Arizona representatives co-sponsor bill seeking relief

When Barbara Sotelo’s husband died in an accident two years ago, her life began to spiral downward.

Faced with raising three children on her paycheck from the state Department of Corrections, Sotelo scraped by for most of a year. Then her adjustable-rate mortgage payment jumped to $1,500.

“That made me use my credit cards so I could keep up,” said the 38-year-old single mother.

Leaning on credit cards for school clothes and sometimes food soon led to higher card balances and payments, and the mortgage burden led to late card payments that sparked higher interest rates.

Credit fees and penalties quickly spun out of control. Sotelo has paid more than $1,000 in card fees in the past year, and all of her interest rates have jumped above 20 percent.

Now she is struggling to keep her home, and credit card companies won’t lower rates or forgive fees that stack on top of existing balances, which total about $8,000, she said.

It’s a difficult life that puts knots in her stomach with every ring of the telephone.

“You go through anxiety, and you’re afraid to answer the phone,” Sotelo said. “My phone is always ringing. Sometimes at 7 o’clock on Saturday, they start calling.”

A bill passed by the U.S. House of Representatives and one pending in the Senate would shelter consumers from some credit card practices that hurt people like Sotelo.

The House’s Credit Cardholders’ Bill of Rights (HR 627) would prevent punitive interest rate increases unless an account was more than 30 days late and require credit card companies to give 45 days’ notice for interest rate increases. It would limit late and over-limit fees and allow consumers to set “hard” limits so purchases would not go through if they push cards over the limit.

U.S. Reps. Gabrielle Giffords and Raúl Grijalva, Democrats from Tucson, co-sponsored the bill.

A companion bill in the Senate would ban punitive interest rate hikes unless payments were 60 days behind, let consumers regain low interest rates after six months of paying on time and require anyone 21 or younger to prove ability to repay before a card could be issued.

The legislation is likely to change before a compromise version is sent to President Obama, and credit provider lobbyists are sure to fight to dilute the bill.

Obama has signaled he would sign such legislation if it passed.

Card debt increasing

About 46 percent of American families had credit card balances in 2007, with an average of $3,000 outstanding – a 25 percent balance increase in three years, according to a Federal Reserve survey report in February.

From 2000 to 2003, the average balance increased just 9 percent, the report said.

Nonhousing debt payments accounted for an average 14 percent of disposable income among survey respondents in 2007 – virtually unchanged from 2004.

But the number of families with debt payments totaling 40 percent or more of their income rose 2.5 percent from 2004 to 2007, which hints at an increase in families with burdensome debt, the report said.

When Sotelo needed advice, she turned to the nonprofit Primavera Foundation, which offers free financial counseling and education. Primavera can help people avert disaster, but that’s usually not the case, said counselor Lisa Peregrina.

“A lot of people don’t learn about credit until they’re in a credit card crisis,” Peregrina said.

Primavera sees walk-in clients and gets referrals, often from banks trying to help people qualify for home or other loans. The number of clients seeking help has risen dramatically in recent months, Peregrina said.

“And the numbers keep going up,” she said.

Consumer Credit Counseling Services, a nonprofit funded largely by credit card issuers, offers free counseling. And for $25 a month, it will manage your debt for you. The company has also seen a sharp increase in clients, said counselor Maria Grijalva.

High interest rates hurt

Interest rates are a common route to higher credit card bills, according to Grijalva and Peregrina.

Many card companies offer low or no interest for new accounts, then slip a policy into the fine print that says interest rates rise if payments are late. Sotelo has been hit by this numerous times, and Peregrina sees it all too often.

“The rate may be zero percent, but if you miss one payment, it might go up suddenly to 29 percent,” Peregrina said.

The House bill would prohibit such rate changes unless a payment were more than 30 days late. The Senate version would extend that to 60 days.

Over-limit fees that often top $30 also snare consumers. Again, credit card companies’ fine print often lets them change limits at will and allows the card holder to freely charge beyond limits.

Card companies are increasingly lowering credit limits, even for customers who always pay on time, and a lack of hard limits means many consumers unwittingly exceed limits and get stung by fees.

Both bills would force credit card companies to notify you at least 45 days before contract changes, such as lowered credit limits.

Avoiding disaster

A key reason people get trapped is a lack of information, even a little bit of which can steer you clear of fees and skyrocketing interest rates, Grijalva said.

“A majority of people don’t even know what their interest rates are,” she said.

Above all, Grijalva urged consumers to read the fine print in credit applications and terms.

“You always have to read the fine print, and it’s always, always in the very fine print where the most important information is,” she said.

Both Grijalva and Peregrina suggest calling credit card companies to negotiate lower interest – even if you have a high rate because of late payments.

“You do have a right to call that credit card company and ask them to negotiate,” Peregrina said.

She also suggests self-imposed balance limits. Keeping your outstanding balance at half or less of your available balance helps your credit score and lowers the chance you will charge over the card limit, she said.

Always review statements, limit yourself to one or two cards for emergencies only and keep those cards at home to avoid temptation, Grijalva said.

“Don’t keep it in your wallet,” she said.

Vigilance and education are your best weapons – whether you are already in trouble with debt or have always been able to pay on time, the counselors said.

And be patient, Peregrina said.

“It took some time to get this debt up. It’s going to take some time to pay it down.”

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WHERE TO GET HELP

• Primavera Foundation, 623-5111

• Chicanos por la Causa, 253-0838

• Consumer Credit Counseling Services, 795-1121

• Catholic Community Services of Southern Arizona, 623-0344

• Family Housing Foundation, 318-0993

• TMM Family Services, 322-9557

• Tucson Urban League, 791-9522

• Old Pueblo Community Services, 445-7085

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AVOIDING CREDIT WOES

• Have one or two credit cards, and use them only for emergencies.

• Don’t carry credit cards with you; leave them at home so they won’t tempt you.

• Review statements carefully. Interest rates and card limits can change unexpectedly, even for people who pay on time.

• Ask questions of your credit card companies.

• Know what actions can trigger higher interest rates such as late payments or over-limit charges.

• Don’t just blame your credit card company when problems arise; you are at fault, too.

• Negotiate with card companies to get lower interest rates. Sometimes they listen.

• Start negotiating with creditors before you have trouble.

Sources: Primavera Foundation, Consumer Credit Counseling

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DID YOU KNOW?

• 46 percent of American families had credit card balances in 2007, with an average $3,000 outstanding balance, a 25 percent balance increase in three years, according to a Federal Reserve survey released in February. During the previous three years, the average outstanding balance increased 9 percent.

• Nonhousing-related debt payments accounted for an average of 14 percent of disposable income among respondents to a 2007 Federal Reserve survey, virtually unchanged from 2004.

