WASHINGTON – Could Sept. 11 someday spur community participation much as Earth Day has become a consciousness-raising event benefiting the environment?

If President Obama signs the Serve America Act as expected later this month, the country will take a big step in that direction.

The legislation, which includes a variety of measures to encourage public service – such as an expansion of AmeriCorps and the establishment of four new service corps – designates Sept. 11 as a national day of service.

The idea was the brainchild of David Paine, who co-founded a group called My Good Deed with friend Jay Winuk.

They want to transform Sept. 11 into a celebration of the volunteerism that swept the nation after the 2001 terrorist attacks.

“The role 9/11 played in triggering, or rather reinvigorating, the spirit of service in this country was monumental,” said Paine. “It inspired a spirit of unity I have never seen in my lifetime.”

Winuk’s brother, Glenn, a New York attorney who trained as a volunteer firefighter, rushed to the World Trade Center after the first airliner hit on Sept. 11 to help. He died when the towers collapsed.

Jay Winuk said the day of service has gained widespread support from groups representing the victims of the attack.

“How do we want to tell future generations about 9/11?” Winuk asked. “Are students going to be taught about the attacks or those people who came from around the country to volunteer and send supplies?”

The Bush administration was reluctant to designate Sept. 11 as a day of service. President George W. Bush instead issued a proclamation declaring it as Patriot Day.

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SERVICE BILL

The Edward M. Kennedy Serve America Act authorizes a major expansion to the federal government’s financial support for community service.

Some of its provisions:

• Expand AmeriCorps from 75,000 positions to 250,000 by 2017.

• Expands the age and income eligibility for Foster Grandparents and Senior Companions. Under a new Silver Scholars program people age 55 and older who volunteer for 350 hours or more would be eligible for a $1,000 grant for education. The grant could be transferred to a child or grandchild to defray the cost of their education.

• Establishes a Volunteer Generation Fund to award grants to states and nonprofits to recruit and train volunteers.

• Establishes Nonprofit Capacity Building Grants to help small to mid-sized nonprofits.

• Establishes a National Service Reserve Corps of former national service workers and military veterans who would be trained to respond to a major disaster under the coordination of FEMA.

• Establishes a Summer of Service program for 6th to 12th graders who would receive grants of $500.

• Establishes a Call to Service Campaign and designates Sept. 11 as a national day of service.

• Establishes a Social Innovation Fund to pay for experimental approaches to intractable community problems.

WASHINGTON – How the presidential candidates would address the nation’s housing crisis when the next administration takes office in January is hard to track because it is still evolving.

The downward spiral in housing prices, increase in home foreclosures and the failure of several major financial institutions led to a $700 billion congressional bailout.

What Democrat Barack Obama or Republican John McCain might do as president could depend on how well that plan and another piece of legislation enacted in July targeted to housing address the problem.

At the second presidential debate, McCain said he “would order the secretary of the Treasury to immediately buy up the bad home-loan mortgages.”

His proposal calls for spending up to $300 billion to help homeowners refinance with new low-rate mortgages based on the current value of homes. To be eligible, it must be a primary residence and the homeowner cannot have used false information to obtain the current mortgage.

The Treasury already has authority to buy the mortgages directly under the multibillion-dollar rescue plan. The Federal Housing Administration has authority to spend up to $300 billion for another program, Hope for Homeowners.

Obama’s campaign pointed out that he made a similar proposal — without suggesting a dollar amount — at a Sept. 24 news conference. “We should consider giving the government the authority to purchase mortgages directly instead of simply purchasing mortgage-backed securities,” he said then.

Hope for Homeowners offers up to 400,000 homeowners facing possible foreclosure the opportunity to refinance their mortgages with new 30-year, fixed-rate loans issued by the FHA.

The bill also created a Housing Trust Fund that will give money to states to award grants to developers to build and redevelop housing and rental units for low-income families.

McCain, who earlier in his campaign offered a plan for families facing foreclosure, plans to monitor how well the new housing legislation works and might offer suggestions to “beef it up,” according to senior policy adviser Douglas Holtz-Eakin.

Obama, on the other hand, wants the federal government to be more aggressive in helping local communities, according to Brian Deese, a campaign economic adviser.

Because the federal government took over Fannie Mae and Freddie Mac, which packaged a majority of the nation’s mortgages into securities, and Congress authorized hundreds of billions to purchase mortgage-backed securities, the government is in a position to make it easier for many to refinance.

Many congressional Democrats — including Obama — advocate going further by allowing federal bankruptcy judges to rewrite the terms of mortgages when homeowners file for court protection from their creditors. Mortgages on vacation homes and investment properties can be revised by bankruptcy courts. Mortgages on primary residences cannot.

But McCain doesn’t think it’s advisable to rewrite the bankruptcy code. Instead, homeowners should renegotiate with their lenders before resorting to a bankruptcy filing, according to Holtz-Eakin.

McCain wants the Justice Department to form a mortgage abuse task force to investigate criminal wrongdoing by brokers and lenders.

Obama supports passage of his Stop Fraud Act legislation establishing a federal definition for predatory lending. “It would substantially tighten restrictions and penalties for fraudulent and abusive lending practices,” Deese said.

Some housing advocates say one of the reasons for the current housing crisis is that Democratic and Republican lawmakers, along with the Clinton and Bush administrations, overemphasized home ownership. What’s needed, say the advocates, is more of a balance that includes a national policy for building more affordable rental housing.

McCain “doesn’t have a specific proposal” for rental housing, said Holtz-Eakin. “What’s he’s focusing on is making sure that those people who want to become homeowners are ready to become homeowners.”

Obama supports the new housing trust fund and the effort to build more affordable rental housing. “He does believe it is something we need to put more attention on,” said Deese.

Contact Brian Tumulty at btumulty@gns.gannett.com.

WASHINGTON – It wasn’t long ago that the downturn in housing was mainly focused in specific cities with artificially inflated prices.

But the mortgage lending crisis that has pushed the nation’s financial services sector into a meltdown has spread throughout the economy.

“The damage is national,” said Julia Gordon, policy counsel at the Center for Responsible Lending.

