Lori Walsh: US Senator Mike Rounds is also a former governor of South Dakota and he's using that insight and experience to join the bipartisan group of former governors asking for flexibility in how federal stabilization funds are used in individual states. He has also called for investigations into potential price gouging in beef packing and he's joining us now on the phone for those conversations and more. Senator Rounds, thanks for being here. We appreciate your time.
Mike Rounds: Thank you Lori. I appreciate the opportunity to visit with you.
Lori Walsh: First, please tell us how you are doing and how you are keeping yourself safe at this point. What measures are you taking?
Mike Rounds: Several weeks ago, as a matter of fact, more than a month ago, we started doing basically isolation within our Washington DC office. We split our staff up, but we only allowed half of them to come in at a time, so that number one, we had more separation in the office. And then about three weeks ago, we went to basically just myself and one or two other individuals in the office to provide more separation.
After that, once we left Washington DC coming home, I isolated at our farm for a period of 10 days, after which time then I moved back up to my home where my wife is there, but we basically separated from the rest of our family. And I'm either there or basically at the office. We never have more than two other individuals in the Pierre office when I'm here as well.
We've done our best to try to keep those separations out and we've tried to maintain the same individuals that worked together so that we aren't adding in other individuals into the mix. We're doing our best to maintain that separation as recommended by CDC. And then at the same time taking those good common sense approaches, lots of hand sanitizers. I've got one here on my desk, we've got one at the door coming in and we continue to recommend as you've heard many times before, washing hands is critical.
In fact, last evening I had a tele-town hall, I invited Senator Bill Cassidy who is also a doctor to stay on the line with me. And he emphasized and explained why hand washing works and how it takes out that virus and kills it and why the reasoning was behind it. So we're going to continue to try to send that educational opportunity out into as many visits as possible and once again, continue to try to be an example of how to keep that isolation going.
Lori Walsh: And I think we all know in your life, this is really hitting home as well because of that at-risk status. So many people are dealing with loved ones who are going through a cancer journey right now. How has that changed the situation? I know my brother is in the middle of a cancer journey as well. We have lots of concerns, but we've also seen monumental efforts from his healthcare providers. He's getting his care in Minnesota. But if people are trying to figure out how do we get these cancer patients, keep them safe in ways that are just ... The urgency of that is so heightened right now?
Mike Rounds: You are correct. And anybody that has hypertension or anybody who is undergoing any kind of a chemotherapy where their immune systems have been impacted or for a period after that, the idea is not to get them in touch with individuals that may have it or places where they could catch this particular virus. This virus is very, very dangerous and it can impact people from any age. But what we do know is that if you have diabetes, if your immune system has been impacted, if you have high blood pressure, any of those items can add to your vulnerability.
And so, part of the message as Jean and I have spoken, she's been going through the cancer treatments. She's been complete now since February and with the last of her radiation. But we had decided early on that she would be in an isolation mode. We're even limiting the amount of time that she has available with grandkids and so forth. And they're not coming over to the house like they used to come over to the house. And our kids aren't coming into the house the way they used to come into the house and bring the family with them.
So we're really trying to keep for this brief period of time. We're trying our best not to have that connection where you could catch something from somebody who has no other symptoms but might be carrying the virus. The separation is important and once again, the good hygiene is absolutely important as well.
Lori Walsh: Let's talk about the economy and some efforts with stimulus and stabilization money. Governor Noem was one of the early governors who expressed concerns that money might not be able to be used to shore up state revenues. Tell us a little bit about why you are gathering with these bipartisan, these former governors, talking to Vice President Pence, also a former governor, about how that money can be flexible in different States.
Mike Rounds: In fact, Governor Noem and I had been in communication back and forth on a consistent basis trying to figure out a way to get that into the original bill because in my former role as a governor, I understood that when you have a loss of revenue because you have a slowdown in the economy, that impacts the state's ability to respond as well.
Governor Noem was aware of that. She had asked if we would try our best to try to get some flexibility into the money that's coming in. We did try. We just couldn't get it successful because it takes a unanimous consent on the part of the Senate in the house to do so. But we're putting in right at about $150 billion into, and money's going out beginning on about the 24th of April back into your local units of government, including the States.
What I had proposed and what I still believe is appropriate, is that a percentage of that should be made available to the States for revenue replacement. If your sales tax is down, if your [inaudible 00:06:11] or your lottery money is down and so forth, you still got to be able to match Medicaid to pick up federal funds if you're a state. You still got to be able to provide those educational payments back to your local units of government to the schools and so forth. But you've also got the ongoing operation of government itself to respond in the case of an emergency.