But the number of families with debt payments totaling 40 percent or more of their income rose 2.5 percent from 2004-07, which hints at an increase in families with burdensome debt, the survey said.

Merchants: Customers avoid us; agents cite improved security

Border Patrol agent Alex Pulliza waves through northbound traffic on Interstate 19. Arizona uses random Border Patrol checkpoints, while Texas, New Mexico and California have permanent checkpoints.

GREEN VALLEY – Local business owners say a U.S. Border Patrol checkpoint on Interstate 19 north of Tubac is killing tourism, putting residents in harm’s way and costing millions of dollars in home sales.

But Border Patrol officials credit the checkpoint with helping them seize tons of illegal drugs, make hundreds of arrests and boost security in the area.

Opposition to the checkpoint has heated up since an expansion was announced last week.

“The checkpoint is a safety hazard to the communities north and south of us,” said Carol Cullen, executive director of the Tubac Chamber of Commerce.

Cullen is concerned that smugglers looking to get around the checkpoint are driven up the Santa Cruz River, Anza Trail or along railroad tracks and gas lines, pushing them closer to homes and people.

The “temporary” checkpoint has been in place since 2007, when a rule requiring the Border Patrol to change sites every two weeks and championed by former U.S. Rep. Jim Kolbe expired.

In June, the Border Patrol will add $1.5 million in “interim” facilities that include a modular building, outdoor lighting and a canopy to protect agents and their search dogs from heat, rain and wind.

A planned $27 million permanent checkpoint could be years off, but its funding is included in the 2008-09 fiscal year budget for the Department of Homeland Security.

Mike Scioli, a spokesman for the Tucson Sector of the Border Patrol, understands the opposition but points out that many residents are thankful for the “second layer of defense” against smugglers and other criminals.

Recently, the sector reported a decrease in arrests at the checkpoint, “which means it’s working,” Scioli said.

Even with a decrease, the numbers are formidable: From October 2008 through March 2009, agents at the checkpoint seized 19,000 pounds of marijuana and made more than 300 arrests, Scioli said.

Out of 20 sectors in the United States, the Border Patrol’s Tucson Sector is the busiest, accounting for more than 50 percent of marijuana seizures and 44 percent of all arrests, he said.

“The numbers speak for themselves,” Scioli said.

After two years of having the temporary checkpoint in place, some business owners in the quaint, historical town of Tubac still eye it with disdain.

The Crowe’s Nest clothing boutique owner David Camet said he relies heavily on shoppers from communities north of the checkpoint. He said some customers, especially those from Green Valley, have called the checkpoint an inconvenience.

“People only come in now if they have to,” Camet said. “They don’t come to browse and enjoy a shopping day because they don’t want to have to wait 20 minutes in a line of cars to get home.”

Gary Hembree, owner of Old Presidio Traders, said the checkpoint has “done nothing to help business during these hard economic times.”

He said he has had Canadian customers ask if a passport is needed to get back through the checkpoint, and added that it creates an atmosphere of apprehension and confusion that drives away return customers.

But Don Stout of Tucson, who was shopping in Tubac last week with out-of-town company, said driving through the checkpoint doesn’t bother him.

“The checkpoint makes me feel secure,” Stout said. “I don’t think it should scare anybody, unless they have something to hide.”

Real estate agents said they have lost millions of dollars in sales because of the checkpoint.

“I’ve had people tell me, ‘I’m not going to drive through that thing every day,’ or that Tubac seems like a high-crime area,” said Zachary Freeland, director of new home sales for Brasher Realty in Tubac.

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WASHINGTON – The U.S. trade deficit rose in March for the first time since last July as the global recession cut sharply into sales of American exports. The politically sensitive deficit with China increased.

The Commerce Department said Tuesday the deficit widened to $27.6 billion in March, slightly lower than the $29 billion gap that economists had forecast.

The March deficit was 5.5 percent higher than February’s revised $26.1 billion trade gap, which had been the smallest since November 1999. Through the first three months of this year, the trade deficit was running at an annual rate of $359.7 billion, far below last year’s $681.1 billion. Economists expect the deficit will remain at low levels this year as a recession in the U.S. crimps demand for foreign goods.

Other reports out Tuesday showed home prices in most of the U.S. fell in the first quarter, which created buying opportunities in some states, while job openings have hit an eight-year low and companies remain reluctant to hire.

The global downturn also has cut into sales of U.S. exports. That will limit the amount of improvement seen in the deficit, which is the difference between what America imports and what it sells abroad. The slump in exports has been a blow to U.S. manufacturing giants such as Boeing Co. and Caterpillar Inc. who derive a large part of their sales from foreign markets.

For March, exports of goods and services fell 2.4 percent to $123.6 billion, the lowest level since August 2006. Sales of farm products dropped $2.4 billion, while exports of capital goods slid $1.7 billion, led by big declines in sales of civilian aircraft, telecommunications equipment, semiconductors, and domestic autos and auto parts.

Imports declined 1 percent to $151.2 billion, the lowest level since September 2004. Imports of capital goods dropped $516 million, led by declines in industrial machinery. The overall import level fell even though imports of oil rose 6.2 percent to $17.2 billion, the highest level since January.

The politically sensitive deficit with China rose 10 percent to $15.6 billion in March, the largest gap since January. China for more than a decade has been the country with the largest trade surplus with the U.S. The gap has triggered repeated calls in Congress for a crackdown on what critics see as unfair trade practices in China that also have resulted in the loss of millions of American manufacturing jobs.

China reported Tuesday that its global export sales fell 22.6 percent in April from the same month last year, fresh evidence that pain in the country’s trade sector persists due to slumping global demand.

The Obama administration earlier this year said it will continue to hold high-level talks with China started by the Bush administration, although the frequency of the meetings was cut in half to once a year. The first meeting is scheduled for this summer in Washington.

With the U.S. recession expected to last until the second half of this year and the downturn in many other nations expected to drag into 2010, economists don’t expect a significant rebound in trade anytime soon.

Meanwhile, home prices in the U.S. also continue to fall, although that has prompted sales gains in a handful of states. The National Association of Realtors said that median sales prices of existing homes declined in 134 out of 152 metropolitan areas compared with the same period a year ago. Nationwide, sales of foreclosures and other distressed properties made up about half of the market.

Home sales fell in all but six states — Nevada, California, Arizona, Florida, Virginia and Minnesota — where buyers have been able to snap up foreclosures at a deep discount. Still, the median sales price nationwide was $169,900, down 13.8 percent from a year ago. The median price is the midpoint, which means half of the homes sold for more and half for less.

The housing slump and latest hit to export sales have added to the wave of job layoffs in the U.S. There were 2.7 million jobs available nationwide in March, down from 3 million in February and 4 million a year ago, according to the Labor Department. That’s also the lowest number in the eight years the department has tracked job openings.