The places affected range from fast-growing states like Nevada, where housing prices have plummeted from stratospheric levels, to Michigan, where home prices didn’t appreciate as much but where any drop in home values is hard on communities with high unemployment.

How bad is the problem?

Over nine months that ended in June, Americans collectively lost $1 trillion in home equity, estimates Christian Weller, an associate professor at the University of Massachusetts. It was the largest drop since 1974.

Many people nearing retirement had been counting on their home equity as the primary source of income.

Home foreclosures have quadrupled over the last four years from 75,597 in August 2005 to 303,879 in August of this year.

“It is comparable in some neighborhoods to being hit by a major hurricane,” Gordon said. “Except this was not an act of God. This was an act of man.”

This loss in home value and the spreading economic instability is on the top of voters’ minds, as could be seen in the recent town hall-style debate in Nashville, Tenn., between presidential candidates Barack Obama and John McCain. One frustrated audience member asked the candidates, “How can we trust either of you when both parties got us into this global economic crisis?”

One in every three foreclosures is in California. Florida ranks second, followed by Nevada.

There are a few states where home foreclosures are rare. Vermont only had 18 in August – up from three the same month three years earlier – compared with 11,706 in Nevada.

“Traditionally, 50 percent who go into foreclosure end up losing their homes,” Chris Varvares, president of Macroeconomic Advisors in St. Louis. “It may be the case that this time it could be a little higher.”

Congress in July set up a program to help up to 400,000 homeowners refinance their mortgages with 30-year, fixed-rate loans. But housing advocates say it addresses only part of the problem.

The program is voluntary, and lenders may decline to participate because they could lose money. The lender must be willing to accept a new mortgage that’s equal to 90 percent of the home’s current value and write off the old loan, possibly losing tens of thousands of dollars.

The financial services industry, despite its dire situation and need for a $700 billion federal rescue package, successfully fought off efforts by some Democratic lawmakers to impose a freeze on new foreclosures and to allow bankruptcy judges to rewrite the terms of loans on primary residences.

“All the counseling that has been set up, etcetera, may have made it less worse, but it certainly has not broken the cycle,” said Sheila Crowley, president and chief executive of the National Low Income Housing Coalition. “The housing foreclosures continue at an alarmingly high rate and the problem now is not just the junk subprime loans, it’s people who did prime loans but they did adjustable rate mortgages assuming they could refinance because the value of their homes would go up.”

According to Gordon, the brokers, lenders and Wall Street financiers were all culpable.

“This crisis was not driven by millions of homeowners clamoring for adjustable rate mortgages,” Gordon said. “It was driven by Wall Street finding an easy way to make money going back down the chain.”

Contact Brian Tumulty at btumulty@gns.gannett.com

———

RELATED

Mortgage crisis takes toll on bystanders

How next president might handle housing breakdown

Shoppers buy products at a supermarket in Lawrenceville, N.J. The last time grocery prices jumped so high was in the early 1970s.

WASHINGTON – After 10 years of steady decline, more supermarket shoppers are using coupons again.

And discount warehouses such as Costco, Sam’s Club and BJ’s Wholesale Club are seeing a jump in business from people buying groceries in bulk.

Both trends are evidence of the ways American families are grappling with a 7.5 percent jump in the price of food consumed at home over the past 12 months. Prices for all foods and beverages are up an average of 5.9 percent. It’s against this stark backdrop that voters will select the next president Nov. 4.

“For all the money the government spends on things that are not necessary, I think they should be focusing more on families,” said Jenny Minton, a Palm Bay, Fla., mother who clips coupons, shops the sales, and now, even has visited a food pantry operated by her church to feed her large family.

How bad is inflation? The last time food prices jump this much was in the early 1970s, according to Bruce Babcock, an economist and director of the Center for Agricultural and Rural Development at Iowa State University. Back then, the major causes were a drop in the value of the dollar, Russia’s move to corner the wheat market, crop shortages and a big increase in commodity prices.

This time, world demand for basic commodities is on the rise. Rising incomes in India and China are allowing people there to eat more meat. Higher fuel prices have increased the cost for farmers to operate farm equipment and transport their crops. And the effort to increase corn-based ethanol production in the United States has pressed corn prices higher.

For many affluent families, the increase in food prices has forced them to cut back on eating out at full-service restaurants.

But for lower income families – who already were less likely to eat out – the rising cost of basic groceries is causing them to cut back elsewhere or seek help.

Cereal and bakery products cost 11.7 percent more than they did a year ago. Fruits and vegetables are up 12 percent.

According to the Department of Agriculture, low-income families eat fewer fruits and vegetables than the average American family in large part because of cost. Families in the lowest 20 percent of income spent $1,878 per person on food in 2006, the latest year government figures are available, compared with a national average of $2,444 per person.

“These are staples for most families and it’s a very serious problem,” said Carol Foreman Tucker, director of the Food Policy Institute at the Consumer Federation of America.

“Unemployment is now up to 6 percent. Incomes are fairly stagnant. And when you have these two forces come together, the increased food price and the lack of a comparable increase in wages, you are making families very uncomfortable,” Tucker said. “For low-income people, those who have to rely on public benefits, it’s especially difficult because those benefits are not going to increase.”

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FOR MORE INFORMATION

www.fuelgaugereport.com/index.asp, American Automobile Association’s “fuel gauge report” on average gasoline prices.

www.fuelgaugereport.com/sbsavg.asp, Average gasoline prices listed by state.

www.ers.usda.gov/Publications/EIB6-5/EIB6-5.pdf, The Food Assistance Landscape FY 2007 annual report.

www.ers.usda.gov/Briefing/CPIFoodAndExpenditures, U.S. Department of Agriculture’s economic research service briefing room on food prices and expenditures.

www.chicagofed.org/publications/fedletter/cfloctober2008(UNDERSCORE)255 .pdf, Chicago Federal Reserve essay on “Food inflation and the consumption patterns of U.S. households.”

www.ers.usda.gov/Publications/ERR61, National School Lunch Program.

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NEEDING HELP

Demand for government food assistance programs has spiked. According to the latest federal data available, June saw the following increases over last year:

Food stamp participants, up 2 million to 28.6 million.

Students receiving free or reduced-cost school lunches, up 500,000 to 31.5 million.

