U.S. Sens. Jack Reed and Sheldon Whitehouse were among the 79 senators who voted Thursday night to get rid of a tax on sales of medical devices passed in 2010 to help fund President Obama’s health reform law.

The two Rhode Island senators joined 31 of their fellow Democrats and all 45 Republicans in voting to repeal the 2.3% excise tax on medical devices, which took effect Jan. 1. Getting rid of it would cost the federal government $29 billion from 2013 to 2022, according to the Center on Budget and Policy Priorities, a left-leaning Washington think-tank that opposed repealing it.

Whitehouse and another stalwart liberal, Massachusetts Sen. Elizabeth Warren, were among those who sided with the device industry on the repeal measure, which was introduced by Republican Orrin Hatch of Utah and has been the subject of a heavy lobbying effort.

Stephen Lane, chairman and chief venture officer of the Providence-based medical-device firm Ximedica, said at a manufacturing forum last year co-hosted by Congressmen David Cicilline and Jim Langevin that the tax was causing his industry to move production to Asia. Cicilline and Langevin voted to keep the tax, and Cicilline clashed over the question with his Republican opponent Brendan Doherty in a WPRI 12 debate last fall.

The Tax Foundation is out with another interesting fiscal map, this one looking at how much of each state’s budget is paid for by the federal government based on 2011 U.S. Census data. Rhode Island ranks 18th, with 38% from the feds, much higher than Massachusetts (40th) or Connecticut (45th):

These numbers may be skewed in part by the 2009 stimulus law, which temporarily increased the share of Rhode Island’s state budget covered by the federal government by a significant amount. Governor Chafee’s proposed 2013-14 budget is only 32% federally funded, a six-point drop compared with the map.

Excitement ricocheted across Twitter Monday night when Republican Mitt Romney mentioned Rhode Island in one of his debate answers, a rare presidential-level cameo for this deep-blue state.

Echoing a frequent talking point from conservatives, Romney pointed to the Medicaid waiver that the outgoing Bush administration granted Governor Carcieri in early 2009 to explain why he wants to give states more control over the program.

“States like Arizona, Rhode Island have taken these, these Medicaid dollars, [and] have shown they can run these programs more cost-effectively,” the former Massachusetts governor said.

As the chart at right shows, Rhode Island has one of the most expensive Medicaid programs in the country, which partly explains why local policymakers have been so intent on finding ways to curb its costs. Yet the impact of the waiver remains in dispute nearly four years after it was approved.

Romney’s comments have led to a flurry of fact-checking, particularly from liberals who oppose Republican proposals to block grant Medicaid. Politico’s Jason Millman weighed in Wednesday with a story questioning Romney’s claims (emphasis mine):

The Romney Medicaid plan would cap the growth of the program’s spending to the consumer price index plus 1 percent and essentially give states a lump sum to spend as they see fit. The Rhode Island and Arizona Medicaid programs, while enjoying more flexibility, are still backstopped by the federal government. …

In the case of Rhode Island, the Global Waiver it obtained in 2009 wasn’t intended to control costs, as a Lewin Group report commissioned by the state explained last December. “The Global Waiver is not a block grant meant to control costs but a demonstration aimed to improve health care quality built on the core foundation of shared state and federal costs,” the report said. …

The Lewin report said it was too early to assess the full impact, but it did find the Global Waiver had saved about $23 million in the first three years — well short of the $100 million in savings predicted when President George W. Bush’s administration approved the waiver.

Health and Human Services Secretary Steven Costantino gave a mixed verdict last year. “I think many of the things we could’ve done without the waiver,” he told McClatchy. “The more important question is, would we have done it?”

To get the case for the Medicaid waiver’s importance, read the Ocean State Current’s Justin Katz, who highlights a key piece of context – the waiver went into effect in January 2009, when the economy was in a tailspin. Within a month that led President Obama to sign the stimulus law, which had a significant impact on Medicaid spending in every state, including Rhode Island. The months after the Medicaid waiver went into effect were not a normal policymaking period.

To get the case against the waiver as a national model for block grants, read the Center on Budget and Policy Priorities’ Jesse Cross-Call and Judith Solomon’s March 2011 study and their March 2012 follow-up. For a shorter summary, try Cross-Call’s new blog post: “The Truth Behind Rhode Island’s Medicaid Waiver.”

(chart: Center on Budget and Policy Priorities)

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – The Providence Community Action Program’s spending and staffing soared in the three years leading up to last month’s allegations of “staggering mismanagement” at the taxpayer-funded nonprofit thanks to an influx of federal stimulus money.

ProCAP’s annual revenue nearly doubled from $8.5 million in 2007-08 to $14 million in 2008-09 and $16.4 million in 2009-10, federal tax filings show. Its revenue was about $12 million in 2010-11, ProCAP spokesman Bill Fischer told WPRI.com on Wednesday.

The documents show ProCAP’s main activities – energy subsidies, housing assistance, emergency food and substance abuse counseling – increased significantly as stimulus money arrived. The weatherization and fuel program’s budget grew from $4.7 million in 2007-08 to $11.1 million in 2009-10.

The surge in cash added a host of new jobs at ProCAP. The agency’s work force jumped from 66 employees in 2008-09 to 120 employees in 2009-10, tax filings show. ProCAP’s payroll has fallen to 58 as of this week, according to a list of employees obtained by WPRI.com.

(more…)

President Obama unveiled a mammoth deficit-cutting plan this morning that would raise $1.5 trillion in new taxes over the next 10 years as part of more than $3 trillion in reductions. “He vowed to veto any deficit reduction package that cuts benefits to Medicare recipients but does not raise taxes on the wealthy and big corporations,” says the AP.

This afternoon, Congressman Jim Langevin became the first of Rhode Island’s four members of Congress to react.

In a statement to WPRI.com, Langevin said he was “encouraged” by the proposal. “However, the devil is always in the details, and I will be evaluating those details to ensure it accurately affects the priorities of the Rhode Islanders I represent,” he said.

