Lori Walsh: The federal government's payroll protection program is launching its second round today, Governor Kristi Noem calls for federal assistance to prevent the bottoming out of state budgets. Meanwhile, pork producers are in trouble and it's not just because of the temporary closure of the Smithfield processing plant in Sioux Falls, though that closure highlights the threat of COVID-19 shutdowns. Congressman Dusty Johnson says the situation needs stitches, not a bandaid, and he's calling on the federal government to provide resources and expertise to bolster America's food supply chain. In the meantime, South Dakota pork producers are facing some impossible decisions in the weeks ahead. We welcome Congressman Dusty Johnson to the program to talk about these topics and the overall response to the pandemic disruption. Congressman Johnson, welcome. Thank you for being here.
Dusty Johnson: Oh, you bet, man. There's a lot going on, isn't there?
Lori Walsh: There certainly is and a lot of it feels pretty bleak from where we're sitting. So let's take a look at the payroll protection program round two first, because that's something a lot of South Dakota business owners have participated in successfully. Others have felt a closed door. What happens next with that starting today?
Dusty Johnson: Yeah, I think it has been a pretty substantial success. Now of course it isn't perfect, but that's not normally how we measure governmental programs, right? We understand there's lots of waste, fraud and abuse in social security and while we work overtime to try to reduce that waste, fraud and abuse, we also acknowledge that wow, social security, critically important lifeline for millions of Americans. The same is true for the paycheck protection program, 74% of those loans went to the smallest category of American businesses, including as you alluded to Lori, 11,000 South Dakota businesses that got more than a billion and a half dollars. That is really having an impact on keeping 30 million Americans employed who otherwise wouldn't be. So last week on Friday, Thursday I was out in DC with my colleagues, we voted to put another $310 billion into that program and so as you mentioned today, it is backup for business.
In South Dakota of course there were people who were shut and left on the outside looking in, but not as many as you might think. 80% of the eligible payroll in this State was approved under the first round of funding.
Lori Walsh: That first round of funding ran out of money and I think something like 13 days nationwide. A staff here at SDPB did a story about really, South Dakotans fared pretty well in that overall effort. But I'm wondering what your advice is to small business owners now, is this a time to urgently get on this payroll protection program and apply now because there's limited funds again?
Dusty Johnson: Yes, it was. And in general whether you were a small business or a large business. If you called your lender in the first few days of the last phase you got in and you were processed with little delay. Of course there were some problems with some people, but by and large, the people who acted quickly were successful. That's going to be the case with this phase as well. There's just no reason to wait. I mean, call your local lender, whether it's somebody you've just had a checking account with or somebody you have received a loan from the past, you got to give them a call. I think this money's going to stick around for a little while, but there's no reason to delay and we do want to make sure that people have an opportunity to bring their employees back to work. Even if they don't have a work for them to do, we would rather they maintain that critically important connection.
That employee employer connection is pretty special. It's how 180 million Americans get their health insurance for example, we don't want that severed because Lori, that is one thing that made the 2008, 2009 recession so much worse. It took us a decade to build back up that labor force participation.
Lori Walsh: Right, so keep people at work. The unemployment roles have also surged and some people are taking that unemployment assistance, insurance assistance as well. But I want to talk, Congressman Johnson a little bit about, you have experience in State government and you hear governor Kristi Noem talking about the State budget and some of the challenges that are looming. She really wants that federal assistance to have some flexibility to refill the revenues. Talk us through that a little bit, so listeners understand what the urgency is and then why are we hearing from people like Mitch McConnell and others in Congress that this is something that there's not a lot of appetite for?
Dusty Johnson: Yeah. South Dakota was provided $1.25 billion in the CARES Act, that's a lot of money. And the language in the CARES Act was pretty restricted. That said that States can only use them in essence for hard COVID-19 cost. Now, South Dakota wilds millions of dollars of those kinds of costs, but they're not going to have 1.25 billion. We will have vast loss of revenue directly related to COVID-19. I mean, I don't know what the numbers will ultimately end up being Lori, but it's going to be 15, 25, 30% who knows how much our sales tax revenue is going to be off. And in a State where half of our general fund, more than half is spent on education and Medicaid, there's limited ability to make 30% cuts if your revenue dries up. And so Kristi Noem is saying, and I agree with her, that States should be given additional flexibility and that if the federal government's provided them $1.25 billion, the State should determine what is the best way to allocate those funds.
But real hangup in DC is that there are a number of folks who think some States, looking at you, Illinois who have been mismanaged and they don't want this to be a federal bailout of non COVID-19 deficiencies. I think we can get it done. I think we should provide States additional flexibility, but I think if they'd been hurt by COVID-19 either on the expense or revenue side, they should be able to use those COVID-19 dollars. We can get that done in a way that is, I think can restrict States from just bailing themselves out for errors that were made two or five or 10 years ago.
