Iowa Governor Terry Branstad: The Digest interview

Iowa Governor Terry Branstad

As part of the Digest’s deeper dive into the origins of Iowa’s economic Renaissance, we sat down in Ankeny, Iowa last week for a conversation with long-time Iowa Governor Terry Branstad.

A native of Leland, Governor Terry Branstad was elected to the Iowa House in 1972, ’74 and ’76, and elected as Iowa’s lieutenant governor in 1978. He was Iowa’s longest-serving governor, from 1983 to 1999. As the state’s chief executive, he weathered some of Iowa’s worst economic turmoil, during the farm crisis of the ‘80s, while helping lead the state’s resurgence to a booming economy in the ‘90s.

In October of 2009, sensing a need for change in the way state government operates and wanting to “lead Iowa’s comeback,” Branstad his gubernatorial campaign in January of 2010, and in June he won the Republican primary and named energetic state Senator Kim Reynolds as his running mate.

Governor Branstad and Lieutenant Governor Reynolds have set four goals for their administration over the next five years: “200,000 new jobs for Iowans, a 15 percent reduction in the cost of government, a 25 percent increase in family incomes and to again have the nation’s best schools.” And he’s been a leading spokesman nationally for protection of the Renewable Fuel Standard.

The Digest: In Iowa, the economic Renaissance has come to a wide section of society, it’s almost anywhere you look. Do you see it tying all back to agriculture?

Gov. Branstad: The Iowa Renaissance? It’s been about education, people, the business culture and about the agricultural base. We also don’t have the debt load we did back then, but on the other hand we face low commodity prices today.

Farm income is important, the value of land is important. When Iowa weathered the global financial crisis of 2008-09, it was because of the strength in our farm economy.

The Digest: What are the steps you feel are most important at the state level that have been driving Iowa’s growth?

Gov. Branstad: Look where we have come from. The biomass industry is “ready to boom”. It’s taken hard work, and some tough decisions to get this state back on track. We are down 1500 state employees since I came back to office in 2011, but we are now rated the #4 state in terms of fiscal management.

Much is happening, in biotech, agriculture and in pharmaceuticals. When I first came to office, we were a big energy importing state. Now, we are #1 in ethanol, a leading biodiesel producer, and we are only behind states like Texas and California in wind. But as a percentage of our power usage we’re way ahead, with almost 30% of our power from wind. And there are the new cellulosic plants like POET-DSM, and in Nevada, DuPont is going to open one before the end of the year.

Gov. Branstad and Digest editor Jim Lane discuss the Iowa Renaissance.

The Digest: But you’ve been warning that the EPA’s lack of action on the Renewable Fuel Standard could impact the Iowa economy?

Gov. Branstad: Farm land values have dropped 15 percent in the past 2 years, and the price of corn and soybeans is right at or lower than the cost of production. That has an impact throughout the economy. Farmers begin to cut back on equipment purchases, on trucks, and so it begins to spread throughout the state.

The EPA is doing some damage with the RFS, recommending a reduction, which has had a negative effect. We’ve seen layoffs at John Deere. We see real opportunities in advanced manufacturing, but we’d like to get some cooperation from the Federal level and see farm income rise.

The Digest: Are you optimistic that gridlock over the Renewable Fuel Standard will be resolved?

Gov. Branstad: I have met four times with [EPA Administrator] Gina McCarty and our Secretary of Agriculture Bill Northey has been very involved. The legislature passed a unanimous resolution in favor of the RFS. I was told last year that by spring we would have something, now I am told it’ll be spring 2015. Am I skeptical? Yes. Do I trust the EPA? No.

I have to say I am not really optimistic, but we’ve been working hard on a bipartisan basis, with Governor Nixon of Missouri and Governor Dayton of Minnesota, we’re in agreement. And Senators like Amy Klobuchar of Minnesota. The problem is Big Oil and their money, and the misinformation out there.

The Digest: Examples of misinformation?

Gov. Branstad: For example, there’s this idea that the RFS impacts the price of food. Now we’ve seen corn drop from $8 a bushel to $4, and now it’s dropped even more and is down near $3.50. And the price of food has gone up, not down. There was a full page ad in the Iowa Register from a group that is trying to educate the potential presidential candidates on these issues.

One of the problems is that in other states, they don’t get the same information we do, that we get from farmers and the sector. A few years back Dan Lundgren was running for Governor of California and I told him, this could be a great thing for California, the RFS and the move toward renewable fuels. But the oil companies have huge influence, and environmentalists can have the problem of a narrow focus. They watched as the groundwater got polluted with MTBE, and here’s this great additive that is clean and they could have had it all along, but they still have trouble with renewable fuels. It’s an ongoing effort of education. But even states like North Dakota, that have tremendous oil opportunities, are on our side when it comes to renewable fuels.

The Digest: Who’s been the biggest disappointment to you, as you look at the gridlock that has developed over the RFS?

Gov. Branstad: I think the one I am most disappointed in is President Obama. He was a farm state senator from Illinois and was a very strong advocate for renewable fuels, and the farm sector, when he was running in 2008. He picked up a lot of support in the Midwest. But since then he has turned his back on us.

The Digest: Critics blame divided government in Washington for the gridlock on energy and other issues.

Gov. Branstad: In our state we have a split legislature. We all represent the people, it shouldn’t be an excuse not to get anything done.

The Digest: What can be done to change the dialogue?

Gov. Branstad: We’ve got to get the word out. We have a great opportunity with the presidential cycle, and the Iowa Caucuses. We have to meet with them and show them, and use this opportunity to educate and correct the misinformation, such as food vs fuel, and how the efficiency is improving.

The National Governor’s Association is here in July 2016, and we are looking forward to a great opportunity to showcase, for the Governors and their families and the people who come along with them. We had the Governors here during Governor Vilsack’s term, in 2005. But a lot has changes. I don;t think there’s a Governor from 2005 that’s still in office.

The Digest: What can the individual do? 

Writing letters, visiting with candidates and reminding them that these 43 ethanol plants in Iowa offer really good, high-paying jobs, and how we are reducing our dependency on foreign oil.

This coalition that is now working, America’s Renewable Fuels, it’s a good organization, they’ve ben working on what is really a certain amount of ignorance out there. Oil has been subsidized for a hundred years, and now we have a chance to replace a lot of that oil with renewable resources. They don’t need a subsidy, but investors need to know that there is going to be a market.

The Digest: But you remain bullish on growth for the Iowa economy and renewable fuels, if the policies are done right?

Gov. Branstad: Absolutely. Already we have reached 10 percent ethanol levels. Look at the impact for people, jobs and energy security. But the sweet spot is really 30 percent, that’s where you get the best balance of mileage and cost. In Brazil, every car is flex-fuel and everyone has a chance to market a fuel. Especially when it costs as little as $100 per car to give a consumer a choice in fuels. They should make every vehicle flex-fuel. And Iowa is unique poised to lead in biobased chemicals with the new tax credit.