OPERATOR: The following is an unrehearsed interview with Iowa Senator Chuck Grassley, speaking to you live from Washington.
Participating in today's public-affairs program are Chris Johnson with KGRN Radio in Grinnell, and Art Cullen, with The Storm Lake Times in Storm Lake.
The first question will be from Chris Johnson.
JOHNSON: Good morning, Senator, and thank you.
It seems the ethanol industry is under a lot of pressure these days from a number of sources. Profit margins are down because of buying corn futures at high prices, and the current soft demand. The Grocery Manufacturers Association doesn't seem to be retracting its blame of corn use in ethanol for consumers' higher food bills. There has been talk of weakening mandates and subsidies, and auto manufacturers say they do not want to make more flex-fuel vehicles until there are more flex-fuel pumps.
My question is: Facing these challenges, where do you see the ethanol industry going from here? How does it rally and rebound from all this?
GRASSLEY: Well, there was a great deal of emphasis in this last campaign by both candidates, and not any less by President-elect Obama, in support of alternative energy, of which ethanol is a major part of it right now. But it's going to be -- it's going to expand to a lot of other alternative energy as well. So I think the political environment with the new president is good.
On the other hand, you mentioned the Grocery Manufactures Association, and you know how I've been involved in counteracting their campaign over the last six months. From July until right now, this week, they haven't raised their ugly head with their intellectually dishonest scapegoating of -- of energy.
GRASSLEY: But now, I -- I'm hoping that they don't see a new administration coming in as an opportunity to -- to do more damage. But I consider the future of the ethanol industry very, very good. And, particularly, when it comes to the Grocery Manufacturers' challenge, temporarily, it's a -- it's a problem, because they're so intellectually dishonest, and not very many people understand ethanol very well. And out here in the East, they still pronounce it "e- thanol," which is evidence of their ignorance of it.
We -- you know, we're going to be moving soon to the second generation, cellulosic ethanol. That ought to take the emphasis off of grain. It won't necessarily deprive farmers of income, because farmers are going to be a source of that cellulosic product.
But I see it as very good, based simply on the fact that God only made so much oil. Even though there's a lot of oil in the ground, there's a lot of people in the political system now, here in Washington, and there's more of them now than ever before who don't want to drill more, and don't want to use as much oil. Well, we've still got to have a mobile society. And the emphasis on our alternative energy of all kinds, I think, is -- gives us a bright future for ethanol.
CULLEN: Yes, Senator. Thanks.
It appears that you're going to have a central role in both the major health-care legislation, and an energy bill, from your position on the Finance Committee. And you and Max Baucus have enjoyed a very long and cordial working relationship. And how do you see your role evolving here, particularly on health care, for starters, and then, second, on energy?
GRASSLEY: Yes. It's easier to start with energy, because...
CULLEN: OK, fine.
GRASSLEY: ... because I think that there is little light between Baucus and me on energy issues.
GRASSLEY: And where there is a little light, we have the capability of getting together.
Now, there is an issue involving energy that's not in our committee, and that's whether to drill or not to drill in the United States. That's in the Energy Committee. And he and I might have different points of view on that, but we aren't going to have much on alternative energy or incentives for conservation, which are -- tend to be very bipartisan.
GRASSLEY: Now, the -- right now, I can tell you that we're getting off to a good start on health-care reform. And yesterday would -- short meeting between Kennedy, Dodd, Rockefeller -- for Democrats -- and Baucus -- and Baucus was there, too. So, for Republicans: Enzi, Grassley and Hatch -- to sit down between -- and that represents two committees of the Congress that have interest and jurisdiction over health care -- to work together in a -- I guess you'd call it a "bi-committee" and a bipartisan way -- to move something very quickly through the Senate.
Now, "very quickly" would be sometime this year.
GRASSLEY: But we're getting off to a good start. And then -- now, maybe three months from now, you might talk to me, Art, and it could all fall apart.
GRASSLEY: But -- but right now, it's getting a good start.
And then, don't forget, on all issues -- yesterday was Wednesday. It usually happens Tuesday, five to six, but Baucus and I meet every week to discuss the work of the Finance Committee on every issue.
And the six years I was chairman, every bill that came out of committee, but one or two, was bipartisan. And every bill, the two years he's been chairman, coming out of the committee, has been bipartisan.