The school breakfast program, up by 400,000 to 10.2 million.

Pregnant women and mothers with small children participating in the Women, Infants and Children program, up 400,000 to 8.7 million.

WASHINGTON – The two major candidates for president – Republican John McCain and Democrat Barack Obama — have mapped out widely different approaches to the issues of top concern to small businesses.

Cost of health coverage

McCain would eliminate the tax exemption employees get for employer provided health insurance and replace it with a refundable tax credit of $2,500 for individuals and $5,000 for families to either purchase their own coverage or offset their portion of the cost of employer-provided coverage.

Obama would keep the current tax exemption for employer health coverage and offer a new tax credit for up to 50 percent of the cost of coverage provided by small businesses.

Both candidates also support measures to control rising health care costs.

Cost of fuel and electricity

McCain supported a tax holiday for the federal gasoline tax through Labor Day — a proposal Obama opposed.

McCain supports ending the taxation of imported ethanol, expanding domestic oil and gas drilling, wants the nation to build 45 new nuclear power plants by 2030 and would spend $2 billion annually to research clean-coal technology.

Obama supports congressional passage of a second economic stimulus package that would provide rebate checks to people to offset the high cost of gasoline and impose a windfall profits tax on oil companies with the money going for home weatherization and fuel assistance programs for low-income families.

Obama opposes expanding drilling rights and would keep in place the tax on imported ethanol.

Corporate tax rate

McCain wants to reduce the corporate income taxes to 25 percent from the 35 percent rate effectively paid by large corporations.

But corporations with taxable incomes under $75,000 already pay a 25 percent rate and those with taxable income under $50,000 pay 15 percent.

George Plesko, a professor of accounting at the University of Connecticut, said his analysis of Internal Revenue Service data indicates a minority of corporations are subject to the 35 percent rate.

In fact, many small business corporations may not pay any corporate taxes. In 2003, just more than 1.8 million corporations filed a Form 1120A with the IRS to report income below $500,000 and only half of them – 902,015 – had a positive net income subject to the corporate tax rate.

Obama has not made a specific proposal for lowering the corporate tax rate, but has indicated he would consider cutting the top rate during a larger overhaul of corporate taxes that eliminates the tax breaks given to companies that move operations overseas.

Individual tax rates

Most small business owners pay federal taxes based on the individual rates paid by singles, a head of household or married couple.

McCain wants to permanently extend the Bush tax cuts that lowered the top income tax rate to 35 percent.

Obama would restore the top individual rates of 36 percent and 39.6 percent paid by high income Americans.

In 2009, an estimated 457,000 individuals in the current top tax bracket of 35 percent will report business income on their tax returns, according to Len Burman, director of the nonpartisan Tax Policy Center.

Estate taxes

Although federal estate taxes do not rank among the top 30 issues listed by members of the National Federation of Independent Business in a February survey, McCain lists it as part of his small business agenda. The Arizona senator would raise the threshold for estates subject to the federal estate tax to $5 million for individuals and $10 million for couples, after which the federal tax rate would be 15 percent.

Obama would freeze the estate tax at 2009 levels. That would mean that estates of individuals with more than $3.5 million in assets and couples with more than $7 million would be subject to a 45 percent tax rate above those amounts.

“In 2011, we estimate that about 4,100 estates would be taxable under Senator McCain’s plan and 8,300 under Senator Obama’s,” said Burman. In comparison, about 2.4 million Americans died annually. About one-tenth of 1 percent of estates would be taxed under the McCain plan and about three-tenths of 1 percent under the Obama proposal.

WASHINGTON – The 2008 president election will offer small business owners a choice of two very different approaches to addressing their top concerns — the cost of health care, energy and federal taxes.

John McCain’s campaign says a key to faster economic growth is helping small businesses.

The presumptive Republican nominee released a “Jobs for America” plan recently that aims to make it easier for small businesses to grow because they create the majority of jobs in America.

His agenda: lowering energy costs, controlling health care costs, changes in the tax code designed to make it “fair, pro-growth and competitive,” and opening new markets through trade.

Obama hasn’t promulgated a small business agenda per se, but he has taken positions on most of the major issues that concern small business owners.

In addition, Obama has two small business initiatives in his economic plan. He would eliminate federal capital gains taxes for startup businesses and spend $250 million annually to establish small business incubators in disadvantaged communities that would dispense shared resources or advice.

Obama recently added a third proposal — a tax credit for small businesses that offer health insurance to their employees that would offset half the cost of employer premiums.

The cost of health insurance is the No. 1 issue facing small businesses, according to a February survey by the National Federation of Independent Business, the nation’s largest small business organization. The cost of fuel — natural gas, gasoline, diesel and home heating oil — ranked No. 2.

Several of the top issues — property taxes and state taxes — aren’t federal matters, but the top 10 also included federal taxes on business income, tax complexity, unreasonable government regulations and electricity costs.

The survey, which ranked 75 issues, also found some variance between the issues most on the minds of small business owners and what the candidates think is at the top.

McCain’s small business agenda includes his support for expanding international trade. The ability to export products or services ranked last in importance in the NFIB survey and competition from imported products ranked No. 66.

Douglas Holtz-Eakin, a senior policy adviser to McCain and a former director of the Congressional Budget Office, theorized that small businesses don’t rate international trade as an important issue because they support the current policies in Washington. He predicted that international trade would rank much higher in the next NFIB survey if Democrats were able to pass protectionist trade proposals.

McCain recently traveled to Colombia to demonstrate his support for a bilateral trade deal with that country, which House Democratic leaders have refused to bring to a vote.

Obama opposes the Colombia pact. He’s promised to not approve new trade deals unless they include labor and environmental standards. And he’s pledged to renegotiate the North American Free Trade Agreement. During a February debate in Cleveland, he said in reference to NAFTA, “I think we should use the hammer of a potential opt-out as leverage to ensure that we actually get labor and environmental standards that are enforced.”

What the NFIB survey did show is that many of the top issues for small business owners are also the top issues that average voters cite in national polls.

Health care costs and access to affordable insurance is a top issue for both employers and employees. And at many mom-and-pop businesses, the employees include spouses, relatives and business partners.

