIRST RESPONSIBILITY WAS TO EXPLAIN TO THE PUBLIC THE NEED FOR THIS. AND WE SPENT THE FIRST COUPLE OF MONTHS OF THE LEGISLATIVE SESSION TRAVELING AROUND THE STATE DOING THAT. NOW WHAT WE'VE DONE IS WE'VE FOCUSED INTERNALLY INSIDE THE CAPITAL. WE'VE BEEN HAVING MEETINGS WITH INDIVIDUAL LEGISLATORS AND GROUPS OF LEGISLATORS THE LAST TWO WEEKS TO EXPLAIN THE IMPORTANCE IN THE TIMING OF THIS, AND WE'LL CONTINUE THOSE MEETINGS NEXT WEEK.

Yepsen:GOVERNOR, REPUBLICANS IN THE SENATE SAY THEY'RE NOT GOING TO DO A VALUES FUND UNLESS YOU'RE WILLING TO REFORM SOME OF THE BUSINESS REGULATIONS IN THIS STATE. YOU INDICATED YOU'D VETO THAT STUFF. ARE YOU PREPARED TODAY TO SEND A SIGNAL THAT YOU'RE WILLING TO TALK OR TO CONSIDER SOME OF THESE IDEAS THAT THE SENATORS ARE ASKING YOU TO DO?

Vilsack:WELL, FIRST OF ALL, LET'S MAKE SURE THE RECORD IS CLEAR ON THIS. WE ARE ABSOLUTELY IN SUPPORT OF REAL REGULATORY REFORM. THAT'S WHY WE HAVE PROPOSED A WAIVER PROCESS IN OUR ADMINISTRATIVE RULES. WE'RE ONE OF THE FEW STATES THAT HAS ADOPTED THAT. WE'VE TAKEN ABOUT 2,000 RULES OUT OF OUR ADMINISTRATIVE CODE OVER THE COURSE OF THE LAST THREE YEARS. WE'VE JUST INSTITUTED A PROCESS WITH THE DEPARTMENT OF ECONOMIC DEVELOPMENT AND OTHER AGENCIES THAT ARE INVOLVED IN PERMITTING AND LICENSING TO ENSURE THAT BUSINESSES LOOKING FOR PERMITS AND LICENSES -- I'M GOING TO RESPOND TO YOUR QUESTION, BUT I THINK THIS IS IMPORTANT TO UNDERSTAND. THERE'S A DIFFERENCE BETWEEN REAL REGULATORY REFORM AND SOME OF THE THINGS THAT WOULD BE VERY HARMFUL TO WORKING FAMILIES. I'M INTERESTED IN WORKING WITH THE LEGISLATURE ON SOME OF THE ISSUES. I THINK THERE COULD POTENTIALLY BE COMMON GROUND IN SOME OF THE AREAS. BUT CLEARLY I'M NOT GOING TO APPROVE ELIMINATION OF A WAITING PERIOD TO RECEIVE UNEMPLOYMENT BENEFITS WHEN WE READ OF CORPORATIONS CONTINUING TO DOWNSIZE AND MANY IOWANS BEING FORCED TO -- BEING LAID OFF AS A RESULT OF PLANT CLOSINGS. IT SEEMS TO ME, IN FAIRNESS TO THOSE FAMILIES, THAT WE NEED TO PROVIDE PROTECTION TO THEM. SO THERE ARE A NUMBER OF THINGS THAT WE COULD TALK ABOUT, BUT THE GENERAL GIST OF WHAT THEY'VE PROPOSED DOESN'T MAKE SENSE IN THE CONTEXT OF THE FOLLOWING. THEY'VE ASKED FOR LIABILITY REFORM, BUT THE U.S. CHAMBER OF COMMERCE HAS JUST PUT OUT A REPORT THAT SAYS THAT IOWA HAS THE THIRD BEST LIABILITY CLIMATE OF ANY STATE IN THE COUNTRY. THEY'VE ASKED FOR UNEMPLOYMENT COMPENSATION RELIEF, BUT YET WE RANK IN THE TOP TEN OF STATES IN TERMS OF THE LOWNESS OF OUR UNEMPLOYMENT BURDEN ON BUSINESS. THEY'VE SUGGESTED CHANGES IN WORKERS COMPENSATION, BUT YET WE HAVE THE FIFTH LOWEST COST OF DOING BUSINESS OF ANY STATE IN THE COUNTRY. SO THEY HAVEN'T MADE THE CASE FOR CHANGE. WE'LL BE HAPPY TO TALK WITH THEM. WE'LL BE HAPPY TO VISIT WITH THEM ABOUT A NUMBER OF ISSUES. BUT AT THE END OF THE DAY, THEY HAVE NOT MADE THE CASE THAT WHAT THEY HAVE PROPOSED WILL ACTUALLY MAKE A DIFFERENCE.

Yepsen:WELL, WHAT THEY SAY IS THAT IMPROVING THE BUSINESS CLIMATE IS MORE THAN JUST A VALUES FUND, THAT IT GOES TO SOME OF THOSE ISSUES THAT YOU'VE TALKED ABOUT. SO ARE YOU PREPARED TO JUST WALK AWAY FROM YOUR VALUES FUND IF YOU'RE NOT WILLING TO COMPROMISE ON SOME OF THESE OTHER THINGS?

Vilsack:I'M NOT GOING TO SACRIFICE THE RIGHTS OF WORKING FAMILIES. I THINK THAT'S VERY IMPORTANT -- THAT'S A VERY IMPORTANT FUNDAMENTAL PRINCIPLE. I THINK THAT THERE ARE WAYS IN WHICH WE CAN REACH COMMON GROUND. HERE'S THE CONCERN. WE HAVE CONSENSUS ON THE VALUES FUND AND THE NEED FOR THE VALUES FUND. EVERYBODY UNDERSTANDS WE NEED TO TRANSFORM THE ECONOMY IN THE STATE. WE HAVE A GROWING CONSENSUS ON TAX REFORM, SIGNIFICANT TAX REFORM THAT CAN TAKE PLACE. WE OUGHT TO BE FOCUSING OUR ATTENTION ON AREAS WHERE WE AGREE, NOT ON AREAS WHERE THERE HAS BEEN DIAMETRIC OPPOSITION OVER THE COURSE OF NOT JUST THIS YEAR BUT THE LAST FOUR YEARS.

