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Senior U.S. Senator Charles Grassley
(#3047)
July 11, 2003

IOWA PRESS #3047 >>

Borg: CONGRESS WRESTLES WITH DECISIONS ON PRESCRIPTION DRUG BENEFITS AND INTERNATIONAL MILITARY INVOLVEMENT, ALL IN THE SHADOW OF A LIMP ECONOMY AND LOOMING 2004 ELECTIONS. PERSPECTIVE FROM IOWA'S SENIOR U.S. SENATOR CHARLES GRASSLEY 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, JULY 11 EDITION OF "IOWA PRESS." HERE IS DEAN BORG.

Borg: AMONG MAJOR DOMESTIC AND INTERNATIONAL DECISIONS VEXING THE CONGRESS IS VERIFYING RELIABILITY OF THE NATION'S INTELLIGENCE OPERATIONS. QUESTIONS ARISE FROM THE 9/11 ATTACKS, AND NOW FINGER-POINTING OVER THE BASIS FOR EVEN INVADING IRAQ. MONEY ALSO A KEY CONSIDERATION. THIS PAST WEEK DEFENSE SECRETARY DONALD RUMSFELD SAID KEEPING U.S. TROOPS IN IRAQ COSTS THIS NATION NEARLY $4 BILLION A MONTH AND AN ADDITIONAL $950 MILLION MONTHLY IN AFGHANISTAN. THERE ARE NOW SUGGESTIONS TO ASK NATO FOR HELP IN IRAQ. AND ALSO ON THE CONGRESSIONAL AGENDA, IF AND HOW TO PROVIDE PRESCRIPTION DRUG BENEFITS FOR MEDICARE PATIENTS. WELL, AS CONGRESS WRESTLES WITH PAYING THOSE BILLS, THE NATION'S UNEMPLOYMENT RATE CLIMBS AND THOSE SEEKING JOBS ARE SCRAMBLING TO PAY THEIR OWN BILLS. IOWA SENATOR CHARLES GRASSLEY CHAIRS THE U.S. SENATE'S FINANCE COMMITTEE. SENATOR GRASSLEY, THAT'S A NICE POSITION WITH ALL THE MONEY PROBLEMS RIGHT NOW.

Grassley: I'M GLAD TO BE WITH YOU, AND I WELCOME THE OPPORTUNITY TO SOLVE THESE PROBLEMS.

Borg: ALSO AT THE "IOWA PRESS" TABLE: "DES MOINES REGISTER" POLITICAL COLUMNIST DAVID YEPSEN AND "ASSOCIATED PRESS" SENIOR POLITICAL REPORTER MIKE GLOVER. >>

Glover: SENATOR, AS YOU'RE AWARE, THE WHITE HOUSE HAS ADMITTED THAT ONE OF THE CLAIMS PRESIDENT BUSH MADE IN HIS STATE OF THE UNION SPEECH IS THAT THE IRAQIS WERE TRYING TO BUY URANIUM IN AFRICA. IT WAS WRONG SO THE PRESIDENT ESSENTIALLY USED SOMETHING THAT WAS WRONG AS AN ARGUMENT FOR MAKING THE CASE FOR WAR IN IRAQ. SHOULD ANYBODY SUFFER CONSEQUENCES FOR THAT? SHOULD PEOPLE AT THE WHITE HOUSE BE DISCIPLINED?

Grassley: IF ANYBODY KNEW OF IT BEFORE IT WENT INTO THE SPEECH, OF COURSE. WHAT REALLY WORRIES ME THE MOST ABOUT IT, MIKE, IS THE FACT THAT WOULD THIS INFORMATION COME FROM THE CIA AND THE CIA KNEW THE WHITE HOUSE HAD IT AND THE CIA DID NOT TELL THE WHITE HOUSE. THERE'S SOMETHING ABOUT THE CIA THAT I'D BE A LOT MORE SUSPICIOUS OF THAN THE WHITE HOUSE OR THE PRESIDENT.

Glover: WHERE SHOULD WE GO FROM HERE ON THIS? SHOULD THERE BE SOME KIND OF AN INDEPENDENT INVESTIGATION? SHOULD CONGRESS LOOK INTO IT? WHAT SHOULD HAPPEN?

Grassley: I THINK CONGRESS ALREADY IS LOOKING INTO IT. BEFORE THIS -- ABOUT THE TIME THIS WAS HEATING UP, BEFORE THERE WAS THE WITHDRAWAL STATEMENT ON THE PART OF THE WHITE HOUSE, THE SENATE INTELLIGENCE COMMITTEE AND THE HOUSE INTELLIGENCE COMMITTEE WAS LOOKING INTO IT.

Glover: AND IS THE PRESIDENT'S CREDIBILITY ON THE LINE HERE? SOME PEOPLE HAVE SAID HIS CREDIBILITY IS ON THE LINE, HE USED SOMETHING THAT MAYBE SOMEBODY IN THE WHITE HOUSE KNEW WAS WRONG AS AN ARGUMENT, AND THERE'S A CREDIBILITY QUESTION. CAN WE BELIEVE HIM TOMORROW?

Grassley: HIS CREDIBILITY WOULD BE ON THE LINE ONLY TO THE EXTENT TO WHICH HE KNEW IT. I DON'T BELIEVE HE KNEW IT, AND I DON'T BELIEVE PEOPLE AT THE WHITE HOUSE KNEW IT. I BELIEVE THAT PEOPLE AT THE CIA KNEW IT AND THE PEOPLE AT THE CIA DIDN'T TELL THE WHITE HOUSE.

