Category: Spring 2009 Newswire
In Question to Bernanke, Gregg Focuses on the Long-Term
BERNANKE
New Hampshire Union Leader
Jillian Jorgensen
Boston University Washington News Service
March 3, 2009
WASHINGTON— At Tuesday’s Senate Budget Committee hearing Ben Bernanke, chairman of the Federal Reserve, was grilled by most senators on the government bail-out of AIG. . But Sen. Judd Gregg, R-N.H, wanted to focus on entitlement reform and the long-term consequences of what he characterized as the massive government spending in President Barack Obama’s proposed budget.
“The budget, as it’s proposed, essentially nationalizes all income over $250,000, nationalizes health care, nationalizes student loans, we’re in the process of nationalizing our banking system, and in addition it creates a national sales tax on the production of energy,” Gregg, the top Republican on the committee, said in his opening statement.
“It’s a real movement of our government to the left and down the road of sort of France,” Gregg said in an interview after the hearing.
Gregg said he did not ask Bernanke about the latest bailout for insurance giant American International Group because of time constraints and what he said were more pressing issues.
“I had five minutes, and I think everybody else was covering it ad nauseam because it was a way to get a press release and get coverage,” he said.
AIG the struggling insurance conglomerate, received another $30 billion from the Treasury Department and the Federal Reserve Bank Monday – marking the fourth time the company has taken taxpayer money. AIG has reported $100 billion in losses for 2008, the largest losses of any U.S. company in history.
“The amount we’re spending on AIG isn’t like what we’re spending on the stimulus package, which we’ll never get back,” Gregg said, because the government has purchased AIG assets that have value. When the economy rebounds, the government should be able to recover its investment, he said.
“It’s still an obscene amount of money being spent to try to stabilize a situation that never should have occurred,” he added.
During the hearing, Gregg asked Bernanke if a government of the size proposed in the Obama Administration’s budget could be sustained and how it would affect the value of U.S. currency and the ability of the country to sell its debt.
In response, Bernanke said: “The president has proposed a number of ambitious programs… I think it’s going to be up to Congress to figure out in terms of the substance of those programs, whether they are achieving social and other objectives that Congress wants to achieve. That’s really not my place.”
“But your place is to protect the value of the dollar,” Gregg interrupted.
“My concern here, as I expressed, was that there needs to be fiscal sustainability,” Bernanke replied.
Gregg also pressed Bernanke on the issue of entitlements, such as Social Security and Medicare, asking whether the government would be able to tell the international community the dollar was strong unless it took action in the face of the coming retirement of the Baby Boom generation.
“It’s clear that to in order get control of the overall budget situation, we’re going to need to look at entitlements,” Bernanke said. “If we don’t get a sustainable fiscal situation, and deficits continue in large amounts for a long period, then it will become more difficult to sell our debt and interest rates will rise, and it will be counter-productive.”
After the hearing, Gregg said he thought Bernanke understood that “unless we get the fiscal house of this country in order, over the long run, we’re going to have very serious problems.”
“He’s clearly said that after we get by this period, when we’ve had to use massive amounts of federal liquidity, tax dollars” to try to turn around the economy, “we’ve got to figure out how to get that debt under control, and the deficits down. And the problem is the Obama proposals do just the opposite,” Gregg said.
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New Hampshire Senator Introduces Bill to Increase Food Safety Standards
FOOD
New Hampshire Union Leader
Aoife Connors
Boston University Washington News Service
March 3, 2009
WASHINGTON - Legislation calling for a significant increase in the safety procedures governing the U.S. food supply was introduced Tuesday by a bipartisan group of senators, including Judd Gregg (R-N.H.).
Greater authority would be given to the Food and Drug Administration (FDA) to improve the protection and safety of the U.S. food supply.
“Americans spend more than $1 trillion on food each year,” Gregg said. “When families go to the local restaurant or to the grocery story, or when children go to school, they shouldn’t have to worry about whether or not they will become ill from the food they eat.”
The bill aims to increase the frequency of inspections at all food facilities and give the FDA expanded access to records and testing results. This would allow the FDA to recall a dangerous food product if a company fails to recall a product at the agency’s request.
