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K Street rushing to get their slice of jobs bill before spending freeze
By Jim Snyder and Silla Brush – 01/27/10 09:55 AM ET
The Hill

An $80 billion “jobs package” under consideration in the Senate is stimulating a lobbying rush for federal dollars before the administration tries to cap spending.

Transit and high-speed rail advocates, teachers, community bankers, credit unions and business trade groups are seeking spending and tax provisions in the package, which Democrats hope will revive the economy and improve their electoral prospects after a string of defeats at the polls.

So far, Senate Democrats have released only an outline of what they are contemplating. The draft shows a sharp turn, though, from the type of stimulus package Congress passed a year ago — and that may limit the opportunities for lobbyists.
At $80 billion instead of $787 billion, the new package is much smaller. It also puts greater emphasis on tax cuts to encourage businesses to hire more workers to bring the unemployment rate below 10 percent.

One of the largest components will likely be a job hiring tax credit, which a draft summary of the bill pegged at $20 billion. The tax credit discussion has spurred a lengthy debate about how to design it so that employers do not abuse the system.

Several industries and advocacy groups also stand to gain from the new jobs bill, and there is no shortage of ideas about how the money should be spent. The push comes on the heels of President Barack Obama’s stated goal of a three-year freeze in domestic spending to reduce the federal debt. Such an effort is likely to make competition for federal dollars even fiercer and is driving some of the push to have projects added to the jobs package now under consideration.

Transit and high-speed rail advocates are cheering the prospect of another $10 billion in federal funds for public transportation projects. That builds on the $16 billion Congress appropriated in the American Recovery and Reinvestment Act, the earlier $787 billion stimulus package.

“If high-speed rail is going to be meaningful at all, we have to keep putting resources into it,” said David Goldberg, a spokesman for Transportation for America, a group that lobbies for transit and high-speed rail projects.

The outline includes $2.5 billion for intercity and high-speed rail, and another $7.5 billion for transit programs. It also includes $14 billion for highways.

Transportation for America (T4) is lobbying senators to let local transit agencies use the federal dollars as they see fit. Now the money would go to capital expenditures, like purchasing new buses or rail cars. However, local governments have been forced to lay off thousands of workers as their revenues dropped sharply in the recession, Goldberg said.

The transportation group says some of the money should go to operating budgets, traditionally paid for by local governments. The stimulus package last year allowed governments to spend as much as 10 percent of the money they received on operating expenses — hiring back bus drivers, for instance. The House jobs package passed in December allows for the same flexibility, but it isn’t clear that the Senate will follow suit.

The transportation group also wants Congress to appropriate more Transportation Investment Generating Economic Recovery (Tiger) grants, which are given to innovative transportation projects. The first stimulus package included $1.5 billion for the budget line, which prompted $59 billion in requests for funding. T4 is hoping the jobs package will include another $3 billion.

Banks are also lobbying for favored provisions. The Independent Community Bankers of America (ICBA) has been pushing for new programs and additional money to help boost lending to small businesses. The new jobs package could extend and expand programs run by the Small Business Administration that provide incentive for banks to lend. For months, the White House and congressional lawmakers have been debating ways to boost bank lending to big and small businesses.

Steve Verdier, executive vice president at ICBA, said bankers are concerned about whether the increased money for lending comes with the type of restrictions and documentation requirements that banks faced when they participated in the $700 billion bailout program.

“If the idea is to beat up on the banks, that’s one thing,” Verdier said. “If the idea is to help small business, that’s another thing.”

Meanwhile, the Credit Union National Association (CUNA) and National Association of Federal Credit Unions (NAFCU) continue to lobby for a long-fought increase in the member business lending cap. The credit unions argue the additional lending would help support job-creation particularly for small businesses, and they are pushing for it to be included in the jobs bill.

The bank lobby and credit unions have clashed repeatedly over the years on the lending cap provision. Credit union groups were buoyed this year when Sens. Mark Udall (D-Colo.), Charles Schumer (D-N.Y.), Joe Lieberman (I-Conn.), Olympia Snowe (R-Maine), Barbara Boxer (D-Calif.), Susan Collins (R-Maine) and Kirsten Gillibrand (D-N.Y.) introduced legislation supporting the increase.

The industry clash would start a political fight that the Senate may not want to wage on the jobs bill

High-tech companies are focusing their efforts to support inclusion of a “green bank” proposal pushed by Sen. Jeff Bingaman (D-N.M.) to help develop emerging clean-energy technologies.

An energy bill crafted by Bingaman’s Energy and Natural Resources Committee in 2009 included money for the Clean Energy Development Administration (CEDA), which would help finance clean-tech projects.