This particular legislation that we passed, The Cares Act, does allow the States the flexibility to use it in responding to the COVID 19 pandemic. So the added expenses and the costs incurred, they can take out of that $1.25 billion, which we're sending back to the State of South Dakota. But also a percentage of the money coming back to the state, about 50% of it goes back out to your counties and to your municipalities as well.
So the state will be sharing that back with those other entities of government as well. And the flexibility there is limited because we're laying out that a percentage of it has to go back and be shared with your communities and your counties.
Unfortunately, what the state would really like would be to have more of it be available to pick up for that loss of revenue. I hope that in the future, and there will be probably another phase in this when that comes in, I'm going to lobby awfully hard to get in some flexibility so that part of that money can be used for revenue replacement.
Lori Walsh: Yeah, talk a little bit about what does need to happen next because this Care's Act was not the first initiative coming out of Washington. As you look at the impact that this is an ... And clearly there's some execution, things that need to happen right now. People are complaining about the difficulty of getting to this money as those things are getting worked out, you're looking ahead at some point and saying, "What happens next?" Lead us, show us a little bit of what that might look like or what those early discussions are like?
Mike Rounds: No question about it. There are improvements that can be made in The Cares Act. Senator McConnell was on the floor of the Senate this morning asking that we add additional money in for a particular part of it, which is The Payroll Protection Act. And that one is the one that that has been really popular in terms of people trying to get in and get access to money as employers to keep employees on their staff rather than laying them off.
And the program I think has some really good fundamentals in it. And it basically says, "Look, whatever you did last year in terms of sales and payroll, compare with what you're doing this year, and if it's down because of the COVID 19 and you simply attest that your business is down and you believe it's due to that, you can get a loan which is forgivable, and it will pick up your payroll, up to a 100,000 per employee, and up to 10 million total for a period of eight weeks. And you'll apply through your local banker. And what it is, is on top of that 25% over and above what your payroll expenses are, you can apply against the interest on your mortgage, your utilities, the cost of doing business. And that is also a forgivable expense as well."
And so the idea was, is to get as much of this money out as quickly as possible back into the economy and keep these employees on the payroll with their benefits also included. The business community has just really, and that they've grabbed a hold of this, and they've inundated our local lenders. The local lenders in some cases had a relationship with the SBA already, but in many cases they did not. We've added over 30,000 additional contacts in the banks that are now doing business with the SBA, that's individual loan officers who are now accredited to send loan applications in. And we're still inundating the system with more requests from the banks across the country. Banks, credit unions and so forth. As it has in the inundated the system.
Number one, the system had to be upgraded. It's growing pains and it did not work as well as we wanted it to, but we're getting there. It's only been in effect for five days. The second part, we're going to run into money because those businesses have really come forward saying, "I'd much rather keep my employees on the payroll. Let's make a deal, let me get the money." And in doing so, we've already committed 100 billion of the $350 billion that was in the plan.
Senator McConnell was on the floor today and said, "Let's increase that by another 250 billion." Unfortunately, our friends on the other side of the aisle said, "Timeout, we're not going to do that yet. We want to make it bigger. We want to go back into some other areas of the program and we want to add money in."
I think the leader's position, Senator McConnell's position, and I happen to agree with him on this, the other portions of the program in some cases have not even been dispersed yet. They wanted to increase the amount for hospitals, but we haven't set out the first 100 billion to the hospitals yet. They wanted to increase the amount to the States by 150 billion, we haven't sent that money out yet.
So I think the leader was saying, "Let's get this 250 and it's unanimous." Everybody supports let's get that out, and we'll look at a bigger package coming down the line. Disagreement there, we're going to have to work that out with our friends on the other side of the aisle. We'll figure this out one way or another, but nonetheless we want to get that back in and get assurances back into these small businesses, the money will be there when they request it. That's part of what we've got to do is just get that 250 in.
And then after that I'd like to see some flexibility for the States as well. I'd like to see that built in. I also would like to go back into the existing program that is there and make it clear that the SBA cannot exclude coverage for individuals that have gaming as part of their business operation.
The SBA has taken it upon themselves to add in a rule saying, "Based upon their previous laws that don't allow the SBA to make loans to businesses that are gaming oriented." They've now applied that to this new act which we think is totally outdated and is the wrong interpretation.
And we see that the president in the last evening was involved and said he's going to get involved in it to take a look at it as well. Hopefully we'll get that resolved and a lot of our small bars, restaurants that have gaming as a part of it will now be eligible. That's the next step that we're working on at this point.