Yepsen:BUT AS I LOOK AT THAT POLITICAL ROW OF DOMINOES UP THERE, YOU'RE RIGHT, THERE IS A LOT OF AGREEMENT. BUT FIRST THINGS FIRST, AND WHAT THEY'RE SAYING IN THE SENATE IS THEY'VE GOT TO HAVE SOME CONCESSIONS FROM YOU ON REGULATORY REFORM, OTHERWISE THEY WALK AWAY FROM THESE THINGS. GOVERNOR, YOU'RE ASKING THEM TO RAISE TAXES, TO BORROW MONEY SO GOVERNMENT CAN --

Vilsack:WHOA, JUST A SECOND. WAIT A MINUTE.

Yepsen:LET ME FINISH MY QUESTION.

Vilsack:NO, NO, I'M NOT GOING TO LET YOU FINISH THE QUESTION BECAUSE THE QUESTION IS WRONG. WE'RE NOT ASKING ANYBODY TO RAISE TAXES.

Yepsen:A CIGARETTE TAX INCREASE IS NOT A TAX INCREASE?

Vilsack:NO, BECAUSE WE HAVE SUGGESTED THAT IF THAT IS THE VEHICLE THAT'S USED TO FUND THE VALUES FUND THAT THERE BE A CORRESPONDING RETURN ON INVESTMENT LOWERING PENSION AND SOCIAL SECURITY TAXES BY CORRESPONDING THEM OUT. THIS IS NOT A TAX INCREASE, SO YOUR QUESTION IS WRONG.

Yepsen:AND THE INTERNET TAX INCREASE IS NOT A TAX INCREASE?

Vilsack:NO, ABSOLUTELY NOT. FIRST OF ALL, YOU'VE MISCHARACTERIZED THAT, DAVID. IT'S NOT AN INTERNET SALES TAX.

Yepsen:A TAXPAYER WINDS UP PAYING MORE IS WHAT I'M GETTING AT.

Vilsack:NO, NO, NO, NO. THE TAXPAYER ENDS UP PAYING TAX THAT'S ALREADY OWED UNDER THE CURRENT LAW AND IT PROVIDES EQUITY BETWEEN THE MAIN-STREET RETAILER AND THE OUT-OF-STATE RETAILER THAT IS BENEFITING FROM THIS INEQUITY THAT EXISTS TODAY. SO LET'S MAKE SURE WE USE LANGUAGE PROPERLY HERE ON THIS SHOW. THIS IS AN IMPORTANT DISTINCTION HERE. IT IS IMPORTANT TO UNDERSTAND WE NEED THE VALUES FUND. THIS ISN'T SOMETHING I NEED AS A GOVERNOR. THE STATE NEEDS IT. WE NEED TO TRANSFORM THE ECONOMY. HOW MANY TIMES DO WE HAVE TO PICK UP THE MORNING PAPER TO READ ABOUT PLANT CLOSINGS TO REALIZE THAT WE'VE GOT TO DO SOMETHING SIGNIFICANT?

Yepsen:MY POINT, GOVERNOR, WITHOUT PARSING WORDS WITH YOU HERE IS THEY FEEL LIKE THEY'RE BEING ASKED TO GIVE UP ON SOME PRINCIPLES. AND BEFORE THEY DO THAT, THEY WANT TO SEE YOU DO IT TOO. SO IS THERE SOME MIDDLE GROUND THAT YOU CAN HAVE WITH THEM ON THESE ISSUES?

Vilsack:WELL, AS I'VE SUGGESTED, I'M WILLING TO VISIT WITH THEM ABOUT CERTAIN ASPECTS OF THE REGULATORY REFORM BILL. BUT THE VAST MAJORITY OF WHAT THEY'VE PROPOSED, THEY'VE NOT MADE THE CASE THAT IT'S GOING TO MAKE A DIFFERENCE FOR BUSINESS. HERE'S WHAT'S REALLY IMPORTANT FOR PEOPLE TO UNDERSTAND ABOUT BUSINESS IN THE STATE. WE HAVE TO STOP TALKING ABOUT HOW POOR THIS STATE IS IN TERMS OF BUSINESS CLIMATE, AND WE HAVE TO START EMPHASIZING THIRD BEST LIABILITY CLIMATE IN THE COUNTRY, FIFTH BEST STATE FOR UNEMPLOYMENT COMPENSATION TAXATION ON BUSINESSES, FIFTH LOWEST COST OF DOING BUSINESS, A PRODUCTIVE WORK FORCE, A SINGLE FACTOR CORPORATE TAX, WHICH ENABLES CORPORATIONS TO AVOID THE PAYMENT OF TAX ON ANY PROFIT GENERATED OUTSIDE THE STATE OF IOWA. AND WITH SIGNIFICANT TAX REFORM THAT WE'RE WORKING ON, THAT COULD REDUCE THE TOP RATE THAT WE PAY BY A SIGNIFICANT AMOUNT, TOGETHER WITH THE VALUES FUND, WE WILL HAVE A STATE, CERTAINLY IN THE MIDWEST, THAT WILL BE ABLE TO DISTINGUISH ITSELF FROM ANY OTHER STATE IN THE MIDWEST AND, FRANKLY, FROM MOST OF THE STATES IN THE COUNTRY. NOW IS NOT THE TIME TO COMPEL OR FORCE US TO SACRIFICE THE RIGHTS OF WORKING FAMILIES, WORKING MEN AND WOMEN, INJURED WORKERS, UNEMPLOYED WORKERS, AND CONSUMERS. NOW IS THE TIME FOR US TO FOCUS ON WHERE THERE IS CONSENSUS. WE'LL BE HAPPY TO TALK TO THEM ABOUT REGULATORY REFORM... REAL REGULATORY REFORM... "REAL" REGULATORY REFORM THAT WILL ACTUALLY WORK AND IMPROVE THE CLIMATE, NOT SOMETHING THAT'S BEING PUSHED BY A SPECIAL INTEREST GROUP BUT SOMETHING THAT WILL IMPACT POSITIVELY THE STATE, NOT SOMETHING THAT'S GOING TO HARM WORKING FAMILIES.