Google, Tesla Motors and some Silicon Valley investment funds wrote the administration last week urging that it push for the clean-energy bank in a jobs bill. They favor Bingaman’s approach rather than a competing version in the jobs legislation that the House passed in December.

The Senate version favors “innovative” technologies versus those that are “commercially deployable.”

“We believe the availability of CEDA financing will help America’s emerging clean energy technology companies cross the so-called ‘valley of death’ between the invention of a technology and its commercial deployment,” 13 executives wrote the White House last week.

Geithner to face tough questions from left, right during hearing
By Silla Brush – 01/27/10 06:00 AM ET
The Hill
Treasury Secretary Timothy Geithner is expected Wednesday to face perhaps his toughest round of congressional questioning in his one-year tenure from Republicans and Democrats alike.

The specific topic before the House Committee on Oversight and Government Reform is the taxpayer bailout of American International Group (AIG) and the role of the Federal Reserve. Geithner led the New York Fed before becoming Treasury secretary.

But underlying all the bailout’s complexity is a simple and powerful brew. Republicans have targeted Geithner as Exhibit A in their attack on Democrats’ economic policies. And some liberal Democrats have started to go public with their deep and growing unease with the White House’s and Geithner’s efforts.
There are no signs that Geithner is on the way out.

The White House has repeatedly stated President Barack Obama’s confidence in the Treasury secretary, who has maintained that he recused himself during the AIG negotiations.

“Senator Reid feels that he is the best man for the job,” said Jim Manley, referring to Geithner.

Still, liberal pundits, including Arianna Huffington and Daily Kos founder Markos Moulitsas, have publicly campaigned against Geithner.

HuffingtonPost ran a headline in December that summed up concerns about his role in the AIG bailout: “HOW DOES GEITHNER SURVIVE THIS?”

Liberals critics have joined Rep. Darrell Issa (R-Calif.), the ranking member on Oversight, and at least seven other House and Senate Republicans seeking Geithner’s resignation.

Rep. Peter DeFazio (D-Ore.) in November publicly called on Geithner to step aside.

These liberals argue a new, more populist Treasury secretary would represent a dramatic and necessary change to show the country that the administration has shifted its economic policies. Some want that change to happen before Election Day.

Anxieties are high because of the midterm elections, particularly in the wake of Democrats losing the Massachusetts special election for the Senate seat held by the late Sen. Edward Kennedy. Liberals are concerned the White House has simply been too cozy with Wall Street and distant from Main Street.

The political dynamic is not unlike what the George W. Bush administration faced when it mulled firing Secretary of Defense Donald Rumsfeld. He held on to his job until a day after Republicans lost the House, leaving some GOPers wondering if they’d have been better off if Rumsfeld had been forced out earlier.

Geithner is not nearly the controversial figure Rumsfeld was, and has been in his post for less than a year.

Supporters argue he’s a success. Wall Street has rebounded in the wake of the government bailout and “stress tests” imposed by Geithner’s department.

The challenge for Geithner on Wednesday, some say, is to make his case as simply and powerfully as possible. And as frequently as possible.

“If he succeeds in doing that for 15 or 20, 25 percent of the hearing, that’s a success,” said former Rep. Gerry Sikorski.

While big banks have roared back to life a little more than a year after receiving massive government bailouts, the broader economy continues to suffer amid 10 percent unemployment and ongoing weakness in the housing market.

Ten members of the Congressional Black Caucus in December withheld their votes on a committee vote on a financial overhaul bill in part as a way to send a message to the White House that it needs to do more to help African-Americans make it through the tough economic times.

Those messages and sentiments will provide an unmistakable backdrop at the hearing on Wednesday.

Geithner will testify alone on the first panel. Then former Treasury Secretary Henry Paulson will testify. And a third panel will include current and former

Federal Reserve officials and Neil Barofsky, the special inspector general over the $700 billion bailout.

The Oversight panel’s investigation has centered on the $62 billion in payments to AIG’s financial partners in troubled derivatives contracts. The contracts were paid in full and the Fed did not negotiate a lower price with the major American and foreign banks that were AIG’s counterparties.

The House Oversight panel for the last year has been digging into the numerous government efforts to bail out the financial industry.

Panel Chairman Edolphus Towns (D-N.Y.) issued a wide-ranging subpoena for e-mails, phone logs and meeting notes from key Fed and Treasury officials, including Geithner.

That request resulted in a trove of 250,000 documents, some of which have been leaked over the past several days.

Issa’s office on Monday released a 22-page summary of the investigation that slams the Fed for a cover-up.