Lori Walsh: I want to talk to you a little bit about these accusations of price gouging and beef packing and how consumers are ending up seeing huge jumps in the price of their beef, but yet the cattle market drops out and commodity prices and ranchers here in South Dakota are really suffering with the market crash. Tell us a little bit about your efforts to have that looked into? Explain to people what the problem is here and then let us know if, is there a resolution?
Mike Rounds: Here's what's going on. Last summer we had a plant that went down, Tyson Foods Plant went down. It was about 20% of the ability to process beef. When that happened, the price for beef on the hoof, in other words, what they would buy in the entire market went down substantially. At the same time, the price in the showcase at the supermarket went up, and it was people that were trading within the market that were basically pushing up the price on processed foods, but also cutting back substantially on what they were expecting the producers to get for beef that are on a feed.
At that point we asked for an investigation. Nothing has happened yet, so this time around, as we've watched prices for cattle continued to go down at the sale barns, we were seeing that prices in the grocery stores were continuing to go up. We asked the attorney general to get involved and to look at this market because basically 80% of the entire market is controlled by four very large processors.
But someplace in the middle of it, the system is not working. And look, we're not going to accuse them and say that they're doing something criminal in nature, but what I asked the attorney general to do was to take a look into do the investigation and find out, number one, is somebody not following the law the way that it is set up? And number two, if they are following the law and we're seeing this type of a discrepancy in the market, which clearly is not working, then what do we have to do to fix the laws that are on the book right now regarding antitrust or a fair market that our producers need to rely on?
We're not going to have these markets around very long if we can't fix the problem with these folks trying to get a fair price where it's not even meeting the cost of their production for beef that are on the market today.
And the other piece of this that we were concerned with is, during this time in which COVID 19 is here, consumers were paying a higher price than what they were before. And at the same time we had producers that were complaining and appropriately so, that there was a voluntary label on these items that said, "Product of the USA," when in fact for years the department of Ag has allowed processors to label beef from outside the country coming in as being a product of the USA. And consumers thinking that it was a product that had been born, bred, raised and processed here in the US being shocked to find out that all they had to do was bring in box B from overseas and reprocess it. And they were calling B from 20 some other countries, "Product of the USA." That's not a fair way to advertise beef.
And so we've number one put in legislation that will take that product to the USA and make it only for beef that's born, raised, fed, and then processed in the US. And second of all, we've asked the secretary of Ag to get involved in this and to do it by rule, because they could do it by rule today.
So far they've responded saying, "Well, we'll consider an inner rule that will allow us to allow live cattle to come in from other parts of the world and still process it and call it product of the USA." But they aren't willing to go so far as to say that it should be beef that was born, raised, fed and processed in the US. And so it's a halfway measure and it's not going far enough as far as I'm concerned.
Lori Walsh: And Senator Rounds, I know you had this town hall last night, the virtual town hall where our people who call in and ask questions. And one of the things we're hearing a lot here in South Dakota is the fact that Governor Noem is one of the only governors, we're one of the only States left in the US that has not issued a statewide stay at home order of some stores. There has been individual executive orders and individual mandates for certain groups and in certain towns.
What's your message to South Dakotans who are frustrated by the state government response, especially when they look to a state like Minnesota and they see how that state has flattened their curve rapidly through stronger actions whereas our numbers are continuingly increasing exponentially? What's your message to South Dakotans who are frustrated with that?
Mike Rounds: Well, first of all, I'm not sure that I would agree that our numbers are increasing exponentially in South Dakota. But I would say this, every single state is different. And I'm not going to criticize the governor's response when she is allowing different parts of the state to respond.
Mike Rounds: Look, if you go into Jones County out here and you tell them that they're going to be stay at home in Jones County rather than working in their fields, they're going to look at you and smile and continue to work in their fields anyway. If you're going to Sioux Falls where the mayor has been very active and I think has done a great job in sending the message that isolation is very important in that community, and I support him on what he's doing there, then I think that's appropriate as well.
But different parts of South Dakota where you've got literally, what? 300,000 people, very, very close to Sioux Falls, and yet you've got another 500,000 spread out over the rest of the state 200 miles North to South and 400 miles East to West, to suggest that all of them should follow exactly the same rules, I'm not willing to buy in to that.