The recall of salmonella-tainted peanut products in January, one of the biggest food recalls in U.S. history, prompted the introduction of the legislation. More than 650 people were sickened and 9 died as a result of the national salmonella outbreak caused by contaminated peanut products.
The peanut recall, Gregg said, “highlights the need for Congress to act to modernize and strengthen our nation’s food safety laws.”
The bill would increase the FDA’s ability to detect and respond to food-borne illness outbreaks by “increasing inspections at all food facilities,” Gregg said, and would give the agency the power to suspend registered food facilities if there is a probability that the food poses a threat to consumers at both domestic and foreign facilities.
“I’m glad we are bringing this important issue to the forefront during the 111th Congress, and I look forward to working with my Senate colleagues on this bipartisan legislation to ensure the safety of our food and restore confidence in the quality of these products for families in New Hampshire and throughout our country,” he added.
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Plummeting Stock Market Leaves N.H. Residents With Poor Retirement Plans
401K’s
New Hampshire Union Leader
Aoife Connors
Boston University Washington News Service
March. 3, 2009
WASHINGTON – Plunging stock markets, down to the lowest level in 12 years, has caused a severe decline in the value of 401(k) retirement plans. “It feels more like a 101(k) at the moment,” Rep. Paul Hodes (D- N.H.) said Tuesday, lamenting that the value of his pension plan has been wiped out.
“I am in the same boat as many folks in New Hampshire,” he said.
Hodes said he truly appreciates the pain caused by the devaluation of 401(k)’s. “Many of my friends and people in New Hampshire are worried.”
Peter Orszag, director of the Congressional Budget Office, said Americans have lost about $2 trillion worth of retirement savings in 401(k)s and traditional defined-benefit pension plans.
A 401(k) plan allows workers to increase the value of their retirement savings by investing a portion of their income before tax in stocks, bonds and money-market investments while deferring income taxes on the money until withdrawal. In many cases, employers match part of that investment.
The 401(k), a so-called defined-contribution plan to which employers and employees contribute, is the least secure retirement plan because it is exposed to the volatility and value of the stock market, unlike Social Security or defined-benefit pension plans, which guarantee retirees a fixed monthly sum during retirement.
Because of the financial crisis, some companies say they can no longer take any responsibility for their employee’s futures. Many, including Macy’s and United Parcel Service, have suspended their matching contributions to 401(k)s. Others have dropped the traditional plans or scaled back the benefits.
People’s pensions have certainly not been completely wiped out, Rep Carol Shea-Porter (D-N.H.) said. “They are dramatically reduced and an extra burden, but if people keep their 401(k) pension money invested, when the economy pops up they will make money again.” It is the people retiring now who are most affected, she said.
Bruce Elmslie, professor of economics at the University of New Hampshire, agreed, saying that “if you want to build your savings to make money for you, you’ve got to invest in the stock market.”
He added, “it takes time to make money when investing in stocks.”
Elmslie advised that “if people have retirement investments in the stock market they should be left there; they have lost as much as they can lose by now.”
The stock market was overvalued in the same way that Americans overvalued debt and the housing market, Hodes said. “The subprime housing bubble of 30 years has burst and resulted in a huge stock market contraction.”
Hodes said the stock market is not yet reacting to the fundamentals of the recovery plan Congress approved last month, but the recovery is happening. “Stimulus will start kicking in this spring -- the Fed programs, TARP (The Troubled Asset Relief Program) and the recovery package are all efforts being made to restore the financial system.” He added that it will take some time, as President Obama has indicated.
Shea-Porter said, “I have heard and read a lot of the predictions and spoken to the economists in the Capitol. They say that 2009 will be very bad but we will see a turnaround in 2010 and 2011.”
“The fall in the stock market,” she added, “has a lot to do with people’s fear of the economy, the housing market and inventories. We must focus on the economy and getting banks creating credit.”
Elmslie said he had seen estimates that the earliest the economy will start to come out of the recession is June and the latest a year from now. “I think the bottom can’t be too far away now,” Elmslie said. “I would predict within six months.”