Borg: I THINK YOUR MESSAGE GOT THROUGH, GOVERNOR.

Vilsack:GOOD.

Borg: AS YOU'VE SAID, THE VALUES FUND IS A VERY HIGH PRIORITY AND IT HAS TO BE DONE THIS SESSION. BUT ONE THING THAT REALLY HAS TO BE DONE THIS SESSION IS A BUDGET OF WHICH THE VALUES FUND IS AN INTEGRAL PART, THEN. BUT ARE YOU SATISFIED AS YOU ARE SEEING THAT BUDGET EMERGE, WHICH TAKES EFFECT JULY 1, THAT THE FUNDING SOURCES ARE CORRECT? DO YOU AGREE WITH ALL OF THOSE? AND WHAT ABOUT THE CRITICISM THAT THERE ARE DEEP CUTS IN SUCH THINGS AS CHILD PROTECTION THAT PEOPLE CAN'T TOLERATE?

Vilsack:WELL, I DON'T BELIEVE THAT THERE WILL BE DEEP CUTS IN CHILD PROTECTION, BUT THE REALITY OF OUR BUDGET -- AND IT MAKES THE CASE FOR THE NEED FOR THE VALUES FUND -- IS THAT NO ONE IS GOING TO BE SATISFIED WITH THIS BUDGET BECAUSE WE'RE NOT GENERATING THE REVENUES TO DO THE JOB THAT ALL OF US WOULD LIKE TO DO IN EDUCATING OUR CHILDREN, IN PROVIDING HEALTH CARE FOR THE CITIZENS, AND PROTECTING THE ENVIRONMENT. THAT IS PRECISELY THE REASON WHY WE HAVE TO TRANSFORM THE ECONOMY. THAT'S PRECISELY THE REASON WHY THE VALUES FUND IS THE NUMBER ONE PRIORITY, EVEN MORE IMPORTANT THAN THE BUDGET. THE REALITY IS THAT SENATOR LAMBERTI, REPRESENTATIVE DIX, SENATOR DVORSKY, AND REPRESENTATIVE MURPHY HAVE BEEN DOING AN EXTRAORDINARY JOB TRYING TO CRAFT A BUDGET IN VERY DIFFICULT CIRCUMSTANCES THAT MAKES SENSE. WE ARE VERY CLOSE TO CONSENSUS AND AGREEMENT ON THE BUDGET. I DON'T SEE ANY SIGNIFICANT MAJOR HURDLES. WE HAVE YET TO TALK ABOUT SALARIES AND SERVICES THAT WILL BE IMPACTED. BUT AT THE END OF THE DAY, WE'LL HAVE A BUDGET. BUT I'LL TELL YOU, IF THAT'S ALL WE HAVE, I'M NOT GOING TO BE SATISFIED AND NO IOWAN SHOULD BE SATISFIED. WE SHOULD NOT FINISH THIS LEGISLATIVE SESSION UNTIL WE HAVE TRANSFORMED THIS ECONOMY. THAT IS THE SINGLE MOST IMPORTANT THING WE CAN DO.

Borg: MUNICIPALS ARE HOWLING, THOUGH, THAT YOU'RE PUSHING, THAT IS STATE GOVERNMENT, NOT YOU PERSONALLY, BUT PUSHING A LOT OF EXPENSES DOWN ON THEM.

Vilsack:WE'VE REDUCED OUR WORK FORCE IN STATE GOVERNMENT BY ALMOST 10 PERCENT. WE'VE REORGANIZED STATE GOVERNMENT. WE'RE GOING TO PASS A FAIRLY SIGNIFICANT ACT THAT'S GOING TO CONSOLIDATE A NUMBER OF DEPARTMENTS THROUGH THE DEPARTMENT OF ADMINISTRATIVE SERVICES. WE'VE MADE A LOT OF TOUGH DECISIONS IN THE LAST COUPLE OF YEARS. WE'VE FORCED LOCAL SCHOOL BOARDS TO MAKE SOME VERY DIFFICULT DECISIONS IN THE LAST COUPLE OF YEARS. CITIES AND COUNTIES ARE GOING TO HAVE TO RESPOND AS WELL. THEY OUGHT TO LOOK AT THIS NOT AS A CONCERN ABOUT FUNDING BUT AS AN OPPORTUNITY FOR THEM TO RETHINK HOW THEY PROVIDE SERVICES, TO RETHINK HOW THEY PROVIDE GOVERNMENT, AND THE LEVEL AND THE AMOUNT OF GOVERNMENT THAT IS NECESSARY TO PROVIDE THE SERVICES PEOPLE WANT.

Glover: GOVERNOR, YOU SAID THAT THERE'S VERY CLOSE TO A CONSENSUS ON A TAX REFORM PACKAGE. WHAT ARE THE ELEMENTS OF THAT PACKAGE THAT YOU'RE CLOSE TO CONSENSUS ON?

Vilsack:WELL, I THINK THE SENATE HAS DONE A VERY GOOD JOB IN PROPOSING AN OUTLINE OF AN INCOME TAX REFORM PROPOSAL, WHICH WOULD ESSENTIALLY SUBSTANTIALLY REDUCE THE TAX RATES THAT IOWANS WOULD PAY, ELIMINATE FEDERAL DEDUCTIBILITY, AND MAKE IT VERY DIFFICULT -- VERY DIFFICULT FOR ADDITIONAL TAX INCREASES TO OCCUR UNLESS THERE'S A GENUINE CONSENSUS ABOUT THE NEED FOR THAT IN THE FUTURE. I THINK THE HOUSE HAS WORKED ON PROPERTY TAX REFORM. THEY MAY BE THE FIRST TO ADMIT THAT PERHAPS THEY DON'T HAVE ALL THE T'S CROSSED AND THE I'S DOTTED. BUT I THINK THERE IS A CONSENSUS THAT WE NEED TO SUNSET THE EXISTING PROPERTY TAX SYSTEM SO THAT WE PUT OURSELVES IN A POSITION EITHER TO ADOPT THE HOUSE PLAN OR ADOPT IT AS A FRAMEWORK AND THEN MOVE IN THE COURSE OF THE NEXT LEGISLATIVE SESSION TO PERFECT IT.

