Frederica Freyberg:

But first this week, the Wisconsin/China connection. China is an emerging market for Wisconsin-made products. The latest figures show more than $1.5 billion in exports, with growth areas expected to be infrastructure development health care, food production and environmental sustainability. Lieutenant Governor Rebecca Kleefisch just returned from her first foreign trip representing the state. The trade mission provided a first-hand look at the opportunities in China for Wisconsin companies. The lieutenant governor joins us this week to share her experiences from that ten day trip. Thanks very much for being here.

Rebecca Kleefisch:

Thank you for having me.

Frederica Freyberg:

You’re just off the airplane, I understand, a couple days ago.

Rebecca Kleefisch:

Yeah, about 48 hours. Good to be home.

Frederica Freyberg:

Have you come back with some new export deals for us?

Rebecca Kleefisch:

Well, I led a bipartisan delegation from across the United States of America. The bonus of heading that delegation though, was that I got to talk about Wisconsin quite a bit. But the point of our trip was to build a foundation, because when it comes to doing business in China, in particular, foundation is the foundation, literally, on which those relationships are built. You need to have a number of meetings to relationship build before money ever changes hands. It’s funny, we talk about the elevator pitch in America, and how if you can make it really, really short and do what you can do on Shark Tank, then chances are you’d be able to make a deal. It’s very different in China. Relationship building was a key component of what I hoped to achieve over there. And I think we did, and I think we did it well.

Frederica Freyberg:

And so you expect to go back then?

Rebecca Kleefisch:

I hope at some point we will continue dialogues. And we started them in a number of different areas, economic development, diplomacy, and then also education. We visited what we would call a high school while we were in Chengdu. We also visited Beijing and Shanghai. It was really a wonderful trip. Ten days, and I think we came home with quite a few action items I'm excited about.

Frederica Freyberg:

Can you talk about those at all?

Rebecca Kleefisch:

Absolutely. We met with the chamber that was called the Federated Chamber of Commerce while we were there, and they talked about building relationships, almost sister city relationship style, with American Chambers of Commerce. I think that’s one of the action items that we can immediately act upon. When it comes to education, the high school that we met with over there, they call it a middle school, was very eager to meet with Mandarin speakers here in Wisconsin. My 6th grade daughter actually uniquely prepared me for this trip because she taught me the basics of Mandarin. So when I went over and introduced myself and introduced my delegation, I could do that in Chinese. And I think our hosts very much appreciated that. So we’d like to build some relationships there. And finally when we met with the American Chamber of Commerce over there, they said that there were some potential foreign-direct investment opportunities, and then also some almost match-making opportunities between business entities that were already established that were accessible only through a platinum membership in AmChan Shanghai, except if you are a .gov. So I further inquired wondering if our .govs here in the United States could serve as kind of a clearing house for their private sector. He said, as long as it's a .gov, I think that's legitimate. We’d like to pursue something like that as well.

Frederica Freyberg:

What is Wisconsin most known for in China?

Rebecca Kleefisch:

I would say, hands down, our ginseng. We product about 95% of America's ginseng in Marathon County, Wisconsin. So if you know the Wausau area, then you know what I’m talking about. And our ginseng is incredibly well-known for its bitter but yet sweet quality. It comes from our soil. And it is the yin to the Chinese ginseng’s yang. It has cooling properties for the body. And our ginseng board seal is very, very important in China. I was blessed enough to meet with the ginseng board before I went and they gave me a number of packages that I could take over as gifts, delegation gifts to represent the United States, and they were an absolute hit. We ship about 70% of you’re ginseng to China and Hong Kong.

Frederica Freyberg:

Are there other export items, products that we’re looking at trying to kind of grow those channels?

Rebecca Kleefisch:

Well, as you might imagine, the ginseng versus the industrial machinery is not even comparable. Industrial machinery is very, very expensive. But on top of that, we would also like to grow our Ag exports there. Because the Chinese people are developing more of an appetite for different foods, because they are an upwardly mobile, a developing economy. We've noticed they’re importing more soybeans to crush to make oil. They would also be very interested in importing more United States beef. And so we have discussions to pursue with the USDA and the US trade representative in order to make sure that we can do that and accommodate what they need. Because they have very high traceabilities standards. We meet those here in Wisconsin, but not all states do.

Frederica Freyberg:

All right. Switching gears a little bit and back on the home front, you’ve just presented your tax reform report, the culmination of more than a year of going around the state and having citizen roundtables. Now, I understand and I read it, and you don’t really set out specific recommendations, but you do have a lot of anecdotal reports from citizens, like a man who lost his house because his property taxes were too high or people who would like the income tax to be eliminated altogether. On that score, eliminating the income tax, are we close to that?

Rebecca Kleefisch:

I wouldn’t say that we’re going to eliminate the income tax in this next budget. But I think it was important to present a compilation of what folks actually said. Anytime I was asked when we were on a tax reform roundtable trail whether we would present recommendations to the governor, I said we’re going to compile the people’s recommendations here, because those are the ones that the governor is sincerely interested in. I sit next to the governor every day in those budget briefings so he can always hear my recommendations, but this was an opportunity for the secretary of the Department of Revenue and I to travel the state and hear directly from our job creators and our students and our municipal leaders, our business leaders, our farmers, our retirees, what they would like our tax code to look like in the future. And as you guessed, there are a couple of major themes. Obviously, folks want taxes to be lower. We’re still number ten in the country. Nobody wants to be on the top ten of a bad list. And even though we have pursued tremendous tax reform and seen a lot of success, the governor has cut taxes by $2 billion, you have to anticipate that at the same time Wisconsin is moving forward with tax reform, everybody else is, too. And so everyone is in pursuit of the right tax strategy and the right tax climate.

Frederica Freyberg:

What do you do if you don’t have enough revenues, though, because you’ve cut taxes so much?

Rebecca Kleefisch:

Well, I don’t think it’s necessarily a choice of revenue versus tax reform. I think you have to take them both at once. It’s a false choice if you have to pick between the two, because what our taxpayers were telling us at the roundtables was, hey, we don’t mind paying taxes, but you have to give us a value for what we pay. And right now we feel we are paying too much. And if you compare us to the rest of the states in the United States, we are comparatively paying a lot.

Frederica Freyberg:

So do you cut spending, reduce services? Does Wisconsin, if the population, and they do, want lower taxes, do you end up kind of being a state that just delivers lesser services?

Rebecca Kleefisch:

Well, I think the people of Wisconsin expect a certain standard of service, but I also see that there are opportunities for efficiencies. Our task force on waste, fraud and abuse was one of those things that I actually talked about often when I was in China because the other delegation members were fascinated by the fact that we could offer such a service and folks could report waste, fraud or abuse. And then we could actually see the merits of reducing our costs and it ended up being a win/win for the taxpayer, providing more value. I also think as we move forward with streamlining government services, implementing lean and -Six Sigma, I think we’ll be able to see a lot fewer steps and better value for taxpayers. I think moving into the next budget you’re going to see more of that. You’re going to see us using some of the best practices from our business leaders in lean and in waste, fraud and abuse elimination and us applying them to government. Because we know folks in the private sector are so good at what they do, they actually make money at it.

Frederica Freyberg:

All right. Lieutenant Governor, thanks very much.

Rebecca Kleefisch:

My pleasure.

Frederica Freyberg:

Rebecca Kleefisch traveled with a bipartisan delegation that included lawmakers from Washington, New York, Colorado and Kansas. The Hong Kong-based China-United States Exchange Foundation paid for the trip. Its mission is to promote a better understanding between China and the United States.