McCain and Obama disagree on how to make health insurance more widely available to the nearly 47 million Americans without coverage. McCain wants to make it easier for individuals and families to buy their own insurance by providing them with tax credits. Obama would expand coverage my mandating that parents obtain coverage for their children and make it more affordable to do so by expanding two government programs targeted at low-income families — Medicaid and the State Children’s Health Insurance Program.

Their approach to putting a lid on the cost of energy also differs.

Obama has campaigned against the gasoline tax holiday proposed by McCain. He opposes the authorization of new federal leases for oil and gas drilling that McCain supports. And he opposes the rollback of the federal tax on imported ethanol that McCain advocates.

Both support alternative fuels, but McCain also supports construction of 45 new nuclear power plants by 2030.

On taxes, McCain would keep the top rate on individual income taxes at 35 percent and lower the corporate rate to 25 percent. Obama has no specific plan for lowering corporate tax rates, but would eliminate the write-offs corporations take when they shift production overseas. Obama also would allow the top income tax rate to rise to the 2001 level of 39.6 percent.

McCain also took a potshot at the Democrats’ presumptive nominee, Barack Obama. “If you are one of the 23 million small business owners in America who files as an individual rate payer, Senator Obama is going to raise your tax rates,” he said.

However, the nonpartisan Tax Policy Center says Obama’s proposal to raise the top individual rates would, at most, affect 663,000 individuals in the 33 percent and 35 percent tax brackets who are expected to report business income on their 2009 tax returns.

———

Comparing McCain and Obama on small business issues

WASHINGTON – The two major candidates for president – Republican John McCain and Democrat Barack Obama – have mapped out widely different approaches to the issues of top concern to small businesses.

Cost of health coverage

McCain would eliminate the tax exemption employees get for employer provided health insurance and replace it with a refundable tax credit of $2,500 for individuals and $5,000 for families to either purchase their own coverage or offset their portion of the cost of employer-provided coverage.

Obama would keep the current tax exemption for employer health coverage and offer a new tax credit for up to 50 percent of the cost of coverage provided by small businesses.

Both candidates also support measures to control rising health care costs.

Cost of fuel and electricity

McCain supported a tax holiday for the federal gasoline tax through Labor Day — a proposal Obama opposed.

McCain supports ending the taxation of imported ethanol, expanding domestic oil and gas drilling, wants the nation to build 45 new nuclear power plants by 2030 and would spend $2 billion annually to research clean-coal technology.

Obama supports congressional passage of a second economic stimulus package that would provide rebate checks to people to offset the high cost of gasoline and impose a windfall profits tax on oil companies with the money going for home weatherization and fuel assistance programs for low-income families.

Obama opposes expanding drilling rights and would keep in place the tax on imported ethanol.

Corporate tax rate

McCain wants to reduce the corporate income taxes to 25 percent from the 35 percent rate effectively paid by large corporations.

But corporations with taxable incomes under $75,000 already pay a 25 percent rate and those with taxable income under $50,000 pay 15 percent.

George Plesko, a professor of accounting at the University of Connecticut, said his analysis of Internal Revenue Service data indicates a minority of corporations are subject to the 35 percent rate.

In fact, many small business corporations may not pay any corporate taxes. In 2003, just more than 1.8 million corporations filed a Form 1120A with the IRS to report income below $500,000 and only half of them – 902,015 – had a positive net income subject to the corporate tax rate.

Obama has not made a specific proposal for lowering the corporate tax rate, but has indicated he would consider cutting the top rate during a larger overhaul of corporate taxes that eliminates the tax breaks given to companies that move operations overseas.

Individual tax rates

Most small business owners pay federal taxes based on the individual rates paid by singles, a head of household or married couple.

McCain wants to permanently extend the Bush tax cuts that lowered the top income tax rate to 35 percent.

Obama would restore the top individual rates of 36 percent and 39.6 percent paid by high income Americans.

In 2009, an estimated 457,000 individuals in the current top tax bracket of 35 percent will report business income on their tax returns, according to Len Burman, director of the nonpartisan Tax Policy Center.

Estate taxes

Although federal estate taxes do not rank among the top 30 issues listed by members of the National Federation of Independent Business in a February survey, McCain lists it as part of his small business agenda. The Arizona senator would raise the threshold for estates subject to the federal estate tax to $5 million for individuals and $10 million for couples, after which the federal tax rate would be 15 percent.

Obama would freeze the estate tax at 2009 levels. That would mean that estates of individuals with more than $3.5 million in assets and couples with more than $7 million would be subject to a 45 percent tax rate above those amounts.

“In 2011, we estimate that about 4,100 estates would be taxable under Senator McCain’s plan and 8,300 under Senator Obama’s,” said Burman. In comparison, about 2.4 million Americans died annually. About one-tenth of 1 percent of estates would be taxed under the McCain plan and about three-tenths of 1 percent under the Obama proposal.

BRIAN TUMULTY

Gannett News Service

Gasoline use in the United States appears to have peaked last year, and the worldwide increase in demand for oil is slowing, Pulitzer Prize winning author and energy expert Daniel Yergin told a Senate-House panel Wednesday.

Worldwide demand for oil will grow by about 900,000 barrels a day this year, down from its recent rate of 1 million barrels a day, Yergin testified.

Although Yergin did not predict whether the recent peak price of $139 a barrel for oil would be broken, he said the current run-up in prices has created a “break point”‘ that is slowing demand.

“Pressure on markets, the impact on consumers and on the economy, the shifts at hand, tell us that a break point is at hand,” said Yergin, chairman of Cambridge Energy Research Associates. “Markets cannot go up forever. We’re already seeing a response.”

Yergin and other experts told the Senate panel the United States needs to take a balanced approach combining improvements in energy efficiency and increases in energy production to address the long-term challenge of coping with high energy costs.

“We’ve doubled energy efficiency over the last 30 years,” Yergin said. “I think it is a reasonable goal to double it again.”

John Laitner, director of economic analysis for the American Council for an Energy-Efficient Economy, suggested Congress order each federal agency to develop an energy efficiency plan, provide money to help pay for the retirement of gas guzzling cars and trucks, and enact legislation to encourage telecommuting and video conferencing.