Other recent reports indicate that while layoffs may be slowing compared with the waves announced earlier this year, hiring hasn’t picked up much since the department gathered the job openings data in March.

The department on Friday reported 539,000 net job losses in April. While still elevated, it was the lowest level in six months and below the 700,000 monthly average during the first quarter of this year.

Many economists believe the unemployment rate, which hit 8.9 percent in April, will climb to around 10 percent even if the recession ends and a recovery begins sometime this fall.

Without new hiring, the unemployment rate will continue to rise. That’s because many people who were discouraged and stopped looking for work at the depths of a recession customarily return to the labor market once a recovery begins. If jobs aren’t available, those new job seekers are added to the total of unemployed workers.

Private firm cleaning up at Tucson’s expense

Bill Hill and Chris Landeen dump their trash at the Los Reales Landfill, 5300 E. Los Reales Road.

Tucson officials estimate a transfer station opened in November by garbage giant Waste Management will siphon 100,000 tons of trash and $3 million in revenue from the city over the next year.

The lost revenue, in combination with plummeting prices for recyclables and high prices for gas, mean the 5-year-old and much scorned city garbage fee is set to go up. Landfill fees have already seen increases.

Environmental Services Department Director Andrew Quigley has asked the City Council to raise the trash fee to $14.50 per month beginning July 1.

A City Council vote on the proposed 3.6-percent increase is set to follow a public hearing June 2.

That day, the council also is slated to tentatively approve a $1.3 billion budget that, as of Friday, included $12.4 million in new or increased taxes and millions more in raised fees. The same day, the council will weigh whether to raise bus fares.

With a budget that relies heavily on sales tax receipts, the city has been struggling to pay its daily bills.

The Environmental Services Department is in similar shape, also having to contend with volatile gas and recyclables prices and relying on sources of funding that are on the decline, most notably private haulers’ landfill fees.

While the public landfill business appears on a downhill slide, Waste Management is reporting increased landfill profits.

The company stated in its first quarter earnings statement that its landfill revenues rose 3.1 percent from the same year before even as its overall earnings dropped more than 16 percent amid a recession.

Waste Management operates the largest network of landfills in the country, with 277 sites accepting more than 116 million tons of waste per year, according to its Web site.

Two of those sites are in the Tucson area, and both have represented challenges to the local governments operating nearby dumps.

A transfer station at 5200 W. Ina Road contributed to Pima County raising landfill fees last year and second-guessing the timing of the closure of its Northwest Side landfill at Tangerine Road.

The opening of Rincon Transfer Station at 5890 S. Mann Ave. in November is causing consternation among city officials because private haulers who once dropped waste at the city’s Los Reales Landfill have begun using the Waste Management facility.

Quigley estimates the shift will mean 20 percent less trash – 100,000 tons – entering the city’s Los Reales landfill next fiscal year, which begins July 1.

Waste Management Arizona spokeswoman Melissa Quillard would not say how much trash the Mann Avenue transfer station accepts. She said publicizing the information could give competitors an advantage.

But Quigley is certain a large proportion of the trash that had been going to Los Reales is now headed for ultimate disposal at Waste Management’s Maricopa and Pinal county dumps.

In a bid to recoup some of the financial losses that follow from the diverted trash, Quigley has offered cut rates to haulers that promise to deliver a set amount of waste.

He hasn’t received any responses yet, though he said haulers expressed interest when he first came up with the deal.

“Right now, we’re just waiting,” he said.

Councilwoman Nina Trasoff praised Quigley for his attempt to extend a deal to the haulers.

“I think that the money he’s going to recoup that way is a very creative approach,” she said.

Regardless of how successful the contract program is in luring haulers back to Los Reales, Environmental Services will almost definitely need other revenue to stay in the black.

That leaves the City Council with an unpopular political decision and one that brushes up against campaign promises made by at least two council members.

Both Trasoff and Councilwoman Karin Uhlich campaigned against the $14 a month trash fee four years ago, saying it was too expensive and implemented inappropriately.

They said when the fee was imposed the year before – 2004 – public comment opportunities were lacking and the waiver program for low-income city residents was inadequate.

Now they’re faced with upping the price.

“(Raising the trash fee) will never make me happy,” Trasoff said. “But it’s been demonstrated that there’s a real need and the money is used for garbage services. I can live with it so long as I know that we have a meaningful waiver program in effect.”

Uhlich takes a similar stance, though she puts the proposed increase in the context of a plan to attach fees to indexes.

“I think there seems to be support on the council to apply indexes across all city fees so that we avoid the large adjustments, which are historically more the norm,” she said.

The reason for indexing, Uhlich said, is that increases will be predictable and therefore easier to incorporate into budgets.

So that applying an index wouldn’t simply mean prices increase gradually but without any relationship to cost trends, Uhlich suggests using indexes that apply directly to the fee at hand.

A fuel index, for example, could be applied to a garbage fee because fuel is one of the primary costs in collecting trash, she said.

Councilman Rodney Glassman, like Trasoff, is not entirely opposed to indexing, though he is wary of applying indexes across the board.

“It’s important when looking at the question of indexing to consider other factors such as the economy and the actual cost of providing the services,” he said. “I support indexing as part of a pricing model but not something that can be relied upon as the sole indicator of price adjustment.”

He advocates giving department directors more leeway in setting fees and running departments more like businesses.

He also thinks the trash fee increase is a better alternative to letting garbage services suffer because there’s not enough money to pay for them.

“It’s unrealistic to think that the department can continue to provide services without adjusting their rates over time,” he said.

Councilwoman Regina Romero also seems to accept the fee increase but is less enthusiastic about using an index.

“It seems that the fees are accumulating,” she said. “At the same time, I see the budget holes.”

The Rincon Recycling and Transfer facility, 5890 S. Mann Ave.

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TRASH AT A GLANCE

Los Reales Landfill, 5300 E. Los Reales Road

Hours: 6 a.m. to 5 p.m. Monday through Saturday

Residential rates: $10 for a covered load weighing less than a ton; $30 per ton for heavier, covered loads; uncovered loads cost $5 more

Commercial rates: $30 per ton for covered loads; $5 more for uncovered loads

Waste Management’s Rincon Transfer Station, 5890 S. Mann Ave.

Hours: 7 a.m. to 3 p.m. Monday through Friday; 7 a.m. to noon Saturday

Residential rates: $38 per ton plus $14 per load for loads weighing less than 500 pounds

Commercial rates: $38 per ton plus about $5 in variable fees

Source: City of Tucson and Waste Management

PHOENIX – A logjam of bills on topics ranging from abortion to transportation has built up as the Arizona Legislature slogs through one of its most unusual sessions.

