By Martin C. Bricketto
CENTRAL JERSEY Both major party candidates for a 7th District U.S. House seat say they would have supported the final version of a $700 billion rescue package for the country's troubled financial sector, but with reservations.
State Sen. Leonard Lance, R-Clinton Township, and Assemblywoman Linda Stender, D-Fanwood, are in the final month of a tight race to replace U.S. Rep. Mike Ferguson, R-New Providence, who announced last year he would not seek re-election.
Each stresses different paths for improving the broader economy.
Stender calls for an end to tax breaks for the oil industry as well as ending the Iraq War and diverting that money elsewhere. Lance calls attention to the country's $10 trillion debt. Both say health care reform needs to play a part in any economic rebound, but disagree on what that reform should be.
Meanwhile, Bridgewater Councilman Michael Hsing, running as an independent, said he wouldn't have voted for either version of the bailout package, arguing among other reasons that both ask taxpayers to subsidize investors and firms that made poor decisions and don't help troubled homeowners.
Faced with the collapse of several investment banks and a widening credit crunch, Congress on Friday, Oct. 3 approved the rescue package that would allow the government to buy troubled, mortgage-backed securities. The final version contained an increase in the Federal Deposit Insurance Corp.'s insurance limit, tax breaks and improved coverage for mental-health benefits.
The same day Bush signed the legislation, the government reported that employers had cut nearly 160,000 jobs in September, the most in more than five years.
Both major-party candidates say the country is in a recession.
Stender said the economy is in a mess because of "failed economic policies over the last eight years" of the Bush administration.
"We've seen no regulation or oversight over our financial markets, and so as a result of a totally unfettered free market, this was the result," Stender said.
Pointing to the subprime mortgage meltdown, Lance said there was pressure by both parties in Congress, but particularly democrats, to have mortgage finance lenders Freddie Mac and Fannie Mae insure subprime mortgages, which is lending to riskier borrowers. Lance called the move "inappropriate."
Lance further criticized credit-rating agencies that highly rated such mortgages, bundled for investment, despite the risk.
Stender said she would have supported the version of the rescue package that the House initially voted down on Sept. 29, though she said it needed stronger protections for homeowners such as bankruptcy courts being able to restructure mortgages.
Irene Lin, a spokeswoman for Stender, also said Stender would have supported the final version passed by Congress last week and signed by Bush to try and calm the markets and restore trust in the system.
"She was not happy about all the Christmas-tree tax breaks that will increase the deficit," Lin added.
Stender also spoke out against changing so-called "mark-to-market" accounting rules, which allow companies to value some long-term assets at the current market price.
Lance said he would have supported the earlier version of the rescue package and "reluctantly" voted for the final bill, also protesting what he described as the "pork" attached to it.
Lance drew particular attention to the partisan squabbling when the earlier version without that "pork" went down in the House.
"I thought the House should have put the country before party," Lance said.
Stender also said the government should look at restarting a program enacted in the 1930s under the Roosevelt administration that helped homeowners keep their homes by establishing an agency that purchased failed mortgages from the banks and renegotiated those mortgages with the borrowers.
Lance mentioned a Depression-era law, the Glass-Steagall Act, that separated commercial and investment banking but was repealed in the 1990s. Lance said he doesn't necessarily want to return to Glass-Steagall, but said there will have to be greater control for the investment portion of banking.
Lance said his opponent usually blames one party and one president, but his view is longer range.
"Glass-Steagall was repealed by a democratic president and a republican congress, and I think the democrats on the Congress have exerted enormous pressure on Fannie Mae and Freddie Mac," Lance said.
Hsing called both versions of the bailout package unfair to taxpayers, ambiguous as to how the program will operate and short-sighted in light of the market's history of ups and downs.
"To truly address the problems with the country's economy they should have taken a step back and considered the many other economic rescue plans that were proposed but ultimately fell on deaf ears," Hsing said.
Stender called for an end to tax breaks and subsidies for the oil industry to instead invest in renewable energy and energy independence. She and her campaign added that instead of spending $10 billion monthly in Iraq, the country could dedicate the money for those purposes.
"New "green-collar jobs' would help revitalize our economy and help struggling small businesses save on skyrocketing energy bills for the future," Lin said.
A lack of affordable health care also is undermining the economy, Stender said, noting that 50 percent of the country's bankruptcies are tied to health-care costs, a statistic also cited in a 2005 report by Harvard University researchers. Stender has called for a hybrid solution and mentioned a Medicare-style insurance plan, a regulated private plan or the coverage people currently have.
"This is about rebuilding access to the American Dream, that's what I think is at stake in this election," Stender said.
Lance said health care reform would help small businesses, adding that many of the country's 47 million Americans without health insurance work for small businesses. Lance called for the pooling of companies, portability of policies and the ability to purchase policies across state lines.
Stender supports allowing employers to buy into the federal health insurance program as well as providing tax credits and incentives to make it more affordable for them to purchase health insurance.
Lance has made resolving the country's $10 trillion debt a prime issue for his campaign, and said it would help the economy by strengthening the dollar, improving interest rates and freeing up money for other purposes.
Asked if the country could afford the Bush tax cuts for higher-income individuals as it spends billions bolstering the economy, Lance said many upper-income filers are small-business owners.
Unlike republican presidential candidate John McCain, Lance said he is not in favor of decreasing corporate taxes at the moment, but added it would be inappropriate to increase individual tax rates because it would hit small businesses.
"To raise taxes in a recession is counterproductive," Lance said.