The stock market will not take as long to bottom out, he said. “We will not see a rapid rise that’s sustainable; it will rise and fall and stay at a certain level for a while, that will be the first sign that we are on the way back up.”
He said stock market advances usually precede improvements in unemployment rates by many months.
Shea-Porter said that as Congress makes changes in regulatory and financial systems, “we should look at what changes are necessary in 401(k)’s, Social Security and pensions.”
As the population ages; the burden on Social Security increases. Many have called for reform or even privatization of the system. But Hodes warned that “the risks of exposing one’s retirement to the whims of a market are not rational.”
The system is in need of reform because it is putting an increasing burden on the national debt and increasing the deficit, Elmslie said. “New Hampshire residents can expect to see decreasing benefits, one way or another.”
People will stay in the labor market longer and retire at age 66 instead of 62, in order to increase their Social Security benefit, Elmslie added. This will save the system money because there will be fewer people on the system’s rolls and for a shorter period of time.
Teresa Ghilarducci, director of the Schwartz Center for Economic Policy Analysis at the New School of Social Research in New York city and author of a book about the effect of pension losses on older Americans, said Social Security has been a dependable mainstay through boom and bust cycles because it has not been privatized.
“We need to make sure that our federal government is acting prudently and not spending the Social Security surplus for other needs,” she said.
Elmslie said that the main effect of the current stock market decline on the economy is that people are holding off on retirement, the values of homes have dried up and 401(k)s have shriveled.
Shea-Porter said that “a lot of people are so upset they’re not even looking at their portfolios because they have been hit so hard.”
“People have lost so much of their 401(k) savings” Hodes said, “so prudence and a reasonably conservative approach are required from the mainstream.”
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Plummeting Stock Market Leaves N.H. Residents With Poor Retirement Plans
Newest 401ks
New Hampshire Union Leader
Aoife Connors
Boston University Washington News Service
March. 3, 2009
WASHINGTON – New Hampshire families are still struggling with the economy, but Rep. Paul Hodes, D-N.H., says encouraging signs are already evident.
“We are seeing a positive response from equity and the bond markets,” Hodes said Wednesday. “If the stock market stays up and keeps rising, it will have a beneficial effect on 401(k)’s.”
Recent plunges in the stock market that took it down to its lowest level in 12 years caused a severe decline in the value of 401(k) retirement plans for many New Hampshire residents.
Americans have lost about $2 trillion worth of retirement savings in 401(k)’s and traditional defined-benefit pension plans, according to the Congressional Budget Office.
Hodes warned that people cannot rely on a market rebound to replenish the value of their retirement plans.
“In the long term,” he said, “we must return to a manner of fiscal prudence and cautious investing in our retirement plans.”
Craig Copeland, a senior research assistant at the nonpartisan Employee Benefit Research Institute, said, “this downturn is going to greatly change the future of retirement plans and the course of people’s retirement.”
He said “it will take years to regain the value of their pensions for those who heavily invested their 401(k) in equity.”
Speaking about the improvements in the stock market in recent days, Copeland said, “One or two days is really hard to tell. It’s going to take sustained levels of improvement; it’s not going to take care of itself in just one or two weeks.”
He cautioned that “in order for people to get the value of their stock back, they will have to stay investing.”
Many economists say it will be 2010 before the economy starts to pick up. Copeland’s view is that “when the stock market improves, it will be a strong indicator on the value of pensions.”
A 401(k) plan allows workers to increase the value of their retirement savings by investing a portion of their before-tax income in stocks, bonds and money-market investments while deferring income taxes until withdrawal. In many cases, employers match part of that investment.
The 401(k) is the least secure retirement plan because it is exposed to the volatility of the stock market, unlike Social Security or defined-benefit pension plans, which guarantee retirees a fixed monthly sum during retirement.
Because of the financial crisis, some companies say they can no longer take any responsibility for their employees’ futures. Many, including Macy’s and United Parcel Service, have suspended their matching contributions to 401(k)’s. Others have dropped the traditional plans or scaled back the benefits.