And there could be splinters aplenty when the logjam eventually breaks – whenever that is.

Trying to solve a state budget crisis has had lawmakers tied up in knots for months, and that work is incomplete.

The focus on that paramount problem has been both natural – the size of Arizona’s $3 billion shortfall is one of the biggest in the nation proportionally to the overall size of the state budget – and forced.

Insisting that lawmakers approve the budget first, Senate President Bob Burns placed an embargo on formal consideration of nonbudget bills when the session started in January. That has placed roughly 500 Senate bills in limbo, not even being assigned to committees, let alone being considered by committees or the full Senate.

Burns, R-Peoria, has said the Senate can start considering bills once the Legislature passes the budget.

Meanwhile, the House has been considering nonbudget bills throughout the session, but at an unmistakably slower place than usual.

While hundreds of bills cleared committees, it wasn’t until Wednesday that the House took the first formal votes on nonbudget bills other than a sweeping abortion measure approved earlier this spring.

Bills that went to the Senate on Wednesday – to sit for now, with no action expected for weeks – included measures on health insurance, students’ religious liberties and concealed weapons permits.

That was one day after the House Appropriations Committee endorsed a Republican budget-balancing plan.

“We think the time has come to start moving Arizona’s business forward and that’s what we’re going to do,” said House Majority Whip Andy Tobin, R-Paulden.

But now the House Republicans’ budget proposal and those of others are the subject of negotiations between legislative leaders and Republican Gov. Jan Brewer. It’s not known when they’ll bear fruit, but the effective deadline is June 30, the last day of the current fiscal year.

So what will happen when the budget is approved?

“I don’t know,” because it largely depends on timing, said Sen. John Huppenthal, a Chandler Republican who has served in the Legislature since 1993. “We could get this thing moving in a week or we could be here until July.”

However, he and other lawmakers say there will have to be a dramatic winnowing of the number of bills once they can be considered.

Some measures likely to make the cut will be those that could implement goals set by the “majority program” that each chamber’s Republican majority set for the session.

Those topics include property taxes, speed cameras, abortion, school choice, regulatory reform, government privatization, health coverage, selection of judges, toll roads and the initiative process.

Other bills moving through the process deal with such high-profile topics as foreclosures, day laborers and fireworks.

However, seemingly humdrum housekeeping bills intended to keep the state government going shouldn’t be ignored, according to several Senate committee chairmen contacted by The Associated Press.

Sen. John Nelson, R-Litchfield Park, said he’s assembling a transportation bill “that has to go because it’s conforming legislation.” For example, one provision would change Arizona law to track federal requirements on commercial driver licenses, Nelson said.

Without it, “everybody that’s driving a commercial vehicle – you can’t get a license,” he said.

Sen. Linda Gray, R-Glendale, said she’ll be pushing a bill to bring the state into compliance with a federal law on foster and adoptive parents.

“Unless we get an extended waiver it would cost the state $148 million if we don’t approve,” the Glendale Republican said in an e-mail.

There could be only a few weeks – instead of months normally – to consider nonbudget bills.

Therefore, supporters of legislation better have it polished and ready to go, said Huppenthal, the Senate’s education committee chairman.

Huppenthal said he has met weekly all session with “stakeholder” groups to wrap numerous proposals into one sweeping education bill that all the groups can support.

“They’ve ground them down and . . . each one of them has things in there that they support,” Huppenthal said.

“I’m not so sure that the (other) members have been polishing their bills.”

Once the logjam breaks, there easily could be unrealistic expectations, tit-for-tat gamesmanship and House vs. Senate misunderstandings if there’s a mad rush to push bills through amid the necessity to prioritize them, said Nelson, a legislator since 2001.

“Leadership is going to have to pull out the important bills that have to go regardless as to whose they are, so that’s going to set up some frustration and then we start saying we’re playing favorites and that kind of stuff,” Nelson said.

“We get down to the first- or second-grade level.”

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Will legislators still be around in June?

There’s no legal barrier to prevent lawmakers from continuing other legislative work once they’ve approved a new state budget before the fiscal year starts July 1.

But practicalities could be a problem for the part-time Legislature.

There’s always a falloff in legislative attendance as sessions slip into June, with lawmakers coming and going for other jobs, family commitments, and even previously planned vacations and conferences.

If enough House and Senate members aren’t on hand, that could make it impossible to pass legislation. That’s because bills must be passed by majorities of each chamber, not just of those lawmakers on hand for a vote.

The Arizona Citizens Defense League, a gun-rights group lobbying for passage of several bills, recently urged its supporters to implore lawmakers to stick around even after a budget is passed. “All it takes is a few legislators to leave and the session is effectively over.”

President Barack Obama speaks about health care reform on Monday in the State Dining Room of the White House in Washington.

WASHINGTON – President Barack Obama on Monday portrayed the health care industry’s promise to cut $2 trillion in costs over 10 years as “a watershed event” in the long search for a solution to the millions of uninsured.

Whether that is true won’t be readily known as debate begins in Congress over sweeping health care legislation. What is known now is that the move puts the industry groups involved firmly inside the process of expanding coverage, with the hope they can steer the final product toward something that doesn’t restrict their profitability.

“I will not rest until the dream of health care reform is achieved in the United States of America,” Obama declared in the White House’s State Dining Room as he announced the voluntary offer made to the White House Monday by a consortium of hospitals, insurance companies, drug makers and doctors.

They told Obama they would slow rate increases by 1.5 percentage points a year by improving coordination, focusing on efficiency and embracing better technology and regulatory reform.

Government economists say the shaved costs would create breathing room to help provide health insurance to an estimated 50 million Americans who now do not have it.

It’s a substantial change from the time in the early 1990s when President Bill Clinton took on health care reform, only to see industry leaders fight back hard, ultimately killing the White House proposal before it could gain any traction.

Still, even Obama acknowledged that the step announced Monday would be meaningful into the future only if it is not a singular event, but part of a larger and successful effort toward universal health care coverage for Americans. He said the country “can, will and must” accomplish this goal by the end of the year.

“There’s so much more to do,” he said.

“We can’t continue down the same dangerous road we’ve been traveling for so many years,” Obama said. “Reform is not a luxury that can be postponed, but a necessity that cannot wait.”

He indirectly criticized some of the groups at his side for killing the effort last time.

“All too often, efforts at reform have fallen victim to special interest lobbying aimed at keeping things the way they are, to political point-scoring that sees health care not as a moral issue or an economic issue, but as a wedge issue, and to a failure on all sides to come together on behalf of the American people,” the president said.

The industry letter said “these and other reforms will make our health care system stronger and more sustainable.”

Although the offer from the industry groups doesn’t resolve thorny details of a new health care system, it does offer the prospect of freeing a large chunk of money to help pay for coverage. And it puts the private-sector groups in a good position to influence the bill Congress is writing.

