Pension reporting legislation would force States to declare massive liabilities

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Rep. Devin Nunes (R-Ca.) wants states to calculate their pension shortfalls more conservatively.

New legislation that would force states to report more accurate unfunded pension liabilities is being pushed by House Republicans, according to the Wall Street Journal.

The Public Employee Pension Transparency Act was introduced on Feb.9 by California Rep. Devin Nunes, and would require states and municipalities to report more accurately on the financial health of public-employee pension funds. Under proposed rules, most states would be forced to report even larger funding deficits than already disclosed.


If passed, the law would require that states provide a more conservative calculation on investment earnings, which they now typically estimate at 8 percent per annum. Under new rules, a second calculation would be conducted using a 4 percent investment earnings assumption. Private companies generally use a 6 percent factor.

States would be required to file annual reports with the Treasury on the status of their funds. Failing to do so would cost them their ability to issue tax-exempt bonds which they rely on for infrastructure and other projects.

The bond-rating agency, Moody’s Investor Service, expressed support for the legislation, saying it “would provide new incentives to state and local governments to take action to ensure public-employee pension plans’ long-term viability.”

Predictably, state government officials expressed opposition for the legislation.

“Transparency is not the issue here,” said Jeffrey Esser, executive director for the Government Finance Officers Association. “The effort is designed to make public-employee pension plans look bad.”

The legislation would also explicitly ban the federal government and the Federal Reserve from bailing out insolvent public pension plans. Although states and municipalities contend they are not looking for the federal government to do so, Illinois Gov. Pat Quinn’s recent proposed budget plan suggested that the state may consider “seeking a federal guarantee of the debt” to help stabilize its massively underfunded plans.

Republicans hope the bail-out provision will prevent states from counting on the feds to step in to prop up sick pension funds. “You still need to put that policy out there so that the states know that there’s not going to be any bailouts coming,” said Mr. Nunes.  “We don’t want to get in a position to where people even think that that’s an option.”

The Pew Center on the States recently calculated state and local pension plans had unfunded balances of $1 trillion based on 2008 data, although some sources estimate the shortfall is now closer to $3 trillion.

The Wall Street Journal

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N.Y. Congressman Christopher Lee resigns for misbehavior

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A New York congressman abruptly resigned his seat Wednesday, saying he was quitting because he regretted actions that have hurt his family and others.

New York Rep. Christopher Lee resigned immediately after he was caught trolling for dates on the Internet.

The gossip website Gawker reported Wednesday that Rep. Christopher Lee, a married two-term Republican lawmaker, had sent a shirtless photo of himself to a woman he met on Craigslist.

Lee said in an e-mailed statement that his resignation was effective immediately. The statement offered no confirmation or details of a Craigslist posting.

“I regret the harm that my actions have caused my family, my staff and my constituents,” Lee said. “I deeply and sincerely apologize to them all. I have made profound mistakes and I promise to work as hard as I can to seek their forgiveness.”

Added Lee: “The challenges we face in Western New York and across the country are too serious for me to allow this distraction to continue, so I am announcing that I have resigned my seat in Congress effective immediately.”

An anonymous woman described as a 34-year-old Maryland resident and government employee provided Gawker with e-mails she said were an exchange between her and Lee in response to an ad she placed in the “Women Seeking Men” section of Craigslist.

Gawker reported that Lee identified himself as a divorced lobbyist and sent a photo of himself posing shirtless. The woman eventually broke off the contact with Lee after becoming suspicious that he had misrepresented himself, according to Gawker.

Lee served on the House Ways and Means Committee and was active on economic revitalization issues.

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GOP slashes budgets of agencies, goes easy on itself

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Republicans now running the House are barely touching Congress’ generous own budget even as they take a cleaver to many domestic agencies. A new GOP proposal would reduce domestic agencies’ spending by 9 percent on average through September, when the current budget year ends.

If that plan becomes law, it could lead to layoffs of tens of thousands of federal employees, big cuts to heating and housing subsidies for the poor, reduced grants to schools and law enforcement agencies, and a major hit to the Internal Revenue Service’s budget.

Congress, on the other hand, would get nicked by only 2 percent, or $94 million.

Recent hefty increases to the congressional budget — engineered by Democrats when they held power in the House from 2007-2010 — would remain largely in place under a plan announced Thursday by the chairman of the House Appropriations Committee, Rep. Harold Rogers, R-Ky.

The plan, developed in close consultation with Republican Speaker John Boehner’s office, would cut Congress’ budget less than any other domestic spending bill, except for the one covering the Department of Homeland Security.

All 12 spending bills left unfinished by Democrats will go into a single, enormous measure that Republicans promise to bring up the week of Feb. 14.”Charity begins at home, and Congress should lead the way with cuts to their own budget,” said Steve Ellis of Taxpayers for Common Sense, a Washington-based watchdog group. “Instead they’re protecting their bottom line while slashing everyone else’s.”

The cut to Congress gets a little deeper, to 3.5 percent, if it were imposed for a full calendar year instead of the seven months that will remain in the current budget year. But so, too, would the cuts to other agencies — growing to 16 percent.