Hodes said he truly understands the pain caused by the devaluation of 401(k)’s. “Many of my friends and people in New Hampshire are worried.”
People’s pensions have certainly not been completely wiped out, Rep Carol Shea-Porter, D-N.H., said. “They are dramatically reduced and an extra burden, but if people keep their 401(k) pension money invested, when the economy pops up they will make money again.”
But she warned that retirees and people retiring now are the most affected.
Lisa Shapiro, chief economist for Gallagher, Callahan and Gartrell, a law firm in Concord, agreed: “The hardest hit folks are the retirees and the near retirees because they are not looking as long term.”
She noted that “more people are now continuing to work for longer and those retired are starting to go back to work part-time.”
Bruce Elmslie, professor of economics at the University of New Hampshire, also said the effect is that people will stay in the labor market longer and retire at age 66 instead of 62 in order to increase their Social Security benefit. This will save the system money because there will be fewer people on the system’s rolls and for a shorter period of time.
Shapiro said retirement investments in the market, like 401(k)’s, are designed to be long-term. These economic times are a wake-up call, she said, telling people that they need to have appropriate allocations in place as they approach retirement age.
“There is a mixed outlook in the short term,” she said, with economists expecting recovery by the end of the year. “But we don’t know whether we have hit rock bottom yet.”
Elmslie’s view is that “if you want to build your savings to make money for you, you’ve got to invest in the stock market.” He added that “if people have retirement investments in the stock market they should be left there; they have lost as much as they can lose by now.”
Hodes said the stock market is not yet reacting to the fundamentals of the recovery plan Congress approved last month, but the recovery is happening.
“Stimulus will start kicking in this spring,” Hodes said. “The Fed programs, TARP [the Troubled Asset Relief Program] and the recovery package are all efforts being made to restore the financial system.” But, he added, it will take time, as President Obama has said.
Shea-Porter said that as Congress makes changes in regulatory and financial systems, “we should look at what changes are necessary in 401(k)’s, Social Security and pensions.”
She said that “a lot of people are so upset they’re not even looking at their portfolios because they have been hit so hard.”
Hodes, for his part, said that “people have lost so much of their 401(k) savings, so prudence and a reasonably conservative approach are required from the mainstream.”
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Finance-Strapped Volunteer Programs May Hinder Sen. Dodd’s Service Initiative
VOLUNTEER
Norwalk Hour
Tait Militana
Boston University Washington News Service
03/03/09
WASHINGTON – Lawmakers need to do more to help ensure the survival of community service programs and nonprofit organizations in the wake of the economic crisis, Connecticut volunteer leaders said.
Though they applauded recent initiatives to increase volunteers nationwide, they said in a series of interviews, the initiatives will have little effect if there are few programs left for the volunteers to join.
Michael Johnston, CEO of United Way of Western Connecticut, said he worries that the economic situation and state budget cuts will leave little money for nonprofits and volunteer organizations, forcing them to cut back on services.
“We are not entirely sure the nonprofits are going to get through this very difficult time,” Johnston said. “We certainly worry that there will be challenges in the next few years because this is as bad as we’ve seen it.”
Last week, Sen. Chris Dodd, D-Conn., introduced four bills to create incentives for people of all ages to volunteer in their communities.
The bills, promoted with Rep. Rosa DeLauro, D-3, who will introduce companion legislation in the House, will expand funds for grants and awards to make education more affordable for volunteers.
Co-sponsored by Sen. Thad Cochran, R-Miss., the legislation includes the Semester of Service Act to offer academic credit to teens for service done during the school year, the Summer of Service Act to provide a $500 educational grant for students who volunteer during the summer between middle school and high school and the Encore Act to offer $1,000 educational scholarships for citizens 50 and older who volunteer 250 to 500 hours per year with local non-profits.
A final bill, known as the Action Act, would increase educational awards for AmeriCorps graduates from $4,725 a year to $6,585, with subsequent increases each year during the four years of college.
However, Ronald Cretaro, executive director of the Connecticut Association of Nonprofits, said rather than creating incentives to persuade more people to volunteer, it is better to make sure the programs that currently exist are financially able to continue operations.