The industry groups are trying to get on the administration bandwagon for expanded coverage now in the hope they can steer Congress away from legislation that would restrict their profitability in future years.

Insurers, for example, want to avoid the creation of a government health plan that would directly compete with them to enroll middle-class workers and their families. Drug makers worry that in the future, new medications might have to pass a cost-benefit test before they can win approval. And hospitals and doctors are concerned the government could dictate what they get paid to care for any patient, not only the elderly and the poor.

It’s unclear whether the proposed savings will prove decisive in pushing a health care overhaul through Congress. There’s no detail on how the savings pledge would be enforced. And, critically, the promised savings in private health care costs would accrue to society as a whole, not just the federal government. That’s a crucial distinction because specific federal savings are needed to help pay for the cost of expanding coverage.

Costs have emerged as the most serious obstacle to Obama’s plan. The estimated federal costs range from $1.2 trillion to $1.5 trillion over 10 years, and so far Obama has only spelled out how to get about half of that.

By Philip Elliott, Ricardo Alonso-Zaldivar

WASHINGTON – The Obama administration warned corporate America on Monday that the government will more aggressively investigate big firms that hurt smaller competitors — contending lax enforcement by the Bush administration fueled the current economic troubles.

Assistant Attorney General Christine Varney said the Justice Department is abandoning legal guidelines established by the Bush administration in September 2008. Critics complained that the earlier instructions made it difficult to pursue antitrust cases against big firms.

Varney laid out the new policy in a speech to the Center for American Progress, a left-leaning think tank.

She said some of the economy’s problems were due to the lack of enforcement in the previous 10 years — a clear jab at the Bush administration, which, she said, raised too many hurdles to antitrust investigations.

“There was a high cost to standing aside. We must change course and take a new tack,” said Varney.

The new rules mark a return to the antitrust policies of the Clinton administration, which brought a major action against Microsoft. These days, similar questions are being asked about the market dominance of Google.

The Justice Department is reviewing a proposed legal settlement with authors and publishers that would expand Google’s digital library of books, after some librarians and consumer activists complained that the proposed settlement will give Google a digital monopoly on millions of books.

Asked about Google, Varney insisted her remarks weren’t aimed at any particular company or industry, but wanted all companies to get the message.

“Look, when you become successful and you have market power, however you define it, you need to pay attention to the rules,” she said.

Bruce McDonald, a lawyer and former antitrust official in the Bush Justice Department, said Varney’s comments don’t give any clear indication whether the government will challenge conduct by Google.

“We now know what direction Ms. Varney wants to take the antitrust enforcement, but exactly how far she will go will only be known when it’s played out in particular cases,” he said.

Ed Black, president of the Computer and Communications Industry Association, said Varney’s remarks showed firms should “do some self-correcting before they get corrected” by the government.

“It’s clear we have a new sheriff in town and I think there is so much that has been left ignored and not dealt with,” said Black.

The Justice Department is following up on a campaign pledge by President Barack Obama, who said the Bush administration had “what may be the weakest record of antitrust enforcement of any administration in the last half-century.”

Varney said the Obama administration would try to follow the historic lessons of The Great Depression in pursuing antitrust cases even in a troubled economy.

Ineffective government regulation, she argued, is contributing to the current economic problems.

“As antitrust enforcers, we cannot sit on the sidelines any longer,” she said, adding that new legislation may be needed to better police the marketplace.

Her division has also launched a program designed to sniff out fraud or anticompetitive collusion surrounding the government’s $787 billion economic stimulus package.

———

ON THE WEB

White House Council of Economic Advisers’ Report: tinyurl.com/pevwsu

WASHINGTON – With the economy performing worse than hoped, revised White House figures point to deepening budget deficits, with the government borrowing almost 50 cents for every dollar it spends this year.

The deficit for the current budget year will rise by $89 billion to above $1.8 trillion — about four times the record set just last year. The unprecedented red ink flows from the deep recession, the Wall St. bailout, the cost of President Barack Obama’s economic stimulus bill, as well as a structural imbalance between what the government spends and what it takes in.

As the economy performs worse than expected, the deficit for the 2010 budget year beginning in October will worsen by $87 billion to $1.3 trillion, the White House says. The deterioration reflects lower tax revenues and higher costs for bank failures, unemployment benefits and food stamps.

For the current year, the government would borrow 46 cents for every dollar it takes to run the government under the administration’s plan. In one of the few positive signs, the actual 2009 deficit is likely to be $250 billion less than predicted because Congress is unlikely to provide another $250 billion in financial bailout money.

The developments come as the White House completes the official release of its $3.6 trillion budget for 2010, adding detail to some of its tax proposals and ideas for producing health care savings. The White House budget is a recommendation to Congress that represents Obama’s fiscal and policy vision for the next decade.

Annual deficits would never dip below $500 billion and would total $7.1 trillion over 2010-2019. Even those dismal figures rely on economic projections that are significantly more optimistic — just a 1.2 percent decline in gross domestic product this year and a 3.2 percent growth rate for 2010 — than those forecast by private sector economists and the Congressional Budget Office.

For the most part, Obama’s updated budget tracks the 134-page outline he submitted to lawmakers in February. His budget remains a bold but contentious document that proposes higher taxes for the wealthy, a hotly contested effort to combat global warming and the first steps toward guaranteed health care for all.

Obama’s Democratic allies controlling Congress have already made it clear that they will reject key elements of his plan. Already apparently dead is a plan to raise $267 billion over the next decade to pay for his health care initiative by curbing the ability of wealthier people to reduce their tax bills through deductions for mortgage interest, charitable contributions and state and local taxes.

And the congressional budget plan approved last month would not extend Obama’s signature $400 tax credit for most workers — $800 for couples — after it expires at the end of next year.

Obama’s remarkably controversial “cap-and-trade” proposal to curb heat-trapping greenhouse gas emissions is also reeling from opposition from Capitol Hill Democrats from coal-producing regions and states with concentrations of heavy industry. Under cap-and-trade, the government would auction permits to emit heat-trapping gases, with the costs being passed on to consumers via higher gasoline and electric bills.

Among the new proposals is a plan — already on its way through Congress — that would increase the Federal Deposit Insurance Corporation’s borrowing authority from $30 billion to $100 billion in order to grant a two-year reprieve from higher deposit insurance premiums while the industry is struggling.

Also new are several tax “loophole” closures and increased IRS tax compliance efforts to raise $58 billion over the next decade to help finance Obama’s health care measure. The money makes up for revenue losses stemming from lower-than-hoped estimates of his proposal to limit wealthier people’s ability to maximize their itemized deductions.