Glover: ISN'T THAT A LOT TO ASK THIS LEGISLATURE TO DO IN THE NEXT COUPLE OF WEEKS: AN $800-MILLION IOWA VALUES FUND, REVISE THE STATE'S INCOME TAX SYSTEM, SCRAP THE STATE'S PROPERTY TAX SYSTEM? ISN'T IT MORE REALISTIC TO THINK ABOUT MAYBE SUNSETTING SOME OF THESE THINGS AND DOING THEM NEXT YEAR?

Vilsack:WELL, WE'VE MADE A LOT OF PROGRESS IN THE LAST COUPLE OF MONTHS. IT'S NOT AS IF WE'RE JUST PUTTING THIS ON THE TABLE IN THE LAST TWO WEEKS OF THE SESSION. WE'VE BEEN TALKING ABOUT THIS FOR MONTHS. WE'VE BEEN HAVING MEETINGS INTERNALLY IN THE CAPITOL BETWEEN WAYS AND MEANS CHAIRS AND OTHER INDIVIDUALS, LITERALLY, FOR MONTHS. THIS IS A CULMINATION OF A LOT OF HARD WORK, AND IT'S TIME NOW FOR US TO BEGIN MAKING SOME DECISIONS AND MOVING THIS AGENDA. IOWANS EXPECT US TO BE BOLD. THEY WANT US TO BE BOLD. THIS IS PRECISELY THE TIME. AS I TRAVELED INTERNATIONALLY TO GERMANY, 60 COMPANIES CAME TO OUR CONFERENCE IN GERMANY AS A RESULT OF THE INTEREST THAT WAS PEAKED WITH THE IOWA VALUES FUND. AS I TRAVEL OUTSIDE THE STATE AND RECRUIT COMPANIES TO COME TO IOWA, THERE IS GENUINE INTEREST IN WHAT IOWA IS DOING. IN FACT, A REPRESENTATIVE FROM LENNOX SAID TO ME THE OTHER DAY IN TEXAS, SHE SAID, "YOU KNOW, GOVERNOR, YOUR TIMING IS EXTRAORDINARY. THIS IS PRECISELY THE KIND OF THING THAT IOWA NEEDS TO DO, AND YOU WILL SEPARATE YOURSELF FROM ALL OTHER STATES. YOU WILL GET A GREAT DEAL OF INTEREST NATIONALLY IF YOU MOVE THIS STATE FORWARD IN THE DIRECTION THAT YOU'VE SUGGESTED."

Yepsen:GOVERNOR, HOW DO YOU RESPOND TO THE CRITICISM THAT'S MADE OF THE VALUES FUND THAT IT'S ESSENTIALLY GOVERNMENT PICKING WINNERS AND LOSERS AND STATE GOVERNMENT'S TRACK RECORD ON THAT HAS REALLY NOT BEEN VERY GOOD, AND THE LASER CENTER IN IOWA CITY IS AN EXAMPLE. I HEAR THAT CRITICISM A LOT THAT THEY FEEL THAT YOU ARE RAISING TAXES TO BORROW MONEY TO PICK WINNERS AND LOSERS. SO DEAL WITH THAT QUESTION OF PICKING WINNERS AND LOSERS.

Vilsack:WE ARE NOT RAISING TAXES. I WANT TO MAKE SURE THAT ANYBODY WHO IS WATCHING THIS SHOW UNDERSTANDS THAT THAT'S NOT THE CASE.

Yepsen:THAT IS YOUR INTERPRETATION.

Vilsack:WELL, THAT'S THE FACT. THAT'S THE FACT. THOSE WHO ARE SUGGESTING TAX INCREASES ARE A RESULT OF THIS PROGRAM ARE SIMPLY TRYING TO DERAIL IT. TO YOUR QUESTION, THIS ISN'T ABOUT PICKING WINNERS AND LOSERS. THIS IS ABOUT A FIFTEEN-YEAR STUDY OF THE ECONOMY OF THE STATE THAT STARTED WITH THE PATEL STUDY THAT WAS RECENTLY REVIEWED BY THE DEPARTMENT OF ECONOMIC DEVELOPMENT THAT IDENTIFIED THREE CLUSTER AREAS, THREE INDUSTRIES, NOT SPECIFIC COMPANIES BUT THREE INDUSTRIES, THAT WILL MAKE SENSE FOR IOWA. CAN ANYBODY MAKE THE CASE THAT WE ARE DOING WHAT WE SHOULD BE DOING WITH WHAT WE GROW, THE CORN AND BEANS? CAN ANYONE SUGGEST THAT THERE ISN'T GREAT OPPORTUNITY IN RENEWABLE FUELS -- ETHANOL, SOY DIESEL -- AND THE LIFE SCIENCES, CONVERTING WHAT WE GROW TO CURES FOR CANCER, ILLNESSES, AND OTHER DISEASES? CAN ANYONE SUGGEST THAT IT'S INAPPROPRIATE FOR US TO GO TO MAJOR MANUFACTURERS AND SAY, "HOW CAN WE HELP YOU RETAIN AND EXPAND JOBS IN THIS STATE BY ALLOWING YOU TO TRANSFORM YOUR WORKPLACE FROM THE OLD-TIME WORKPLACE TO THE ADVANCED WORKPLACE"? CAN ANYONE SUGGEST THAT WE HAVEN'T HAD SUCCESS WITH FINANCIAL SERVICES AND INSURANCE WHEN THAT HAS SEEN A 40-PERCENT INCREASE IN EMPLOYMENT AND IS ONE OF THE REASONS WHY OUR STATE IS A LITTLE BETTER OFF THAN MOST OTHER STATES. THIS ISN'T ABOUT PICKING WINNERS AND LOSERS; THIS IS ABOUT DOING WHAT WE DO BEST AND DOING IT BETTER.