In some States where you've got a very high density population sure. In South Dakota to have the independence to be able to decide what the best approach is based on where you're living and so forth, I think we are doing a good job in that regard. And in essence, and I think Dr. Fauci made this comment, "Every state really does have a different approach to it, but basically qualitatively, we are achieving a lot of the same goals as what they are asking to be done in those more densely populated States."
So we're right in the middle of planting season. You've got small communities all over the state that are servicing farmers and ranchers who are coming in, and as an essential part of the food supply, we've got to get the wheat in the ground, we've got to get to corn in the ground, we've got to get the ground ready, we've got to get the fertilizer and get the chemicals on and so forth. They're not going to be sitting at home. They're going to be out in the going to be actively engaged in that.
The business that support them need to be available to help them with it, or we really will have a shut down on our economy here. For folks that are in the livestock industry, the same thing goes. And then you've got to have your trucking organizations that are moving all of these commodities back and forth as well.
So in South Dakota there is so much of what our economy is which is considered essential and critical. A good example right now is in Sioux Falls with Smithfield, we just heard that they had a large number of individuals who had confirmed to be positive with COVID 19, we need to address it. We need to be actively engaged in it. We've got to be proactive. But that beef or that hog processing facility is critical to our food supply across the entire country. And so you can't simply just shut it down and tell everybody to go home. You've got to find a way to be as safe as possible, but if at all possible, you need to keep those facilities open.
Lori Walsh: And I think that's the followup question there, which is, we need those critical infrastructures, from the grocery store to the trucking industry, to the farmers in the field to keep going. But we also need them to not drop and have a closure like we saw at Smithfield because that not only impacts lives, but can acutely impact the supply chain for the rest of the country very, very quickly. Do you think Smithfield did enough early enough?
Mike Rounds: I honestly can't talk about it because I don't know enough information. I only heard about it earlier today. I had not heard about it before today. So rather than pass judgment on whether they did a good job or a social job, let me find out more information about it before I comment on that.
Lori Walsh: One more question before I let you go Senator Rounds and it goes back to what you were talking about with Senator McConnell, and the things in Washington before the Coronavirus really came and we were seeing documented cases in the United States. It was a time that most people agree was really bipartisan and contentious in Washington. Some challenges about what we were able to get done in Congress.
Have you seen that shift at all? Is there more working together than there was before? Or are we seeing the impact to respond as a federal government hampered by the ranker that all Americans were participating in and we're noticing before coronavirus took over as a pandemic on our shores?
Mike Rounds: Well, the elephant in the room for a while was the impeachment process, and it was very aggressive by the House. In the Senate, there was throughout that time period, kind of a little bit more of a laid back approach, I should say. Republicans and Democrats alike during that time trial.
Well, we knew we had to discharge our constitutional responsibilities, and we knew that there would be differences of opinion with regard to the final outcome in the Senate. We basically all knew what the outcome was going to be with regard to the impeachment. But Democrats and Republicans have maintained a very good across the aisle discussion. It was there during the impeachment proceedings and it was there after the impeachment proceedings.
In fact this morning I've had almost as many contacts with my Democrat colleagues on issues that I have with my Republican colleagues this morning. And we're talking about the same things. We're talking about, how do we move forward? How do we make sure that we get this additional 250 some billion in? And is there some common ground we could find to make this work more easily?
And the same thing with our scheduling, we're discussing, "Okay, what's the appropriate way to recommend the leadership about how we reschedule ourselves back into Washington? And is there a common approach we can all find to make recommendations to our leaders on both sides of the aisle about how we get together again in the future?" Those are all going on right now and they're across the aisle.
So the discussions we're having are bipartisan in nature. And we seem to be on very good terms with folks in our committees that we're working through. A lot of that doesn't make headlines day-to-day, but the vast majority of the issues that we work through, even in Washington, have been bipartisan in nature. The ones that get the attentions are where there's a contentious issue involved and people get interested in that. But they really do expect that we do the day-to-day operations as efficiently as possible.
And it's kind of like back here and when I was in the legislature back here in South Dakota, the vast majority of the discussions we had might have had differences between rural and urban, but there weren't nearly as many that were Democrat and Republican oriented. The same thing in Washington. We've got a lot of discussions about urban versus rural and the different approaches you do in the different States. That takes a lot more time to work through sometimes than the differences between Republicans and Democrats on the mundane day-to-day issues that we face. On major issues, the green new deal and so forth, that stuff, that brings out the ranker. But the vast majority of the discussions that we have with folks on both sides of the aisle are very, very good.
Lori Walsh: Senator Mike rounds, thank you so much for spending time with us today, we really appreciate.
Mike Rounds: Thank you.