“The 250,000 documents we received from the New York Fed paint a startling picture,” said Issa in a statement. “It is clear that the financial elites at the Federal Reserve felt it was more important to take care of wealthy Wall Street firms than to protect the taxpayer investments.”
Some committee staff said there was nothing in the documents that showed Geithner knew about or was involved in discussion about the level of disclosure of information related to the counterparties.

But lawmakers, including Towns, are expected to question Paulson and Geithner about why the government did not do more to pressure the counterparties to accept less than the full value of the derivatives.

Jennifer Swift contributed to this article.

Geithner warns of Bernanke fallout
By: Mike Allen
January 24, 2010 11:49 PM EST
POLITICO

Treasury Secretary Timothy Geithner warned that the financial markets would view a Senate rejection of Ben Bernanke’s renomination as “very troubling” but said he’s sure the embattled Federal Reserve chairman will prevail.

“We’re very confident that the chairman will be reconfirmed by the Senate, and we think it’s very important he be reconfirmed by the Senate,” Geithner said Friday in an interview at the Treasury for POLITICO’s new video series, “Inside Obama’s Washington,” debuting Monday.

“He’s done a remarkable job of helping steer this economy out of the great recession. And I think he’ll play a very important role in helping in the success of our efforts to try to make sure we are bringing this economy back to durable growth.”

Asked about possible market reaction to a defeat, Geithner said: “I think the markets would view that as a very troubling thing to the economy as a whole. But, as I said, I don’t think they should be uncertain. I think they should be confident because we are very confident he will be reconfirmed.”

Bernanke is having such a rough time, Geithner suggested, because the country is “in a moment where people are incredibly angry and frustrated by the damage this crisis caused.”

“You see that across the country,” Geithner said. “That’s perfectly understandable, and everybody involved in this effort is bearing a lot of the brunt of that frustration and anger.”

The Bernanke nomination is the latest headache for the nation’s 75th Treasury secretary, who has kept his dry sense of humor while juggling some of the Obama administration’s highest-stakes crises — winding down financial bailouts and trying to get banks lending again, instilling confidence despite data that are mixed at best and serving as a public face (and sometimes punching bag) for an economic team often accused of being too close to Wall Street.

He sees his biggest challenge as getting the right incentives in place to help spur private-sector job creation through tax, export and research-and-development policies. And he continues to shepherd the financial reregulation that was a centerpiece of President Barack Obama’s first-year agenda. The House has passed a version, and the Senate will continue working on it this winter.

Geithner is most grateful that his strategy to bring private capital in to stabilize the markets has worked effectively. Banks have raised about $200 billion in nongovernment equity and debt, effectively taking the government out. Last year, most everyone assumed the U.S. would have to pony up a lot more taxpayer money. In fact, the government has gotten most of the bank money back and is on track to make a profit on that part of the bailout. Treasury’s view is that without that stability in the system, no progress on the broader economy would have been possible.

Geithner, 48, came up as a staff guy, working in three administrations for five Treasury secretaries. And he was president and CEO of the Federal Reserve Bank of New York during the financial meltdown of 2008. So this is the second time that he’s been one of a handful of officials charged with staving off a depression.

Despite the sudden pressure from Bernanke’s renomination, Geithner chatted calmly in the Treasury’s Diplomatic Reception Room. He joked that he’d like to do a segment explaining the economy on ESPN’s “SportsCenter” (he can’t tell the anchors apart) and was looking forward to a birthday dinner with his wife, Carole, at Rasika, a hip Indian restaurant in Penn Quarter.

The question hanging over the pleasantries: Is there any way that Bernanke could lose?

“I don’t believe so,” Geithner replied. “We are very confident that this will happen, and he will have the support he needs to continue in this important role.”

On Saturday, Obama made what a White House aide called “a few check-in calls to senators and members of leadership to make sure Bernanke was on track, and he was assured he was.”

The White House was rushing to shore up Bernanke as the stock market was dropping, after Obama’s announcement that he wanted further restrictions on the activities of the biggest banks. Geithner rejected the banks’ contention that the proposed rules could mean thinner markets and less money available for lending.

“That’s the argument you’re always going to hear when you try to change things,” he said. “But I do not believe that there is a credible risk of that in the reforms we are pursuing.”

One of the most surprising — and persistent — critics of the administration’s economic team has been Arianna Huffington, founder of The Huffington Post, who has taken a boisterously populist tack that includes a Move Your Money campaign to get depositors to move their money from big banks to neighborhood banks.