Volunteer programs and nonprofits “are going to be faced with further cutbacks or packing it in,” he said. “I would like to see more initiatives out of the government to help make sure nonprofits are going to be around in a couple years.”
In the past two months two nonprofit groups in Fairfield County have closed because of financial problems associated with the poor economy. The Safe Neighborhoods AmeriCorps Partnership, a Bridgeport-based program that fought to reduce crime and violence, was discontinued in January because the program could not raise enough to match federal grants.
Last month, Dress for Success Mid-Fairfield County, a program that provides professional attire for disadvantaged women based out of Fairfield, suspended its services because of financial challenges and economic uncertainty, according to its Web site.
A spokesman from Dress for Success was not available for comment.
Thyda Korng, a former Bridgeport AmeriCorps program director, said though she is happy that there has been a call for public service from Washington, she is disappointed that her program could not be included in the volunteer expansions.
“It’s about the many people who had their lives changed by the program,” Korng said.
AmeriCorps is in the preliminary stages of creating a new program in Bridgeport, Korng said.
According to Dodd, the programs closing around the country present a problem for his plan, but there are other ways for people to help out. He said it is important now more than ever to volunteer because so many people are suffering.
“The need now is greater than it has ever been,” Dodd said. “There are still churches and community organizations and ways for people to plug into those.”
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Dahlkemper Aided by Democratic Committee in Win over English
DAHLKEMPER FEC
WSEE-35
Lindsay Perna
Boston University Washington News Service
March 3, 2009
WASHINGTON -- The Democratic Congressional Campaign Committee spent more on behalf of Kathy Dahlkemper in her successful race for Pennsylvania’s 3rd Congressional District seat than the candidate’s campaign raised, according to year-end reports filed with the Federal Election Commission.
By making massive expenditures in the late stages of the campaign, the Democratic committee helped Dahlkemper defeat Republican incumbent Philip English, who raised twice as much money as his Democratic opponent.
The committee independently spent $1,567,016 for a seat that Republicans held for 32 years, according to reports filed with the election commission. The committee expenditures are separate from the candidate’s campaign and include money spent in support of the candidate and money spent against the opponent. The Democratic committee spent $783,509 for Dahlkemper and $783,507 against English.
“Having support from the party was very helpful, just in letting me compete on a level playing field,” Dahlkemper said of the expenditure made outside of her campaign.
Dahlkemper raised only $1,313,239 to English's $2,659,971, according to the year-end campaign reports filed with the election commission.
“I was going up against a 14-year incumbent who had resources well beyond what I had to start with and certainly was able to raise,” the congresswoman said in her House office. “The power of the incumbency is huge.”
Democratic committee ads “were able to take on the opposition while allowing us to stay focused on the positive message of change and vision for the district,” said Tina Mengine, Dahlkemper’s chief of staff and former campaign manager.
“Because we have no input into these ads nor do we know about them in advance, each ad that ran was a surprise and usually very welcome,” she said.
The National Republican Congressional Committee spent $776,828 on the race, according to election commission filings, including $7,659 on behalf of English and $769,169 in opposition to Dahlkemper.
“The fact that Kathy Dahlkemper was one of 30 that we targeted—it was a district and a seat we had our eyes on,” said Paul Lindsay, spokesman for the Republican committee.
Both the Democratic and Republican committees doled out the majority of their funds in October of 2008.
Realizing that English had serious competition after the Dahlkemper campaign released a poll in July of 2008 showing her leading, the Republican committee started saturating the Erie media market. At the same time, the Democratic committee began spending money in the district as well.
“I got their attention,” Dahlkemper said, proving that she was worth the extra Democratic effort.
The party committees were not the only big independent players in Dahlkemper’s win. The American Federation of State, County and Municipal Employees (AFSCME) political action committee independently spent $497,875 against English on Oct. 15—the only other significant independent expenditure besides the Democratic committee’s, according to the year-end filings with the election commission.
This labor organization’s expenditures in Dahlkemper’s race were one of only five House campaigns it spent money on, according to the Center for Responsive Politics, a Washington-based group that tracks money in politics.