Lori Walsh: And one of the challenges that I was reading about this morning, and I'm curious if you agree with this or disagree with it because I'm puzzling over it myself, was this notion that the federal government wants these States to reopen. South Dakota never closed in the way that some States closed. There were specific restrictions and there were vast changes and certainly many businesses closed. But we didn't have a statewide mandatory shutdown. So where some States are thinking about "reopening" it looks a lot like what South Dakota was always doing. So do you think that there's something behind that that they're trying to get an economy back in the right direction and what lessons can be learned from South Dakota to say this is what it looks like here and it certainly doesn't look like a robust economy with lots of sales tax receipts flowing in. We are open for business in a lot of places.
Dusty Johnson: Yeah I do think that States coming back and rolling back previous decisions could end up looking a lot differently than South Dakota does today though. I mean, I didn't travel a lot because we're not supposed to be doing that. But I mean I was called back to DC a couple of times to do votes. I mean I see what the district of Columbia, which is under a stay at home order looks like and it wasn't really any different. Not in any material way from South Dakota. I mean South Dakotans had really sheltered in place. I mean there was in mention, there was no church I'm aware of that was having in-person services. But I went to go pick up, take out food from our local Mexican restaurant, there was nobody sitting there having a meal in the restaurant. We were doing a lot of walking, out doing a lot of walking and biking as a family, but when we see people out and about, they're not congregated together.
I mean, I think South Dakotans, their compliance on these best practices has been remarkable and I don't think it's been deficient in substantial ways from what I saw in DC for example. But as States begin to phase back, Lori, there's a danger that may be seated that people will overreact. They'll think, okay, it's fine now. Wait, now we can go back to the way it was. That's not what President Trump has said, that's not what Dr Fauci has said, that's not what the blueprint released by the White House has said. It is a series of phases and I think we want to be careful as we work, we all want to get back to normal, but as we work toward that goal, we can't just say, flip the switch we're all back to normal. The president's made it clear, there are a series of guidelines and gateways, numerical database gateways that States should pass before they opened back up and that that will be a phasing reopening. Let's try not to get that wrong.
Lori Walsh: Let's talk about pork producers because that is an urgent situation. We have not heard anything as far as I'm aware of today about the Smithfield processing plant reopening in spite of guidance from the CDC. I read through that report, there was a lot in there, but there was nothing that seemed to me to be particularly prohibitive of reopening the plant. Tell us where we are with that process and what needs to happen next. And then let's talk about, just what do pork producers need right now in order to make some of these difficult decisions about the days ahead?
Dusty Johnson: Yeah, there is a lot there. I mean, I'll start on the producer side. I talk to these folks every day and they're just devastated. I mean, the emotional weight of these decisions they're making are really getting to them, Lori, I mean obviously it's a financial deal. But they talk more about the emotional strain, just having to depopulate these herds that they have spent so much time to build up and sealed such a stewardship over. And such a pride in helping to feed the world when all of that effort instead goes to not feeding the world, that is really hard for people. And government's pretty good at cutting checks but no check is going to erase that kind of trauma that they felt last week and are going to be feeling this week. So that's hard and we need to safely, as quickly as we safely can, we need to get not just Sioux Falls but other packing plants open. From a food security and availability perspective but also just from a producer perspective.
As far as Smithfield yeah, you read through the report as I did as you did, you get the sense that there's nothing particularly onerous there. We're dealing with 111 year old building and processes that a lot of us are not particularly familiar with. And so you can think, okay, well I read here they put up a ton of plexi black glass, but some additional plexiglass is going to be necessary before reopening. Well there's some areas where they're using hot water and if you have too much plexiglass that can trap the hot water in place, which may steam up the area. And when you have people using sharp instruments, visibility is important. So that's something that when you're reading the report just on its face, maybe you don't appreciate. Things like making sure there are hand dryers, touchless hand dryers, well, that may put a strain on an electrical system that was put in long ago and that may take additional time.
So the report itself doesn't seem very onerous, but it is going to take some real effort on behalf of Smithfield and others to make sure that that thing gets open in a way that's consistent with public health.
Lori Walsh: Is it possible they don't open it? Is it possible that it's not worth the investment to Smithfield and what happens then?
Dusty Johnson: Well, this is a really important part of the American food system. Depending on how you count it, it's anywhere from 4% to 6% of our nation's pork capabilities capacity. It's the second I believe, as I look at the numbers, it's Smithfield second largest plant in the entire country, so it's important on all of us who like to eat, it's important to Smithfield, it's important to Sioux Falls, it's important to workers, it's important to the producers. It is really hard to imagine that thing not sticking around. I know at times John Morrell had talked about closing it, but that was under a very different environment. The capacity, it's a lot tighter capacity in that packing industry, which causes lots of problems for producers I would mention as an aside.
But if we want to continue to feed America and the rest of the world, I think that is a critically important part of the equation. And there are not a ton of new plants being built, so if they're going to start closing old plants, oh, this one is very old. I just don't think they have the appetite to start shuttering plants when this country needs them.
Lori Walsh: All right. So what happens next and start with the producers first. Are producers really going to have to figure out how to destroy thousands of hogs. Is that going to happen in the next two weeks? Is it going to happen in the coming weeks? Is it happening now? Yeah.
