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Published September 19 2010

Pomeroy, Berg view bailouts differently

About this series

On Nov. 2, North Dakota voters will decide the fate of the state’s only U.S. House seat.

In his bid for a 10th term, Democrat Earl Pomeroy faces a strong challenge by Fargo legislator Rick Berg – a Republican who’s consistently led Pomeroy in monthly polling.

The Forum asked Berg and Pomeroy where they stand on a host of issues, and each week leading up to Election Day, we’ll highlight their positions on topics including the economy, the federal budget, health care, Social Security, agriculture, energy and Red River Valley flood protection.

This week: a look at the economy and federal budget.



The man elected as North Dakota’s congressman in November will join a U.S. Congress wholly conscious of a nation in economic recovery that’s seeking help to spur stronger growth.

Democratic Rep. Earl Pomeroy and Republican challenger Rick Berg are as split as their political party leaders on how to tackle the challenges facing America’s economy and what role the government should play in the solution.

Berg says government intervention isn’t the answer, while Pomeroy says sometimes government needs to take emergency measures to avoid long-term catastrophe.

However, the two candidates partially agree on one topic: whether to extend the so-called Bush tax cuts, a move Congress is mulling this fall.

Economic meltdown

A housing bubble that burst, coupled with lax mortgage-lending and credit-rating practices, eventually led to a nationwide recession beginning in late 2007.

Then, Wall Street came to the brink of collapse in fall 2008, driving Congress to approve a $700 billion bailout to prevent some of the nation’s largest financial institutions from failing.

Pomeroy, who voted in favor of the bailout, stands by his vote – although congressional intervention continues to be a controversial issue.

“There is no doubt in my mind, this economy faced the most significant threat – the meltdown of the financial services sector – that had been faced by our economy since the Depression,” Pomeroy said. “It was that bad in my view. Dramatic action was taken, and we didn’t crater into a depression.”

Berg – who criticizes Pomeroy’s vote in campaign ads – said he wouldn’t have supported the bailout because he believes it only exacerbated the problem.

“We have a process called bankruptcy laws in America,” Berg said. “If those were followed, we’d have had more turbulence, but I think our economy would be growing back right now, and the forecast would be real positive.”

“I think the federal government went in and picked and choosed who we’re going to buck up, who we’re not going to buck up, and I think that created more uncertainty,” Berg added.

Stimulating growth

With no end in sight to the economic downturn by 2009, President Barack Obama proposed an expensive fix – a $787 billion stimulus package that was meant to spur economic activity through job creation and consumer spending.

But more than 18 months later, the success of the massive spending measure remains a contentious debate between Republicans and Democrats.

Pomeroy believes the stimulus has worked – to an extent.

“It kept us from a depression,” he said. “It worked in part, but it didn’t make everything better, because people are still choking on all the debt they racked up earlier in the decade.”

As with the bailout, Berg said he wouldn’t have supported the stimulus, either.

“What have they done?” Berg asked of the stimulus projects. “They spent

$800 billion and promised us that our unemployment would not go above 8 percent, and today we’re at 9 percent.”

Berg believes the national unemployment rate is closer to 15 percent because the rate doesn’t include people who stop looking for work or who have exhausted their unemployment benefits.

However, Pomeroy said the positive effect of the stimulus can be seen all across North Dakota – from a new hospital being built in Jamestown to broadband technology being extended to about 20,000 rural residents who wouldn’t have had access to it without the funding.

“All of these things will have a positive, long-term contribution, and they made economic activity happen in the meantime,” Pomeroy said.

Nearly $683 million in stimulus dollars have been paid out so far by federal government agencies to fund North Dakota projects.

On Labor Day, Obama proposed an additional “mini-stimulus” of $50 billion to be used toward infrastructure projects over a six-year period.

Pomeroy said he’d support the plan as long as it’s paid for, but he doesn’t agree with how Obama proposed to pay for it (through cutting tax breaks to oil and gas companies).

Strong infrastructure is especially vital to ensuring continued productivity in western North Dakota’s oil patch, where the unprecedented amount of activity has diminished the quality of roads and other infrastructure there, Pomeroy said.

But Berg said pouring more government money into the economy isn’t the solution.

“It is a stimulus, and the stimulus have proven they’re not working,” he said.

If the federal government showed fiscal restraint, it might inspire small businesses to create jobs, said Berg, who’s a businessman by trade as an owner and senior vice president at regional real estate giant Goldmark.

But when asked how the government should go about building that confidence with small businesses, Berg proposed few specifics.

“What the federal government needs to do is they need to provide some stability,” he said. “Everything that small business wants is stability and a longer term plan, and we’re absolutely not getting that out of Congress now.”

What next?

The latest economic debate before Congress is whether to extend widespread tax cuts that were implemented under Republican President George W. Bush.

The cuts are set to expire in December, and federal lawmakers are hesitant to let them lapse when the economy hasn’t yet bounced back.

Eliminating the tax cuts would amount to a tax increase for Americans when their pocketbooks are already tight.

But there’s a catch: Extending the tax cuts for another 10 years is estimated to cost the government about $3.7 trillion in revenue, which would add to an already overwhelming national debt.

Both Berg and Pomeroy agree that the tax cuts should be extended for all Americans – but for how long is where the candidates differ.

Berg wouldn’t specify how long he would extend the tax cuts for, saying, “We have to see what happens here in the next couple of months, quite frankly.”

But Pomeroy said he would extend the tax cuts for at least one to two years because that’s how long they can be continued without worsening the federal deficit.

“We need to extend the Bush tax cuts, but we need to pay for them while we do it,” he said.

Pomeroy voted against the Bush tax cuts when they came before Congress in 2001 and 2003, he said, because they were part of a poor fiscal policy undertaken by the Bush administration. “Their fiscal policies cratered the economy,” he said.

But given the stagnant economy America is still experiencing, Pomeroy said now isn’t the time to end the tax cuts.

“You want to have money circulating in the economy, so that you can slowly but surely grow your way back to a robust economy,” he said.

In focus: The economy

America's economy has been in a slump for nearly three years. Despite a $700 billion bailout for banks on the edge of collapse, government buyouts of mortgage lending powerhouses Fannie Mae and Freddie Mac and a nearly $800 billion stimulus meant to spur job growth, many communities across the country are still waiting to bounce back.


Readers can reach Forum reporter Kristen Daum at (701) 241-5541