“We felt the need to counter that with the independent expenditure on our part,” David A. Bielski, the director of AFSCME in the district and secretary treasurer of the Northwest Pennsylvania Area Labor Federation, said of the Republican committee ads.
“It’s been a strategy of ours for a long time—we don’t want to let all of our tricks out of the bag early on,” he said. “It seemed to have worked.”
Daniel Shea, a political science professor at Allegheny College in Erie, said that there are different strategies on when to direct the cash: giving money early could help propel candidates, but storing it for the end could make a difference in the outcome.
Political action committees and interest groups used to spread their money around, Shea said, but are now spending it on a limited number of races.
“Their efforts now are more effective,” Shea said.
And the party committees increased their total independent expenditures significantly from years before.
The Democratic committee spent 21 percent more in the 2008 elections than it did in the 2006 elections, while the Republican committee spent 77 percent more, according to election commission data.
Dahlkemper, a small-business owner, beat four other more experienced candidates.
“I had connections with people from all over the district—through my life,” she said.
“She is pretty conservative on social issues; voters knew this wasn’t a typical Democrat—that match was a good one,” said Stephen Medvic, a government professor at Franklin and Marshall College in Lancaster, Pa.
Shea attributed Dahlkemper’s win to the fact that the National Republican Congressional Committee’s efforts were spread too thin and too late.
“One catch is that Republicans held their money. Money that the DCCC spent in very end was very necessary to stave off English,” Shea said. “I think Phil English felt his vulnerability early on and was begging for help.”
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Himes Gave Big Money to His Campaign, But Defied Odds by Winning
SELF
Norwalk Hour
Tait Militana
Boston University Washington News Service
March 3, 2009
WASHINGTON - Rep. Jim Himes, D-4, put just over a half million dollars of his own money into his campaign against incumbent Republican Christopher Shays last fall, which was 13 percent of his total spending.
According to political experts, self-financing is a common tactic for challengers to try to make up for the fundraising advantages incumbents have. But what is surprising, experts said, is that for Himes it worked.
Candidates who spent more than $350,000 of their personal wealth to challenge incumbents have won just two out of 32 times since the 2004 election, according to the Center for Responsive Politics, a Washington-based research group that tracks money in politics.
Jennifer Steen, a New Haven campaign finance expert and author of the book “Self-Financed Candidates in Congressional Elections,” said self-financing often creates a disadvantage for candidates because the money does not necessarily translate into votes.
“If you do ask for money in increments you are asking each individual for support,” said Steen. “Each check adds more than monetary value to the campaign. If you write yourself a check, it doesn’t contain any of that.”
Himes defeated Shays with 51 percent of the vote in what was the fourth most expensive congressional race of 2008, according to year-end candidate reports filed with the Federal Election Commission. By raising just over $3.9 million Himes out fundraised Shays by nearly $165,000, though $527,088 was his own money. Shays contributed $22,000 to his own campaign or less than 1 percent of the total money he raised.
Don Carlson, Himes’ chief of staff during the transition, said the decision to use the congressman’s money was made very late in the campaign to provide an extra boost to the field organization and advertising effort.
“It was a bridge loan to get us over the hump,” said Carlson. “It enabled the campaign to do the things it needed to do in final weeks.”
Himes’ communications director Elizabeth Kerr, said she believed Himes platform and message had a larger role in his success.
“He presented a strategy to help bring change,” said Kerr. “That was something that resonated with Connecticut residents. I think that has a lot more to do with the victory.”
According to data filed with the Federal Election Commission, Himes has been paid back $138,300 of the money he loaned his campaign.
Kerr said Himes expects to eventually receive back all of the money he lent his campaign, though she declined to specify how that would happen.
It is common for candidates to continue fundraising in non-election years to help pay off their campaign debt including debt to themselves. Months after her loss in the presidential primary, Hillary Clinton continues to ask supporters to donate to her campaign to help pay off her nearly $6 million debt.
Nonetheless, several experts agreed with Kerr that Himes’ message was much more important to his success than money. Vincent Moscardelli, an assistant professor of political science at the University of Connecticut, said though self-financing can help candidates get their names out there or keep the campaign afloat through hard times, it cannot overcome serious popularity flaws.