Dusty Johnson: It is. Yeah, and I talked to producers or members of Congress who had talked to producers just over the weekend in both Minnesota and Iowa that had some relativity widespread depopulation and it's not good. I mean, it is not good for a hundred different reasons and I think if the plant has to stay offline for very much longer, it is an inevitability. I mean we just don't have the capacity in this country. When we have Minnesota Smithfield at 20,000 hogs a day, it's 100,000 hogs a day, nationally that we're down off a capacity and it is going to have a devastating impact. But that being said, when it comes back online, we want it to be safe. We should be measuring twice and cutting once.
Lori Walsh: Where do they put the carcasses of hogs when they're destroyed? How are we solving some of those massive problems and how are the farmers going to handle the trauma of that? Because you used to take them to a plant where there were, I mean regardless of how you feel about a processing plant, there were systems in place for the humanity of the treatment of the animals and now that regulatory, I mean the door is wide open.
Dusty Johnson: Yeah. That I think is a very astute comment and people probably don't realize over the last 30 years the evolution that really has happened in these processing plants and animal. I mean there is just a lot more from an animal treatment perspective that is being done than was being done. And by and large when there's depopulations on the farm, there are trenches dug and then the carcasses are thrown in the trench. It takes a lot, I mean the digging of the trench, that's not the really time consuming part. I mean it really is putting down the animals which has an emotional toll. And when people are raising that to be food, I mean they're raising that animal to provide a life to another family somewhere else when that isn't the end result. That is a double whammy.
Lori Walsh: All right. So what do you think the federal government can do? What are the steps that you're calling for in Congress?
Dusty Johnson: Yeah, so Senator Thune and I led a five or six State letter here last week, lots of interest from our colleagues in getting on this letter. And we've tried to be national leaders in calling out for months as we've looked at coronavirus and trying to figure out what are the impacts on egg producers specifically. And so whether it's Roger Marshall from Kansas and I leading letters and efforts or Senator Thune and I, we've really tried to be focused, I mean Senator Thom Tillis, and I had done something previously. But what we're calling for number one, we do need assistance to producers so that they can pay their bills like so many other Americans. And small businesses, things like the paycheck protection did help, but there are unique set of financial burdens and egg country we need to be attentive to.
We secured $23 billion in the CARES Act. We need to get that money out in the country. It has not been released yet, we've been talking to USDA a lot. We need to make sure that if there needs to be flexibility on things like hours of service for truck drivers so that we can get these animals moved around to places where there is capacity, that we don't have government standing in the way there. We need to make sure that USDA, when they're doing inspections, because this is a heavily inspected industry, we want to make sure that there's not a packing plant that's got to hit the pause button because there's not an inspector at the right place at the right time. Let's make sure that we're not slowing things down at the federal government level. And let's make sure that to the extent these producers have massive out of pocket expenses, Lori, on this euthanizing that we're talking about, that the federal government is willing to walk with them, partner with them on some of those extraordinary costs. And I think we're moving toward making that happen.
Lori Walsh: Congressman Johnson, you also called for the federal government to acknowledge and support local media. And we've had lots of struggles with small town newspapers in South Dakota. Speak for a moment if you would about the importance of, this is the biggest story, community story in South Dakota history perhaps with the impact that we're seeing. And yet some of these newspapers are having a hard time covering it because they just don't have, the revenue was completely dried up as well. What's at stake here?
Dusty Johnson: Yeah, and I like many thoughtful Americans. For a decade I felt bad about where news has been headed from a financial perspective. And I know everybody loves to pick on the media and in the politician playbook, which I don't read closely enough, it probably says that I'm just supposed to spend all of my time, when we talk about the media, railing against, the indignities of dealing with them when they're so biased. Well, the reality is, you can't have a free country without a free media. And there are times where that is a massive pain in my butt. But if I want a free country, that's the cost to doing business. And they will write things that politicians don't like and they will say things that politicians don't like. And that is not a flaw in the system, that is unnecessary characteristic of the system. That's what brings the freedom is that tension, that accountability.
I know my three sons behave themselves a lot better when they know that there's a chance their mother or I could walk in the room in the next couple of minutes. And we all, I'm not being hard on politicians, we all are better at our jobs and in being humans when we know that we will be held accountable for wrongdoing. And when we don't have the cop on the beat, when we don't have smart people with the tools to ask serious questions, then we risk having a government that is not as good at its job. And that's just true for the weekly newspaper as it is for CBS Evening News. And the weekly newspaper and the small local radio I mean, these guys are getting pummeled and I don't know what to do about it. But I do know that all of us as citizens, to the extent that we want a better, more verdant world that's got to be something that to the greatest extent we can, we should invest in.
I mean, we should invest in institutions that make us better, we should invest in news organizations that make us better. And I don't know as many friends who take a newspaper subscription as used to, and I just wish they would. Now there's a role for the federal government to play, that's what our letter was about. But this is a bigger problem, this is a problem that the federal government cannot solve on its own. It is for all thoughtful, well-intentioned Americans to ask themselves, what kind of media did they want to invest in?
Lori Walsh: Congressman Dusty Johnson, we thank you today for your time and for those words. We appreciate everything that you're doing on behalf of South Dakotans. Thanks. We'll see you next time.
Dusty Johnson: Thanks, Lori. Bye.