Yepsen: SENATOR, IS THIS GOING TO UNDERMINE SUPPORT THAT THE AMERICAN PEOPLE HAVE GIVEN THE PRESIDENT ON THIS QUESTION? POLLS HAVE SHOWN MOST AMERICANS STILL SUPPORT THE PRESIDENT. DO YOU THINK THIS IS THE KIND OF QUESTION THAT WILL UNDERMINE THAT?

Grassley: NO, I DO NOT THINK SO.

Yepsen: GO TO THE LARGER QUESTION, SENATOR, OF IRAQ. HOW LONG DO YOU THINK WE'RE GOING TO HAVE TO STAY THERE AND AT WHAT COST?

Grassley: TWO OR THREE YEARS AND THE COST IS DOLLARS. THE COST IS A LIFE NOW AND THEN. BUT THE MOST IMPORTANT THING IS REMEMBER THAT WE HAVE WON THE WAR. REMEMBER THAT WE WENT THERE BECAUSE SADDAM HUSSEIN WAS A THREAT, A THREAT DETERMINED BY THE ISRAELIS IN 1982 WHEN THEY BOMBED THE NUCLEAR THING, WHEN WE WENT TO WAR AGAINST THEM IN 1991, WHEN PRESIDENT CLINTON SHOT MISSILES INTO AFGHANISTAN, AND WE PASSED A RESOLUTION IN 1998. THERE WAS WEAPONS OF MASS DESTRUCTION WHEN THE U.N. PEOPLE LEFT IN 1998, SO THERE'S ALL SORTS OF REASONS TO KNOW OF HIS BEING A THREAT. AND SO THE BOTTOM LINE -- MY ANSWER TO YOUR QUESTION IS IT'S NOW -- IT'S NOT A CASE OF NOT WINNING THE WAR, IT'S A CASE OF WINNING THE PEACE, AND THAT'S GOING TO TAKE TIME.

Yepsen: I GATHER YOU'RE STILL COMFORTABLE WITH YOUR VOTE IN SUPPORT OF THIS ACTION?

Grassley: I AM COMFORTABLE WITH MY VOTE, AND THE REASON FOR THAT VOTE WAS BECAUSE TWELVE YEARS THAT SADDAM HUSSEIN DID NOT ABIDE BY THE U.N. RESOLUTIONS THAT HE ACCEPTED OR IN THE PEACE AGREEMENT HE SIGNED. AND IF YOU BELIEVE IN THE RULE OF INTERNATIONAL LAW, YOU'VE GOT TO ENFORCE THAT LAW, AND THAT'S WHAT WE WERE DOING IN IRAQ.

Borg: THERE HAVE BEEN SOME SUGGESTIONS OF ASKING NATO NATIONS FOR HELP NOW, BROADENING THE ORIGINAL COALITION. SHOULD WE DO THAT?

Grassley: WE DID IT IN BOSNIA AND KOSOVO, ALBANIA, AND I THINK WE SHOULD DO IT HERE AS WELL.

Borg: TALK ABOUT EXTENDING U.S. INVOLVEMENT ON A HUMANITARIAN BASIS IN LIBERIA. SHOULD THAT -- THE QUESTION BEING MADE -- IN FACT THE PRESIDENT, IN AFRICA NOW, IS BEING ASKED DAILY ABOUT ARE YOU COMING, ARE YOU COMING.

Grassley: QUIETLY AND AMONG MEMBERS OF OUR REPUBLICAN CAUCUS, THERE'S A LOT OF DISQUIET ABOUT DOING THAT FROM THE STANDPOINT OF OUR MILITARY BEING SPREAD TOO THIN. WE HAVE MILITARY IN 120 DIFFERENT COUNTRIES. OBVIOUSLY THEY AREN'T VERY DEEPLY INVOLVED IN MOST OF THOSE COUNTRIES, BUT THERE IS A QUESTION OF WHAT -- OF WHETHER OR NOT WE CAN DO THAT AND STILL MEET OUR NATIONAL COMMITMENTS -- NATIONAL SECURITY COMMITMENTS THAT WE MIGHT HAVE ELSEWHERE. YES, I HAVE SOME CONCERN ABOUT IT.

Glover: YES, SENATOR, AND WOULD YOU ADDRESS THAT STRETCHED-THIN ISSUE. THE SECRETARY OF DEFENSE HAS RAISED THAT QUESTION. WE HAVE 145,000 TROOPS STATIONED IN IRAQ, AND PROBABLY THREE TIMES THAT NUMBER NEED TO BE COMMITTED TO THE EFFORT. ISN'T, IN FACT, THE AMERICAN MILITARY STRETCHED TOO THIN, IN YOUR VIEW?

Grassley: DOES YOUR QUESTION COME ON TOP OF THE QUESTION I JUST HAD ABOUT PUTTING TROOPS IN LIBERIA?

Glover: YEAH.

Grassley: I THINK IT IS, YES. I THINK WE'RE TRAINED MOSTLY TO PROTECT THE NATIONAL SECURITY OF OUR COUNTRY, TO FIGHT A WAR. OUR PEOPLE AREN'T TRAINED FOR PEACEKEEPING.

Glover: IS THE NATIONAL SECURITY AT STAKE IN LIBERIA, THE ARGUMENT BEING THAT A COUNTRY THAT IS UNSTABLE CAN BECOME A BREEDING GROUND FOR TERRORISM?

Grassley: I DON'T THINK IT IS BUT, ON THE OTHER HAND, THE ONLY FIGURES I'VE SEEN TO THIS POINT IS 500 TO 1,000. I DON'T THINK THAT'S GOING TO BE A THREAT TO OUR NATIONAL SECURITY, AND HOPEFULLY NOT GET ANY MORE INVOLVED THAN THAT.