Langevin says he wants “a balanced approach that cuts wasteful spending and asks the wealthiest few to pay their fair share,” and said Obama is correct when he “recognizes that we cannot get our fiscal house in order unless we grow our economy, and that means putting Americans back to work.”

After the jump, Senator Reed, Senator Whitehouse and Congressman Cicilline weigh in.

(more…)

FEMA had less than $800 million left in its disaster relief fund before Hurricane Irene, and the situation in Congress is making people nervous about whether its coffers will get refilled. FEMA’s chief says the dwindling fund won’t hinder Irene relief efforts, but the agency is already halting work in Missouri.

There’s no question that the politics of disaster are changing, though. In 2005, some Congressional Republicans tried and failed to obtain spending cuts in exchange for Hurricane Katrina relief money. Now those lawmakers have more allies, which is setting the stage for another battle, the NYT reports:

The new push for federal austerity is threatening to change the traditional dynamic when it comes to government relief in the aftermath of a storm, an earthquake or other calamity. It has touched off an intensifying debate over whether the government should just tack needed money onto the deficit or try to find a way to adjust the budget to cover the costs.

Holding fast to their push for lower federal spending, top Congressional Republicans have argued that any federal aid in the aftermath of the double whammy of an earthquake followed by a hurricane should be offset, if possible, by spending less on other programs. …

That view and the idea of offsetting the cost of relief is unsettling to those of both parties who see disaster aid as a chief responsibility of the federal government. They note that past efforts were financed through deficit spending by both parties ….

This debate has major implications for Rhode Island – particularly now that Governor Chafee has said he may in fact seek a major disaster declaration from President Obama because of Irene, which (if granted) could make more federal dollars available for cities, towns and individuals.

We’re not talking chump change, either: The R.I. Emergency Management Agency’s budget for 2010-11 more than tripled from $13 million to $47 million thanks to an influx of FEMA aid in the wake of the floods. FEMA reimbursed 90% of eligible expenses caused by the flooding, according to state documents.

I mentioned earlier this month that Congress’ budget-cutting super-committee could have a significant impact on Rhode Island depending on where the axe falls. The debt-ceiling deal that created the super-committee also included a “trigger” provision that would force huge automatic cuts if the panel can’t come to agreement.

But it turns out there’s some wiggle room in how the trigger works, which may help explain why Senator Whitehouse didn’t sound overly concerned about it when I spoke with him last week. The New York Times explains:

Under the legislation written to raise the debt ceiling this month, if the committee fails to come up with a plan by Nov. 23 to cut the federal deficit by $1.2 trillion over 10 years or if its proposals are not approved by Congress roughly a month later, the government will automatically cut spending across a vast area of its operations, including the Pentagon.

But the cuts would not be made until January 2013, nearly a year after the trigger is hit, leaving members of Congress to devise ways to avoid the fallout ….

“The trigger can get pulled,” said Josh Barro, a senior fellow and federal fiscal expert at the Manhattan Institute, a conservative research organization. “But then there is a substantial amount of time to unpull the trigger. …”

Update: The Associated Press has spoken. AP style for the panel is going to be “supercommittee” – one word. Guess I’ll change how I spell it from now on.

U.S. Sen. Jack Reed is reportedly one of four Senate Democrats who’ve emerged as frontrunners to serve on the congressional “super-committee” charged with figuring out how to cut the federal deficit.

Senate Majority Leader Harry Reid is considering naming Reed to the high-pressure 12-member panel, which was created as part of the debt-ceiling deal and must recommend at least $1.2 trillion in spending cuts by Thanksgiving, The Washington Post reported Monday.

“Reed is a senior member of the Banking Committee and regarded on both sides of the aisle as one of the chamber’s hardest workers,” Paul Kane, a congressional reporter at The Post, wrote in the article.

A spokesman for Reed, who is traveling in Alaska with Interior Secretary Ken Salazar, declined to comment. According to The Post, the other frontrunners among Senate Democrats are Patty Murray of Washington, Max Baucus of Montana and Kent Conrad of North Dakota.

There are conflicting reports out of Washington, however. The Hill reported Tuesday that Reed is only a “dark horse” candidate for the tough assignment.

“Reed is respected on both sides of the aisle, and unlike others in the Senate, refrains from partisan barbs,” the paper said. Its list of frontrunners includes Baucus, Dick Durbin of Illinois and Charles Schumer of New York.

And The Huffington Post contradicted The Washington Post’s list of frontrunners, reporting that two of them – Baucus and Conrad – are “unlikely to end up on the committee.”

The spending cuts the super-committee is likely to recommend could weaken the economy further by reducing demand, Reed told WPRI.com last month. But he said he supported the majority leader’s compromise with House Republicans as “the best of two very bad options,” since it staved off a federal default.

House Speaker John Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Reid and Senate Minority Leader Mitch McConnell will each name three members of their respective caucuses to serve on the super committee. They must do so by next week.

The other three members of Rhode Island’s congressional delegation – Sen. Sheldon Whitehouse and Congressmen Jim Langevin and David Cicilline – are unlikely to serve on the super-committee.

Update: Senator Reed sure didn’t sound like he wanted the job when WPRO’s Bob Plain asked him about it last week, though. “I have no interest,” Reed told Plain. “I’ll be very blunt: I have no interest.”

Update #2: Senator Reed won’t be serving on the super-committee, according to Politico.

The Beltway paper reported late Tuesday afternoon that Reid is naming Washington’s Patty Murray, Montana’s Max Baucus and Massachusetts’ John Kerry – a surprise choice – to serve on the panel.

Rhode Island’s state budget is already feeling the squeeze now that federal stimulus money has dried up. But this week’s debt-ceiling deal promises more pain down the road.

Federal dollars will pay for about 34% of Rhode Island’s $7.7 billion budget this fiscal year, which started July 1. That’s about the same as in most other states, where federal revenue accounts for about $1 out of every $3.