Yepsen:WHAT'S WRONG WITH WAITING, GOVERNOR? THESE ARE -- AS MIKE HAS APPOINTED OUT, THESE ARE DELICATE THINGS --

Vilsack:WAITING?! GOOD LORD! WE'VE WAITED FOR TWENTY YEARS, DAVID. IT'S TIME THAT THIS STATE MOVE FORWARD. WAITING?! IT'S THE SMALL THINKING THAT HAS PREVENTED THIS STATE FROM UTILIZING ITS FULL POTENTIAL. WE CAN'T WAIT ANY LONGER. WE'VE WAITED TOO LONG FOR AN EXPANSION OF ETHANOL AND SOY DIESEL. WE CAN'T WAIT. IF WE WAIT, WE SEND A SIGNAL TO THE LIFE SCIENCES INDUSTRY, TO TRANS OVA AND OTHER COMPANIES, THAT WE'RE NOT OPEN FOR BUSINESS, AND THEY'LL GO SOMEPLACE THAT IS AGGRESSIVELY PURSUING THEM. WE CAN'T WAIT.

Yepsen:THEN THE FLIP SIDE OF THAT QUESTION IS IF WE CAN'T WAIT, WILL YOU BRING THEM BACK IN A SPECIAL SESSION IF YOU DON'T GET ALL OF THESE THINGS DONE IN THE NEXT TWO WEEKS?

Vilsack:WELL, I BELIEVE THAT THE SPEAKER IS CORRECT. THE SPEAKER SAID HE'LL STAY AS LONG AS IT TAKES TO GET THE JOB DONE. I THINK HE'S ABSOLUTELY CORRECT ABOUT THAT.

Glover: ONE OF THE SUGGESTIONS THAT'S COME UP HAS BEEN A PROPERTY TAX REFORM BILL THAT WAS PROPOSED BY HOUSE REPUBLICANS THAT WOULD SCRAP THE CURRENT ASSESSMENT SYSTEM, REPLACE IT BY A SQUARE FOOTAGE SYSTEM. YOU KNOW THE DETAILS OF IT. WHAT DO YOU THINK OF IT?

Vilsack:WELL, I THINK IT'S A GOOD STARTING POINT. I THINK THAT THERE ARE SOME CONCERNS THAT HAVE BEEN RAISED ABOUT IT, WHICH IS WHY SOME FOLKS THAT ARE CURRENTLY WORKING WITH PROPERTY TAX REFORM ARE MODIFYING IT AS WE SPEAK, WHICH IS WHY I THINK WHAT WILL HAPPEN IS THAT YOU'LL ESTABLISH A FRAMEWORK FOR REFORM AND YOU'LL SUNSET THE EXISTING PROPERTY TAX SYSTEM, GIVE PEOPLE A SENSE OF WHAT THE NEW SYSTEM WILL LOOK LIKE AND THEN GIVE US TIME TO PERFECT IT.

Glover: AND WHEN WILL YOU SUNSET IT TO? WHAT WILL BE THE DEADLINE FOR PLACING IT?

Vilsack:I'VE ONLY SUGGESTED THAT THEY SUNSET IT IN A NONELECTION YEAR. [ LAUGHTER ]

Yepsen:THE SAME SORT OF QUESTION ON THE INCOME TAX. YOU MENTIONED EARLIER THAT YOU LIKED SOME OF THESE IDEAS THAT ARE FLOATING AROUND IN THE SENATE. WHAT ABOUT SUNSETTING THE INCOME TAX AT A DATE CERTAIN TO FORCE THE LEGISLATURE AND THE GOVERNOR TO ACT ON THIS?

Vilsack:WELL, I THINK WE HAVE A GOOD IDEA. I THINK SENATOR MCKIBBEN AND OTHERS HAVE WORKED ON A VERY GOOD PROPOSAL FOR THE INCOME TAX. I DON'T THINK WE NEED -- IT'S NOT AS COMPLEX AS THE PROPERTY TAX SYSTEM. ESSENTIALLY, WE KNOW THAT THE HIGH NOMINAL RATE THAT WE HAVE TODAY DISCOURAGES MIDDLE-LEVEL AND UPPER-LEVEL MANAGEMENT FOLKS FROM COMING TO IOWA, SO WE NEED TO BRING THAT RATE DOWN. WE KNOW THAT ONE WAY TO DO THAT IS TO ELIMINATE FEDERAL DEDUCTIBILITY. WE KNOW THAT THOSE WHO ARE CONCERNED ABOUT THAT FEEL THAT WE MIGHT THEN INCREASE THE RATES. AND SO WE'VE SUGGESTED MAKING IT MORE DIFFICULT. IT'S RELATIVELY SIMPLE TO DO THE INCOME TAX WORK. IT'S MUCH MORE COMPLEX TO DO THE PROPERTY TAX WORK.

Yepsen:WHAT DO YOU SAY TO REPUBLICANS WHO ARE HAVING TO TURN THEIR BACK ON HISTORIC OPPOSITION TO GETTING RID OF FEDERAL DEDUCTIBILITY. THAT HAS BEEN AN ARTICLE OF FAITH IN THEIR PARTY FOR YEARS. IOWANS FOR TAX RELIEF, A VERY INFLUENTIAL INTEREST GROUP, STRONGLY SUPPORTS THAT NOTION. IF YOU'RE NOT WILLING TO GO AGAINST YOUR FRIENDS IN THE TRIAL LAWYERS OR IN THE LABOR MOVEMENT ON A REGULATORY REFORM BILL, WHY SHOULD THEY BE REQUIRED TO GO AGAINST IOWANS FOR TAX RELIEF?

