The Delta Grassroots Caucus (DGC) is a broad coalition of grassroots leaders in the eight-state Delta region. DGC is also a founding partner of the Economic Equality Caucus,
which advocates for economic equality across the USA.

Congressional Candidate Gary Latanich's Answers to Economic Questionnaire--April 22

Posted on April 22, 2012 at 11:59 AM

Here are answers to our economic issues questionnaire from First District Congressional Candidate Gary Latanich, ASU economics professor (D-Jonesboro).

This is the second in a series of responses we plan to post from US Rep. Rick Crawford (R-Jonesboro), State Rep. Clark Hall (D-Marvell), Prosecutor Scott Ellington (D-Jonesboro), and Gary Latanich. We will have presentations from all four candidates at our May 4 session of the Delta conference at the Clinton Center.

  1. “Big picture” question on your priorities for job creation and economic recovery: It is clear that the economy requires a much stronger recovery to put people back to work, spending cuts, and more revenue to jump-start economic development while getting our fiscal house in order. What are your top priorities in job creation and economic recovery?

Getting our fiscal house in order is something we need to do when we approach the full employment point, not now. At this point we need to expand demand for goods and services. This will require tax cuts for middle and lower income individuals, increased aid to the states to forestall any further budget cuts and hopefully to restores previously cut social services. In addition the federal government needs to begin a long-run infrastructure investment program. The nation has trillions of dollars of capital projects that need attention.

EPA and other regulations: The Delta Caucus partners are strong advocates for protecting the environment, but there are concerns that some of the new EPA regulations may inhibit job creation or retention and weaken the already fragile recovery. Would you support delaying implementation of EPA and other regulations that would inhibit job creation at least until the economy is fully recovered?

Regulations that are an immediate threat to the public’s health should not be put off. Other regulations can wait until we approach the full employment point. It’s important to note at this point that the burden of proof relating to the negative impact of EDP regulations on the economy is on the critics of such proposals. It’s my guess, that most of the criticism of EPA regulations is misguided or self-serving.

Health care: The Delta suffers from inadequate access to affordable, high-quality health care. This is harmful both to our health and to our region’s economic situation. What policies would you advocate to improve health care in the underserved Delta?

I support the public option when it comes to health care financing. The public option is more cost effective for the government than the individual mandate. Having said that, political reality dictated that the individual mandate was the best bill that could be passed at the time. This bill will allow women to pay the same premiums as men, it will eliminate the “preexisting conditions” clause, it will eliminate life time cap on medical bills, and it will have sliding scale subsidies that will make health insurance afforable for all Americans. This law is a great addition to the social safety net, and I support it 100%.

ENERGY: The expanded use of biofuels and other sources of renewable energy is supported by many people in the Delta as a way to create jobs, develop an independent source of energy and reduce dependence on foreign oil, and promote economic development.

a. Renewable energy: Do you consider renewable energy a priority for Arkansas? What steps would you advocate to promote the development of renewable energy? How would you work with the eight Delta states as well as other states that border the Delta to implement these programs?

In First District we have four biofuel facilities. At this time we have only two that are functioning, with one of them Future Fuels, being state-of-the-art. Biofuels can be a valuable addition the the nations fuel supply, and especially for farmers in Arkansas, as well a way to reduce green house emissions. We need to find ways to lower the cost of biofuels so that it can more economically compete with other fuels. Tax credits or subsidies might be one approach. If economies-of-scale are and issue an eight state approach would probably be the best approach.

b. Energy retrofits, the LIHEAP program to aid lower income customers, and energy efficiency are increasingly important in reducing energy costs. Energy retrofit programs such as Arkansas’ Home Energy Loan Assistance (HEAL) program (where the costs of retrofits are paid for by the savings in energy bills) have been successful. Would you support LIHEAP as well as energy retrofit programs similar to the HEAL program? If so, what would you recommmend to implement those programs?

Energy retrofits would conserve energy and the retrofit process would dovetail with efforts to expand employment. The best way to implement this type of program is to highlight it’s long-run cost effectiveness and it’s affordable cost on the front end. For this to occur we would need a tax credit that should be at least 50%. This would cut the cost in half, and, it the tax credit had a time limit (2-years) it would be encourage prompt attention to the issue.

c. Gas prices: We know that the federal government cannot totally control gas prices. But to the extent federal actions can deal with this issue, what policies in addition to expanded renewable energy–if any–would you support to reduce gas prices?

We should work on trying as quickly as possible to convert coal-fired power plants to natural gas. Our reserves are huge and the cost of natural gas is low and projected to stay low for the foreseeable future. We need to encourage conversion to more fuel efficient vehicles. We need to expand refinery capacity, or bring back on-line, refineries that at present are not operating.

USDA programs: USDA has a broad array of tremendously important programs to the Greater Delta Region. We support a new farm bill that will fully fund these programs:

a. Rural Development: Rural Development programs are vital for rural small business and job creation, rural housing, infrastructure, expansion of broadband to the underserved Delta, telemedicine, renewable energy, and other constructive activities for rural America. There have been unwise attempts to make major cuts in such programs as rural housing, for example. In the farm bill and other legislation would you support full funding and oppose cuts in USDA Rural Development programs?