This week’s agreement calls for more than $2 trillion in federal budget cuts over the next 10 years. Those cuts will either be made by a congressional “super-committee” or forced through automatically if that panel fails to come to an agreement by the fall. Congress must vote on the panel’s ideas by Dec. 23. If those cuts take effect immediately, they could throw a monkey wrench into Rhode Island’s budget halfway through the fiscal year.

The New York Times reports that figuring out how states and local governments will be affected is “a frustrating task given the fact that many of the details of the reductions in federal spending will not be known until later in the year.” But the paper says there is “no doubt” they are “facing even more tough times ahead.”

The Washington Post agrees, saying “steep cuts will be unavoidable” and that they are “sure to compound the dire fiscal situation confronting the states.”

Medicaid, the state-federal health insurance program for the poor, is exempt from the automatic-cuts trigger, but it could still come under the knife if the super-committee targets it. The Post thinks transportation and infrastructure spending could also be reduced. And as Stateline notes, there are a host of smaller programs that send federal dollars our way, too.

The impact won’t be limited to governments, either. The debt deal calls for cuts in Medicare payments to providers – doctors and hospitals – which will squeeze Rhode Island’s sizable health sector. Grad students will start accruing interest on their federally subsidized loans while they’re in school instead of after, and on-time repayment bonuses will be phased out for all student loans, USA Today reports.

Update: I forgot another obvious way the deal could affect Rhode Island – big cuts to the defense budget.

The automatic trigger would slice $600 billion from the Pentagon budget halfway through this year. (That’s on top of the roughly $400 billion in cuts military is already planning over the next decade.) That could mean layoffs at Naval Station Newport or a loss of business for the state’s Aquidneck-centered defense sector.

At this rate, Republicans in Rhode Island’s 1st Congressional District won’t have trouble drawing distinctions between Brendan Doherty and John Loughlin when they go to the polls next year.

Just two weeks after the two took different stands on House Republicans’ “Cut, Cap and Balance” bill – a Loughlin spokesman said he’d vote for it, while Doherty expressed doubts – the pair are finding themselves on different sides of another big issue: the debt-ceiling deal that passed the House 269-161 last night.

Doherty said he would have voted in favor of the bill to cut at least $2.4 trillion in federal spending over the next decade in exchange for an increase in the federal borrowing limit.

“In light of the attendant circumstances and potential ramifications, I would have supported the House bill,” Doherty said in a statement. “However, while no one would argue that this bill is going to cure all that ails our bloated federal government, it is a step in the right direction. I believe it’s in the best interest of the country at this time.”

Loughlin is serving in Iraq, but spokesman Mike Napolitano said his candidate would likely have opposed the legislation, partly out of concern that it could lead to the expiration of the Bush tax cuts in 2013 during a time of high unemployment and sluggish economic growth.

“This bill reduces the deficit … however, it fails to reduce the country’s long-term budget problems,” Napolitano said in an e-mail. “In addition, it contains large cuts to our nation’s defense budget. I believe John would vote against this.”

The Democrat whom Doherty and Loughlin are vying to challenge, Congressman David Cicilline, voted in favor of the bill, but said in a statement, “To be clear, there’s a lot about this bill I don’t like.” Congressman Jim Langevin also voted for it with reservations. “This is not the debt reduction bill that I wanted to vote for,” he said.

Two liberal Democrats across the border in Massachusetts took a different stance from Rhode Island’s House members: Congressmen Jim McGovern and Barney Frank both voted against the deal.

The fight over the federal debt ceiling has already done permanent damage to the country’s reputation, and even his own party’s preferred spending cuts will hurt the economy, U.S. Sen. Jack Reed warned Friday.

“I’m disappointed,” Reed told WPRI.com. “The stakes are so high. … Even if it can be resolved, there’ll still be this sort of lingering question about the future and the ability of the country to make tough decisions in a timely way.”

“I think there’s been some damage done,” he said. “No party up until this point – up until the Republicans, particularly in the House – has ever tried to use the credit of the Untied States as a point of leverage for policy.”

The House is expected to vote this evening on Speaker John Boehner’s bill to increase the debt ceiling for roughly six months and cut federal spending by $917 billion.

Reed said that plan is a nonstarter for him and his party, and the Senate will reject it this evening and instead send Majority Leader Harry Reid’s alternative proposal to the House. That will also force Senate Republicans to cast a vote saying where they stand, Reed said.

Enacting Reid’s Democratic alternative to Boehner’s plan will still weaken the economy by further reducing demand, Reed said – a particular concern in light of the anemic GDP numbers that were released this morning.

“When you make cuts and lower demand in a fragile economy, that translates not into growth but into what we’ve seen, which is very modest growth,” he said. ”We’re trying to be responsible, and we’re trying to make the best of two very bad options.”

The senator also said he hopes a resolution to the debt ceiling fight will bolster confidence among businesses and consumers, which could give the economy a boost.

My colleague John Perry sent me this nice Associated Press chart comparing and contrasting the four big proposals for reducing the federal deficit that have been put forward as Congress tries to resolve the debt-limit crisis. Take a look:

Right now all eyes are on the Boehner plan, which Bloomberg says would now cut spending by $917 billion. The Republican leadership is now saying the House will take a vote today after last night’s was canceled.

General Treasurer Gina Raimondo and other top Rhode Island officials are keeping a close eye on Washington’s bitter battle over the federal debt ceiling as they wait to see how it will get resolved – and how that will affect the state.

“My office is closely monitoring the debt ceiling debate,” Raimondo told WPRI.com in a statement Wednesday, and Treasury officials are “hopeful” President Obama and congressional leaders will reach a deal.

“If deadlines are not met, the state is currently in a strong liquidity position and will be able to cover its August payments,” the treasurer said. “Treasury will continue to monitor the state’s cash position closely as events unfold and the markets react to the eventual resolution of the situation.”

House Republicans and Senate Democrats remained at loggerheads Wednesday afternoon over how to move forward, with U.S. Sen. Charles Schumer calling House Speaker John Bohener’s latest proposal “a nonstarter” that President Obama would veto.

