2010-04-15 / Front Page

Sen. Reed fields tough questions

By Phil Zahodiakin

Jamestowners last week questioned U.S. Sen. Jack Reed about a wide range of issues with national, as well as local, significance.

A Rhode Island Democrat and Jamestown resident, Reed was on hand for the latest in a series of “Community Conversations” hosted by the Central Baptist Church. The event, dubbed “The State of the Economy,” was facilitated by Pastor Kathryn Palen.

Reed sits on numerous committees and subcommittees in Congress, including panels with a purview over appropriations, armed services, banking and education.

The April 8 meeting drew a large number of islanders to the church. Many of the questions posed during the Q&A involved the economy – but there were just as many questions addressing such local concerns as the liquefied natural gas facility proposed for Mt. Hope Bay.

Asked to assess the status of the LNG proposal, Reed remarked that both of the previous permit requests – first for Providence and then for Fall River – were “ill-advised.”

“The Coast Guard rejected the Providence proposal flat out because of safety concerns,” he said, “and they put so many conditions on the Fall River proposal that the proponents felt that it would be infeasible.”

“Frankly,” he added, “I thought the problem was receding.”

But Weaver’s Cove Energy came back with a proposal to build the facility in Mt. Hope Bay, which doesn’t make sense for many reasons, according to Reed.

“The transit of ships below the Pell and Mt. Hope bridges would disrupt traffic while requiring huge safety zones around the ships, which would shut down traffic in the Bay,” he said. Reed also wondered who would pay local communities for police protection along the roads encompassed by the safety zones.

“I’ve been doing this for a while now, and my expectation is that, at this point, they would agree to almost any [conditions] now,” he said, “so we have to be very careful about that …and we have to keep working.”

Reed said he has asked National Oceanic and Atmospheric Administration Administrator Jane Lubchenko to look closely “at the impacts to our fishing industry” from dredging in the middle of winter flounder spawning grounds.

However, Reed also observed that “the issue is location – not the need for LNG, which is part of our economy and is clean-burning. There are places, I suspect – up and down the coast – which would be more hospitable in terms of public reaction and geography, and I think we have to move in the direction of a regional facility negotiated among the states.”

A second Narragansett Bay question involved efforts to “land” for the University of Rhode Island an ocean research vessel whose construction has just been funded – and which would be berthed at Woods Hole, Mass., or at Quonset Point.

Reed, who chairs the Senate Seapower Subcommittee, said he has told NOAA’s Lubchenko “how much she needed to put that ship at Quonset Point. We have a great record of maintaining these ships, we were successful with the [research vessel] Okeanos, which will be berthed at a facility under construction at Quonset, and we hope to be successful” with the state’s bid for the next Northeast research ship.

Reed was also asked about a state issue that has drawn national attention – the state proposal to fire all the teachers at Central Falls High School. Noting that the dispute is now in the hands of a federal mediator “who is a very experienced and respected jurist,” Reed said, “both sides are beginning to look for collaboration.”

He also said that the solution to problems such as those at Central Falls High School will require the collaboration of parents because there are some challenging family environments out there.

“We have to deal with that issue in addition to things like simple lesson plans,” he said.

In his answers to questions about the economy, Reed said, among other things:

• The consumer economy is not the most sustainable model for a strong economic future. “Over the last decade, policies on interest rates made borrowing seem affordable, but we didn’t have robust job growth, so a reliance on credit and home values didn’t prove to be an appropriate model. We need an economy that produces jobs through technology investment and tax credits. We also hope that health care reform will stabilize insurance costs, which increase 10 to 16% a year. Health care costs have been such a drag on our economy that most of the raises people would have normally received over the last 10 years have gone to pay for increases in health care premiums,” Reed said.

• Although there’s a correlation between taxation and business growth, “our tax policy over the past 10 years was clearly aimed at reducing taxes, but those reductions didn’t correspond to economic growth,” he said. There are other factors supportive of growth, Reed said, and the president’s proposal will help prevent disincentives to growth – such as his proposal to waive capital gains taxes on small businesses.

• The “vast majority of bank bailout loans have been repaid” – and the government has made money on those loans because they involved U.S. purchases of dividend-paying preferred stock issued by the ailing banks. Reed said he also insisted that the banks provide warrants allowing the purchase of additional stock and those warrants have, in many cases, been redeemed.

• Our export economy can’t compete against cheap foreign labor so “we have to compete through skill and expertise. For the first time, America is not the leader in producing college graduates – China and other countries are producing an incredible number of graduates and they are investing in new technologies. So, that area needs attention, and we also want a level playing field: Chinese practice favors their exports by effectively increasing the price of products they import, so we face difficult negotiations to get them to accept a floating rate” for their currency – or at least a rate that’s consistent with the country’s economy, Reed said.

• The burden of unfunded retirement benefits “is not exclusive to Rhode Island,” and the states will have to “sit down and start doing what they haven’t been doing in terms of changing benefits. You can hope for an improving economy to help the states mitigate this challenge, but it will also require negotiations among all the parties. My expectation is that it will take a long time, but the easiest way to do this will be as people are hired. The situation will be harder for people over 50,” Reed said.

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