Yepsen: SENATOR, WHAT DO YOU SAY TO THE GROWING AMOUNT OF CRITICISM THAT WE'RE HEARING OUT HERE FROM DEMOCRATIC PRESIDENTIAL CANDIDATES THAT WE'RE NOT DOING ENOUGH TO FIGHT THE WAR ON TERRORISM, THAT WE HAVEN'T FOUND SADDAM HUSSEIN, THAT WE HAVEN'T FOUND OSAMA BIN LADEN, AND THAT AFGHANISTAN HAS STILL NOT BEEN A SECURE PLACE AGAINST TERRORISM? WHAT DO YOU SAY TO THOSE KINDS OF CRITICISMS?

Grassley: FIRST OF ALL, THEY'RE MAKING THESE CRITICISMS, OBVIOUSLY, AGAINST THE BUSH ADMINISTRATION. I HELD NINE TOWN MEETINGS DURING THE FOURTH OF JULY RECESS. I HAD THREE OR FOUR POLITICAL EVENTS THAT I ATTENDED. I WAS AT A LARGE CROWD IN CLEAR LAKE FOR A FOURTH OF JULY PARADE, VISITING WITH PEOPLE ONE ON ONE. AND I FIND A GREAT DEAL OF PRAISE FOR PRESIDENT BUSH, AND I'M NOT SURE THAT THEY'RE MAKING MUCH OF A DENT ON HIM EVEN HERE IN IOWA, EVEN AS LIBERAL AS THE DEMOCRATIC CAUCUS GOERS ARE. SO WHAT I SAY TO THEM IS, YOU KNOW, A LOT OF THE COMPLAINTS THAT YOU ASK ABOUT, INTELLIGENCE INFORMATION, ABOUT WHETHER OR NOT THERE'S WEAPONS OF MASS DESTRUCTION, A LOT OF THESE MEMBERS OF CONGRESS KNEW THIS BEFORE THEY VOTED TO GO TO WAR LAST OCTOBER.

Yepsen: SENATOR, I'D LIKE TO SWITCH GEARS TO ISSUES IN FRONT OF YOUR FINANCE COMMITTEE. SO, MR. CHAIRMAN, ARE THESE TRADE AGREEMENTS THAT THE UNITED STATES HAS ALL OVER THE WORLD WORKING? WE'RE SEEING MORE AND MORE AMERICAN JOBS LEAVING THIS COUNTRY AND IOWA AND GOING ELSEWHERE. UNEMPLOYMENT IS CREEPING BACK UP. ARE YOU SATISFIED THAT THE TRADE AGREEMENTS THE U.S. HAS ALL OVER THE WORLD ARE REALLY WORKING?

Grassley: I'M SATISFIED THAT WHEN WORKERS AT JOHN DEERE, ONE OUT OF FIVE ARE RELATED TO INTERNATIONAL TRADE AND ONE DAY THERE'S 30 TRUCKLOADS OF TRACTORS GO FROM WATERLOO TO THE EAST COAST AND 23 OF THEM ARE GOING FOR EXPORT, I THINK VERY DEFINITELY. WHETHER IT'S AGRICULTURAL PRODUCTS, 40 PERCENT OF IT, OR WHETHER OR NOT IT'S OUR MANUFACTURED PRODUCTS OR WHETHER IT'S EVEN PRINCIPAL FINANCIAL WITH ITS OVERSEAS INSURANCE AND INVESTMENTS AND THINGS OF THAT NATURE, THAT IOWA'S PROSPERITY IS TIED TO ENHANCING INTERNATIONAL TRADE. NOW, IS THERE ADJUSTMENTS THAT COME FROM TRADE? DON'T FORGET PART OF THAT, DAVID, IS RELATED TO WORLDWIDE THERE'S A DOWNTURN IN THE ECONOMY, JUST NOT A DOWNTURN IN THE ECONOMY IN THE UNITED STATES. SO I THINK THAT THE UNITED STATES BASICALLY HAS VERY LOW TARIFFS. MAYBE SOME PEOPLE SAY TOO LOW. BUT THE POINT IS WHEN THE REST OF THE WORLD IS UP HERE AND WE'RE DOWN HERE AND WE'RE NEGOTIATING NOW AND HAVE NEGOTIATED TO BRING THOSE TARIFFS DOWN FROM THE AROUND THE WORLD, IT'S GOT TO BE A WIN/WIN SITUATION FOR THE UNITED STATES.

Glover: THERE'S A SPECIFIC TRADE ISSUE THAT'S IN THE NEWS RIGHT NOW, AND THAT'S STEEL. THE PRESIDENT ORDERED SOME PRETTY STEEP TARIFFS ON SOME STEEL IMPORTS AS A PROTECTION FOR THE DOMESTIC INDUSTRY. THE WORLD TRADE ORGANIZATION HAS RULED THAT THAT'S AN UNFAIR TARIFF AND COULD MOVE TO IMPOSE SANCTIONS. WHAT'S YOUR VIEW? SHOULD THE -- THE INDUSTRY WANTS TO GO TO CONGRESS TO GET CONGRESS TO OVERTURN THE WTO DECISION OR EVEN PULL OUT OF THE WTO, SHOULD THE DECISION NOT BE OVERTURNED. WHAT'S YOUR VIEW?