As it is, the message is not getting through to federal agencies. Laitner said he quit his previous job at the Environmental Protection Agency because he had a supervisor who frowned on employees’ working at home and insisted they come into the office.

On another front, the federal Energy Information Administration released a forecast Wednesday with encouraging news — an inflation-adjusted decrease in worldwide oil prices through 2015 because new production is anticipated in Azerbaijan, Brazil, Canada, Kazakhstan and the United States from both traditional sources and through alternative energy production.

But the agency’s annual outlook for international energy production and use had a bleaker long-term forecast for a continuing rise in prices between 2015 and 2030, predicting worldwide energy consumption would increase by 57 percent from 2004 to 2030.

Wednesday’s Senate-House hearing by the Joint Economic Committee marked the 11th congressional panel to discuss the ongoing energy crisis this month and the 40th since the beginning of the year, said Chairman Sen. Chuck Schumer, D-N.Y.

With gas prices topping $4 a gallon and retailers beginning to pass along the higher cost of energy on store shelves, Congress has been under pressure to come up with solutions to ease the price crunch.

But partisan bickering has crippled many proposals because many Republicans want to emphasize increased oil production measures such as opening the Artic National Wildlife Refuge to drilling and construction of nuclear power plans while most Democrats want to focus on imposing a windfall profits tax on oil companies and legislation requiring energy conservation and alternative energy production.

Schumer suggested what’s needed is “a grand compromise” between members of the two parties such as the one he suggested 10 years ago in which some Democrats would agree to open ANWR to drilling if some Republicans would agree to higher fuel efficiency standards for motor vehicles.

“Frankly, I don’t think this administration can pull it off,” Schumer said, suggesting that Congress may have to wait for President Barack Obama or President John McCain to strike such a deal.

WASHINGTON — Gasoline use in the United States appears to have peaked last year, and the worldwide increase in demand for oil is slowing, Pulitzer Prize winning author and energy expert Daniel Yergin told a Senate-House panel Wednesday.

Worldwide demand for oil will grow by about 900,000 barrels a day this year, down from its recent rate of 1 million barrels a day, Yergin testified.

Although Yergin did not predict whether the recent peak price of $139 a barrel for oil would be broken, he said the current run-up in prices has created a “break point”‘ that is slowing demand.

“Pressure on markets, the impact on consumers and on the economy, the shifts at hand, tell us that a break point is at hand,” said Yergin, chairman of Cambridge Energy Research Associates. “Markets cannot go up forever. We’re already seeing a response.”

Yergin and other experts told the Senate panel the United States needs to take a balanced approach combining improvements in energy efficiency and increases in energy production to address the long-term challenge of coping with high energy costs.

“We’ve doubled energy efficiency over the last 30 years,” Yergin said. “I think it is a reasonable goal to double it again.”

John Laitner, director of economic analysis for the American Council for an Energy-Efficient Economy, suggested Congress order each federal agency to develop an energy efficiency plan, provide money to help pay for the retirement of gas guzzling cars and trucks, and enact legislation to encourage telecommuting and video conferencing.

As it is, the message is not getting through to federal agencies. Laitner said he quit his previous job at the Environmental Protection Agency because he had a supervisor who frowned on employees’ working at home and insisted they come into the office.

On another front, the federal Energy Information Administration released a forecast Wednesday with encouraging news — an inflation-adjusted decrease in worldwide oil prices through 2015 because new production is anticipated in Azerbaijan, Brazil, Canada, Kazakhstan and the United States from both traditional sources and through alternative energy production.

But the agency’s annual outlook for international energy production and use had a bleaker long-term forecast for a continuing rise in prices between 2015 and 2030, predicting worldwide energy consumption would increase by 57 percent from 2004 to 2030.

Wednesday’s Senate-House hearing by the Joint Economic Committee marked the 11th congressional panel to discuss the ongoing energy crisis this month and the 40th since the beginning of the year, said Chairman Sen. Chuck Schumer, D-N.Y.

With gas prices topping $4 a gallon and retailers beginning to pass along the higher cost of energy on store shelves, Congress has been under pressure to come up with solutions to ease the price crunch.

But partisan bickering has crippled many proposals because many Republicans want to emphasize increased oil production measures such as opening the Artic National Wildlife Refuge to drilling and construction of nuclear power plans while most Democrats want to focus on imposing a windfall profits tax on oil companies and legislation requiring energy conservation and alternative energy production.

Schumer suggested what’s needed is “a grand compromise” between members of the two parties such as the one he suggested 10 years ago in which some Democrats would agree to open ANWR to drilling if some Republicans would agree to higher fuel efficiency standards for motor vehicles.

“Frankly, I don’t think this administration can pull it off,” Schumer said, suggesting that Congress may have to wait for President Barack Obama or President John McCain to strike such a deal.

WASHINGTON – The presumptive presidential nominees of the two major political parties each would reduce taxes for a middle-income household earning $66,354 a year by about $1,000 in 2009, according to an analysis released Wednesday by the nonpartisan Tax Policy Center.

The tax analysis comes just more than a week after Barack Obama clinched the number of delegates need to secure the Democratic presidential nomination, making it nearly certain he will face Republican John McCain in the November election.

On the campaign trail, both candidates are emphasizing economic issues this week and have exchanged charges over the content of their economic plans.

The Tax Policy Center’s independent analysis of the pieces of each tax package found Obama’s plan would provide $1,042 in estimated tax cuts for Americans in the middle 20 percent of income while Republican John McCain’s plan would provide about $1,009 – $33 less.

Overall, the plans have many differences. Obama’s tax cuts would aim more toward lower- and middle-income households while McCain’s plan would favor higher income households with the biggest tax cuts.

Families in the lowest 20 percent of income – earning about $18,981 annually – would get an estimated tax cut of $567 under the Obama plan but only $19 under the McCain plan in 2009.

Those in the top 1 percent of income – earning $603,402 a year – would face a dramatically different situation. They would pay $115,974 more in taxes under the Obama plan while getting a $45,361 tax cut from the McCain plan.

Both proposals would significantly increase the national debt over the next 10 years.

Obama is promising to cover the cost of his tax cuts with new revenue and savings from withdrawing troops from Iraq. McCain promises to freeze federal spending on nondefense and nonveteran related programs his first year in office and make spending cuts in future years.