The updated budget also would repeal an unintended tax windfall taken by paper companies that use a byproduct in the paper-making process as fuel to power their mills. The tax credits were never intended for paper companies, but now they could be worth more than $3 billion a year, according to a congressional estimate.

The budget would make permanent the expanded $2,500 tax credit for college expenses that was provided for two years in the just-passed economic stimulus bill. It also would renew most of the Bush tax cuts enacted in 2001 and 2003, and would permanently update the alternative minimum tax so that it would hit fewer middle- to upper-income taxpayers.

NEW YORK – Three banks that have received a clean bill of health from the government have announced plans to raise capital to help repay government funds received last fall.

U.S. Bancorp, Capital One Financial Corp. and BB&T Corp. have all announced common stock offerings, proceeds of which will be used, subject to approval, to help repay preferred stock investments the government made as part of the U.S. Treasury’s TARP Capital Purchase Plan.

Banks that received funds under this program have become subject to increased government scrutiny, as well as limitations on executive pay.

US Bank, Capital One and BB&T were among the 9 banks deemed by the government to have enough capital to withstand a deeper recession. On Thursday, the government announced the results of its “stress tests” of the 19 largest U.S. banks. Ten of those banks, including Bank of America Corp. and Citigroup Inc., must raise a total of $75 billion in new capital as a backstop against possible future losses.

Minneapolis-based U.S. Bancorp, which received a $6.6 billion investment from the government, said it will sell $2.5 billion of its common stock. Its shares jumped 3.8 percent in pre-market trading, adding 75 cents to $20.54.

McLean, Va.-based Capital One, which received $3.55 billion from the government, is planning to sell 56 million new common shares — worth about $1.76 billion at Friday’s close. Shares dropped $2.69, or 8.6 percent, to $28.65 ahead of the market’s open.

Southeast regional bank BB&T said it will sell $1.5 billion in common stock, and will also cut its dividend by 68 percent to 15 cents to save $725 million annually. The Winston-Salem, N.C.-based bank received a $3.1 billion investment from the government last fall. BB&T shares fell $1.38, or 5.2 percent, to $24.95.

The government’s stress tests — a centerpiece of the Obama administration’s plan to prop up the financial system — were designed to determine which banks might need more capital to cover rising loan losses if the economy worsened. As home prices fell and foreclosures increased, banks took huge hits on mortgages and mortgage-related assets they were holding. And with the unemployment rate rising — it jumped to 8.9 percent in April — losses on credit cards and other types of consumer loans are expected to increase throughout the year.

The government hoped the stress tests would restore investors’ confidence in the financial system, providing evidence that not all banks are weak. Regulators have repeatedly said none of the country’s biggest banks will be allowed to fail.

Among the 10 banks that need to raise more capital, Bank of America needs $33.9 billion. Wells Fargo & Co. needs $13.7 billion, GMAC LLC $11.5 billion, Citigroup $5.5 billion and Morgan Stanley $1.8 billion.

Regional banks Regions Financial Corp., SunTrust Banks Inc., KeyCorp, Fifth Third Bancorp, and PNC Financial Services Group Inc. also need to raise funds.

Among the other banks that the government did not ask to raise more capital were JPMorgan Chase & Co., investment bank Goldman Sachs Group Inc., insurer MetLife Inc. and credit card lender American Express Co.

Together, the 19 firms that took the test hold two-thirds of the assets and half the loans in the U.S. banking system.

Many recipients will have to repay funds at tax time

WASHINGTON – About 52 million Social Security recipients started receiving $250 economic recovery checks Thursday, including many who will have to repay the money at tax time next year – either through a smaller refund or a larger tax bill.

The payments were meant to provide a boost to people who don’t qualify for President Obama’s “Making Work Pay” tax credit, which pays individuals up to $400 and couples up to $800.

Taxpayers are ineligible to keep both the full tax credit and the stimulus payment. However, stimulus payments will go to many people who also are earning the credit through jobs that provide taxable income. Those people will have the $250 payment deducted from their tax credit next spring, when they file their returns for the 2009 tax year.

Stimulus payments are slated to go to people who receive Social Security, Supplemental Security Income, railroad retirement benefits or veteran’s benefits. In all, a little more than $13 billion will be distributed.

“There’s going to be millions of individuals who receive Social Security benefits and will be receiving the Making Work Pay credit,” said Christina Martin Firvida, director of economic security for the AARP.

About 17 percent of U.S. residents 65 and older are in the labor force, according to the Bureau of Labor Statistics.

The Internal Revenue Service issued tax withholding tables in February designed to distribute the new tax credit by increasing workers’ pay a few dollars a week. However, the tables could cause millions of taxpayers to get hundreds of dollars more than they are entitled to under the credit, money that the IRS will recoup at tax time next year.

At-risk taxpayers include married couples in which both spouses work, workers with more than one job, as well as Social Security recipients with jobs that provide taxable income.

The IRS says it is planning an outreach campaign to help educate people about the tax implications of stimulus payments and the new tax credit.

“For a lot of taxpayers, these payments will be a loan, not a gift,” said Sen. Chuck Grassley, R-Iowa, a member of the Senate Finance Committee. “That wasn’t made clear in the way the program was sold to the American people.”

Sluggish rebound could make effort to reform health, other administrative goals difficult to push through Congress

Copies of President Obama's fiscal 2010 federal budget books.

WASHINGTON – President Obama’s budget, unveiled with fanfare on Thursday, fails to deal with his biggest money problems.

A molasses-slow economic recovery will make it hard to find the huge sums he’ll need to reach his biggest goals – fixing health care, confronting climate change and overhauling the tax system – without much deeper cuts than he’s proposing in other programs.

Obama faces not only fiscal obstacles but political ones, too.

The White House’s exercise in fiscal discipline this week amounts to micro-cutting – proposals that would trim half of 1 percent of the overall budget – and don’t address the sacrosanct entitlements of Social Security and Medicare. His effort found a scant $17 billion in potential savings, suggesting that only a strong economy and its boost in government revenue can truly put a dent in the federal deficit and pay for Obama’s policy goals.

Pushing an ambitious agenda during a tepid economic rebound will require money and presidential muscle that even the popular president might find is in short supply.

In just two months, the recession has proven to be deeper than the White House predicted when Obama submitted his 2010 budget outline. His budget writers in February forecast that the economy, as measured by gross domestic product, would shrink by 1.2 percent this year and then grow by a relatively robust 3.2 percent in 2010. But the economy contracted by 6.1 percent in the first quarter, and economists inside and outside the government predict another, though smaller, contraction in the second quarter.

Likewise, the White House anticipated unemployment of 8.1 percent this year and slightly less next year. But unemployment is already at a 25-year high of 8.5 percent and is expected to climb when new numbers are announced Friday.