Grassley: ON THE PARTICULAR STEEL CASE, THE WTO RULING WAS ON WHAT WE CALL THE BYRD AMENDMENT, WHICH THE BYRD AMENDMENT PUTS TARIFFS ON THAT WOULD GO BACK TO THE VERY INDUSTRY THAT WAS HARMED. NOW, THAT'S A GOOD POLITICAL MOVE DOMESTICALLY, BUT IT'S A SUBSIDY FOR AN EXPORTING INDUSTRY. SO WHAT WE CAN DO IN THE CONGRESS IS TAKE THAT MONEY AND PUT IT IN THE GENERAL FUND OR SPREAD IT AROUND THE ECONOMY MORE EVENLY, AND WE'LL STILL BE ABLE TO MEET OUR WTO COMMITMENTS. THERE ARE OTHER -- THERE'S ANOTHER ONE INVOLVING OUR INTERNATIONAL TAXING REGIME CALLED THE FISCI T.I. THAT WE'RE GOING TO HAVE TO BE WORKING ON THIS SUMMER TO MEET GATT -- OR WTO-COMPLIANT SITUATION. BUT HERE'S THE WAY YOU OUGHT TO LOOK AT IT: WE WIN SOME AND LOSE SOME, BUT WE WIN A LOT MORE THAN WE LOSE IN THE WORLD TRADE ORGANIZATION. AND REMEMBER THE WORLD TRADE ORGANIZATION REGIME IS KIND OF LIKE A SUPREME COURT OF THE UNITED STATES. IT'S A SITUATION WHERE YOU WANT THE RULE OF LAW TO BE INVOLVED IN INTERNATIONAL TRADE SO THAT PEOPLE THAT INVEST IN INTERNATIONAL TRADE HAVE THE PREDICTABILITY OF IT. AND DON'T FORGET THAT WE HAVE CONSUMERS IN THE UNITED STATES THAT BENEFIT A GREAT DEAL FROM FREE TRADE AGREEMENTS AS WELL.

Glover: WHAT GOES INTO THE EMOTION OF THIS ISSUE, THIS TRADE ISSUE? YOU SEE VERY, VERY UNLIKELY CONSERVATIVES HATE THE GROUP BECAUSE THEY SAY WE'RE SIMPLY LETTING SOMEBODY ELSE MAKE DECISIONS FOR US. LIBERALS HATE THE GROUP. WHAT IS IT ABOUT THE WTO AND THIS WORLD TRADE ISSUE, INTERNATIONALIZATION, THAT DRAWS SUCH SHARP EMOTIONS FROM PEOPLE?

Grassley: I THINK PEOPLE ONLY LOOK AT IT FROM THE STANDPOINT OF ECONOMICS. AND ECONOMICS ARE VERY IMPORTANT BECAUSE IF YOU'RE GOING TO LOSE A JOB, THAT'S A JOB LOSS AND THAT REALLY HURTS THE PEOPLE THAT ARE AFFECTED. BUT I THINK YOU HAVE TO LOOK AT INTERNATIONAL TRADE BEYOND JUST ECONOMICS. WHEN MILLIONS OF BUSINESS PEOPLE AROUND THE WORLD ARE TRADING BACK AND FORTH, IT BREAKS DOWN BARRIERS. IT ENHANCES INTERNATIONAL UNDERSTANDING. AND NATIONS THAT TRADE GENERALLY DON'T WAR, SO I SEE A BENEFIT OF FREE TRADE AGREEMENTS BRINGING MORE PEACEFUL WORLD SITUATIONS, BETTER RELATIONS BETWEEN PEOPLES AND BETWEEN NATIONS.

Yepsen: SENATOR, YOU RECENTLY HELPED FASHION A LARGE TAX CUT FOR AMERICANS. TWO-PART QUESTION: WHEN WILL WE START TO SEE THESE TAX CUTS WORK; AND SECONDLY, HOW DO YOU RESPOND TO THE CRITICISM THAT THEY GO DISPROPORTIONATELY TO THE WEALTHY?

Grassley: WELL, FIRST OF ALL, IN A $350-BILLION TAX BILL THAT WE PASSED, THERE WAS A THIRD OF IT THAT WAS USED FOR LOW INCOME PEOPLE. AND DON'T FORGET THE AVERAGE TAXPAYER IN THE UNITED STATES MAKES ABOUT $41,000. THAT'S A TAX CUT OF $1,100 PER YEAR FOR THAT FAMILY. IT TAKES EFFECT, TO ANSWER YOUR QUESTION, JANUARY 1, 2003, AND BASICALLY JUST ADVANCES TO THE YEAR 2003 TAX CUTS THAT WOULD HAVE TAKEN EFFECT 2005/2006. THEY'LL MAKE THEIR ECONOMIC IMPACT OVER THIS YEAR AND NEXT YEAR. $80 BILLION OF THAT TAX CUT WILL BE EFFECTIVE IN THE YEAR 2003, AND $120 BILLION OF IT WILL BE EFFECTIVE IN THE YEAR 2004. AND WHAT IT IS DIRECTED TOWARDS, FOR THE MOST PART, IS THE TWO-THIRDS OF THE ECONOMY, THAT IS RELATED TO CONSUMER SPENDING. AND SO IT PUTS MORE MONEY IN DAVID'S POCKET, MORE MONEY IN MIKE'S POCKET. YOU SPEND IT, YOU ENHANCE THE ECONOMY, YOU CREATE JOBS. ECONOMISTS TELL US THAT IT'S GOING TO CREATE JOBS TO THE TUNE OF A LITTLE OVER MILLION JOBS.

Yepsen: SENATOR, HAVE YOU CHANGED YOUR VIEWS ON FEDERAL BUDGET DEFICITS? THIS TAX CUT IS GOING TO CONTRIBUTE TO A RISING FEDERAL BUDGET DEFICIT. NOW, I'VE COVERED YOU ALMOST ALL YOUR CAREER, AND I CAN REMEMBER WHEN YOU USED TO BE A REAL HAWK ON THE DEFICIT. NOW HERE YOU ARE AS CHAIRMAN PUSHING THROUGH A BIG TAX CUT AT A TIME WHEN WE'VE GOT A DEFICIT. HAS CHUCK GRASSLEY CHANGED HIS ATTITUDES TOWARD FEDERAL BUDGET DEFICITS?