Officials of the Tax Policy Center estimate Obama’s plan would add $3.3 trillion in new debt while McCain’s plan would add $4.5 trillion.

On the campaign trail, neither candidate has offered a detailed plan to balance the federal budget.

McCain has accused Obama of proposing the largest tax increase in U.S. history, which the authors of the new study described as wrong.

“Low- and middle-income taxpayers would undoubtedly be paying lower taxes under the Obama plan,” said Len Burman, director of the Tax Policy Center and a former Treasury official in the Clinton administration.

Other highlights:

• Obama would eliminate President Bush’s tax cuts for high-income families earning more than $250,000 in 2009 instead of waiting until they expire in 2011.

• Obama would increase taxes for middle-income senior citizens by an estimated 2.9 percent. Although people 65 and older would pay no income taxes if they earned less than $50,000, there would be no tax break for an estimated 10 million senior households with incomes higher than that. And seniors in those higher income brackets would pay higher tax rates on capital gains and dividends.

• McCain would rely on phase-in periods to keep the cost of the tax cuts lower than they might otherwise be. For example, he would phase in an increase in the exemption for dependent family members.

• McCain’s largest tax cuts would go to married couples because they are the most likely to be in the highest income brackets.

Contact Brian Tumulty at btumulty@gns.gannett.com

———

ON THE WEB

Tax Policy Center

One reason Hillary Clinton has had a rough time conceding the Democratic presidential nomination may be that losing is so unfamiliar to the New York senator and her husband.

Until last week, Bill and Hillary Clinton had not lost an election or a nomination fight since 1980. They have won 16 of 19 congressional, statewide or national nomination contests or general elections since Bill Clinton first ran for Congress in 1974.

Counting the 1992 presidential primaries Bill Clinton ran in, and the 54 contests Hillary Clinton ran in this year, a Clinton name has been on more than 100 statewide ballots around the country since 1976. Except for a few brief interludes here and there, they have been running for and mostly winning since the year Richard Nixon quit during Watergate.

In short, the Clintons are accustomed to receiving concessions, not giving them.

Hillary Clinton halted her campaign and endorsed Obama in a rally of her supporters Saturday at the National Building Museum in Washington, D.C.

But she refused to concede in a Tuesday night speech and instead delivered a campaign-style address that focused on the more than 17 million Democrats who voted for her in this year’s primaries.

“What does she want?” Clinton asked Tuesday night, referring to herself. “I want what I have always fought for in this whole campaign. I want to end the war in Iraq, I want to turn this economy around, I want health care for every American, I want every child to live up to his or her God-given potential. I want the nearly 18 million Americans who voted for me to be respected, to be heard, and to no longer be invisible.”

Her remarks drew tough criticism.

“The Clintons are sore losers, and Bill Clinton does believe he is the big dog and no one crosses the big dog,” Steffen Schmidt, an Iowa State University political scientist, said.

Because Clinton suspended her campaign, she can continue raising money. Her campaign Internet site asked for donations and urged viewers to “Be one of 18 million – Stand with Hillary.”

Schmidt compared a suspended campaign with an idling car. He said Clinton will remain “sort of this ticking sound out there” for Obama.

He said she “has few upward mobility opportunities after this,” noting that her senior New York colleague, Chuck Schumer, aspires to be Senate Democratic leader.

But there are lessons from Bill Clinton’s first two losses. The Clintons almost immediately jumped into the next contest – and redemption – at the ballot box.

In 1976, two years after losing a surprisingly close Arkansas House race to Republican John Paul Hammerschmidt, Bill Clinton was elected attorney general of Arkansas. He was ascended to governor in 1978 but lost to Republican Frank White in 1980 when voters became angry over fee increases and a federal program housing Cuban refugees in the state.

But Bill Clinton beat White in a rematch in 1982 and was re-elected in 1984, 1986 and 1990, surviving three statewide primary challenges along the way.

In 1992, he won the Democratic nomination and won the White House that year and in 1996.

In 2000, Hillary Clinton easily won a Senate primary and general election in New York. She was re-elected by a more than 2-1 margin in 2006. Less than three months later, she began running for president.

Throughout the busiest electoral life of any American political couple, one unifying theme has always been the Clintons’ quest for redemption. They have routinely defied doubters. The 1984 edition of the Almanac of American Politics, the bible of American politics, noted Bill Clinton’s up-and-down career to that point.

“Some absurdly mention this 32-year-old governor of a small state as a possible president,” the authors proclaimed then.

Eight years later, Bill Clinton was in the Oval Office.

Chuck Raasch is political editor for Gannett News Service. E-mail: craasch@gns.gannett.com. Get more behind-the-scenes reports, context and analysis about politicians and the political process in Raasch’s Furthermore blog.

By Chuck Raasch, Brian Tumulty

Apology offered by Clinton after remark at paper

WASHINGTON – Hillary Rodham Clinton made reference Friday to Sen. Robert F. Kennedy’s June 1968 assassination while he was running for the presidential nomination as part of her explanation of why she refuses to drop her bid for the White House.

Responding to questions posed by the editorial board of the Sioux Falls (S.D.) Argus Leader about why she’s being pressured to get out, Clinton said she couldn’t understand it. She noted that her husband did not wrap up the Democratic nomination in 1992 until the California primary was held in mid-June.

“And we all remember Bobby Kennedy was assassinated in June in California,” she said.

Her offhanded comment – which indirectly raised the possibility that Barack Obama, the Democratic front-runner, might also be assassinated – drew a quick rebuke from Obama’s campaign.

“Sen. Clinton’s statement before the Argus Leader editorial board was unfortunate and has no place in this campaign,” said Obama campaign spokesman Bill Burton.

Clinton later apologized.

“The Kennedys have been much on my mind the last days because of Senator Kennedy,” she said, referring to this week’s brain-tumor diagnosis of Sen. Edward Kennedy, D-Mass. “I regret that if my referencing that moment of trauma for our entire nation, and particularly for the Kennedy family, was in any way offensive.”

Clinton also denied reports that members of her presidential campaign had been discussing her exit strategy with Obama’s campaign.