A slow recovery heading into the 2010 midterm congressional elections will probably make Democratic lawmakers especially cautious. What does that mean for the president’s agenda?

“It doesn’t improve chances,” said Sen. Ben Nelson of Nebraska, a moderate Democrat. “It might dampen some enthusiasm about trying to find a health care solution that costs money.”

Over the first 100 days of Obama’s presidency, the nation has shown patience with his approach toward the economy. Over time, the public will watch three key numbers – unemployment, the stock market and the deficit.

In the short term, only the stock market might offer some relief as workers could see value return to their 401(k) accounts. But unemployment could reach 10 percent next year, according to some estimates. And the deficit, which the administration has predicted will reach nearly $1.2 trillion, will dip only to $533 billion in 2013, according to the president’s own February projections. In March, the Congressional Budget Office offered a bleaker prediction – a deficit of $672 billion in 2013 under the president’s policies.

The latest Associated Press-GfK poll shows that 41 percent of those surveyed disapproved of Obama’s handling of the deficit, his highest disapproval rating on any subject polled. Other surveys show that the public is particularly attuned to government spending and the amount of red ink in the budget, a sign of restlessness that could pose a problem ahead.

Obama would like to couple the ideas of deficit-cutting and health care overhaul. He says the overhaul – costing more than $630 billion over 10 years – is the answer to spiraling costs of Medicare and Medicaid.

“The big ticket, that’s health care,” said Jared Bernstein, Vice President Biden’s chief economist. “That’s where some of our real savings come from in the longer term.”

As for the economy, Federal Reserve Chairman Ben Bernanke predicted it would begin growing again this year, citing improved home sales, increased consumer spending and signs of improved lending conditions.

But he said activity would remain below normal and “only gradually gain momentum.” Unemployment, which typically lags behind a recovery, “could remain high for a time, even after economic growth resumes,” he said. In a private luncheon, he told Senate Republicans that he projected 2 percent GDP growth in 2010, according to Sen. John Ensign, R-Nev.

That assessment reinforces the “glimmers of hope” with which Obama and his team have begun to promote the economy. But it also underscores the difficulties Obama will have persuading Congress, even one dominated by his party, to put new potential stresses on the economy while it is still getting back on its feet.

“The problem, the challenge for the administration, is they don’t just need tolerance or slack from the public, they need sufficient support to drive very difficult policies through Congress,” said Robert Shapiro, a former adviser to President Clinton and now chairman of Sonecon, an economic advisory firm.

The economy may well not cooperate.

Analysts often talk about a U-shaped recovery, where the economy moves strongly upward after a bottom-dwelling period. But this recovery, as described by John Silvia, chief economist at Wachovia Corp., could look more like a Nike swoosh, with only a gradual rise back to normal.

White House budget chief Peter Orszag on Thursday said the administration saw no need to adjust its ambitions based on a changing economic picture.

“We have not changed policies,” he said. “There are a whole variety of proposals that we put forward in February. The world has evolved a bit since then. We have incorporated those proposals in the new document as a matter of principle.”

Jim Kuhnhenn covers the economy and politics for The Associated Press.

'In Washington, I guess that's considered trivial. Outside of Washington, that's still considered a lot of money. But these savings, large and small, add up.'

PRESIDENT OBAMA

PHOENIX – A newly formed advocacy coalition on Thursday offered suggestions to Arizona legislators on ways to protect education, health care and social services from spending cuts needed to balance the troubled state budget.

The coalition announced its formation on Thursday and released a menu of dozens of alternatives. They range from tax increases and accounting maneuvers to rehiring laid-off tax collectors and selling off Arizona Lottery revenue for upfront cash.

“We are here talking about hope and possibilities today,” Timothy J. Schmaltz, coordinator of the Protecting Arizona’s Family Coalition, said during a news conference.

Schmaltz’s group is among more than 20 organizations that announced formation of the Arizona Budget Coalition. Other member groups include the Arizona Education Association, the Children’s Action Alliance and the Service Employees International Union.

Arizona’s state budget has been battered by the recession in general and the housing industry’s collapse in particular, with tax collections going down and costs for social services going up.

The state faces a projected $3 billion shortfall in the next budget, and lawmakers have been struggling throughout their current regular session to agree on ways to fill the gap.

A Republican proposal includes spending cuts and raids on special-purpose funds throughout virtually all of state government to help close a projected $3 billion budget shortfall projected for the fiscal year that starts July 1.

House Appropriations Chairman John Kavanagh and other GOP budget-writers argue that the next budget must include significant spending cuts because the state’s budget troubles will continue into the following fiscal year.

If state spending isn’t reduced now, the budget for the 2010-2011 year will be even harder to keep in the black because one-time options will have been used up, Kavanagh contends.

Asked to respond to the Republicans’ assessment on what’s needed, a coalition leader said the group will urge Gov. Jan Brewer and lawmakers “to pick a combination of options that work for both the short term and the long term.”

“Many of those options are far better than the damage to families and our future that come from the alternative – budget cuts – and those are the choices we face,” said Dana Wolfe Naimark, Children’s Action Alliance president. “We have to pick and choose and set our priorities.”

Also Thursday, Brewer reaffirmed her commitment to “all of the components” of the budget approach she announced in March. It included a temporary tax increase, spending cuts, use of federal stimulus money, a large rainy day fund and changes to voter spending mandates.

“Now, more than ever, dramatic steps are necessary to protect our education system, sustain our critical public safety needs, and protect our state’s must vulnerable. Now, more than ever, all five points of my plan are necessary to get the job done, and to return the state of Arizona back to a path of prosperity,” she said.

———

Highlights of proposals

Arizona Budget Coalition: Newly formed coalition of 20-plus groups, including two labor unions, the Children’s Action Alliance and the Protecting Arizona’s Family Coalition.

Recommendations: Continue state property tax that is now suspended but proposed for repeal. Levy new property tax for school facilities. Raise corporate income tax. Suspend income tax credits for school contributions. Delay payment of some spending into next fiscal year. Budget for $35 million in revenue from speed cameras. Place nonviolent offenders on home arrest. Sell and lease back some state facilities. Hire laid-off tax collectors and auditors. Use federal stimulus money.

Quote: “The coalition is guided by a belief that a robust state budget for services is not just feasible, but necessary for building a prosperous 21st Century economy for Arizona.”

Web site: http://www.arizonabudgetcoalition.org

Arizona Chamber of Commerce and Industry

A statewide advocacy group for businesses.

Recommendations: Cut state spending. Loosen voter spending mandates. Approve tax cuts with delayed effective dates. Consider expanding off-reservation gambling. Consider a temporary tax increase only as last resort.

Quote: The chamber believes that, under these extraordinary circumstances, certain temporary tax increases, such as an increase to the sales tax, should be considered if all other options have been exhausted and there is no other viable way of closing the deficit.”