Given the level of poverty in rural areas, and the volatile nature of farming, the farm bill needs to be reauthorized with both revenue and price protections added in. While crop insurance is important, for farms in the Arkansas area, we need a continuation of the direct payment provision.

b. Hunger and nutrition–The Delta unfortunately has extremely high rates of food insecurity, as well as diabetes, obesity and other nutrition-related diseases. Would you support full funding for Supplemental Nutrition Assistance Program, WIC, aid to food banks, school meals, and the other key USDA nutrition programs in the new farm bill and other appropriations?

Existing food assistance programs need to be expanded, and more creative programs brought on line, 25% of children in the US live in poverty. Obesity rates in the south are the highest in the nation. These kinds of programs need be turned in “entitlement programs” so that levels of funding are not an issue in the future.

Many hunger and nutrition experts in the Delta oppose proposals to block grant SNAP and thereby reduce SNAP benefits by $127 billion (over 10 years). Would you oppose this policy?

Block grants are simply a way of getting the federal government out of situation that are costly in the long-run. The presence of the grant does nothing to address the overall cost problem(s) it simply makes the problem a private as opposed to a federal government problem. I oppose effort to block grant SNAP.

c. Family farmers: While it may be inevitable that some farm aid for higher income farmers may be reduced or in some cases eliminated, there are many middle class, lower-income, and/or minority farmers who need aid to continue their essential work in raising the food and fiber we all use. Would you support full funding in the new farm bill and other appropriations for aid to limited resource and middle class farmers?

Farm aid needs to continue in a way that make farming viable. At times all farmers need assistance, at other times, aid is needed only in certain areas due to weather or drought conditions. What we want to avoid are programs that unduly reward farmers with payment that are not needed, and serve only to earn then economic profits at the nation’s expense.

The Delta Regional Authority has done a fine job with its limited resources, but has been seriously underfunded throughout its brief history. When the legislation was signed into law in 2000 with bipartisan support, its funding level was envisaged at $30 million annually. During the early Bush administration that funding was cut sharply to $5 million, and since then the agency’s supporters at grassroots, state and federal levels have raised its funding to approximately in the range of roughly $12 million through the energy and water appropriations bill and another $3 million through USDA Rural Development.

The DRA is a relatively new agency in our region: Since its creation ten years ago, the DRA has worked diligently to improve the lives of the 10 million people who live in the Delta. Targeted investments in each of the eight states has created over 6000 jobs and retained nearly the same number of jobs. With a leverage ratio of 23:1, the Delta Regional Authority leveraged $1.4 billion in private investment with DRA projects and helped 17,000 families gain access to clean water and sewer service.

In addition to this impressive targeted investment program, the DRA has many other constructive activities, such as the Delta Doctors Program that has placed over 150 doctors in underserved parts of the Delta; a series of strategic plans on issues such as transportation, health care, broadband and other key issues; the Delta Healthy Initiative and other issues. Federal Co-Chairman Chris Masingill, Alternate Federal Co-Chairman Mike Marshall, the eight governors of the DRA states and the entire DRA team forge partnerships throughout the region. Local development districts are key partners, as are the U.S. Department of Agriculture’s Rural Development offices in the region and state economic development departments.

Given the DRA’s impressive track record, would you oppose cuts to the DRA until the economy strengthens, on the grounds that it makes no sense to cut funding for a program that helps create jobs and improve infrastructure during a weak economy?

Funding for the DRA should be cut when the DRA is no longer needed. That means, when the employment rates and median income levels approximate national levels (or some percentage of). Until that time the mission of the DRA has not been fulfilled, if anything, funding should be expanded for those programs deemed the most successful.

When the economy recovers and the increase in revenue from having more people at work strengthens the budget, would you support an expansion of the funding at least up to the original level of $30 million?

Given that the government and the Federal Reserve regularly engage in money creation via debt monetization, there is no reason why the $30 million budget should not be restored now!

Finding the budgetary resources needed to invest in the domestic economy: We need for our nation’s elected officials to tell us where they will make spending cuts and where they will raise revenue in order to reduce the deficits and find the funding to invest in domestic economic recovery in the Delta and throughout the rest of the country.

a. Reductions in foreign military interventions and exorbitant weapons systems to provide funds for America’s economic recovery: By far the largest potential areas for spending reductions are the military budget, Social Security, Medicare and Medicaid. While there are many different points of view, many people in the Delta would not support cuts to Social Security, Medicare and Medicaid.

In reducing the deficits, many people believe that one of the key areas for spending cuts is to reduce military spending on foreign interventions and exorbitant weapons systems, in order to have more funds to invest in the domestic economy. (We know that a premeditated, major act of aggression against the United States would of course require the country to defend itself, so that kind of calamitous event would obviously change the situation.) But currently, with the wars in Iraq and Afghanistan winding down, would you agree that military spending should be substantially reduced, and if so what level of funding cuts would you support?