Grassley: CAN I EXPLAIN TO YOU THAT WE DO NOT HAVE A DEFICIT BECAUSE PEOPLE ARE UNDERTAXED; WE HAVE A DEFICIT BECAUSE CONGRESS OVERSPENDS. AND IF YOU'D LOOK AT THIS CHART, YOU'D SEE THAT THE TAX CUT IS ONLY RESPONSIBLE FOR 17 PERCENT OF THE DEFICIT; THE WAR ON -- THE WAR AND NATIONAL SECURITY, 15 PERCENT; AND THE ECONOMIC DOWNTURN FOR 68 PERCENT OF IT. SO IT'S NOT RELATED TO THE TAX CUT.

Glover: SENATOR, I'D LIKE TO GET YOUR VIEW, IN A GENERIC SENSE, ON THE CONDITION OF THE ECONOMY. YOU TOUCHED ON IT EARLIER, BUT THERE ARE A LOT OF TROUBLING SIGNS ABOUT THE ECONOMY. DAVID MENTIONED THAT UNEMPLOYMENT IS UP, UNEMPLOYMENT CLAIMS ARE UP. THE ECONOMY SEEMS TO BE FAIRLY SLUGGISH. WHAT IS YOUR VIEW: ARE WE IN A STAGNATION; ARE WE GOING IN A DEEPER RECESSION; ARE WE BEGINNING TO RECOVER? WHAT'S YOUR TAKE ON THE ECONOMY?

Grassley: WE'RE IN A RECESSION IN ONLY ONE PART OF ECONOMY, IN THE MANUFACTURING SECTOR OF THE ECONOMY. THERE'S A DOWNTURN WORLDWIDE IN THE MANUFACTURING SECTION. I THINK WE DID A LOT IN THIS TAX BILL TO ENHANCED INVESTMENT, TO TURN AROUND THE MANUFACTURING SECTOR. WE'RE FINDING INVENTORIES AT A LOW LEVEL. THEY'RE GOING TO START TO TAKE -- TO GO UP, OR PEOPLE WILL REPLENISH THEIR INVENTORY. WE SEE THE MANUFACTURING SECTOR TURNING AROUND VERY SHORTLY. I WOULD SAY THIS: THAT THE MANUFACTURING SECTOR IS STILL 15 PERCENT OF THE GROSS NATIONAL PRODUCT. AT THE HIGH, IT WAS 20 PERCENT. WE'VE LOST A LOT OF JOBS, BUT MOST OF THEM HAVE BEEN IN MANUFACTURING.

Glover: AND SOME PEOPLE ARE WORRIED THAT WE'RE EMULATING JAPAN, WHICH HAS BEEN IN A STAGNATION FOR A DOZEN YEARS OR SO. ARE YOU WORRIED ABOUT THAT, A LONG-TERM SLOWDOWN?

Grassley: I'M NOT AS WORRIED ABOUT THAT BECAUSE WHAT THE UNITED STATES HAS A CORNER ON IS TECHNOLOGICAL ADVANCEMENT, TECHNOLOGICAL GENIUS. AND WE HAVE -- WE REALLY HAVE A LOCK ON THAT FOR THE WORLD. AND I THINK THAT GIVES US AN ADVANTAGE OVER OTHER COUNTRIES, EVEN TO THE POINT OF MAKING UP FOR DOWNTURN IN MANUFACTURING.

Yepsen: SENATOR, I WANT TO FOLLOW UP ONE THING ON THIS TAX CUT. FOR SOME REASON, LOW INCOME FAMILIES WERE LEFT OUT OF THAT TAX CUT. NOW, CAN YOU TELL US WHAT HAPPENED AND HOW SOON THAT'S GOING TO GET CORRECTED?

Grassley: I'VE ALREADY PASSED A BILL THROUGH THE UNITED STATES SENATE TO CORRECT IT, AND IT WAS OFFSET SO IT WOULDN'T ADD ANY FURTHER TO THE DEFICIT. THE HOUSE LOADED IT DOWN WITH A LOT OF OTHER TAX CUTS, IN A SENSE TO REALLY SHOVE IT DOWN THE THROAT OF SENATORS, PARTICULARLY DEMOCRAT SENATORS. WE'RE IN CONFERENCE NOW BETWEEN THE HOUSE AND SENATE TRYING TO WORK OUT THOSE DIFFERENCES. THE PROVISIONS THAT THE HOUSE OF REPRESENTATIVES ADDED TO MAKING PERMANENT -- DOING AWAY WITH THE MARRIAGE PENALTY, TO MAKING PERMANENT THE $1,000 CHILD CREDIT -- I FAVOR THAT LEGISLATION BUT I DON'T FAVOR IT IN THE VEIN THAT WE'RE GOING TO HAVE A POLITICAL WAR OVER JUSTICE FOR LOW INCOME PEOPLE WHO ARE ENTITLED TO THE REFUNDABILITY OF THE CHILD CREDIT. SO I HOPE TO GET IT PASSED ON ITS OWN OFFSET. AND THEN I'LL GO ALONG WITH THE HOUSE REPUBLICANS THAT WANT TO MAKE THESE OTHER THINGS PERMANENT, BUT I THINK WE OUGHT TO DO THAT ON A SEPARATE BILL.

Yepsen: WELL, IS THAT YOUR BEST GUESS THAT SOMETHING CAN GET WORKED OUT, OR DO YOU THINK THIS IS GOING TO BE A DEADLOCK?