“You can’t overcome the larger political forces at work, said Moscardelli. “Chris Shays did not lose because he faced a self-financed candidate. He lost because he was the last Republican in New England.”
Scott McLean, professor of political science at Quinnipiac University, said this is one reason why so many self-financing candidates lose. Often they are forced to rely on their own money because they are a weaker candidate and cannot match their opponents in fundraising.
“That result is entailed in the very reason why candidates have to finance their own campaigns,” said McLean. “They are simply weaker candidates for the most part or first time candidates.”
Ultimately, McLean said one can point to the low success rates of self-financed candidates to disprove the theory that candidates can buy their seats in Congress.
“I don’t think rich candidates can just buy their seats,” said McLean. “They can get into the game and be a player, but it won’t make them win. Money matters, but in the end it’s the votes that count.”
Steen said the fundraising process changes once a candidate becomes an incumbent.
Because it’s much easier for incumbents to raise money, they almost never contribute as much of their own money to their campaign once they have been elected.
“Self-financing candidates almost always lose but when they win, they very rarely self-finance reelection campaigns,” said Steen. “That says it all right there.”
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U.S. Lumber Benefits From Court Ruling
LUMBER
Bangor Daily News
Drew FitzGerald
Boston University Washington News Service
Feb. 27, 2009
WASHINGTON – The U.S. lumber industry scored an economic victory Thursday after an international court ruled Canadian producers must pay millions of dollars in additional taxes for violating a bilateral trade agreement.
The London Court of International Arbitration said eastern Canadian producers violated the U.S.-Canada Softwood Lumber Agreement in 2007 by exceeding their export quotas. The agreement was designed to help U.S. producers compete on equal footing with Canadian producers, who can be subsidized when the provincial governments charge smaller fees to harvest timber from government land.
“We [the United States] felt strongly that they knowingly refused to implement it from day one, and we challenged it,” said Zoltan van Heyningen, executive director of the U.S. Coalition for Fair Lumber Imports.
The ruling requires Canada within 30 days to impose a 10 percent tariff on softwood exports from Québec, Ontario, Manitoba and Saskatchewan until it collects $68 million in Canadian money.
The added charges, equal to about $53.6 million in U.S. money, make up a small slice of the more than $7 billion U.S. buyers spend annually on Canadian softwood lumber.
It is hard to quantify the ruling’s impact on U.S. producers, but they will be helped if the agreement is enforced, van Heyningen said.
Canadian Department of Foreign Affairs and International Trade spokeswoman Renee David said Ottawa was disappointed that the court ruled against it and that there was no option for appeal. The government is reviewing the decision and deciding how it will enforce it, she added.
The cross-border dispute has by no means ended, with U.S. lumber advocates charging Canadian producers of dodging the agreement with new subsidies that include lower government fees and poorer quality ratings for timber.
In a statement released Friday, Sen. Olympia Snowe, R-Maine, said the success of the “hard-won deal” depends on whether provincial Canadian governments enforce the agreement and clamp down on current and future subsidies. Low Canadian land use fees are testing the agreement’s effectiveness, she said.
John Allan, Canadian Lumber Trade Alliance secretary, disputed Snowe’s allegations, calling accusations of Canadian subsidies untrue and the products of “economic competition for a dwindling market.”
“Given the prices that we’ve seen for the last couple of years, this will have a huge negative impact on the eastern Canadian lumber industry,” he said.
Van Heyningen agreed that the weak economy has especially hurt the lumber industry, after a collapse in housing prices halted new construction and reduced demand for all building materials.
“The housing market is horrible, which is why it’s more important that it [the agreement] is adhered to,” he said. “Will it solve everything? No. But it will certainly help.”
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Local Projects May Get Funding From Omnibus Legislation
Omnibus
The New Bedford Standard-Times
Cristian Hernandez
Boston University Washington News Service
02/27/09
WASHINGTON—Local projects may get up to $21.4 million in earmarked federal funding requested by Rep. Barney Frank.