State agencies are being surveyed to find out how they might be impacted if the federal government stops making some payments because the debt limit is reached, State Budget Officer Tom Mullaney said, but it’s unclear which programs would be impacted.

The immediate impact on Rhode Island of a failure to raise the ceiling could be similar to a federal shutdown, leaving officials here to decide whether to use state dollars to fund federal programs such as food stamps or unemployment insurance until Washington comes through.

The debt fight was “the major topic of conversation” at a National Governors Association meeting earlier this month, Gov. Lincoln Chafee said Tuesday during a taping of WPRI 12′s “Newsmakers.”

Chafee said he agreed with conservative Republican senators Tom Coburn, Mike Crapo and Saxby Chambliss that revenue increases need to be a part of any deal to reduce the federal deficit.

“One of the reasons I left the Republican Party is we were always the party of fiscal responsibility, and when I was there I saw complete irresponsibility – spending sprees, wars, prescription drug benefits – and at the same time, tax cuts that favored the wealthy,” Chafee said. “It made no sense.”

U.S. Sen. Jack Reed said Tuesday a failure to raise the debt ceiling “could exacerbate Rhode Island’s fiscal and unemployment woes at a time when the state is still coping with the recession.”

“It could have a profound impact on people’s retirement savings and result in higher interest rates for families, businesses, and local governments,” Reed said in a statement. “It would also increase the deficit itself because it is estimated that every 1% increase in interest rates will raise the deficit by $1.3 trillion over ten years.”

Reed’s statement warned specifically against a default; some reports have suggested the U.S. Treasury would try to avoid a technical default by paying debt service on bonds ahead of other bills such as Social Security payments or military contractors’ invoices. The latter decision could conceivably impact companies in Rhode Island’s defense sector on Aquidneck Island.

WPRI 12 reporter Tim White contributed to this report.

Update: Chafee’s office issued a statement late Wednesday saying the governor and the cabinet “have been monitoring the situation closely and are preparing in a manner consistent with the lead-up to the possible federal government shutdown.” He also called for a deficit-cutting plan that includes more tax revenue.

During my January trip to Washington to cover the State of the Union, Senator Reed and I sat down for a half-hour interview inside the Capitol. I didn’t get around to writing up most of his comments at the time, but our discussion of polarization seemed timely this week amid the deadlock over the debt ceiling. Enjoy.

WASHINGTON – There’s no doubt in U.S. Sen. Jack Reed’s mind that Capitol Hill is a more toxic place than it was when he arrived here two decades ago as a freshman congressman.

“Over the last 20 years, everything has been much more bitterly debated – not just how to do things, but what is the proper role of government,” Reed said.

The senior senator cited a number of reasons for the Beltway’s increased polarization, including a 24/7 media environment, a shift to nonstop campaigning and a breakdown of the ideological consensus that prevailed in the postwar era.

Reed – a West Point graduate – also thinks it matters that far fewer current members of Congress served in the military than was the case with previous generations.

Those former soldiers “had a certain camaraderie, in that you had a common experience in the government that was successful,” he said. “So the notion that government doesn’t work, that there’s nothing government can do, was not as prevalent.”

Reed was unapologetic about the legislation passed during President Obama’s first two years in office, including health care reform, the Dodd-Frank finance reform law, Race to the Top and changes to the federal student loan program. Many of those laws would have been a big deal in normal times, he said, but they were “totally overshadowed” by the financial crisis.

With so many issues on Washington’s plate, though, there is a risk that a problem brewing under the radar doesn’t get the attention it deserves. ”There’s an issue of capacity with every government,” Reed said.

“One of the reasons, frankly, President Bush spoke about being blindsided by the economic collapse, is because he was obsessed with getting it right on foreign policy and the War on Terror,” he said. “That was his focus.”

“That’s what makes it so challenging for the president,” Reed continued. “It’s hard for us, but more so for the president. You not only have to deal with the crisis at the moment, but you’ve also got to have a sensitivity to what’s happening out there.”

Reed described President Obama as possessing “a remarkable personality, because he has the ability to maintain a focus and a demeanor in the worst circumstances that is truly incredible.” But the president has faced the same challenges as his predecessors.

“He’s learned a lot,” Reed said. “It’s the toughest job in the world, and it’s a job that – as well prepared as you may be – you’ve got a learning curve. You’ve got to learn a lot quickly.”

For a Rhode Island leader, no issue is more pressing than the weak economy and the state’s ongoing jobs crisis. Reed said he’s focused on maintaining the state’s defense sector and directing federal resources here, citing Quonset Point as a success story. “Infrastructure is so important,” he said.

Reed and Gov. Lincoln Chafee, another infrastructure proponent, have discussed ways they can work together on projects like the expansion of passenger rail service. ”He understands,” said Reed, who served with Chafee in the Senate. “He has a very collaborative personality. He wants to get some things done. We do, too.”

Reed also said it’s important that the state’s remaining manufacturing firms receive support. “The manufacturers in Rhode Island that have been able to hold on are terrific,” he said. “We have to expand that.”

Such a comment may not sound controversial today, but prior to the financial crisis the idea that industrial firms would continue to play an important role in the American economy wasn’t as common. Many people thought the nation could get by with financial products and leave manufacturing to other nations.

“I think one of the things that we recognized over the last decade or more is that, frankly, a country is what it produces – tangibly produces – and sells to the world,” Reed said.

“We have to recognize that there are still an extraordinary amount of talented Americans whose talents are mechanical,” he added. “If they don’t have a job, it’s not because they’re not talented; it’s because their skills aren’t in abstract thinking and computer programming. … That’s reality.”

Epilogue: Reed issued a statement last night warning of the consequences of default if the U.S. debt ceiling isn’t raised. “A federal default would be a self-inflicted wound that could exacerbate Rhode Island’s fiscal and unemployment woes at a time when the state is still coping with the recession,” he said.