Vilsack:WELL, FIRST OF ALL, BECAUSE MAJOR BUSINESS LEADERS ARE TELLING THEM, WHO HAPPEN TO BE VERY BIG REPUBLICAN SUPPORTERS, THAT THIS IS AN IMPEDIMENT TO THEM GETTING TALENT IN IOWA. SECONDLY, IT MAKES SENSE AND WE'RE RESPONDING TO THE CONCERNS FROM INTEREST GROUPS BY MAKING IT MORE DIFFICULT TO RAISE TAXES. FINALLY, I'VE NOT SUGGESTED THAT I'M NOT WILLING TO WORK ON REGULATORY REFORM. I'M JUST SUGGESTING THAT WHAT THEY HAVE PROPOSED IS HARMFUL TO FAMILIES AND THEY'VE NOT MADE THE CASE THAT IN FACT WILL MAKE A DIFFERENCE IN TERMS OF -- IN TERMS OF IMPROVING THE BUSINESS CLIMATE. AGAIN, THIRD BEST LIABILITY CLIMATE IN THE COUNTRY, FIFTH LOWEST UNEMPLOYMENT COMPENSATION, FIFTH LOWEST COST OF DOING BUSINESS. THEY HAVEN'T MADE THE CASE THAT ANYTHING THAT THEY'VE PROPOSED IS ACTUALLY GOING TO RESULT IN A NEW JOB BEING CREATED IN THE STATE.

Yepsen:YOU SAID HERE TODAY YOU'RE WILLING TO TALK, AND YOU'VE SAID WHAT YOU WON'T TALK ABOUT. WHAT WILL YOU TALK ABOUT WITH THEM? WHAT ARE THE KINDS OF REGULATORY REFORMS THAT YOU WOULD LIKE -- THAT YOU'D GO ALONG WITH IN A BILL?

Vilsack:THEY'VE SUGGESTED A CHANGE IN THE SUPERSEDEAS BOND PROCESS IN TERMS OF APPEALS IN CASES. THAT'S SOMETHING WE CAN WORK WITH. THERE'S A SUGGESTION THAT MAYBE THE CIVIL CONSPIRACY LAWS CAN BE CHANGES. THERE'S A SUGGESTION THAT WE CAN TRY TO REACH CONSENSUS ON APPORTIONMENT AND WORKERS COMPENSATION, WHICH I THINK IS POSSIBLE. THEY'VE PROPOSED SOME ADDITIONAL FEES THAT COULD BE CHARGED IN FINANCIAL CIRCUMSTANCES. ALL OF THAT HAS BEEN OUTLINED IN THEIR BILL. THESE ARE ALL THINGS THAT WE'VE BEEN TALKING TO THEM ABOUT AND I THINK WE COULD REACH CONSENSUS ON AND WE COULD CODIFY WHAT WE ARE DOING ADMINISTRATIVELY WITH REFERENCE TO THE ONE-STOP SHOP. THAT'S THE SINGLE, MOST IMPORTANT THING TO BUSINESS. BUSINESS WANTS TO KNOW THAT THEY CAN GET THINGS DONE IN A TIMELY WAY. TIME IS MONEY IN TODAY'S WORLD. WHAT WE'RE TRYING TO DO IS TO STREAMLINE THE PROCESS THAT THEY HAVE TO GO THROUGH TO GET PERMITS AND LICENSES. THAT IS EXTREMELY IMPORTANT. THAT IS REAL REGULATORY REFORM.

Borg: YOU MAY THINK THAT I HAVEN'T BEEN LISTENING AS I ASK THIS QUESTION, BUT I'M GOING BACK TO THIS NO TAX INCREASE.

Vilsack:YES.

Borg: NOW, I UNDERSTAND INTERNET'S -- TAX ON INTERNET SALES IS SIMPLY COLLECTING SOMETHING THAT'S ON THE BOOKS RIGHT NOW AND SHOULD BE BEING PAID. BUT WHY ISN'T A RAISE IN CIGARETTE TAXES A TAX INCREASE?

Vilsack:BECAUSE IT'S COUPLED WITH A CORRESPONDING REDUCTION IN ANOTHER TAX, WHICH IS WHAT WE PROPOSED. WE SUGGESTED IF YOU RAISE THE CIGARETTE TAX TO FUND THE IOWA VALUES FUND THAT YOU TAKE THE DIVIDEND FROM THAT FUND, THE NEW JOBS, WE BELIEVE 50,000 JOBS CAN BE CREATED WITH THIS FUND IN THE NEXT FIVE YEARS. WE KNOW THEY'LL PAY ADDITIONAL TAXES, AND WE USE THOSE ADDITIONAL TAXES TO BASICALLY BUY DOWN A MORE ONEROUS TAX, THE PENSION TAX, THE SOCIAL SECURITY TAX, BY A CORRESPONDING AMOUNT. IT'S A TAX SHIFT. IT'S NOT A TAX INCREASE.

Yepsen:AREN'T YOU WORRIED, GOVERNOR, AS A DEMOCRATIC THAT YOU'RE TAX SHIFTING HERE, THAT YOU'RE SHIFTING -- CIGARETTE TAX IS ESSENTIALLY PAID BY LOWER INCOME PEOPLE WHO SMOKE. AND IF YOU RAISE THAT TAX TO PROVIDE TAX RELIEF FOR WELL-TO-DO RETIREES, AREN'T YOU IN EFFECT EXECUTING A TAX SHIFT?

Vilsack:THERE'S NO QUESTION THAT THE CIGARETTE TAX IS A VOLUNTARY TAX THAT'S PAID BY FOLKS. WHEN WE LOOK AT ECONOMIC DEVELOPMENT POSSIBILITIES AND POTENTIAL FOR THE STATE, THERE ARE MANY PEOPLE WHO GENUINELY BELIEVE THAT THESE RETIREMENT TAXES ARE IMPEDIMENT TO ECONOMIC DEVELOPMENT AND TO RETAINING POPULATION. SO THAT IS ONE WAY WE CAN LOOK AT THIS. I MIGHT SAY THAT IN TERMS OF SENATOR MCKIBBEN'S INCOME TAX PROPOSAL, HE HAS SUGGESTED A PROPOSAL THAT WOULD ELIMINATE TAXATION FOR ABOUT 30- TO 40,000 OF THE LOWEST INCOME WORKERS IN OUR STATE. THAT WOULD BE MY RESPONSE. THAT'S REAL MEANINGFUL TAX REFORM. HE'S DONE A GOOD JOB AND HE'S TAKEN A LOT OF HEAT FOR THIS. AND I WANT TO TAKE THIS OPPORTUNITY TO COMPLIMENT HIM FOR THE WORK HE'S DONE. IT'S HARD WORK. HE NEEDS HELP. HE NEEDS THE REST OF US TO HELP HIM LIFT THAT HEAVY LOAD, AND I'M PREPARED TO DO THAT.