Grassley: I THINK IT'S GOING TO BE A DEADLOCK. I SHOULDN'T BE PESSIMISTIC ABOUT IT, BECAUSE I'M CHAIRMAN OF THE CONFERENCE. BUT I THINK THAT THERE'S AN ATTITUDE IN THE HOUSE OF REPRESENTATIVES THAT WE'RE JUST GOING TO SHOW THOSE SENATORS, AND PARTICULARLY THOSE LIBERAL REPUBLICAN SENATORS, THAT -- THAT, YOU KNOW, HELD UP GETTING A $726-BILLION TAX CUT AS OPPOSED TO A $350-BILLION TAX CUT THAT I NEGOTIATED WITH THEM.

Borg: SO YOU'RE TALKING ABOUT A WAR AMONG REPUBLICANS.

Grassley: TO SOME EXTENT, YES.

Borg: GOING BACK TO THE NATION'S ECONOMY -- AND YOU LOOK FAVORABLY ON THE PROSPECTS NOW BECAUSE OF THE TAX CUT AND SO ON, INFUSING MONEY BACK INTO CONSUMER SPENDING. BUT THERE SEEMS TO BE ANOTHER BUMP IN THE ROAD, AT LEAST, COMING IN THE NEAR FUTURE, AND THAT IS NATURAL GAS PRICES PREDICTED TO BE INCREASING QUITE ABRUPTLY NOW IN THE WINTER HEATING SEASON AS SUPPLIES DIMINISH -- OR ARE TIGHT, MAYBE NOT DIMINISHED. WHAT CAN THE GOVERNMENT DO TO ALLEVIATE THAT SITUATION? IT'S CRITICAL FOR THE ECONOMY.

Grassley: THERE HAS TO BE SOME RELAXATION OF SOME FEDERAL REGULATION ON SOME DRILLING ON FEDERAL LANDS. THERE HAS TO BE THE PIPELINE FROM ALASKA TO BRING DOWN ALL THE NATURAL GAS THAT HAS BEEN CAPTURED OFF OF THE WELL -- THE OIL WELLS THAT HAS BEEN PUT BACK INTO THE GROUND. WE ALSO NEED TO -- IN PART OF THE ENERGY BILL THAT WE'RE GOING TO PASS BEFORE THIS MONTH IS OUT WILL BE SOME ADDITIONAL INCENTIVES FOR EXPIRATION. BUT ADDITIONAL FOSSIL FUELS, NATURAL GAS OR ANYTHING ELSE, CANNOT BE THE TOTAL SOLUTION TO OUR ENERGY PROBLEMS. WE HAVE TO HAVE TAX INCENTIVES FOR CONSERVATION. WE HAVE TO HAVE TAX INCENTIVES FOR ALTERNATIVE SOURCES OF ENERGY. AND IN A TAX BILL THAT CAME OUT OF MY COMMITTEE IN MARCH THAT WE WILL SOON BE JOINING UP WITH THE ENERGY BILL OUT OF THE ENERGY COMMITTEE, WE DO HAVE THAT BALANCE OF TAX INCENTIVES FOR PRODUCTION, TAX INCENTIVES FOR CONSERVATION, AND TAX INCENTIVES FOR ALTERNATIVES LIKE WIND, ENERGY, AND BIODIESEL.

Borg: WHAT I HEAR IS LONG-RANGE SOLUTIONS AND NOTHING THAT CAN HELP IN THAT COMING HEATING SEASON.

Grassley: YOU'RE PROBABLY RIGHT. HERE'S SOMETHING, THOUGH, THAT WE OUGHT TO BE REVIEWING AND, AGAIN, MAYBE A LITTLE MORE LONG TERM BUT A LITTLE SHORTER TERM. THERE'S BEEN A TREMENDOUS EMPHASIS IN THIS COUNTRY ON NATURAL GAS FOR GENERATION OF ELECTRICITY. I THINK IT'S A VERY BAD MISTAKE, CONSIDERING ALL THE RESOURCES OF COAL, 600 YEARS SUPPLY OF COAL, THAT WE HAVE MOVED SO MUCH FROM COAL TO NATURAL GAS FOR GENERATION OF ELECTRICITY.

Glover: IS THIS GOING TO BE AN ISSUE THAT YOU'RE GOING TO -- YOU SAY YOU BROUGHT IT OUT OF COMMITTEE, YOU'RE TRYING TO TIE TOGETHER AN OVERALL PACKAGE. IS THIS GOING TO BE AN ISSUE YOU'RE ACTUALLY GOING TO GET TO THE PRESIDENT'S DESK, OR IS THIS GOING TO BE ANOTHER ISSUE THAT'S GOING TO DEADLOCK? AND I ASK THAT BECAUSE IT'S ALREADY BEGINNING TO BECOME AN ISSUE IN THE PRESIDENTIAL CAMPAIGN. DEMOCRATS ARE ALREADY SEEKING TO MAKE HAY WITH THIS ISSUE. IS THIS GOING TO GET BOGGED DOWN IN PRESIDENTIAL POLITICS?

Grassley: WE'RE ONE YEAR AHEAD OF A YEAR AGO, WHEN IT DIED IN CONFERENCE JUST PRIOR TO THE ADJOURNMENT OF THE LAST CONGRESS. SO I THINK WITH THAT YEAR EXTRA, WE'RE GOING TO GET A BILL TO THE PRESIDENT EARLY NEXT YEAR.

