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ONE-ON-ONE - March 2004
by Ed G. Lane
'An Out-of-Date Tax Code Is Driving Business... Out of Kentucky'
U.S. Congresswoman Anne Northup talks about the changes and challenges that lie ahead for the nation and the state
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Anne M. Northup
Anne M. Northup was elected to represent the Third Congressional District of Kentucky in 1996 and currently serves on the Appropriations Committee and numerous subcommittees, all of which oversee all federal spending for various agencies. Before her election to Congress, she represented the 32nd Legislative District of Kentucky in the Kentucky House of Representatives for nine years, where she served five consecutive terms from 1987-1996.
Northup holds a bachelor of arts degree in economics and business from Saint Mary's College. An active community volunteer, she has served on a number of community boards and is a recipient of numerous civic awards. She and her husband, Robert Wood Northup, a small-business owner, have six children and reside in Louisville. |
Ed Lane: Governor Ernie Fletcher is in the first 90 days of his term as governor. How well is he doing?
Anne Northup: He’s doing great. His first job was to appoint people to manage each of the cabinets, which – quite frankly – have needed a whole new management structure. Governor Fletcher has recruited some of the most talented people, organizationally and in terms of being able to find solutions to nagging problems. That was the first test.
The second test is being able to grapple with the major issues that are challenging Kentucky today. And they’re considerable. Revenues are down and needs are always up coming out of a recession. An out-of-date tax code is driving business and individual taxpayers out of Kentucky.
If the economy comes back tomorrow, the budget problems will not be resolved; they are much more long-standing than that. Ernie attacks a complicated problem in terms of “What can we do incrementally?” What are the short-term and long-term approaches? Being able to go after one nagging problem after another – whether it’s social services, transportation, the overall budget, education – all of those are challenges that he will meet and do a good job.
EL: Has anything that Governor Fletcher has done so far surprised you based on your working relationship with him when both of you were in Kentucky’s congressional delegation?
AN: Not a thing. He’s very straightforward. He campaigned on the principles that he thinks will make Kentucky stronger. He’s undaunted by the liberal newspapers that pretend to reflect public sentiment. Of course they don’t, as we saw in a recent poll in the Louisville Courier-Journal. The public agrees with the governor that a better way to balance the budget is to cut spending as opposed to increasing taxes.
Sometimes new people in office become intimidated by a barrage of negative editorials. I never saw Ernie worry about making a good decision based on what the press fallout might be. Governor Fletcher has a clear idea of where he wants to go. He’s working with very smart people. How do you solve a big problem? One bite at a time – they’re working on that.
EL: Governor Fletcher announced at the Greater Louisville Inc. annual meeting that the state was committing $118 million to the Ohio River Bridges Project (bridges between Louisville and Southern Indiana) over the next two years. How will the state’s investment and your efforts as U.S. Representative to secure federal appropriations work together to initiate the $1.9 billion bridge project?
AN: First of all, the bridge project is the state’s responsibility. However, the Fletcher administration is the first to commit any independent dollars to this project. Federal dollars require a 20 percent match from the state. Now we’re ready to go into final design, the purchase of right-of-way, and construction.
While the Patton administration gave verbal support for the bridge, they spent every dime in the Kentucky road fund and did not put the bridge project on the six-year plan. If they really were committed, Patton should have budgeted the bridges in the six-year plan. Kentucky will receive about $549 million federal dollars for this project next year. The federal government sees our current bridge network as a traffic jam and an obstacle to interstate travel. I’m very gratified that the state also sees the need for this project.
The Fletcher administration had to study every single road project to find these dollars in the six-year plan. For the last eight years the Patton administration just came up with excuses. To now have an administration that executed is very gratifying.
EL: According to the governor’s announcement and your comments, no money for the bridge project had been budgeted by the Patton administration. Were you aware that this was the case? What reasons were given by the Patton Administration for not providing funds for the bridges?
AN: Paul Patton had an Eastern Kentucky agenda. That’s pretty clear when you look at how his administration spent money. That became even more transparent as the second term wound down and the governor no longer was looking towards the U.S. Senate race.
Just looking at the Ohio River bridges you don’t get a complete picture. There are roads all over Jefferson County that need to be expanded. They’re in the six-year plan, but they should have been constructed a long time ago. Any obstacle – a challenging right-of-way problem, a water main that needed to be moved – would become a “stop dead in your tracks” excuse. There were no excuses for Pike County projects and the surrounding counties.
Road funds come from gasoline taxes. They’re not meant to build roads where you hope traffic may someday be. They’re meant to build roads where the traffic is. If you add the $549 million that’s going to come into this state from the federal government and you add it to the $600 million that the state’s going to raise on gasoline taxes, that’s about $1.1 or $1.2 billion. The majority of the gasoline taxes come from urban communities. There’s no excuse to fail to build roads in Lexington, Northern Kentucky and Louisville. Not to do so, corrupts the whole purpose of the road fund.
EL: If the bridges are constructed on schedule, when will they be placed into service?