This is a false dichotomy, the idea that we need to cut spending and increase tax revenue to invest in our economy will only turn us into the next Greece. Our deficits are not a problem, but bad economic policies are. A quick look at the actions of the federal government in 1936 and after the recession of 1937 are proof enough of that. We need to undertake no spending reductions at this time, we need more spending for infrastructure programs now. The deficits will take care of themselves, just like they did at that end of the Clinton Presidency. As to defense spending, I see no reason why it shouldn’t be cut to the levels that existed when Clinton was President. We have 11 aircraft carrier groups, no other nation has more than one!

b. Revenue from highest income brackets: Even with substantial spending cuts in the military and other areas for reduced spending, the deficit are so massive that much greater revenue will be needed to stop the flood of red ink. Reliable polls show that roughly two thirds of the wealthiest people themselves would approve of this in order to get the deficits under control.

Would you support higher taxes on higher income people in order to reduce the deficits? In particular, would you support a surtax on incomes of $1 million a year? If you would support a surtax, would you recommend a 5% rate or what level would you support?

As the income distribution has become more skewed toward rich, our continuous reductions in the progressivity of the tax structure make no sense. We need to return to a tax rate structure that existed at the time Reagan was elected President. The top marginal tax rates should return to somewhere around 60%.

Priorities in spending: In choosing priorities for spending cuts, many people in the Delta would oppose cuts to programs that create or retain jobs or provide aid for the most vulnerable populations that are most damaged by the recession, especially in Medicare, Medicaid, Social Security, aid to senior citizens, hunger and nutrition, flood control and disaster relief, veterans and housing; therefore, would you oppose cutting spending for these job creation and vital programs for the most vulnerable populations?

Again, we should not be cutting and nondefense spending. And to the extent that defense spending is cut, the saving should be devoted to expanding programs in other “social safety net” areas.

Transportation and other infrastructure: There have been very unfortunate and unwise delays in passing the new highway bill. Not only in this bill but in many infrastructure areas, there is substantial support in the Delta for major infrastructure and job creation investments, which would not only get the economy rolling but also repair our seriously deteriorating infrastructure. The WPA investments are a successful model for this type of beneficial investments.

Would you support a major, WPA-like program of job creation by major expansion and improvements in schools, roads (including the Interstate 69 Corridor and the entire Delta Development Highway System plan), bridges, broadband, rails, inland waterway systems and other essential infrastructure?

The government should, on a regular basis, be the employer of last resort. We should have an ongoing program of federally funded projects in both urban and rural areas. These programs could employ those who either do not qualify for unemployment compensation or for whom it has run out. As business needs for employees increases they could simply hire any needed workers away from the government program. A permanent WPA or CCC style program should be a regular feature of our economy.

Housing: In addition to the highly unfortunate and ill-advised efforts to cut funding for USDA rural housing programs, many people in the Delta believe that one of the weaknesses of the federal economic recovery programs has been thus far an inadequate program of cleaning up the mortgage and housing crisis. USDA’s new pilot program to help families refinance in the hardest hit states is a good start. But it should be expanded.

Would you agree that much more aggressive action needs to be taken to reduce the numbers of foreclosures and reduce the mortgage debt of many Americans whose housing values have declined?

**We need to use section 13-3 of the Federal Reserve Act and allowed Fed to buy these homes directly and refinance them directly, or through a program like the RTC at was created to resolve the S&L crisis

There are differing points of view about providing aid to the many home-owners who are struggling with foreclosures or heavy mortgage debt. Some believe that these people made unwise decisions regarding their mortgages and should be punished to set an example and avoid future unwise decisions. Others emphasize more that the recession and housing collapse was so severe, difficult to predict, that foreclosures harm not only the ones who lose their homes but their neighbors who have their housing values reduced, and that the damage to the economy from foreclosures and massive mortgage debt is so widespread that the priority should not be in punitive action against those in distress but in removing this road block to economic recovery.

Many housing experts believe that both points of view have some merit, but they emphasize that no one should pay more than 30% of their income for housing and a program that adjusts the length of payment for mortgage rather than foreclose could serve to fill both needs. The homes could remain occupied, saving property values for neighbors & helping owners keep their homes.

Which of these points of view has more merit, and what is your position regarding an aggressive program of federal aid in reducing mortgage payments and preventing foreclosures?

The experts told potential home buyers, and themselves, that housing prices would never fall, and interest rates would never rise. Based on these two erroneous assumptions, we allowed an unregulated market to sell all kinds of exotic mortgages under the assumption that all would be fine in the end. When the housing market collapsed we realized our mistakes. The problems were foreseen by some experts, but no one would listen to them. Many people who were given subprime mortgages actually qualified for prime mortgages, but didn’t get them. This problem can be laid at the feet to government and their efforts to deregulate the banking system and their failure to regulate the “shadow” banking system. We owe to to homeowners and the nation to fix the problem like we fixed Wall Street.