So, you know, we have a good track record. Will it be different now that the Democrats have close to 60? It could be, because he may get a lot of pressure from his caucus, saying, "Why you got to work so closely with Grassley, or compromise with Grassley, when we've got these big numbers?"
GRASSLEY: Well, I -- I don't -- I think he's going to resist that. But sometimes he's got to give that some consideration...
GRASSLEY: ... just like, sometimes, when I was chairman, it had to have some consideration.
GRASSLEY: Back to Chris.
JOHNSON: Thank you.
If I may, a -- a kind of a follow-up or a clarification on some of the -- on the VeraSun issue.
GRASSLEY: Yes. Go ahead.
JOHNSON: There was an article in today's Des Moines Register about VeraSun, who has already declared bankruptcy -- about wanting to void some contracts. And, now, here's this Omaha investment banker, Mark Lakers, predicting, that up to 40 more ethanol plants might be in bankruptcy by early next year.
So I kind of agree with you. The long picture for ethanol might look good, but right now, there's -- a lot of these companies are upside-down because of buying the high corn futures. How do you see -- do you see a way out of this snafu?
GRASSLEY: Well, those that have to go into bankruptcy -- there's a very sophisticated procedure that everybody in bankruptcy goes through to get reorganization. And those laws -- well, they were changed recently in 2005, but prior to that, they were not changed for 25 years.
And so I expect that procedure to be followed and considered to be fair. You know, I'm a farmer. I haven't gotten any of those contracts with ethanol plants. I feel sorry for the farmers that did. They're going to have to get their lawyer, and have the lawyer watch their process through bankruptcy.
But I think the bankruptcy process is pretty regular. And, you know, you're going to be protected the way the law would protect you. But each farmer is going to have to look that -- at that in a different way.
I doubt if you're going to find any changes in the bankruptcy laws to reflect this. If it is, then, obviously, I'm going to take a look at it, because I've always been in the middle of every bankruptcy procedure -- I mean change in law -- in the last 20 years.
CULLEN: Yes, Senator, if I may go back to what your role may be -- and can you describe what you think in -- especially in terms of the energy package that's supposedly coming out as part of what Rahm Emanuel describes as a "big bang" -- what do you think the implications are for Iowa in terms of, you know, a long-term wind- energy-production tax credit, possibly E-20 vehicles, more cellulosic development -- what -- how do you see this playing out in Iowa over the next four years, say?
GRASSLEY: Well, mostly what's going to happen in the next four years is already part of our public policy, with all of the tax incentives, assuming that they're continued.
One thing that would be beneficial -- you used the word "long- term" -- the extent to which we could get solar, wind and ethanol -- long-term extensions, instead of sun-setting every two or three years -- would -- would be very beneficial, and it would -- and it would speed up, because there's some slowness happen every time you get near a sunset of the law. And, sometimes, you even pass the sunset, so you've got to make it retroactive. That shuts down business.
GRASSLEY: But -- but I think -- I think -- don't look at the usual ones we talk about. I think where they can make a big impact is the extent to which they emphasize clean coal. And I don't expect them to, but it would really be a big move forward if they would come out with some nuclear program.
CULLEN: So you're saying, "Watch clean coal and nuclear?"
But I think that you're going to find that the -- Obama for clean coal -- but you're going to find a lot of environmental groups fighting him, because there's too many people in this town say there's no such thing as clean coal.
GRASSLEY: And nuclear -- there's -- tends to be -- you know, I don't understand it. When Japan and France can generate 80 percent of their electricity by nuclear, and over several decades -- why there's a resistance in the United States to nuclear.
But within the liberal elements of the community, there is a lot of resistance.
GRASSLEY: And it's a shame.
So they may not have any nuclear program. Although, don't forget, in the 2005 tax bill, we did reactivate nuclear energy, after 30 years. But the trouble is there's so much regulatory process involved with licensing that it takes about 13 years to get one up and running.
So I don't see a Democrat majority wanting to make that process as easy as three years, like it is in France and Germany.
GRASSLEY: Or France and -- I should say France and Japan.
OPERATOR: Thank you, Chris and Art, for participating in today's public-affairs program.
This has been Senator Chuck Grassley, reporting to the people of Iowa.