Geithner didn’t endorse her idea. But he did say that customers of financial institutions “should be very demanding in the kind of service they expect, the kind of products they get, the disclosure banks offer to basic fairness and dealings.”

“I’m very supportive of customers of banks, other investors of banks, creditors of banks holding them to very high standards — that’s something that’s very appropriate,” Geithner said. “I’m not concerned about her campaign, and I agree with the basic principle … that we’ve been through a period where I think people are right to expect more of their financial institutions.”

Huffington had an off-the-record dinner with Geithner shortly after Thanksgiving and gave him some advice he clearly has not taken. Dodging a question about their conversation, the secretary said that his approach of “trying to fix [the system] quickly and cleanly” should have appeal for both ends of the political spectrum.

“If you’re on the right, you should be relatively pleased with our strategy, because we were able to pull the government out of the financial system much more quickly than people thought,” he said. “We have a much, much smaller footprint today than when I came into office. And if you’re from the left, you should be able to look at the strategy and say, by solving this today at much lower cost, we have more resources available to do things that many people think are important for the government to do better.”

Other key points by Geithner:

— On whether he remains confident a clear recovery will be under way by this spring: “Very confident. The economy is healing. It’s growing. It’s more broad-based. You see the classic signs of greater confidence among consumers and businesses now. They see stronger orders. So I think we’ve been successful in breaking the momentum of the worst recession in generations. But this crisis caused a lot of wreckage.
There’s still a lot of damage out there. Unemployment is still very, very high, and we have a lot of work to do to make sure that we’re restoring confidence, getting people back to work, making businesses comfortable to make the kind of decisions that are necessary to grow the economy. … I think most business economists, most businesses, would say now that you’ll probably start to see positive job growth sometime in the spring.”

— On when people are going to start to feel better about the economy: “The turn really came in the second quarter of last year — really in the spring and early summer. That’s when the economy started to bottom. That’s when the financial markets started to show the classic signs of confidence and hope. And there’s been a steady, gradual improvement since then. … I just want to emphasize that this crisis caused an enormous amount of damage not just to people’s lives and to businesses but to their confidence in how this country is being run. And we need to restore that, rebuild that. That’s going to take a lot of effort over time.”

— On his philosophy for the job: “The most important thing — and the really only source of credibility and confidence — is to be honest with people about the challenges we face, to try to be open about how we think it’s best to solve them and then to act.”

— On his own job security: “I’m going to do this as long as the president wants me to help contribute to fixing this mess, and I’m very proud of what he’s been able to accomplish in this first year under enormously difficult conditions.”

Dems’ Bush-bashing goes bust
By: Jonathan Martin
January 25, 2010 05:07 AM EST
POLITICO

After three consecutive losses in statewide races, some top Democrats are questioning a tactic aimed at boosting the party’s candidates in each of those contests: Bush-bashing.

Running as much against the Bush White House as he was running against Sen. John McCain, Barack Obama easily carried Virginia, New Jersey and Massachusetts in 2008.

Yet when Democratic nominees for governor in Virginia and New Jersey and for Senate in Massachusetts sought to tie their GOP opponents to the still-unpopular former president, the strategy didn’t resonate. Voters were more focused on the current administration or local political issues — and the onetime Democratic magic formula seemed yesterday’s news.

“Voters are pretty tired of the blame game,” said longtime Democratic strategist Steve Hildebrand, a top aide on Obama’s presidential campaign. “What a stupid strategy that was.”

Howard Wolfson, a senior official on Hillary Clinton’s campaign and veteran Democratic communications guru, noted that his party was able to run against Republican Herbert Hoover’s Depression-era presidency for 30 years.

“That doesn’t seem to be the case here,” he said.

Another well-respected Democratic consultant put it simply: “Need a new game plan!”

Having so effectively lashed GOP candidates to President George W. Bush and Vice President Dick Cheney in their successful 2006 and 2008 cycles, and seeing the Republicans’ still-dismal approval ratings, some in the party aren’t quite ready to turn over a new political leaf.

But following their recent defeats, there seems to be consensus now in the Democratic consulting community that candidates can’t simply insert grainy footage of the former president into a commercial or say their rivals will “support Bush policies” and hope voters will respond.

This fall, said Democratic strategists, their clients must be more strategic about if and when to play the Bush card — and do so only if their opponent has an actual personal or political connection to the former president that can be explained to the electorate.

“It’s got to be highly relevant,” said pollster Joel Benenson. “It has to be done in a way that’s not gratuitous and on issues that affect people’s lives. You can’t just brandish [Bush’s image] and wave it like a pennant.”