The money is included in the 2009 Omnibus Appropriations Bill, which passed the House Wednesday 245-178.
“I am very proud of the earmarks I have sought for the 4th District,” Frank said in a statement. “They will help create jobs, promote economic development, and provide very important public benefits.”
Proposed funding for projects in the area include:
- $475,000 for the construction of YWCA in New Bedford.
- $1.6 million for the development of submarine sensor software.
- $380,000 for handicap access improvements for the Auburndale commuter rail station.
- $475,000 for the construction of a community center in New Bedford.
- $1 million for the Massachusetts Marine Fisheries Institute.
“With other states around the country in line to receive project funding under the omnibus bill, I believe it’s important to make sure the people of the 4th District get their fair share,” Frank said.
The list of 22 earmarks also includes $423,000 for cranberry grower organizations, $950,000 for the building of a bus terminal and parking facility in Fall River, $95,000 for upgrades to the New Bedford airport, and a $285,000 for the South Coast Health System electronic records technology.
“The monies set aside for the Fall River but terminal will inject much needed jobs and funds into out local economy and help people get back to work,” said Fall River Mayor Robert Correira in a press release by Frank.
The legislation has been criticized by House Republicans for having too much pork. According to the government watch dog organization Taxpayers for Common Sense, the bill has 8,570 disclosed earmarks worth $7.7 billion.
In a press release, Frank’s office said that about 40 percent of the earmarks in the bill were requested by Republican House members.
Included in the bill are nine appropriations bills that will fund the federal government through fiscal year 2009, which ends Sept. 30. The Senate is expected to vote on its version of the bill sometime next week.
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Spending Bill Steers $15 Million Toward Maine Projects
OMNIBUS
Bangor Daily News
Drew FitzGerald
Boston University Washington News Service
Feb. 26, 2009
WASHINGTON – Maine stands to get more than $15 million for programs ranging from emergency response to blueberry research under a long-delayed $410 billion bill to fund government operations that passed the House Wednesday night.
The proposal combines nine separate spending bills that never came to a final vote during the last congressional session. The last Congress passed a continuing resolution that provides for funding until March 6. This bill would fund the government for the rest of the fiscal year, which ends Sept. 30.
The House passed the bill 245-178 with 16 Republicans voting for it. Reps. Mike Michaud and Chellie Pingree, D-Maine, both voted for it.
“It’s probably not a perfect piece of legislation, but it was needed to get us going so we can start with the 2010 budget cycle,” Michaud said.
Though congressional leaders said they passed a stimulus bill with no earmarks, the late 2009 spending bill was full of funding for specific local projects. Michaud set aside several provisions for Maine, including funds for national parks, agricultural research and town utilities.
Among the provisions:
- The proposal includes $190,000 to help restore rail service between Brewer and Hancock, which would serve vacation destinations in Eastern Maine.
- The University of Maine would receive $1.4 million for research on lobsters, blueberry cultivation science and pest tracking for potato growers. The bill also provides $2.2 million for the New England Plant, Soil and Water Research Laboratory.
- The Maine Tidal Power Initiative, a relatively new program, would receive $951,500 to study possible locations for renewable tidal power plants in on the coast. The project is a collaboration between the Maine Maritime Academy and the University of Maine.
- Maine health care facilities stand to gain, with $114,000 allocated for Bucksport Regional Health Center and $209,000 for Charles A. Dean Memorial Hospital in Greenville.
- The bill provides $200,000 for the Maine Warden Service to upgrade its search-and-rescue equipment. Michaud spokesman Ed Gilman said the service could use the money to buy night-vision goggles.
- At least $200,000 would go to the Maine Public Safety and Health Initiative, which assigns law enforcement to investigate drug trafficking and overdoses in the state.
Republican leaders blamed Democrats for passing what they called a bloated bill full of earmarks and called for a “spending freeze” in Washington.
“Congressional Democrats haven’t lost their appetite for spending in Washington,” National Republican Campaign Committee spokesman Ken Spain said in a statement.
The funding was proposed last year, so freshman Pingree did not make her mark on the legislation. The bill now goes to the Senate.
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