When Democrats took over Congress in 2007, they inherited a $3.8 billion budget for Congress. That includes money for members’ and leadership offices, House and Senate committees, and support agencies such as the Capitol Police and the Congressional Budget Office, which crunches numbers for lawmakers as they consider legislation.

Since then, that budget has risen to $4.7 billion, a 23 percent increase over four years. The biggest jump, 11 percent, occurred when President Barack Obama signed a Democratic-written spending bill just after he took office in 2009.

Among the first items of business when the GOP regained the House was to pass a bipartisan measure to cut office and committee budgets by 5 percent. That move that prompted much self-congratulation even though it would produce just $35 million in savings. For context, the deficit is climbing toward $1.5 trillion this year.

Republicans bristle at the suggestion that Congress is getting off easy. They promise further cuts when the Senate pitches in and when the two chambers work out joint items such as budgets for the Capitol Police, Library of Congress and the Government Accountability Office.

“Earlier this year, the House passed unprecedented cuts to its own budget, and we are cutting more … a total of nearly $100 million in House-related spending cuts,” said Boehner’s spokesman, Michael Steel. “The Senate has substantial responsibility for the overall legislative branch appropriations bill, and we hope to work with them to cut even more going forward.”

Republicans will provide more details about the spending bill in the week ahead.

Legislative branch cuts are hardly unprecedented. Former Speaker Newt Gingrich engineered an 8 percent cut in Congress’s budget when Republicans last wrested control of the House, in 1995.

When Democrats gained a majority in 2007, the budget for the office of the speaker’s office — considered the most powerful of any in Congress — exploded. As speaker, Rep. Nancy Pelosi, D-Calif., engineered a $2 million, 71 percent increase immediately after that transfer of party control.

A Pelosi spokesman attributed some of the increase to her decision to consolidate a variety of leadership jobs within her office — as opposed to the power-sharing approach of her predecessor, Republican Dennis Hastert of Illinois.

Regardless, Boehner inherited a pretty flush office account, which permits him a sizable staff contingent, including a press and communications operation with a dozen people. Capitol Hill news coverage has increased considerably in recent years with the advent of the 24-hour news cycle, the growth of niche publications and a range of new online media, including Twitter and Facebook.

The Associated Press

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Rep. Dennis Kucinich sues cafeteria over olive mishap

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Rep. Dennis Kucinich has filed a lawsuit over a lunch-time incident, in which he ate a pita wrap sandwich in a House of Representatives cafeteria, which contained non-pitted olives. He is suing the four companies involved in running the cafeteria in the Longworth House Office Building for a total of $150,000.

Rep. Dennis Kucinich is suing four companies involved in running a congressional cafeteria, over an accident involving an olive.

The court documents say that Kucinich ordered the vegetarian sandwich wrap “on or about” April 17, 2008 that was advertised as containing “pitted olives.” After biting into it, he realized that it “contained dangerous substances, namely an olive pit.”

After consuming the sandwich, Kucinich incurred “serious and permanent dental and oral injuries” which required “multiple surgical and dental procedures.”

The lawsuit was filed on Jan. 3, and claims that the congressman is entitled to damages for future dental and medical expenses and to compensate him for pain, suffering and loss of enjoyment. He also accuses the four firms of breach of implied warranty.

The former mayor of Cleveland, Kucinich has represented Ohio’s 10th district in the House for eight terms.

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House legislators using constitutional clause to stop corruption investigations

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A clause in the U.S. Constitution is causing concern at the Justice Department, as legislators under investigation on corruption charges are using it to defend themselves from federal prosecutors, according to a story in The Washington Post.

The clause, simply known as the “speech and debate” clause, shields legislative work from executive branch interference. House members have successfully used the clause in recent years in corruption probes to limit the FBI’s ability to search for evidence and install wiretaps on their phones.

A 2007 court decision ruled that government agents violated the constitutional rights of then-Rep. William J.  Jefferson when they conducted a search of his Washington D.C. office. At the time, the Justice Department warned that the decision would “seriously and perhaps fatally” undermine congressional corruption investigations by limiting the scope of federal investigators.

A few days before the office raid, FBI agents, searching his Washington, D.C. home, found $90,000 in cash hidden in his kitchen’s freezer.  Jefferson was eventually convicted of corruption using that and other evidence, and sentenced to 13 years in prison.

Since the Jefferson court ruling, the speech and debate defense has killed off, or severely limited the investigations into potential corruption activities of former-Reps. Tom Feeney (R-Fla.), John T. Doolittle (R-Calif.), Rick Renzi (R-Ariz.) and veteran Rep. Peter J. Visclosky (D-Ind.).

Instead of any opposition to the constitution clause, House leaders of both parties have been supportive of the use of it by members under investigation by Justice Department officials. A recently-filed brief by House lawyers compared the extensive wiretapping of Renzi, who was accused of financially benefitting from a land deal, to the wiretapping of former FBI director J. Edgar Hoover.

