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HELENA - Heading into the home stretch of the 20-12 campaign, Montana's U.S. Senate race dominates the air waves and the headlines.

In recent weeks.. a new controversial audio recording has surfaced in the Rehberg-Tester race, one that's raising the stakes for both camps.

Q2's State Political Reporter Marnee Banks reports on how this ad and its secret recording came about, and gets reaction from both camps.

TRANSCRIPT Congressman Dennis Rehberg
American League of Lobbyists
October 14, 2011

Rehberg: Thank you, Pam. And let me introduce someone that got skipped. Kristin Smith.
You wanna stand up, Kristin? Kristin is a former staffer on the Hill and went to lobbying and I brought her back. So clearly the revolving door does not make me nervous. I always say she's worked for both Republicans and Democrats. She worked for Conrad Burns and then went to
work for Olympia Snowe...

Rehberg: Oh, she's not? You know I-I sometimes suggest that I was a teenage Lieutenant Governor because I was appointed Lieutenant Governor when I was in my early 30's and so I was the youngest when I started and the youngest when I finished, but I've always kind of pushed amble up on youth and now I can see the error in the ways of hiring the young, because I was inexperienced but I didn't know it. But, I was also a teenage lobbyist and I
got into lobbying accidentally. I was-came out of college and wasn't ready to take over the family ranch. I'm fifth- generation Montana rancher and we have the original place, albeit much smaller because of the estate tax and those are the kind of life experiences that get you interested in getting involved in government service from the perspective of trying to change some of the goofy ideas that are occurring in America.

But in the [interim] I took over the family ranch, I went into the real estate business and was selling real estate and still had a sickle of interest because I was an intern at the Montana legislature because my dad had been a member of the House and the Senate and gained an
interest in government, public administration and such, but I was in real estate. And I was in real estate. I started seeing things that made me particularly upset. And especially my own representative and so I was asked to come up to Helena during the legislative session and lobby for the Montana Association of Realtors. As a result of that, I was talking to my legislator one
day and he was the Majority Leader-the Republican Majority Leader of the House I said "You just can't do this because of this, this, this, this," and he said, "I understand," and he walked in and voted exactly the opposite. I said, "Well obviously anybody can do this. There's no literacy test to run for the State Legislature cause the guy just lied to me." And so after that legislative session I went back and filed against him and ran against the Majority Leader. And everybody
said, "What are you, nuts? You can't do that." I said, "Yes, I can because clearly there seems to be a philosophical difference between Republicans as much as there is among conservatives and liberals and Republicans and Democrats and you name it." And there's... there's obviously a difference of opinion. And I went back and I beat him 3 to 1 in a three-way primary and it's
because I started on January 1 is when I announced and I hit every door and house 3 times before the primary.

Fast forward to the next session of my life, I left the Lt. governor's position after having been appointed. I ran for the U.S. senate against Max Baucus and, what do you do after you've been Lt. governor? You go back to the ranch?

I wasn't really sure and I was contacted by a gentlemen by the name of Jack Ramerez here in Washington D.C., who had been a chief of staff for Conrad Burns who had head hunted Brad out of that position and made him the president of the National Association of Independent
Insurers, and he approached me and asked if I'd would like to run his lobby shop here, he had a staff of six lobbyists and he wanted somebody that he trusted that, and he knew and he's been kinda my mentor over the years and asked if I wanted to come back and lobby for the National Association of Independent Insurers.

Almost did it. But a lot of y'all's type came to me and said what are you nuts? You know, if we had the choice of either run for Congress or be a lobbyist, wouldn't you like to try the Congress first, and I fell for it, and I ran for Congress, I probably, if I had been smart I would've said nope, no, I think I'll stay out of the political arena and go into lobbying.

What I'm trying to suggest is I think lobbying is an honorable profession, and thank you for doing it because we can't survive as Congressmen or as state legislators or even as presidentswithout the information and knowledge that you have in the areas of your interest. I know nothing about grocery stores except I buy groceries. Um, and so, you know, I don't, know the struggle of the wholesale pricing, of the distribution, of the competition of the brands on the, uh, on the shelf, and I don't want to. It would be kinda interesting if I was in the business, I'd like to be, you know, Albertsons of Montana, but that's not the profession I chose for myself,
and so I have to rely on you guys to tell me the information, and so, when somebody came up to me yesterday, happens about half a dozen times, people come up and say "What do you know about, what's going on in the super committee". I have to honestly say you probably know more about it then I do, because there's secret meetings, there behind closed doors and the chatter sometimes, that's how you get your information, your network, among yourselves, to find out the information.

That's why, and I use Kristin as a good example because she lobbies in the telecommunications bill. That's not my thing. It was Conrad Burns' thing and as a result of me working for Conrad and managing his first campaign way back in 1988, I have an interest in it but I can never replace Conrad because that was his thing. That's what he did. So I hire somebody that has got a telecommunications background, but that's not why I hired her. I hired her because of her networking skills, of who she knows on the Hill, in the Senate and the House, and the ability to
go out and, and, put those pieces together and give me information because you know as well I do, in this town, information is key. That's the, where you are successful or not and you won't be a lobbyist very long in Washington D.C. if, one, you haven't got the personality, two if you don't network, three, you're not honest with the people who you are talking to, and you know this as well as I. So, I thank you for being a part of an organization that I think is pretty darn important.

