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Blunt, Carnahan differ on stimulus, bank bailout

Friday, September 3, 2010 | 2:48 p.m. CDT

JEFFERSON CITY — Republican Rep. Roy Blunt campaigns for Senate in a blue RV plastered with the message: "The choice is clear. Roy will fight for jobs."

Secretary of State Robin Carnahan, his Democratic rival, says the poor economy is evidence Blunt already has failed in that fight. "I think we're living with his jobs plan right now," she says.

The still sluggish economy and weak job market have comprised a central and consistent theme in the campaign to replace retiring Republican U.S. Sen. Kit Bond in the Nov. 2 elections.

In short: Blunt contends the policies of President Barack Obama and Democratic congressional leaders are stifling economic recovery and job creation; Carnahan contends policies embraced by Blunt and fellow Republican congressional leaders in past years created the economic mess.

Both call for cuts in federal spending. Both say they eschew tax increases. And both say the deficit must be reduced.

But only Carnahan contends the $814 billion economic stimulus act has helped. And only Blunt contends the law authorizing up to $700 billion to bail out troubled financial institutions has helped.

The two candidates answered a series of questions about the economy and financial issues in separate interviews this past week. Here are their responses:

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With unemployment still above 9 percent, how can Congress spur job creation?

Blunt: "The best thing for the government to do is to try to eliminate all of the job-killing uncertainty in areas like tax policy and energy policy and health care costs."

Blunt said Congress should back tax policies that encourage small businesses to expand and should support all forms of U.S.-based energy development. He wants to reject "cap and trade" legislation that would tax carbon dioxide emissions from Missouri's many coal-fired power plants as a way to reduce pollution blamed for global warming.

He also says the economy could be helped by repealing the new federal health care law, which Blunt said could increase costs for employers by setting requirements for insurance policies and penalties for some businesses that do not offer health insurance.

Blunt has released a 20-page policy platform entitled: "Jobs for Missouri."

Carnahan: "The first thing I think we need to do to get our economy back on track and create jobs is to change the focus, change the policies, which means to focus on small businesses — not those corporate special interests."

Carnahan said Congress needs to end a "too-big-to-fail, bailout mentality" that results in unnecessary aid for big banks and oil companies. She supports exempting small business owners from capital gains taxes and from payroll taxes on their employees. She said the creation of revolving loan funds could help manufacturers gain better access to the credit.

She said Congress injected uncertainty into the economy by taking too long to pass legislation overhauling regulations for the financial industry.

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The nonpartisan Congressional Budget Office in August put the cost of the economic stimulus plan passed in 2009 at $814 billion and estimated it increased the number of jobs by 1.4 million to 3.3 million during the second quarter of this year. Was the bill worth it?

Carnahan: Yes. "It wasn't perfect, but it did provide 2.2 million Missouri families a tax cut, (and) it funded our teachers and cops and firefighters."

Had she been in Congress, Carnahan said she would have pushed for the legislation to have a greater focus on small businesses and consumers.

Blunt: No. "If it was a stimulus plan, the money would have had more immediate and direct impact. It was a government spending plan, and it didn't work."

Blunt, who voted against the legislation, contends many of the jobs created by the bill are government-related jobs, not long-term private-sector jobs. He says the plan should be halted, and the remaining money authorized under the bill should not be spent.

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In 2008, Congress passed a bill authorizing up to $700 billion, in two phases, to help shore up banks and other troubled financial institutions. Do you believe the bill helped prevent the economic recession from being even greater? In other words, has it worked?

Blunt: Yes. "I think it did prevent the recession from being greater. We may have prevented real economic disaster."

Blunt helped negotiate the bill and as the then-House Republican whip urged colleagues to support it. He says it's wrong for people to characterize the bill as deficit spending and notes most of the initial $350 billion provided to banks and financial institutions has been repaid with interest.

Carnahan: No. "The recession has continued much worse than we expected."

Carnahan, who has a bachelor's degree in economics, said it's a basic economic fact that "when you let people take outsized risks and then bail them out" and thereby "reward that risky behavior, they'll continue to do it."

She criticized the bill for lacking enough accountability measures to prevent Wall Street banks from paying big bonuses to their executives.

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The CBO reported in August that the federal deficit will exceed $1.3 trillion this year. Is it important to reduce that soon, and if so, how do you propose to do that?

Carnahan: "We need to put an end to the reckless spending as a first step — that means banning earmarks, because it's become a corrupted and abused process."

Although not a large part of the deficit, Carnahan said, earmarks reflect a lack of responsibility in spending decisions. Carnahan said she supports a resurrection of 1990s-era pay-as-you-go rules for budgeting and strong spending caps. She also backs a deficit-reduction commission, which Obama created after senators failed to do so.

Blunt: "I'm not for raising taxes and I am for cutting spending."

Blunt said the deficit could be reduced by not spending the remaining money in the $814 billion stimulus plan and by not moving forward with the various boards and commissions created by the new federal health care law. He said he wants to reinstate nearly $40 billion of cuts to federal programs that he helped push for when he was the House majority whip in 2005.


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