“Voters are smart about this,” added pollster Geoff Garin. “There’s got to be some credible relationship, either in terms of how they voted or [in terms of] specific policies that they’re supporting now.”

It’s not, Garin continued, one size fits all, but for some GOP candidates, the line of attack still carries some promise. He cited Rep. Roy Blunt, a House majority whip in the Bush years who is now running for a Missouri Senate seat, and former Rep. Rob Portman, who served as Bush’s budget director and is now running for the Senate in Ohio.

“Those people were really present at the creation, and making the case against them as helping to create the Bush economy is still very powerful,” Garin said.

During the Bush years, however, Sen.-elect Scott Brown was practicing law in Wrentham, Mass., and serving in the state Senate.

So when Democrats, realizing in the race’s final week that they were in danger of losing the seat previously held by Ted Kennedy, rushed up ads depicting Brown as being a Bush clone, it had little effect.

They’re “linking me to people I don’t even know!” Brown exclaimed in the days leading up to his election.

Despite what Martha Coakley’s campaign, the Democratic Senatorial Campaign Committee, the League of Conservation Voters and American Federation of State County and Municipal Employees said about Brown and Bush — and each of them aired TV or radio ads connecting the two — Massachusetts’s liberal-leaning voters didn’t believe it or simply cared more about other issues.

“Brown was the perfect vessel for independents,” said Democratic consultant Jim Jordan, who was an outside adviser on the special election. “His obscurity was a plus.”

In New Jersey, Republican Chris Christie did have a clear connection to the former president, having been tapped by Bush to be a U.S. attorney and serving as a top campaign fundraising bundler during Bush’s 2000 run.

But with the recession taking its toll and property taxes soaring, Garden State voters were more focused on the tenure of incumbent Gov. Jon Corzine than on just how cozy Christie — who earned a coveted nickname — was with the unpopular ex-president.

Juxtaposing Christie’s face with a narrator warning of “the same Bush policies that got us into this mess,” as Corzine did in a September ad, wasn’t as relevant as Christie’s warnings of higher taxes in a second Corzine term.

In Virginia, a more moderate political state than New Jersey, Democrats used Bush less in trying to tar Republican Bob McDonnell, a former state legislator and attorney general who lacked a direct connection to the ex-president. Still, there was an attempt to use him after McDonnell lauded Bush’s tax-cutting approach to the economy.

“Tax breaks for the superwealthy. Job losses and foreclosures for the rest of us. Virginia calls the McDonnell-Bush approach a failure,” went the August ad for Democrat Creigh Deeds.

Not long afterward, the Democrats running Deeds’s campaign determined such a strategy was a failure. Spurred by the unearthing of McDonnell’s controversial graduate school thesis, Deeds’s high command decided from its polling that the only effective line of attack against McDonnell that would resonate with both independents and base voters was to portray him as a cultural extremist. (That didn’t ultimately work, either.)

Democrats said that invoking Bush’s name doesn’t have the same impact now, in part for a fairly obvious reason: He’s not in charge anymore.

And the anger toward the political establishment that helped lift Obama and so many Democratic candidates in 2008 has now been transferred to the party in power.

“This isn’t 2008, and to voters, you no longer represent a beacon of hope, change and a brighter day,” wrote Democratic consultants Kristian Denny Todd and Steve Jarding in Friday’s POLITICO, in a piece addressed to their party. “Instead, 12 months into your ‘mandate to change,’ Americans see you as a card-carrying member of the arrogant political establishment that they increasingly believe is out of touch at best and self-serving at worst.”

Further, given the flurry of major steps Obama has taken in the year since he took office — from the stimulus to more bailouts to health care — Bush looks even more distant in the public’s rearview mirror.

“Obama has made so many moves and changes that it is hard to argue that all the Bush screw-ups are still the leading reason things aren’t better,” explained Democratic pollster Paul Maslin.

And in the era of real-time coverage of events, media fragmentation and the general cacophony of noise that both commands and distracts, attempting to prop up Bush’s status as a Democratic archvillain is rendered all the more difficult.

“We have enough problems getting voters to pay attention to the here and now, much less a history lesson,” said veteran Democratic strategist Bill Carrick. “People are much more in the moment.”

Benenson, while noting that the November elections are the political equivalent of “eons” away, said the environment in which the legacy of “Hoovervilles” would loom in the public’s consciousness for decades is long gone.

“You’ve got a 24/7 news cycle, conflict- and entertainment-driven [content] substituting for political coverage on cable TV and a very different country geographically and technologically,” said the pollster. “The president dominated the media more when Roosevelt took office than when Obama did. Now, any congressman can get on TV on the subject of the day.”