Jay (Martin) is my Chief of Staff. He did say that. He's been with me for nine years, yes, so we keep our people around and I like that as well. I know he's always looking over his shoulder at a lobbying job, but uh, okay, so I don't exactly believe in the revolving door in my case, in my staff. Real quickly, what's going on-people ask me why would you even consider giving up your new position as Chairman of an Appropriations Subcommittee and getting to be a Cardinal and such and I just tell them, you know, I have never been in this necessarily for the power and the influence. It's to try and make a difference-to try to affect some change. And as you know you have to give up your House seat to run for the Senate. I'm willing to do that.

I so strongly believe that this president and, and much of this Congress has been heading this country in the wrong direction and I, I look around the room and think of some things that you're, you're representing-it many, many of you are part of the solution, are part of turning
this economy around and ending the recession except that government's in your way. They are, in fact, the enemy as they're your senior partner and that is not what government was intended to do. And so, yeah, I could be Chairman of the Labor-H Appropriations Subcommittee,
maybe if I live long enough I could be Chairman of the Appropriations Committee, but if you have the ability to change the majority in the Senate and kick Harry Reid out and have a new governing majority that clearly understands government's the problem, not the solution and
can actually, hopefully get some things done, frankly, again, I don't need to tell you the Senate is
dysfunctional. It cannot move. They didn't pass the '11 budget and so when we passed H.R. 1, they killed it. But they never passed an alternative. So what happens when they go do that, all the negotiations end up at the White House behind closed doors.

The debt ceiling debate. We passed Cut, Cap and Balance as a plan. They killed it. We passed a second version. They killed it. What happens when they don't pass one? Well there's no Conference Committee. Where's it going? It's going to the White House behind closed doors
until John Boehner outnumbered every time three to one. It's the President, the Vice President, the Majority Leader and John. And that's not right. That's not, that's not what America wants.

Now what have we done with this crazy Super Committee? They created a, a, a God-like committee. They've gone behind closed doors and none of us know what's going on. And they blame lobbyists for the problem? What are they, nuts? It's, it's, it's the Congress itself. It's the
dysfunctional Senate and it's got to be changed. And so I'm willing to, to give up the House seat and if, frankly, if we can change the majority, I believe, whether it's gaining the presidency or not, or changing the Senate or not, I believe the country would be better off. That's why I'm doing what I did. That's why I'm willing to stand before you and just ask you to help share the message that one of the things that are going on in this country-the direction is wrong. And the American public gets it and they're disgusted. And there's a reason for that disgust and it's not you. It's, it's-I think the people that have the attitude that they know better than the people of America and, especially, the business people of America. There just happens to be
one of them walking by right now, who clearly-

(Voice: I was wondering if you were going to say that. Now I really don't want to be out front.)

Rehberg: Yes, that's exactly right. Let's use Pell Grants as an example. I don't know if you guys follow Pell. It's killing us. It's going to eat up my education budget. In 2007 we spent $20 billion a year on Pell Grants. We want to give kids an opportunity, not just kids, it's anybody
that qualifies for Pell, an opportunity to go to college. And we as a society are willing to do that.
However, because of his changes, that he pushed through the House of Representatives and the Senate and the presidency, they made it semi-mandatory, so the only thing I can affect is the grant level. And what they did in the stimulus is they raised the grant level to a little, an all-time high, the second highest jump in the history of the Pell program, to $5,550 and you could at that time get too many years so it was over $11,000 and they changed the eligibility and the criteria, so you can go to college for 9 years on Pell. And not have to graduate. There are 9 million people on it right now, half of which will never finish. And you can get a Pell without having a GED or a high school diploma. How crazy is that? So, up until we made some changes, most
recently within the last few months, Pell Grants went from $20 billion in 2007 to 43 and a half this last year, billion dollars a year. The entire rest of the Department of Education's budget is $48 billion. So you've got Pell Grants coming in at 43 and a half and the whole rest of the entire Department of Education budget at 48. It can't work.

And that's just one small example of what's happening in this country as far as Congress and their spending and their lack of ability to deal with the problems of the day, which are Social Security and Medicare and all the other things. And so unless we educate those of us who are
here now, we're not going to solve this problem. And that's why, that's why I'm trying to make a change, a fundamental change in my position from the House to the Senate.

Let me stop there. I know you might have some questions about what's going on, where I think things are. Actually I, I missed it but I also kinda grew up in this arena because my dad ran for Congress in 1970 and he was defeated by John Melcher who is the one that, that Conrad beat. He became a lobbyist for the Montana Petroleum Association and Rocky Mountain Oil & Gas. So I grew up with my dad being a lobbyist for Exxon, Conoco and the rest of the independent oil and gas producers in Montana and it was the worst possible years because it was 1973
and 4 when it was the environmental years when they were passing all the environmental laws. He had the toughest job out there and so I watched him do that. He smartly got out of that and went into banking, which was a good thing for him. But so I kinda grew up in, in the
environment of lobbying as well. I respect the profession, thank you for having me and I'll just
open it up.