Yepsen: SENATOR, ANOTHER ISSUE THAT A LOT OF IOWANS CARE ABOUT IS PRESCRIPTION DRUG BENEFITS. YOU PASSED A BILL. THE HOUSE HAS GOT ONE. WHAT'S GOING TO HAPPEN WITH PRESCRIPTION DRUG BENEFIT? WHAT'S IT GOING TO LOOK LIKE WHEN YOU'RE ALL -- WHEN IT'S ALL SAID AND DONE?

Grassley: IT'S GOING TO BE VOLUNTARY. SENIORS DON'T HAVE TO PICK IT UP AND JOIN IT IF THEY DON'T WANT TO. IT'S GOING TO BE VERY COMPREHENSIVE. IT'S GOING TO BE UNIVERSAL. IT MAY OR MAY NOT BE MEANS TESTED. I DON'T THINK IT WILL BE MEANS TESTED. IT'S GOING TO ALLOW PEOPLE TO STAY IN OLD MEDICARE IF THEY WANT TO, WITH OR WITHOUT PRESCRIPTION DRUGS. IT'S GOING TO GIVE BABY BOOMERS A NEW OPTION OF A PREFERRED PROVIDER ORGANIZATION, PPO-TYPE INTEGRATED DRUG BENEFIT IF THEY WANT IT, PATTERNED SIMILAR TO WHAT FEDERAL EMPLOYEES HAVE. AND IT'S GOING TO BE ONE THAT'S GOING TO BE WITHIN THE $400-BILLION BUDGET THAT WE HAVE ALREADY SET UP FOR THIS DRUG BENEFIT AND THE STRENGTHENING AND IMPROVEMENT OF MEDICARE. THE BOTTOM LINE, THOUGH, EITHER WAY, WITH OR WITHOUT PRESCRIPTION DRUGS, WITH OR WITHOUT PEOPLE CHOOSING THE NEW MEDICARE, WE ARE GOING TO BE BRINGING MEDICARE INTO THE PRACTICE OF MEDICINE IN THE 21ST CENTURY, BECAUSE THE PRESENT MEDICARE IS BASED ON THE PRACTICE OF MEDICINE, 1965, WHEN IT WAS TO PUT EVERYBODY IN THE HOSPITAL. AND PRESCRIPTION DRUGS HAVE A GREAT DEAL TO KEEPING PEOPLE OUT OF HOSPITALS, AND THAT'S WHAT WE WANT TO DO. SO THAT'S WHY PRESCRIPTION DRUGS HAS TO BE PART OF A MEDICARE PROGRAM.

Glover: SENATOR, WHENEVER WE GET INTO THIS ISSUE, A LOT OF TERMS GET TOSSED AROUND ABOUT PPOs AND THINGS LIKE THAT, AND A LOT OF PEOPLE ARGUE THAT THIS BILL DOESN'T DO ANYTHING, IT'S ROTTEN AND ALL THAT KIND OF STUFF. THE PEOPLE THAT LIKE IT SAY IT ACCOMPLISHES A LOT. TALK TO THOSE SENIORS OUT THERE WHO ARE ON MEDICARE. HOW ARE THINGS GOING TO CHANGE FOR THEM IF THIS BILL BECOMES LAW?

Grassley: FIRST OF ALL, THEY'RE GOING TO HAVE TO MAKE A CHOICE: DO THEY WANT PRESCRIPTION DRUGS THROUGH MEDICARE OR NOT. THAT'S THEIR CHOICE. THEY DON'T HAVE TO DO IT. NUMBER TWO, IF THEY'RE VERY LOW INCOME, THEY'RE GOING TO HAVE A HIGHLY SUBSIDIZED PRESCRIPTION DRUG PROGRAM, PARTICULARLY IF THEY'RE UNDER 100 PERCENT OF POVERTY OR FOR SURE UNDER 160 PERCENT OF POVERTY. THEN IF THEY HAVE VERY, VERY HIGH DRUG COSTS, WHERE IT GETS THOUSANDS OF DOLLARS A MONTH OR EVEN, I'D SAY, $500 A MONTH, THEY'RE GOING TO BE ABLE TO HAVE A PROGRAM THAT THE PLAN WILL PAY FOR 90 PERCENT AND THEY'LL ONLY HAVE TO PAY FOR 10 PERCENT.

Yepsen: SENATOR, I WANT YOU TO RESPOND, THOUGH, TO THE CRITICISM THAT THIS THING DOESN'T GO FAR ENOUGH. YOU'RE HEARING THIS FROM DEMOCRATIC CANDIDATES, THAT $400 MILLION IS NOT GOING TO BE ENOUGH.

Grassley: WELL, ALL I CAN SAY IS THAT'S NOT A VERY WORTHWHILE CONSIDERATION, CONSIDERING THE FACT THAT MY BILL PASSED 76 TO 21 AND THERE WERE 10 DEMOCRATS VOTED AGAINST IT AND 11 REPUBLICANS VOTED AGAINST IT. AND YOU COULDN'T GET ANYTHING MORE BIPARTISAN THAN THAT. SO IT'S A BIPARTISAN BILL, AND SO ANY DEMOCRATIC CRITICISM OF IT IS NOT JUSTIFIED, CONSIDERING THE FACT THAT THERE'S A LARGE NUMBER OF DEMOCRATS THAT VOTED FOR IT.

Yepsen: SENATOR, I WANT TO ASK YOU ABOUT SOMETHING THAT'S ON MIKE'S WIRE TODAY. THE AGRICULTURE DEPARTMENT, INSPECTOR GENERAL OFFICE HAS FOUND THAT GOVERNMENT CREDIT CARDS WERE USED BY THAT AGENCY TO PAY FOR PEOPLE TO GO TO BARTENDER SCHOOL; TO BUY OZZY OSBOURNE TICKETS, LINGERIE, AND TATTOOS; AND MAKE A DOWN PAYMENT ON A CAR. WHAT DO YOU DO ABOUT THINGS LIKE THIS THAT ARE HAPPENING IN THE AGRICULTURE DEPARTMENT?