For someone fighting off elimination and calls for her withdrawal, Hillary Clinton is looking a lot like a winner as the Democrats’ marathon presidential primary fight comes near its end.

The New York senator thumped front-runner Barack Obama in West Virginia on Tuesday, again raising questions about Obama’s appeal among blue-collar voters in states that Democrats have traditionally won when they have captured the White House.

Clinton showed no sign of giving in, and her advisers touted her decisive win as proof she deserves to stay in until the last votes are counted June 3.

“I am more determined than ever to carry on this campaign, until everyone has had a chance to make their voices heard,” Clinton told supporters at a victory rally in Charleston.

West Virginia provided a tailor-made audience for Clinton’s populist economic message that includes a call for a federal gas tax moratorium, which Obama opposes.

Network exit polls found that nearly two-thirds of West Virginia Democrats who voted cited the economy as their biggest concern, far ahead of the Iraq war and health care.

“What we saw tonight was Hillary Clinton was able to build the kind of coalition necessary to win swing states like West Virginia,” said Clinton adviser Mo Elleithee.

“Record turnout coupled with a decisive win, I think, shows a lot of excitement and energy behind Hillary’s candidacy,” Elleithee added. “Despite the reckless rush by many in the media and our opponent’s campaign to call this thing over, West Virginia said we are going to have a say in this thing, too.”

But Clinton is short on money – she has loaned her campaign more than $11 million – and Obama has maintained a steady lead in delegates for two months, even as Clinton grabbed victories in pivotal general election states like Pennsylvania and Ohio.

And with only five contests remaining, Clinton is increasingly dependent on “superdelegates” to give her the nomination. In recent days, they have been steadily flowing to Obama.

Obama on Tuesday continued his focus on the general election fight with McCain.

Speaking in Cape Girardeau in the swing state of Missouri, Obama did not even mention Clinton by name or refer to the West Virginia vote. Instead, he accused McCain of offering another four years of George W. Bush’s policies.

“There is a lot of talk these days about how the Democratic Party is divided,” Obama said. “But I’m not worried.”

Democrats will unite, he said, because “there’s too much that unites us as Democrats. . . . There’s too much at stake for our country.”

Obama plans to campaign in Michigan, another swing state, on Wednesday before heading to South Dakota and Oregon. Kentucky and Oregon will hold their primaries next Tuesday.

Obama’s advisers spent much of Tuesday trying to downplay the expected results. Adviser Bill Burton said that while 28 delegates were at stake in West Virginia, Obama had gained the support of 27 “superdelegates” – party leaders and elected officials – in the past week alone, putting him roughly 150 delegates from his party’s nomination.

He is roughly 175 delegates ahead of Clinton in the race to 2,025, needed to clinch the nomination.

On Tuesday, New Orleans Mayor Ray Nagin and Indiana Rep. Joe Donnelly endorsed the Illinois senator, both alluding to Obama’s desire to unite the country. Implicit in those observations is Obama’s need to unite the Democrats after a long primary.

Most of the clamor for Clinton to quit seems to be coming from party activists and Obama supporters concerned that the longer the competition goes on, the greater chance the eventual nominee could be further bruised in the upcoming contest with McCain.

But a USA TODAY-Gallup poll taken over the weekend indicated that 55 percent of rank-and-file Democrats want the contest to continue. And some of Clinton’s grassroots supporters are upset at the calls for the primaries to end.

“I think it’s a doggone shame,” said Loretta Haddy, 60, a state worker from Charleston, W.Va., who supported Clinton. “My vote is as important as someone who voted in a caucus in Iowa. Why should any of us not have an opportunity to having our voice heard?”

Others believe Obama could benefit from continuing to contest the last few primaries, while holding his delegate lead.

Jasmine L. Farrier, a political scientist at the University of Louisville, said Democrats in Kentucky are exhibiting rare excitement because they think their primary will count for something. She said Obama cannot afford to ignore that spirit even if Clinton is favored to win there.

Farrier noted that while Kentucky voted for Republican George W. Bush twice, it also voted for Bill Clinton twice in the 1990s. She said issues such as high energy costs could put Kentucky in play for Democrats this fall.

“This is a coast-to-coast primary now and people in Kentucky and in Oregon – and in the other states that haven’t voted – deserve their say,” Farrier said.

While Clinton is favored to win Kentucky next week, Obama is favored in Oregon. Those contests are followed by votes in Puerto Rico on June 1 and South Dakota and Montana on June 3 conclude the primary season. The pressure on Clinton to drop out before the end might hold more weight if she were losing, Farrier said.

“She’s not Joe Biden,” Farrier said, “she’s winning contests.”

Raasch’s blog: Get more behind-the-scenes reports, context and analysis about politicians and the political process in Raasch’s Furthermore blog. Look for it at http://gns.gannettonline.com/apps/pbcs.dll/section?Category=BLOGS03.

Chuck Raasch is political editor for Gannett News Service. E-mail: craasch@gns.gannett.com. Get more behind-the-scenes reports, context and analysis about politicians and the political process in Raasch’s Furthermore blog.