Glover: AS LONG AS WE'RE ON TAX ISSUES, THERE'S A TAX ISSUE THAT WAS RAISED LAST SUMMER BY THE IOWA SUPREME COURT WHEN IT STRUCK DOWN THE TAXATION SCHEME FOR IOWA'S CASINOS. THERE WAS A LOT OF TALK ABOUT REPLACING THAT. THERE HASN'T BEEN MUCH TALK LATELY. WHAT'S GOING TO HAPPEN WITH THAT?

Vilsack:I THINK YOU'RE GOING TO SEE THE LEGISLATURE ESSENTIALLY PASS A BUDGET THAT'S CONTINGENT ON THE SUPREME COURT'S DECISION, AND WE WILL WAIT FOR THE SUPREME COURT TO DECIDE. WE GAVE THE GAMING INTEREST PLENTY OF OPPORTUNITY TO REACH CONSENSUS AND COMPROMISE. THEY WERE UNWILLING TO DO THAT. THERE MAY VERY WELL BE A COMPROMISE OR TWO THAT'S FLOATING OUT THERE THAT'S BEING DISCUSSED, BUT AT THIS POINT IN TIME, I THINK THE INTENT OF THE LEGISLATURE IS TO WAIT UNTIL THE SUPREME COURT MAKES ITS FINAL DECISION.

Glover: SO IF NOTHING HAPPENS IN THIS LEGISLATIVE SESSION, THEN YOU'RE OKAY WITH THAT?

Vilsack:I'M FINE WITH THAT BECAUSE WE GAVE THE GAMING INTEREST THE OPPORTUNITY TO SETTLE, TO RESOLVE IT. THEY REFUSED TO DO IT. THEY DIDN'T FEEL THAT WHAT WE WERE PROPOSING WAS FAIR OR REASONABLE. SO WE'LL SEE WHAT THE COURT DOES.

Glover: ARE YOU GOING TO HAVE -- WOULD THAT SET UP THE SCENARIO WHERE YOU'D HAVE TO HAVE A SPECIAL SESSION IF THE SUPREME COURT RULES AGAINST YOU?

Vilsack:NOT NECESSARILY, NO. BASICALLY --

Glover: ISN'T THAT A BIG HOLE IN YOUR BUDGET?

Vilsack:NO, NO. THE RIF BUDGET COULD BE STRUCTURED IN SUCH A WAY THAT IT CAN ESSENTIALLY BE BASED ON A CONTINGENT PROCESS RELATIVE TO THE COURT'S DECISION. IF THE COURT'S DECISION TURNS OUT TO BE ADVERSE TO THE STATE, THEN THE LEGISLATURE WILL BE BACK IN SESSION BEFORE WE HAVE TO DEAL WITH THE IMPLICATION OF THAT.

Yepsen:WELL, WHAT ABOUT A SPECIAL SESSION ON SOME OF THESE OTHER THINGS. I KNOW CHRISTOPHER RANTS SAYS HE'S WILLING TO STAY. A LOT OF LEGISLATORS ARE NOT. I WANT TO -- I WANT TO PIN YOU DOWN ON THAT. ARE YOU PREPARED, IF YOU DO NOT GET TAX REFORM, PROPERTY TAX REFORM, INCOME, VALUES FUND, ARE YOU PREPARED TO BRING THE LEGISLATURE BACK SOMETIME THIS SUMMER OR FALL?

Vilsack:I'M PREPARED TO SAY TO THE FOLKS WHO ARE WATCHING THIS SHOW TODAY, GET THE JOB DONE IN THE NEXT COUPLE OF WEEKS. THAT'S THE BEST WAY TO DO IT BECAUSE WE HAVE TO DO IT. HERE'S WHY IT'S TIME SENSITIVE. INTEREST RATES ARE AT A LOW RATE RIGHT NOW. IF WE ACTUALLY AGGRESSIVELY PURSUE THIS, WE CAN ESSENTIALLY GET THESE RESOURCES FOR HARDLY ANY MONEY AT ALL. I'M CONCERNED ABOUT WAITING BECAUSE IF WE WAIT, THE INTEREST RATE MAY GO UP. THE REALITY IS WE CAN GET THIS JOB DONE AND SHOULD GET THIS JOB DONE IN THE NEXT TWO WEEKS. THERE'S NO REASON WHY WE CAN'T GET IT DONE IN NEXT TWO WEEKS. BUT IF IT DOESN'T GET DONE IN THE NEXT TWO WEEKS, I'M PREPARED TO STICK WITH THE SPEAKER AND TO STAY IN SESSION FOR AS LONG AS IT TAKES. AND IF IT BECOMES NECESSARY TO BRING FOLKS BACK, I BELIEVE IT'S IMPORTANT ENOUGH -- IT'S IMPORTANT ENOUGH FOR THIS STATE TO GET THIS JOB DONE.

Yepsen:WILL YOU BE ABLE TO PROVIDE DEMOCRATIC VOTES FOR THESE IDEAS? REPUBLICAN LEADERS ARE UP THERE, CRITICAL OF THE MINORITY DEMOCRATS SAYING, "WELL, THEY'RE JUST OUT THERE SAYING 'JUST SAY NO,' AND YOU'RE NOT PROVIDING ANY LEADERSHIP IN BRINGING DEMOCRATIC VOTES FOR SENATOR MCKIBBEN'S IDEA."

Vilsack:THE DEMOCRATIC VOTE THAT THEY NEED IS ONE. THEY NEED MINE. [ LAUGHTER ] AND THEY'LL GET IT.