AN: It depends on how fast the money flows. Probably in as short as 12 or 13 years and as long as 20.
EL: What, in your opinion, will be the major issues facing President George Bush in his re-election campaign?
AN: The situation in Iraq, the war on terrorism, and investment in our military, all are strong defense issues. Then jobs.
EL: One of the major economic issues in our country and Kentucky is the outsourcing of manufacturing and business service jobs to lower-cost producers in foreign countries like China and India. The loss of U.S. jobs is being offset by the creation of new jobs, but the net job growth has been lower than expected during the ongoing recovery in the U.S. economy. What do you see on the jobs horizon?
AN: Public policy will have a lot to do with what the U.S. job picture looks like. First of all, there’s no way the U.S. can stop free trade. If we build barriers to trade in this country, then the U.S. will really have a recession because Americans cannot consume all that we make and we will have higher prices because we won’t have goods that are mixtures of domestic and internationally manufactured components. Trade is going to happen. The question is, will the U.S. be competitive?
Congress needs to make the tax cuts permanent. The U.S. needs to have a predictable and affordable supply of energy – that means exploration and production. Americans need lower healthcare costs, which means people need to have access to “large group policies.” We need all these things and more to make it more attractive to build products in the U.S. than overseas.
There are already things that make it attractive to stay here – a highly educated workforce, the fact that you have this country backing you up. If your company was building a supply line and it got intercepted, you would have the full might of this country to back you up? If you’re located overseas, you have to ask the question, would China back you up. There are a lot of attractive things about producing goods in the U.S., but because of non-productive factors like red tape, labor issues, and strikes, sometimes companies give up and move overseas – even though they would like to stay here.
EL: You were instrumental in helping secure funds to lengthen the Louisville International Airport’s runways so non-stop flights to Asia could originate from Louisville. Why was the airport runway modification needed?
AN: When you talk about economic development in Kentucky, nothing could epitomize it more than UPS’s presence in Louisville. UPS pays more taxes to our state and our local community than any other business. UPS is in a fast-changing, emerging industry. There’s not only U.S. competition but there’s also competition with overnight deliverers from overseas that want to serve the U.S. market. The fastest growing segment at UPS is international delivery services – particularly to Asia. UPS has made tremendous investments that continue to attract a bigger workforce in Louisville. Extending Louisville International Airport’s runway ensures that UPS will be able to solidify its presence in Louisville and Kentucky by flying non-stop to Asia.
EL: U.S. Representatives have to run for office every two years and you seem to have consistent and ongoing competition from the Democrats. How is your current race for re-election?
AN: It’s going fine. We always expect a tough race, we prepare for a tough race. We are organized, we are raising our money because we know the campaign will depend on us telling our story. Louisville does not have a newspaper that’s pro-growth or pro-business or pro-job expansion; they’re instead pro-tax increases, the type of things that would be obstacles to economic growth. The paper does not share my values and they’re not going to support me. My campaign has got to raise the money to get our message out. We’re always eager to reach out to people that care about who’s elected in this country. We’re working hard and we know we have a tough race.
EL: How would you characterize your relationship with Greater Louisville Inc.?
AN: I can pick up the phone and call Steve Higdon, the CEO of Greater Louisville Inc. (GLI), anytime I want and I am sure he feels he has the ability to contact me anytime. We’re partners, we believe in most of the same things. GLI represents the business community very, very well. I am thrilled to have such a close working partnership with GLI.
EL: How would you rate Louisville Mayor Jerry Abramson’s (Democrat) performance and your working relationship with him?
AN: When Jerry Abramson was first elected mayor (of Louisville), the Democratic Party “owned” this community. When he was mayor, there were 12 Democratic alderman, a Democratic county judge, there was a Democratic county commissioner and I think that the mayor was the leader of the Democratic Party as well. But it’s a different situation now. I don’t know what the mayor plans for in the next election.
I can say what has evolved over the last year: mutual respect, more trust in each other and very straightforward conversations. Certainly mayors are right on the front line every day. Without jobs, they don’t have tax revenues. They see politics up close and personal. I don’t think either one of us deny that we would disagree on a number of issues. But, Louisville’s first for both of us. While it was tenuous for our relationship in the beginning, we’ve found good ways to work together.
EL: The Louisville Metro Council recently elected Kelly Downard, a Republican, as its president. Are Republicans gaining at the grass roots level in Metro Louisville?
AN: There’s no question. Jefferson County is almost evenly split between Republicans and Democrats, not by registration, but in terms of voter performance, whether it’s George Bush, the governor, or my races for Congress. What happened with Kelly Downard is there are enough Democrats who see Louisville’s progress as being more important than a territorial hold on power. And they decided Kelly would do the best job.
As council president, he will do an excellent job. He’s a natural leader, very straightforward, and doesn’t mince or back down from tough issues. You may disagree with him, not that I do, but there may be people that disagree with him on an issue but they usually respect him for his straightforwardness and not trying to play both sides. There’s nothing worse for a leader than trying to make nobody mad.
EL: You voted across the board to support George Bush’s tax cut plans. Will the tax cuts be extended by Congress?