Law enforcement officials say that the clause is used now in virtually every defense, because many involve legislative acts in which the lawmaker was involved. For example, a potentially illegal action might involve a  lawmaker who introduces legislation in exchange for campaign contributions or other favors.

In the Visclosky investigation, investigators sought to determine if the lawmaker used his influence on the House’s Appropriations Committee, of which he was a member, to steer government contracts to clients of lobbyist PMA Group. Over a period of 10 years, Visclosky took $1.36 million in campaign donations from PMA, while voting for over $137 million in purchases from PMA clients.

The lawmaker’s lawyers refused to turn over most of the documents requested by investigators, citing the speech and debate clause. The investigation has stalled, and sources say the congressman is unlikely to be charged based on a lack of evidence.

More at The Washington Post

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Rep. Jesse Jackson Jr. bucks trend, wants bigger budget for own office

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Unhappy with the cuts that lawmakers in Washington agreed to last week in their own office allowances, Rep. Jesse Jackson Jr. proposed Tuesday that they award themselves a raise instead.

In a gesture signalling their commitment to reducing government overhead, last week the House voted 408-13 to reduce their annual office allowance by 5 percent. House members are allotted $1.5 million annually for the cost of staffing an office in Washington and in their home districts.

On Tuesday, Jackson proposed that instead of a cut, the office allowance be increased by 10 percent, citing the need for additional security after the Arizona shooting spree that injured Rep. Gabrielle Giffords and killed 6 others.

In a statement, Jackson said: “My staff is working on a proposal to restore last week’s 5 percent cut in member budgets, because in this economic climate, we should be providing more services to our constituents – not less.  On top of that, I will propose a 10% increase in member budgets for security measures.  In some districts, that will mean hiring security personnel for public events.  In other areas, that may mean installing surveillance cameras at district offices as a deterrent or improving the locks or the entry systems in district offices.  Some will need more resources in order to move their offices to a safer area.

“I do not feel that fear should grip us, but since 9/11 we’ve secured every federal facility with the exception of our district offices. After the events of last weekend it is clear that our district staffs are vulnerable. Members should have the resources and the latitude to take the appropriate security measures in order to protect themselves and their staffs.”

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Former House GOP leader Tom DeLay sentenced to 3 years in prison

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Former U.S. House Majority Leader Tom DeLay, once one of the most powerful Republicans in Congress, was sentenced on Monday to three years in prison for his conviction on corruption charges.

DeLay waived his right to have the jury decide his fate, and instead chose to have state district judge Pat Priest determine his punishment in an Austin, Texas courtroom.

DeLay was found guilty of a money swap, which prosecutors said was used to funnel campaign contributions to other Texas politicians.

Priest sentenced him to three years on a conspiracy charge and five years on a money laundering charge. In lieu of the sentence on the money laundering charge, the judge will allow DeLay to serve 10 years of probation with community service, and for the sentences to run concurrently.

Prosecutors presented only one witness at the hearing, Peter Cloeren, a businessman who pleaded guilty to campaign finance rules violations.  Cloeren claimed that DeLay had encouraged him to make the illegal donations in 1996, while the defense noted that DeLay wasn’t charged with any wrongdoing in the case.

The judge cut the prosecution testimony short, ruling that Cloeren’s testimony couldn’t be proven beyond a reasonable doubt.

Former House Speaker Dennis Hastert appeared on DeLay’s behalf, although earlier, defense lawyers said they would present as many as nine character witnesses.  Defense lawyers also submitted more than 30 letters attesting to DeLay’s character, including former Israeli Prime Minister Benjamin Netanyahu and 8 current U.S. congressmen.

The former Houston-area congressman, nicknamed “The Hammer”, was convicted Nov. 24 on charges of money laundering and conspiracy to commit money laundering, in what prosecutors described as a money swap intended to illegally funnel campaign contributions to fellow Texas politicians in 2002.

At the center of the charges was whether DeLay violated campaign contribution laws for his part in a single transaction involving the alleged money swap. A political action committee he founded, Texans for a Republican Majority, sent a $190,000 contribution to the Republican National Committee, which in turn, according to prosecutors, used the monies to help fund the 2002 campaigns of seven Texas Republican candidates supported by DeLay.

Under Texas state rules, corporate political donations to candidates are prohibited. Prosecutors said that corporate donations to the PAC were “laundered” by virtue of a special arrangement with the RNC in Washington. They claimed that the monies from the PAC were corporate funds, but funneled through the RNC to skirt campaign finance laws.

Travis County prosecutor Beverly Mathews charged that the exchange of monies ultimately had a much larger role in state and national politics. The monies helped get more Republicans elected to the Texas House, which allowed the GOP to push through a redistricting plan so that more Republicans could get elected to Congress, further cementing DeLay’s leadership position.

DeLay had been under investigation for years, and his political career had been badly damaged by his association with Washington lobbyist Jack Abramoff, causing him to resign in 2006.  The lobbyist, a close friend of DeLay’s, was convicted on charges of tax evasion, mail fraud and conspiracy.

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