“It could have a profound impact on people’s retirement savings and result in higher interest rates for families, businesses, and local governments,” he continued. “It would also increase the deficit itself because it is estimated that every 1% increase in interest rates will raise the deficit by $1.3 trillion over ten years. So simply put, we cannot afford to default – it’s bad for jobs and it’s bad for taxpayers.”

The two Republicans vying to challenge Congressman David Cicilline next year are singing different tunes when it comes to House Republicans’ long-shot “Cut, Cap and Balance” plan to reduce the federal deficit.

A spokesman for former state Rep. John Loughlin, who is serving in Iraq, said Loughlin supports “Cut, Cap and Balance,” which passed the House on a party-line vote Tuesday. The bill would cut federal spending by $6 trillion and amend the Constitution to require balanced federal budgets.

“If John Loughlin were here he would support ‘Cut, Cap and Balance,’ ” spokesman Mike Napolitano told WPRI.com in an e-mail. “Spending caps need to be created and there must be a mechanism in place to enforce them.”

“John Loughlin is a fiscal conservative and has been well aware that the United States can’t continue to tax and spend its way to prosperity,” Napolitano said. “We need to stop spending money we don’t have as we are creating a nightmare for our future, as well as the futures of our children and grandchildren.”

Loughlin’s opponent, former State Police Col. Brendan Doherty, isn’t so sure about the strict spending limits “Cut, Cap and Balance” would put in place.

“In theory we need to balance the budget from year to year, but there also needs to be a reasonable mechanism to allow flexibility in the event of a national crisis or serious economic downturn,” Doherty said in a statement sent to WPRI.com.

“The truth is that I am not in Congress right now and don’t have access to all the information that is being considered and debated,” Doherty continued. “What I do know is that we have to work in a bipartisan manner to move this country forward.”

The “Cut, Cap and Balance” plan is unlikely to become law with Democrats controlling the U.S. Senate and President Obama threatening to veto it if the legislation reaches his desk. Nine of the House’s 240 Republicans voted against the bill, as did most Democrats, including Rhode Island’s Cicilline and Jim Langevin.

Related | Loughlin camp not fazed by Doherty’s six-figure quarter (July 14)

The Wall Street Journal caught up with Governor Chafee at the National Governors Association meeting in Salt Lake City to ask him about the fight over the debt ceiling, and – surprise, surprise – he thinks both parties are to blame:

He said the Republican Party had turned surpluses into deficits last decade with a tax cutting “program” that coincided with wars in Iraq and Afghanistan, a new prescription drug benefit that was unpaid for, a new Homeland Security Department whose costs were not offset with other cuts, and “an earmark binge.”

“I say to the Republicans, my former party, you created this economic disaster. You’ve got to be for helping to fix it,” he said. “And right now they’re not.”

To Democrats, Mr. Chafee said a balanced budget amendment would have tempered the GOP and should be considered. He is not convinced federal aid to states like his has been a help, especially in light of the federal deficit.

“I would side with, don’t drive up the deficits,” he said. “Let us fight our way out of it without the stimulus.”

The Washington Post editorial board disagrees with Chafee – the paper called a balanced budget amendment “a bad idea that never dies.” From the sounds of it, the governor is not a Keynesian.

What Congress giveth, Congress taketh away.

Back in February, I put up this chart showing why the withdrawal of federal stimulus aid was going to make it a particularly painful process to put together the state budget for the fiscal year that starts July 1.

With House leaders inching closer to releasing their tax-and-spending plan, I thought it would be a good time to update the chart. These numbers are based on Governor Chafee’s proposal from March:

A couple things stick out to me.

Though it’s a little hard to tell from this chart, Governor Chafee’s 2011-12 budget calls for the first decrease in the total size of the state budget since the recession began. State spending grew by about $1 billion, from $6.9 billion in 2007-08 to $7.9 billion in 2010-11, over the past four years.

But that top-line growth masks a big change in where the money that pays for that spending came from.

Total general revenue (that is, regular Rhode Island state tax revenue) dropped 16% between 2007-08 and when it bottomed out in 2009-10, from $3.4 billion to $2.9 billion. But federal funds’ contribution to the state budget grew a whopping 50% between 2007-08 and 2010-11, from $1.9 billion to $2.9 billion.

Put another way, federal funds covered the entire billion-dollar growth in the state budget over the past four years. Much of that extra money is now disappearing; the federal contribution will decline from $2.9 billion to $2.6 billion in 2011-12. The state is making up some of the gap, but not all of it.

Put a third way, the state-covered share of the budget plunged from 49% in 2007-08 to 36% in 2009-10, but is now creeping back up. It’s expected to be around 40% in 2011-12 – higher than last year’s 38% but still far less than the pre-recession level. The federal share was 28% in 2007-08, peaked at 37% this fiscal year, and will decrease to 33% next year.

The U.S. District Court in Rhode Island will hold Judge John J. “Jack” McConnell Jr.’s public investiture ceremony at the Rhode Island Convention Center in order to have enough room for the big crowd that’s expected.

Invitations are in the mail for the event, which will be held Monday, June 27 at 3 p.m. in the Convention Center’s Ballroom A, court clerk David DiMarzio told WPRI.com. The formal swearing-in will be followed by a reception.

The U.S. Senate voted 50-44 to confirm McConnell to the vacant seat on May 4 following a two-year battle. Chief Judge Mary Lisi administered the oath of office to McConnell privately on May 17 so he could begin working on cases.

Investiture ceremonies are usually held in the ceremonial court room No. 1 of Providence’s historic five-story federal building along Kennedy Plaza, but DiMarzio said McConnell’s will be held at the convention center to accommodate the large number of people likely to show up.

Among those expected to attend are the state’s congressional delegation, including U.S. Sens. Jack Reed and Sheldon Whitehouse, who were instrumental in getting McConnell a seat on the federal bench. Security for the event will be handed by the U.S. Marshals Service.

The district court will pay to rent the convention center ballroom for the ceremony, while McConnell himself will cover the cost of the reception, DiMarzio said.