AN: I certainly hope so and I would expect it. What we know when we look at the economy today is that the tax cuts have worked – just like they’ve always worked in the past, I might point out. They stimulate the economy in more than one way. Yes, they put increased purchasing power back in the hands of middle America – at every level – and prosperity depends on the middle-class having purchasing power. They also stimulate businesses to invest in new technologies. All of the tax cuts were designed to drive this economy forward. I would be shocked if we didn’t extend the cuts.
EL: Kentucky’s been a laggard when it comes to the role of women in business and government. As one of the women in the forefront, what comments would you like to make to our women readers about getting into politics and business?
AN: Probably nothing makes me more excited than to see what Governor Fletcher is doing with the Kentucky Commission on Women. Previously started by other governors, the Commission had become a place for some of the most liberal women in Kentucky. You can be liberal or conservative. One of the things that makes democracy great is bringing all the best ideas to the table and having an honest conversation about the issues. But when you create a board that focuses on liberal thoughts rather than promoting women successfully, the commission moves so far in the fringe that it really makes a lot of people mad. Some of the issues the Commission spent so much time and money on didn’t help women who are trying to meet a payroll or get elected to an office. Voters don’t want women that are on the fringe. They want women that have shouldered responsibility, family, work and so forth. These are the kinds of women we need at the table of public policy and leading companies. Each time I read the Commission’s newsletter, I thought – please don’t talk to my daughter because you won’t instill in her how many great opportunities there are for women, and how to take advantage of those opportunities.
Did I make it clear? Ernie has asked the director to resign and appointed new members to the board that better represent women from around the state. I believe that the Kentucky Commission on Women can now make a difference.
EL: Speaking of women, how would you describe First Lady Glenna Fletcher?
AN: Glenna Fletcher is just so talented. She, like her husband, has had a number of successful roles and occupations. Anybody that was close to the Fletcher campaign knows that Glenna and Ernie Fletcher have a real partnership. She in her own right is strong, articulate, and able to make decisions. That makes her a role model to girls all across the state. She certainly makes it look like you can have it all – a successful marriage, a strong partnership, be successful in your own right, and not lose your inner core of what you stand for and what you believe in. She was beloved by many of Ernie’s congressional colleagues and their wives thought so highly of Glenna. Glenna will be so appreciated in Frankfort.
EL: Nationally, the Democrats are making a big deal about the U.S. deficit. Is it a serious problem?
AN: The deficit is a challenge, no question about it. But it’s important to realize that two-thirds of government spending is on programs like Social Security, Medicare, veteran’s pensions, public employees’ pensions – what we call mandatory expenditures. Without any appropriation from Congress, these dollars are already spent each year. Of the other 33 percent, half of that goes into fighting the war on terrorism and homeland security. Congress believes these expenses are not only a wise investment but are also absolutely essential. Obviously, we hope the world will be more peaceful, that we won’t have to be in a wartime defense budget forever, but right now we have to meet that challenge.
Government spending last year in all the other domestic programs combined – these include roads, airports, education, healthcare, etc. – went up less than one percent. And in the coming year, the president has proposed less than one percent and Congress is going to try to flat-fund them. The real problem and the solution come in looking at two-thirds of the spending.
The point is that it wasn’t proliferative spending or tax cuts that put us in a deficit – it was an economic downturn. Let me point out that far more money was lost to the Treasury because the U.S. economy didn’t have growth – about three times more than the tax cuts. Congress can’t tax the U.S. out of a deficit; the only thing we can do is grow the economy.
EL: What is the toughest part of your job as a member of Congress?
AN: Public policy is challenging. It’s slow. I kiddingly say it makes scrubbing up your kitchen floor look like a great thing to do because that has a beginning and an end. You finish it in an afternoon. Everybody appreciates what you did. Public policy is much slower. In many ways, it’s much better when you take one bite out of a problem at a time rather than making sweeping wholesale changes. It’s amazing the strategic way the Bush administration is dealing with the energy problem, education, homeland security, and transportation. On every front, they roll up their sleeves, make decisions, and take action.
EL: Gasoline prices have continued to escalate quite a bit. Do you feel that higher costs are related to cold weather or has OPEC been tightening the oil supply?
AN: There are a variety of reasons that gasoline goes up, from OPEC to weather to delivery problems to EPA mandates on what kind of gas we use by region. But there is nothing more important for alleviating this problem than becoming energy independent. To fail to invest and to allow exploration and expansion of our energy base makes no sense at all.
EL: With regard to homeland security, America has been very fortunate not to have had another major act of terrorism. Has America been lucky?
AN: The Bush administration and Congress have worked together to create a much safer environment. We’ve already stopped many potential attacks. Can we stop them all? No, not unless we win the fight where terrorism’s roots are. In the meantime, Congress is spending money, taking every precaution, and we’re winning so far. But, it’s on a case-by-case basis until America wins the war on terrorism.
Ed G. Lane is chief executive of Lane Consultants Inc. and publisher
of The Lane Report.
edlane@lanereport.com
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