Grassley: I CAN TELL YOU EXACTLY WHAT I DID -- EXACTLY THE SAME THING THAT I DID ABOUT IT WHEN THE PEOPLE IN THE DEFENSE DEPARTMENT WAS DOING IT. YOU GO TO A HEARING, EXPOSE IT IN A HEARING BEFORE THE HOUSE OF REPRESENTATIVES. IN TWO DAYS SECRETARY RUMSFELD CALLS ME AND HE SAYS, "I'M GOING TO SET UP A TASK FORCE TO GET ON TOP OF THIS." HE DID SET UP A TASK FORCE AND GOT ON TOP OF IT. AND TWO THINGS... ABOUT 400,000 PEOPLE THAT HAD THE CREDIT CARDS NO LONGER HAD THEM. THEY SHOULDN'T HAVE HAD THEM IN THE FIRST PLACE. ANOTHER THING, BANK OF AMERICA RECOMMENDED TO THE DEFENSE DEPARTMENT THAT THEY OUGHT TO TAKE A CREDIT CHECK OF THE PEOPLE WHO KEEP GETTING THESE CREDIT CARDS, FIRST OF ALL. AND SO THEY'RE STARTING TO GIVE CREDIT CHECKS TO THEM. THE NEXT THING THAT THEY DID IS STARTING TO PUT IN PLACE A FINANCIAL MANAGEMENT SYSTEM SO YOU CAN TRACK MISUSE AND GET ON TOP OF IT SOONER. AND THEN FINALLY, THEY'RE BEGINNING TO PROSECUTE SOME PEOPLE THAT HAD FRAUDULENTLY USED THEIR CREDIT CARD. AND SO THAT'S THE WAY WE HANDLED IT IN THE DEFENSE DEPARTMENT. THAT'S THE WAY SECRETARY ANN VENEMAN IS GOING TO HANDLE IT -- HAVE TO HANDLE IT. NOW, I DON'T KNOW ABOUT THE REPORT YOU GAVE ME, BUT I ASSUME IT'S TRUE AND IT OUGHT TO BE HANDLED THE SAME WAY.

Borg: CLARIFY THIS FOR OUR VIEWERS. ARE THESE CHARGES THAT OBVIOUSLY AREN'T FOR THE DEFENSE DEPARTMENT OR FOR AGRICULTURE DEPARTMENT BUSINESS, DO THE PEOPLE REIMBURSE THE DEPARTMENT, THEN? IS THAT THEIR INTENT OR ARE THESE ACTUALLY CHARGED TO THE FEDERAL GOVERNMENT?

Grassley: THEY'RE CHARGED TO THE FEDERAL GOVERNMENT. THEY'RE SUPPOSED TO MAKE APPLICATION TO GET REIMBURSED FOR LEGITIMATE EXPENSES. WELL, FIRST OF ALL, THEY CANNOT BE USED FOR PERSONAL BUSINESS, AND PARTICULARLY PERSONAL ENTERTAINMENT OF THIS NATURE. THEY WERE USED IN SOUTH CAROLINA FOR PEOPLE TO PAY TO -- LAP DANCING, AS AN EXAMPLE.

Glover: ARE YOU GOING TO GET INVOLVED IN THIS? THIS APPEARS TO BE A FAIRLY EGREGIOUS CASE. YOU'RE CHAIRMAN OF THE SENATE FINANCE COMMITTEE.

Grassley: LET'S PUT IT THIS WAY: I'VE JUST LEARNED OF THIS BECAUSE OF YOUR PRESS RELEASE; BUT NUMBER TWO, I'VE BEEN INVOLVED WITH IT WITH THE EDUCATION DEPARTMENT, I'VE BEEN INVOLVED WITH IT WITH THE DEFENSE DEPARTMENT. AND IF IT TAKES ME TO GET INVOLVED WITH IT WITH THE AGRICULTURE DEPARTMENT, I'LL BE GLAD TO GET INVOLVED WITH IT.

Yepsen: SENATOR, WE'VE GOT JUST A FEW SECONDS LEFT. YOU HAVE BEEN CRITICAL OF THE FBI FOR THE WAY IT TREATS WHISTLE-BLOWERS IN THAT AGENCY. HAVE YOU GOT THAT PROBLEM CLEANED UP? CAN AGENTS SPEAK FREELY NOW ABOUT PROBLEMS IN THE FBI?

Grassley: I DON'T BELIEVE SO. I THINK THERE'S AN INSTITUTIONAL DISEASE THAT IS IN THE WAY, BUT I DO BELIEVE THAT MUELLER IS TRYING TO DO A GOOD JOB. AND JUST THIS VERY DAY, MUELLER HAS CALLED AND WANTS A MEETING WITH ME ON TUESDAY. AND ONE THING I'M GOING TO COMPLIMENT HIM ON: HE MOVED AGENT WRIGHT TO PORTLAND, OREGON, MOVED HIM OUT OF A PLACE THAT HE COULDN'T DO THE JOB RIGHT. >>

Borg: WE'RE OUT OF TIME. WE HAVE NO CREDIT CARD FOR THAT.

Grassley: OKAY.

Borg: AND THAT'S IT FOR THIS WEEKEND'S EDITION OF "IOWA PRESS." I HOPE YOU'LL WATCH AGAIN NEXT WEEK: 6:30 FRIDAY; SUNDAY AT NOON. THANK YOU, SENATOR, FOR BEING WITH US. I'M DEAN BORG. THANK YOU FOR JOINING US TODAY.

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