The U.S. District Court in Rhode Island is the state’s federal trial court and has jurisdiction over both civil and criminal cases. McConnell has been reviewing cases and holding pretrial hearings since taking his oath last month, and is now preparing to schedule his first trials, DiMarzio said.

McConnell is one of nine judges assigned to the district court here. The others are Chief Judge Lisi and District Judge William Smith; Senior Judges Ronald Lagueux and Ernest Torres, the latter of whom is inactive; Magistrate Judges David Martin and Lincoln Almond; and recalled Magistrate Judges Jacob Hagopian and Robert Lovegreen, who fill in when needed.

Update: About 500 people are expected to attend McConnell’s investiture ceremony, according to DiMarzio.

(photo: Motley Rice)

Last week, The New York Times and the Projo published long examinations of Rhode Island’s hotly debated Medicaid waiver. This week, McClatchy’s Washington bureau (formerly Knight-Ridder’s) weighs in under a Providence dateline.

I don’t see much new in the story, to be honest – it’s another attempt to weigh the claims of waiver lovers like former Carcieri aide Gary Alexander against criticisms from liberal groups like the Center on Budget and Policy Priorities.

If anything, Alexander’s main argument in favor of the waiver – that it saves lots of money – seems like the weakest one its supporters can marshal, since the cap on Medicaid spending was set above forecasts and the state is also getting extra federal funding from it.

A more convincing one might be along the lines of Justice Brandeis’ old “laboratories of democracy” argument. From McClatchy:

Many feared that Rhode Island would use its waiver to impose waiting lists for services, limit benefit packages and tighten eligibility for services. But that hasn’t happened, Costantino said.

Instead, the state used the added flexibility from the waiver to beef up home-care services, overhaul hospital payments, tailor benefit packages to specific populations and inject competition into contracts for program goods and services. It also required most Medicaid enrollees to join managed-care networks.

Critics say Rhode Island could have done most of these things without its unique waiver. It’s a fair criticism, Costantino said.

“I think many of the things we could’ve done without the waiver,” he said. “The more important question is, would we have done it?”

(chart: Center on Budget and Policy Priorities)

President Obama has a warehouse in Charlestown he’d like to sell you.

And an office building in Pawtucket. And an acre and a half in North Kingstown.

The United States government has 12,000 buildings and structures designated as excess property, so the Obama administration is trying a modern tack for selling them – an interactive map on WhiteHouse.gov.

“The Federal Government is the biggest property owner in the United States, and billions of taxpayer dollars are wasted each year on government properties that are no longer needed,” the site notes.

The White House says there’s more than 24 million square feet of property available nationwide, including 10,691 right here in Rhode Island.

The largest local property shown on the map is a 6,391-square-foot former Social Security Administration building in Pawtucket. There’s also a 4,100-square-foot building in North Kingstown, described as “Quonset Hut – Building 336.”

(h/t: Ezra Klein)

Providence's Federal Building

Jack McConnell will likely take his seat on the federal bench in Providence before the Fourth of July, the clerk of the U.S. District Court in Rhode Island said Thursday morning.

After a two-year battle, the U.S. Senate voted 50-44 on Wednesday to confirm President Obama’s nominee to the vacant seat. The final step in Washington will be for the president to make it official by signing McConnell’s judicial commission, David DiMarzio, the district court’s clerk, told WPRI.com.

The commission is a large, engraved document. A White House press aide was not immediately able to say when Obama would sign McConnell’s, but he will likely do so within a matter of days.

Once the president does that, the court’s local staff will work with McConnell to coordinate the timing of his swearing-in ceremony. “Those details are evolving now, because all of this happened so quickly,” DiMarzio said, adding that more information should be released “very shortly.”

The ceremony is likely to take place within the next two months, and possibly much sooner. “I think it’ll be fairly quickly – it’s just a matter of how quickly we can get together the logistics, if you will,” DiMarzio said. The state’s U.S. senators, who are closely involved in the judicial confirmation process, usually attend the event.

It’s also possible there will be two ceremonies – a private swearing-in to make McConnell a judge and let him get to work on the trial court’s backlog of cases, followed by a public one with more pomp and circumstance; that’s what appellate Judge O. Rogeriee Thompson did last year.

McConnell will be able to decide who should administer the oath and where it should take place, but traditionally local appointees have been sworn in by the chief judge – currently Mary M. Lisi – in the ceremonial court room No. 1 of Providence’s historic five-story federal building along Kennedy Plaza.

The U.S. District Court in Rhode Island is the state’s federal trial court and has jurisdiction over both civil and criminal cases.

Once McConnell is sworn in, there will be nine judges assigned to the district court: Chief Judge Lisi and District Judges William Smith and McConnell; Senior Judges Ronald Lagueux and Ernest Torres, the latter of whom is inactive; Magistrate Judges David Martin and Lincoln Almond; and recalled Magistrate Judges Jacob Hagopian and Robert Lovegreen, who fill in when needed.

(photo: U.S. General Services Administration, via Wikipedia)

Congressman David Cicilline is just as excited as his Republican colleagues about their passage of Chairman Paul Ryan’s GOP budget blueprint last week – but for very different reasons.

“It’s interesting,” Cicilline said Tuesday during a half-hour interview with WPRI.com in his Pawtucket district office. “During my campaign I was criticized for doing a ‘Scare the Seniors’ tour. This is exactly what I was talking about. This is real!”

Ryan’s sweeping 2012 tax-and-spending plan would sharply reduce the size of the federal government by cutting $6 trillion in spending over the next decade; ending traditional Medicare for Americans who are currently 55 and under; and turning Medicaid into block grants. It would not change Social Security.

The House of Representatives voted 235-193 along party lines Friday to pass Ryan’s budget, with the exception of four Republicans who voted with Democrats to reject it. Senate Democrats and President Obama have declared the budget dead on arrival.

“There are few issues where I think the differences between the parties are really stark, and now we have an example,” Cicilline said. “With the exception of four Republicans, every other Republican voted to end Medicare as we know it, the Medicare guarantee. Every single Democrat opposed it. That’s a big difference, and voters need to know that.”

