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July 29, 2014

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THE ECONOMY:

As downturn worsens, price of help goes up

New government spending is on the table this week

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ALEX RICHARDS AND ALEX K. FONG

Even the most committed skeptics can become believers in times of trouble.

With Nevada staring down alarmingly high unemployment and its worst economic downturn since the 1980s recession, Republican Gov. Jim Gibbons has not only reneged on his no-tax pledge but has called on his colleagues in Washington extend government aid.

For the fiscally conservative former congressman who voted against even the concept of extended unemployment benefits during a 2004 debate in Congress, the plea for federal assistance shows the depth of the economic problems facing Nevada’s lawmakers returning to Washington this week.

Congressional leaders are considering various options for sending money to the states, increasing jobless benefits and bailing out the Big Three automakers. Nevada’s lawmakers will return to the Hill for the final session of the year, called “lame duck” because some members are retiring or have left office, and once again be expected to make tough choices between philosophy and reality.

“The adoption of a robust recovery package should be the top priority of the upcoming lame duck session,” Senate Majority Leader Harry Reid wrote Friday to the Republican leader of the Senate.

Democratic Rep. Shelley Berkley’s spokesman said she is hopeful an economic package could pass both houses of Congress, but said any aid for Detroit would “have to come with strict requirements to protect taxpayers.”

Nevada’s Republican Sen. John Ensign remains opposed to a government program to stimulate the economy.

“If it just means more spending, it’s not something I would support,” Ensign told the Hill, a newspaper in Washington. Ensign voted against extending unemployment benefits this year in a broader package he called “fiscally irresponsible.”

Democrats have scaled back their original hopes for a broad $150 billion package of public works projects that could create jobs, send aid to states for increased health care costs for the poor and other measures.

The big spending program was met with opposition from Ensign and other Republicans who prefer to cut business taxes to encourage economic growth.

The White House has repeatedly said that a public works program of highway and other building projects would not create jobs fast enough to help stem the downturn. Other Republicans worry the project list will be laden with pork.

Instead, Reid has indicted he may offer a smaller proposal early this week that would tie aid to automakers to a popular program to extend unemployment benefits.

Yet funneling $25 billion to Detroit remains controversial on both sides of the aisle.

Republicans are wary of bailing out the automakers after the unpopularity of the $700 billion Wall Street rescue that become a lightning rod on the campaign trail, and Democrats are under pressure from environmentalists not to give Detroit more money without conditions for greener vehicles.

As Nevada’s economy has worsened, state Republican House members Jon Porter and Dean Heller have both been more willing to support government aid programs.

Porter and Heller voted in September for a stimulus package of public works and other spending, as Ensign voted against. Porter and Heller also voted various times over the year for extended unemployment benefits.

Late last month, Gibbons sent a letter to all five members of the Nevada delegation calling on them to consider passing a broad economic stimulus package to help the state.

Gibbons’ request mirrored proposals being circulated by Democratic leaders for public works spending, extra funding for health care for the poor and unemployment benefits.

“These are difficult times for all Nevadans,” Gibbons wrote to Nevada’s lawmakers.

After receiving the Gibbons letter, Porter’s office said the congressman would be willing to consider aid package so long it included government oversight to prevent waste. Porter was voted out of office this month, but is expected to be in Washington for the final session this week.

Heller won reelection after voting against the Wall Street bailout, which was hugely unpopular in his largely rural district. His office declined to respond to a request for comment on conversations with the governor about the stimulus help.

Gibbons’ office had specifically reached out to Ensign to ensure “our position was clear,” the governor’s spokesman said.

Nevada’s unemployment rate has steadily climbed most of this year, and economists think joblessness could hit a Depression-broaching 10 percent before improving.

Gaming revenue, a main source of taxable income, has similarly declined as fewer visitors are partying in Las Vegas. The state has led the nation with the highest rate of housing foreclosures for 22 months.

The prospect of further cuts in a slashed state budget has led to widespread concern about the ability of government to provide services.

Gibbons’ new outlook on federal aid comes as a first-term governor in Carson City rather than as a congressman in Washington, his spokesman said. Gibbons left Washington after being elected governor in 2006.

“He’s often described the difference as being on the board of directors and being the CEO. As the CEO, you’re hands-on and have a much better understanding of where the wheel hits the road,” spokesman Ben Kieckhefer said. “To say his perspective has changed — it’s not a bad thing.”

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