Glover: GOVERNOR, WE'VE SPENT ALMOST THE ENTIRE AMOUNT OF THIS SHOW TALKING ABOUT ISSUES, WHICH IS PAINFUL FOR ME AT THIS TABLE, SO LET'S DROP THE ISSUES FOR A MINUTE AND GO STRAIGHT TO POLITICS. YOU'RE THE LEADER OF YOUR PARTY, IN ADDITION TO BEING GOVERNOR OF THIS STATE. WHO IS YOUR PARTY GOING TO BE ABLE TO PUT UP AGAINST SENATOR GRASSLEY IN NEXT YEAR'S ELECTION? I HAVEN'T HEARD ANY NAMES.

Vilsack:YEAH, IT'S A VERY GOOD QUESTION. I THINK AT THIS POINT IN TIME, THERE ARE A LOT OF DEMOCRATS THAT ARE BASICALLY TAKING A WAIT-AND-SEE APPROACH TO SENATOR GRASSLEY'S SITUATION. THEY'RE WAITING TO SEE A SENATE FINANCE CHAIRPERSON WITH EXTRAORDINARY POWER, WHETHER THE SENATOR IS GOING TO BE ABLE TO MAKE GOOD ON HIS PLEDGE TO TAKE CARE OF THE MEDICARE PROBLEM. I THINK IF HE SUCCEEDS, OBVIOUSLY IT WILL MAKE IT DIFFICULT FOR OUR PARTY. IF HE DOES NOT, THEN I THINK YOU'LL PROBABLY SEE QUITE A FEW PEOPLE INTERESTED IN HIS JOB.

Glover: HAVE YOU HEARD ANY NAMES?

Vilsack:WELL, I THINK THE SECRETARY OF STATE'S NAME HAS BEEN DISCUSSED. THE LIEUTENANT GOVERNOR'S NAME HAS BEEN DISCUSSED. THOSE TWO NAMES HAVE BEEN THE MOST PROMINENT.

Yepsen:GOVERNOR, WE'VE GOT ABOUT A MINUTE LEFT. A QUICK QUESTION ON PRESIDENTIAL POLITICS. YOUR PARTY'S PRESIDENTIAL CANDIDATES ARE CRISSCROSSING THIS STATE. IS IT STILL YOUR INTENTION TO STAY NEUTRAL IN THIS PRESIDENTIAL CAMPAIGN?

Vilsack:AT THIS POINT IN TIME, THAT'S CORRECT.

Yepsen:GIVE US YOUR HANDICAP. WHO LOOKS GOOD? WHO'S NOT SO GOOD?

Vilsack:JOHN KERRY HAS GOT A GOOD START, GOOD ORGANIZATION, HAS MADE A PRETTY GOOD IMPRESSION ON A NUMBER OF IOWA DEMOCRATS. HOWARD DEAN HAS COME ON STRONG AND HAS REALLY GOT A LOT OF PASSION BEHIND HIS CAMPAIGN. REPRESENTATIVE GEPHARDT HAS A LOT OF OLD-TIME FRIENDS IN LABOR THAT MAKE -- COULD MAKE A REAL DIFFERENCE AND HAS A VERY GOOD ORGANIZATION HERE. SENATOR EDWARDS I THINK IS BEGINNING TO REKINDLE THE MOMENTUM HE HAD LAST YEAR. I WOULD SAY THOSE ARE IN THE TOP TIER. EVERYONE ELSE I THINK HAS GOT A WAYS TO GO. I THINK SENATOR LEIBERMAN, IN PARTICULAR, HAS GOT A WAYS TO GO, BUT HE'S JUST GETTING ACCLIMATED AND JUST GETTING INVOLVED IN THE STATE.

Yepsen:CAN DICK GEPHARDT REKINDLE THE MAGIC THAT HE HAD IN 1988?

Vilsack:I THINK HE CAN. I THINK HE'S COME OUT AGGRESSIVELY IN TERMS OF THE BUSH TAX CUT PROPOSAL AND SUGGESTING THAT WHAT WE SHOULD HAVE IS A TAX CREDIT FOR HEALTH CARE, WHICH WOULD PROVIDE HEALTH CARE INSURANCE FOR AMERICANS, WHICH IS AN ISSUE THAT REALLY PLAGUES A LOT OF AMERICAN FAMILIES TODAY.

Glover: TURN TO YOURSELF? WHAT'S YOUR FUTURE? YOU'VE SAID YOU'RE NOT GOING TO RUN FOR A THIRD TERM AS GOVERNOR? IS THAT STILL HOLDING?

Vilsack:YES.

Glover: AND WHAT'S YOUR FUTURE?

Vilsack:HOW MANY TIMES DO I HAVE TO ANSWER THAT QUESTION? I'M JUST CURIOUS.

Glover: OH, ABOUT ONCE EVERY TIME YOU COME OUT HERE.

Vilsack:ALL RIGHT.

Glover: AND IF YOU'RE NOT GOING TO RUN FOR GOVERNOR AGAIN, ANYTHING ELSE?

Vilsack:YOU KNOW, I WENT OVER TO EUROPE AND HAD AN OPPORTUNITY TO SPEND SOME TIME IN LONDON TALKING TRADE AND ALSO SPENDING A LITTLE TIME WITH MY SON. WE WENT TO A CASE THAT WAS BEING TRIED IN THE QUEEN'S COURT. I LEFT THAT COURTROOM AND I SAID TO MY SON, "YOU KNOW, IF THAT'S THE BEST THAT THEY'VE GOT OVER THERE, WE COULD PROBABLY MAKE A LOT OF MONEY OVER HERE, JESS." [ LAUGHTER ]

Glover: SO YOU'RE GOING TO RUN FOR PRIME MINISTER?

Yepsen:OPEN A LITTLE OVERSEAS LAW PRACTICE?

Vilsack:THE PRACTICE OF LAW ON CERTAIN DAYS, PARTICULARLY IN THE LAST COUPLE OF DAYS OF THE SESSION, LOOKS VERY APPEALING.

Borg: I'M SORRY, GOVERNOR, WE'RE OUT OF TIME. THANKS FOR SPENDING TIME WITH US TODAY AND FOR YOUR CANDID COMMENTS.