Web site: http://www.azchamber.com

Arizona Tax Research Association.

A business-backed advocacy group on tax and fiscal issues.

Recommendations: Adjust only school transportation costs, not basic state aid, for inflation. Cap or phase out local school district property taxes that are outside the public school equalization system but that trigger higher costs for state. Eliminate state funding for kindergarten students who turn 5 before Sept. 1. Eliminate extra funding for “rural” districts. Eliminate state aid for out-of-state university students.

Quote: “ATRA encourages the Legislature and the governor to view the difficult task of reducing spending as an opportunity to also improve the state’s fiscal management.”

Web site: http://www.arizonatax.org

The proposed end games for General Motors and particularly Chrysler illustrate why government shouldn’t have gotten involved in the first place.

It’s worthwhile to begin with the broader picture. Americans used to buy about 17 million new cars and trucks a year. Now, we’re buying fewer than 10 million. That, of course, puts considerable stress on manufacturers with weaker products or financial structures.

How many new cars Americans will want to purchase in the future is unknown. But there can be a high degree of confidence in this: However many it is, someone will sell them to us.

Moreover, they are likely to be produced in the United States. A majority of cars sold by foreign manufacturers in the U.S. are actually built here.

So, why should the federal government care who it is that sells us our cars?

There are two rationales offered. First, to preserve an “American” auto industry. Second, to preserve “American” jobs.

The proposed Chrysler restructuring gives the lie to both rationales.

Under the Obama administration’s proposal, Chrysler would, in essence, be given to Fiat, an Italian company, to operate.

So, how is an Italian car maker operating in Michigan any more “American” than a Japanese manufacturer operating in Kentucky?

And why should the federal government give a market preference – through taxpayer financing and warrantee guarantees – to Italian cars produced by American workers in Michigan over Japanese cars produced by American workers in Kentucky?

The Obama administration’s proposed restructuring is more than just unjustified, however. It dangerously undermines the rule of law, as explicated so beneficially by Friedrich Hayek in his classic, “The Road to Serfdom.”

The essence of the rule of law, according to Hayek, is that what the government will do is known to all economic actors in advance. That government will not act arbitrarily in specific circumstances to favor some economic actors over others.

Chrysler has $6.9 billion in secured debt. Under the law, secured lenders have the first claim on the assets of the debtor in the event of nonpayment.

The Obama administration is attempting to muscle past this law. Under its proposal, the health care trust of the autoworkers union, an unsecured creditor, would forgive 57 percent of what Chrysler owes it, and receive 55 percent of the company’s equity in exchange.

The federal government would forgive about a third of what it would loan Chrysler and receive 8 percent of the company’s equity. Fiat would pay nothing for its 20 percent initial ownership.

The secured creditors, with the first claim on Chrysler’s assets, were asked to forgive 70 percent of what they are owed and receive nothing in equity. When they refused and forced the company into bankruptcy, they were excoriated by Obama – a shameful act by a president who pledged to uphold the law, not make it up as he went along.

The purposed GM restructuring is equally lopsided. The union trust would forgive half of what it is owed and receive 39 percent of the company. The government would forgive half of what it is owed and receive 50 percent of the company.

The other private lenders, in this case unsecured, would forgive 100 percent of what they are owed and receive just 10 percent of the company.

In his recent press conference, Obama said he had no interest in owning or operating car companies. Until this point, I was willing to accept Obama at his word, while fundamentally disagreeing with his economic policies.

Given his actions, however, it’s hard to credit his disclaimer in this instance.

These proposed restructurings are power grabs, pure and simple. The positions of lenders are eviscerated to give control to the union trust and the government.

The emergent companies are given market preference through taxpayer financing and government warrantee guarantees. All to serve no true national purpose.

Robert Robb, an Arizona Republic columnist, writes about public policy and politics in Arizona. E-mail: robert.robb@arizonarepublic.com

The seaport of Guaymas, Son., shown in a 2005 file photo, could be an important part of making Tucson an international port.

Tucson could be a major international transportation hub, but if the city’s serious about that, there should be one person in charge, the region’s economic development group said in a recent report.

Tucson Regional Economic Opportunities, or TREO, advocates the hiring of an inland port director and creating a new organization whose mission would be to advance “Puerto Nuevo.”

The director’s salary would be paid by business contributions, said Sarah Smallhouse, who headed the advisory committee that helped write the report. “Think of it sort of like a trade association,” she said.

The idea – in the works since 2005 – is to use Tucson’s logistically convenient geography to its economic advantage.

The city sits at the intersection of east-west and north-south interstates I-10 and I-19 and a similar convergence of rail lines.

About 72,000 of the city’s jobs are already in the transportation sector, the report states.

But to be a major player, TREO says, the city needs to look at improvements related to to trucking, air freight and ocean access.

Key components of TREO’s plan involve building an I-10 bypass, setting up a larger rail yard near Marana and improving infrastructure connecting Tucson to the seaport of Guaymas, Mexico.

The report also recommends the development of food processing plants because of the tons of Mexican agricultural products shipped daily through the city.

Most of the related development is anticipated along Valencia Road.

Smallhouse said the project is realistic despite the recession and should be the domain of business owners, not government.

A paid director could coordinate the work of a volunteer board, she said, characterizing the port as likely more “virtual” or “promotional” than “bricks and mortar.”

That was music to the ears of the City Council, in the midst of a budget process that will undoubtedly involve millions of dollars in both spending cuts and new taxes.

“I think this is really wonderful,” Councilman Steve Leal said. “There could be all kinds of jobs in this.”

Laura Shaw, TREO’s vice president of corporate and community affairs, said the process of hiring an inland port director had not yet begun.

WASHINGTON – A new independent commission to investigate the cause of the financial meltdown and chart the nation’s path ahead will lean left politically, with Democrats getting to pick six members and Republicans four.

While a Republican senator helped write the legislation creating the commission, and nearly all congressional Republicans have endorsed the measure, the uneven split on the proposed Financial Markets Inquiry Commission could call into question the group’s impartiality and hamper its ability to raise consensus on the issue.

While it is not uncommon for a congressionally appointed panel to favor the majority party, high-profile issues often are given an even split to try to generate consensus.

The president hasn’t received the bill yet and already the 6-4 split designated in the measure has prompted partisan bickering.

In a statement Wednesday, Republican Study Committee Chairman Tom Price, R-Ga., accused House Speaker Nancy Pelosi, D-Calif., of “political opportunism” for putting the bill on the House floor.

Under the bill, the commission would focus on more than 20 areas, including how the government failed to protect investors and the role financial fraud may have played in the meltdown. The group would be able to issue subpoenas to interview witnesses and demand documents before it reports its findings by Dec. 15, 2010.