The changes to Medicare are key to the critique of Ryan’s budget that Cicilline plans to offer at senior high-rises in Woonsocket, Warren, Pawtucket, North Providence and Central Falls during the two-week congressional recess. The freshman Democrat argued his message is not demagoguery but rather a fair comparison of the parties’ priorities.

But Cicilline also said Congress has “got to be serious about managing the deficit,” which he said has primarily been caused by “two wars and tax cuts for the richest Americans.” He again called for the Obama administration to speed up its timeline for withdrawing U.S. troops from Afghanistan.

“We’re cutting the COPS program here while we’re training police officers in Afghanistan,” he said. “This is a moment when we have to make this country our priority.”

On Medicare, Cicilline acknowledged the program’s finances will be strained in the coming years by continued growth in medical inflation, and said he hoped new initiatives included in last year’s health reform law will help hold down costs.

Cicilline is one of just nine freshman Democrats – compared with 87 freshman Republicans – in the House this year, making him a junior member of a minority party in a majority-ruled chamber.

The congressman said being a backbencher limits what he can do, but he still thinks it’s important to mold his own legislation even if it stands little chance of passing. He is also focused on constituency services – his office has received roughly 9,000 pieces of correspondence since he took office in January.

Asked what has surprised him about Washington after four months on the job, Cicilline paused for a moment, then replied: “It’s a very, very partisan place – surprisingly partisan. … I think there are a lot of people who have a lot of scar tissue from these really, really tough fights, over the last few years in particular.”

Cicilline declined to discuss whether he may face a challenge getting re-elected next year, citing ethics rules that prevent members from talking party politics in their district offices.

This is the second of two articles from my interview with Congressman Cicilline.

Uncle Sam, we feel your pain.

Markets trembled on Monday (or did they?) when Standard & Poor’s, one of the big three ratings agencies, lowered the federal government’s credit outlook to “negative” out of concern that policymakers won’t reach agreement on how to stop the national debt from increasing.

Such a forecast is old news around here. S&P cut Rhode Island’s credit outlook from stable to negative way back in March 2009, more than two years ago.

Eleven states have the same first-class AAA credit rating as the federal government, at least in S&P’s judgment, but Rhode Island isn’t one of them, according to a Treasury roundup from Dec. 31.

Fitch Ratings, like S&P, has a negative outlook on Rhode Island. Moody’s is a bit more optimistic, putting the state’s outlook at stable. And it appears both Moody’s and Fitch raised the state’s rating one notch sometime in the past year, though I don’t remember when that happened. (I asked Treasury for more information.)

Here’s how the three agencies judge Rhode Island’s creditworthiness on their 10-point scales for investment-grade bonds.

- Standard & Poor’s. Rating: AA (#3). Outlook: Negative.

- Moody’s. Rating: Aa2 (#3). Outlook: Stable.

- Fitch. Rating: AA (#3). Outlook: Negative.

Update: Treasurer Gina Raimondo’s spokeswoman, Joy Fox, says Rhode Island’s credit ratings went higher because of a technical change at Moody’s and Fitch. “Last year, Moody’s and Fitch recalibrated to a ‘universal’ rating system applicable to all debt (public and private) and readjusted Rhode Island’s ratings accordingly,” Fox said in an e-mail.

(logos via ERM Strategies)

The reviews are in, and they’re not exactly raves.

Two members of Rhode Island’s four-man congressional delegation – Senator Sheldon Whitehouse and Congressman Jim Langevin – issued rather lukewarm statements this afternoon about the deal between House Republicans and their fellow Democrat President Obama to cut this year’s budget to avoid a government shutdown.

My early read on the agreement is that it will be hard for liberals to stomach. Obama and Senate Majority Leader Harry Reid wound up agreeing to about $38 billion in cuts – even more than House Republicans had originally requested. They did avoid a shutdown, and they did get rid of some of the controversial policy “riders” (Planned Parenthood, EPA). But Democrats are playing on Republicans’ turf at this point.

Whitehouse spoke first (emphasis mine):

I’m glad we were able to work together to avert a government shutdown. That said, the cuts in this budget are steep, and will be difficult for Rhode Island families. We still have work ahead to close corporate tax loopholes, reduce subsidies for big oil companies, end tax incentives for shipping jobs overseas, and make sure millionaires and billionaires pay their fair share. On the road back to fiscal health, every group needs to do their share. We cannot demand sacrifice only from the poor and the middle class.

Langevin spoke next and he was, if anything, even more skeptical than Whitehouse (emphasis mine):

I am glad that we have averted a shutdown, though disappointed that it took as long as it did to avoid something that would have done great harm to our economy. I am ready to review the details of the agreement and will withhold judgment until we have the specifics of the proposed budget.

So both Whitehouse and Langevin are “glad” about the fact the government didn’t shut down – but that’s about it. Unlike Langevin, Whitehouse is still a member of his chamber’s majority party – but it doesn’t sound like he’s going to lead any liberal revolt.

So far, the situation reminds me of how Rhode Island’s delegation reacted last December to Obama’s deal on extending the Bush tax cuts.

Senator Jack Reed, who is in Rhode Island attending local events today, opted not to issue a statement about the deal, though he will probably share his views with reporters in person there. Congressman David Cicilline’s office did not immediately respond to an e-mail requesting comment.

Update: Cicilline’s office also declined to issue a statement on the announced deal for now.

(photo: Wikipedia)

thanks for nothing

Happy Shutdown Friday – an appropriate day to note the fact that Washington, D.C., has lately been a net drain on Ocean State taxpayers.

From 2007 to 2009, Rhode Island only got back 89 cents in federal funding for every $1.00 in federal taxes it sent to Washington, according to a new study by The Daily Beast based on Census Bureau and IRS data. The state paid $11.5 billion in federal taxes and received $10.2 billion in federal funding.

Rhode Island was one of just 13 states that lost money by participating in America’s federal system, NewsBeast found. (No wonder we didn’t like the Constitution much.) Delaware makes out the worst of all, getting back only 40 cents for each $1 in taxes sent to the feds.