By Chuck Raasch, Brian Tumulty

CHERAW, S.C. – The sheen of inevitability that Sen. Hillary Rodham Clinton has cloaked around her presidential candidacy has been suddenly and fiercely challenged.
Now, as the 2008 presidential campaign comes into focus for many Americans, will attacks on the New York senator’s veracity, consistency and honesty hurt her, or backfire on her opponents?
Will Clinton’s less enthusiastic supporters take a second look at her character?
Or will they dig in further for her, seeing the questions about her character as evidence that her opponents are being overrun by the potential first female president’s rendezvous with history?
One thing appears increasingly certain: Less than two months before the first real votes are cast, the intensity of attacks on the Democratic senator’s character is de facto proof that both Democrats and Republicans consider her the front-runner going into 2008.
She has greatly helped create the impression of being the one to beat, not only by virtue of polls, but in the way she has campaigned.
She is trying to come across as a battle-scarred trailblazer, running a campaign that has all the look and feel of an incumbent president – down to the Secret Service protection and carefully controlled media access.
Most improbably of all, she’s portraying herself as the true change agent, despite 16 years in the national spotlight.
Led by John Edwards, the former North Carolina senator, Democratic and Republican contenders spent the past week trying to strip all these trappings away.
Campaigning in this textile, lumber and cotton town on Friday, Edwards amplified a Clinton-can’t-be-trusted refrain from a contentious debate in Philadelphia three nights earlier.
He accused Clinton of using “smoke and mirrors” to duck tough questions and said her haul of tens of thousands of dollars in campaign contributions from lobbyists, defense contractors and corporate interests made a mockery of her change-agent claims.
“It is my contention that she continues to say she wants change, yet she defends a system that is clearly broken,” Edwards told reporters after speaking to about 250 South Carolinians who had gathered here, in jazz great Dizzy Gillespie’s hometown.
The anti-Hillary chorus was sung all week. Republican contender Rudy Giuliani said Clinton has never run anything.
Former Hewlett-Packard chairman and CEO Carly Fiorina swiped at Clinton’s gender appeal when Fiorina introduced Republican Sen. John McCain at an appearance at Coastal Carolina University on Thursday.
“I am a woman, and I know what it’s like to be in a man’s world,” Fiorina said. Arizona’s McCain, she added, has “greater capabilities, greater character, to lead than does Hillary Clinton.”
Even the reluctant attacker, Illinois Sen. Barack Obama, joined in, saying the New York senator had a propensity to parse.
If all this sounded vaguely familiar, it was because it was a reprisal of a 1990s theme: that an aspirant named Clinton was too slick and too willing to dodge questions to be trusted in perilous times.
Clinton’s campaign manager dubbed the attacks “politics of pile-on,” and her supporters viewed them as further evidence of her formidableness. After several days of back and forth, Clinton, in an ironic twist, employed a domestic metaphor in her defense.
“I will let my opponents run whatever campaign they choose to run because that’s their right,” she said. “But I anticipate it’s going to get even hotter. And if you can’t stand the heat, get out of the kitchen. And I’m very much at home in the kitchen.”
When her husband ran for president in 1992 and her potential impact on his presidency was questioned, Hillary Clinton angered traditionalists by saying: “I suppose I could have stayed home and baked cookies and had teas, but what I decided to do was to fulfill my profession which I entered before my husband was in public life.”
Today, as the challenge to Clinton continues, the political has become the psychological.
Was the senator playing the gender card by implying that a bunch of men were ganging up on her?
Had she so successfully assumed the mantle of Democratic front-runner – leading nationally by wide poll margins, vigorously contending in all the key early states – that all her detractors had left was what the Clintons long ago dubbed the “politics of personal destruction?”
Some grass-roots Democrats aren’t enamored with the fight.
“I don’t like this at all,” said Obama supporter George Stukes, 57, from Manning, S.C. “Mention the Republicans, but not this going against each other.”
For others, the attacks ring true. Edwards “is right on target,” said James Williamson, who had come out to see Edwards speak.
“She is a corporate Democrat, and we have to break that cycle of the good-old-boy network which is alive and well in Washington,” said Williamson, the president of a technical school in Cheraw.
As to Clinton’s assertion that she is challenging the good-old-boy club, Williamson said, “I don’t think so.”
Yet, as further evidence of the power of the history and familiarity that Clinton carries, Williamson says he still may vote for her in South Carolina’s Jan. 29 primary.
For some, all the fuss is further evidence that Clinton’s campaign is in presidential mode.
“This is just a much more polished group of people who really have the shtick down,” said Ellie Tsetsi, executive director of a maternal and child health group in Claremont, N.H., which Clinton visited Friday. “They know what they are doing. There is a lot of Secret Service, of course. But the down side is she is not taking questions, and she’s not lingering to see everybody in the room.”
Raasch’s blog
Get more behind-the-scenes reports, context and analysis about politicians and the political process in Raasch’s Furthermore blog. Look for it <a href=”http://gns.gannettonline.com/apps/pbcs.dll/section?Category=BLOGS03″>here</a>.

Chuck Raasch is political editor for Gannett News Service. E-mail: craasch@gns.gannett.com.Brian Tumulty reported from New Hampshire. E-mail: tumulty@gns.gannett.com

By Chuck Raasch, Brian Tumulty

WASHINGTON – Sen. Chuck Schumer and other congressional Democrats appealed to the Bush administration Wednesday to increase the flexibility of federal agencies in helping more homeowners facing foreclosure because they cannot refinance their subprime mortgages.

Congressional Democrats discussed several legislative proposals in the works to address the mortgage crisis, which some likened to a “50-state Katrina,” at a midday news conference.

The White House, however, said President Bush’s plan for addressing the mortgage crisis announced Aug. 31 already is on a path to help 240,000 homeowners avoid foreclosure in the next 12 months.

Among those actions, the administration has allowed Fannie Mae and Freddie Mac to increase their mortgage portfolios by 2 percent help deal specifically with the subprime mortgage crisis. The two government-sponsored agencies purchase mortgages from lenders and package them as securities, increasing liquidity in the mortgage market.

Schumer, D-N.Y., said a larger increase of 10 percent is needed to prevent hundreds of thousands of foreclosures in the coming months

“In the next three to six months things are going to get very bad,” Schumer said.

Senate Majority Leader Harry Reid said lawmakers only want to help people who live in their homes. In his home state of Nevada, he said 20 percent of the foreclosures in Las Vegas involve properties that were bought by speculators who don’t live in the home.

Community groups such as the Legal Aid Society that are providing counseling to homeowners in financial trouble are finding that they can’t arrange mortgage refinancing unless they obtain loans that carry the backing of Fannie Mae and Freddie Mac, Schumer said.

Lawmakers said they are prepared to enact legislation requiring the 10 percent increase, but the administration has the power to do it without congressional action.

“Most of the people in subprime trouble, if there were a bank on the scene who still held their mortgage they’d be refinanced,” Schumer said, indicating that half have enough household income to qualify for a regular mortgage.

Loan workouts are less expensive to lenders than foreclosures, the lawmakers said. Housing counselors cost about $1,500 compared to the $227,000 average combined cost of a foreclosure to the homeowner, lender, local municipality and neighboring homeowners who experience a drop in property values, according to the congressional Joint Economic Committee.