Mississippi leads the list of winners in our system, receiving a whopping $2.83 in federal funding for every $1 in federal taxes it paid. West Virginia and New Mexico were close behind.

One thing I’ve always found odd about this is how Republican states like Mississippi that elect members of Congress who rail against federal spending are also the net beneficiaries of running our tax dollars through Washington. The more you cut spending out of Washington, the more each state will be left to make do with whatever resources it has on its own. Maybe that’s a good idea, maybe it’s not – but the states helping push it forward through the ballot box have more to lose.

Slate magazine took a look at this paradox last fall, highlighting a study by University of California economist Gary Richardson that showed the amount of money being collected from Democratic states and redistributed to Republican ones has been growing since the mid-1990s:

There is certainly room for debate about Richardson’s conclusions. Seth Giertz at the University of Nebraska argues, for example, that the correlation merely reflects the fact that we have a progressive tax system—blue states pay more into the kitty because blue states are richer than red states. We also don’t know who in the red or blue states is paying or receiving the money. Is it possible that Republicans in blue states are paying most of the money, while Democrats in red states are receiving most of it?

In an e-mail, Richardson argued — and I agree with him — that the progressive-tax-code explanation is inadequate because the blue-state-red-state trend has unfolded even as the tax code has become less progressive. …

At a minimum, conservatives must agree there is a contradiction between being against government spending and dominating the politics of states that get the lion’s share of federal spending.

Thank you to a smart Nesi’s Notes reader for sending the study my way.

(painting: Howard Chandler Christy, via Wikipedia)

Sen. Sheldon Whitehouse says he and his colleagues should not get paid if the federal government shuts down, which looks increasingly likely with negotiations stalled ahead of Friday night’s deadline.

Rhode Island’s junior senator was one of 21 Democrats who sent a letter Tuesday to House Speaker John Boehner urging him to pass a bill that would withhold paychecks from members of Congress and President Obama during a shutdown. (The White House says such a law would be unconstitutional.)

“Our bill is simple: if we cannot do our work and keep the government functioning, we should not receive a paycheck,” the senators wrote in their letter. “If we cannot compromise and meet each other halfway, then we should not be paid.”

Rhode Island’s senior senator, Jack Reed, did not sign the letter. Massachusetts’ two senators, Democrat John Kerry and Republican Scott Brown, weren’t among the signatories, either.

Whitehouse’s wallet probably wouldn’t feel much of a pinch if he misses a few paychecks, though; his personal fortune totaled between $4.6 million and $15.5 million as of 2009, according to WPRI.com calculations based on his most recent financial disclosure form.

Update: I should have noted earlier that a bill to do just this passed the Senate unanimously last month, so effectively Reed, Kerry and Brown have already given the idea their support.

There’s more grim budget tidings for Rhode Island in this article from today’s Wall Street Journal, as I’ll explain in a minute:

Both President Barack Obama and House Republicans are moving to rein in federal spending by reducing aid to states and cities, which would deepen their fiscal woes just as economic-stimulus funds from Washington are drying up. …

The 2009 federal stimulus bill helped plug state and local budget holes early in the recession and recovery, but those funds are waning. The states received $89.4 billion in federal stimulus funds for 2011, but will get $23.3 billion in 2012 and $14.3 billion in 2013.

Much of the stimulus went to fund state Medicaid programs, state departments of education and transportation and infrastructure projects. That freed up state funds for public safety, the courts, environmental protection and human service programs.

This could be a big problem for Rhode Island. Here’s why:

As the chart shows, the share of Rhode Island’s state budget paid for by the federal government has jumped from 28% to 37% since the recession began; over the same period, the share paid for by state tax revenue (the ol’ General Fund) fell from 49% to 37%.

Put another way, state funds are covering $2.94 billion of Rhode Island’s budget this year while federal funds are covering $2.90 billion. In a $7.9 billion budget, that’s basically a rounding error – Rhode Island is leaning heavily on Washington to balance its books.

Update: Governor Chafee’s spokesman, Mike Trainor, tells me this is a major concern of the new administration as it tries to close an estimated $295 million shortfall in next year’s budget.

“The sharp decrease in federal funding as ARRA [stimulus] funds end greatly intensifies the challenges that this administration faces,” he said. That’s why Chafee’s team “is looking at how much can be done on the expense side vis-a-vis reductions, as well as prospects for relief on the revenue side, such as the governor’s proposed idea of extending the sales tax,” he added.

(I teased Trainor for that artful phrasing about higher taxes – “relief on the revenue side” – but in fairness to him, he did say “tax” at the end of the quote there.)

Chafee’s budget proposal for 2011-12 is due on March 10.

a state EBT card for food stamps

The R.I. Department of Human Services is receiving a $501,701 bonus from the federal government as a reward for making major strides in getting eligible Rhode Islanders enrolled in the Supplemental Nutrition Assistance Program – better known as food stamps, though the name was changed in 2008. The state says it will use the extra money “to continue to improve technology and access.”

About 149,000 Rhode Islanders are receiving food stamps right now, more than double the number enrolled before the state began losing jobs at the start of 2007. I took a look at the reasons for the surge in enrollment in a WPRI.com story about a month ago – it’s much more than the economy:

Nearly one out of every seven Rhode Islanders gets food stamps now, as a combination of high unemployment, expanded eligibility and stepped-up outreach has doubled enrollment in the federally funded program. …

A series of technical changes made by federal and state policymakers over the past two years has expanded the number of people in Rhode Island who are eligible to get food stamps, which switched from actual stamps to plastic debit cards in 1998.

Among other changes, they raised the maximum pre-tax income people could have from 130 percent of the federal poverty level to 185 percent; increased the number of people classified as receiving other benefits, which makes them eligible for food stamps, too; and stopped excluding people for having assets such as 401(k)s and higher-value vehicles.

(image credit: URI Feinstein Center for a Hunger-Free America)