Inaction on debt frustrates Valley leaders

July 29, 2011 at 12:09a.m.

and Peter H. MILLIKEN

YOUNGSTOWN

The debt-ceiling deadline is one day closer, and local elected officials are getting more frustrated.

The U.S. stands to reach its debt limit at midnight Tuesday, and according to one House member, the two sides aren’t any closer to a deal.

U.S. Rep. Tim Ryan, a Democrat from Niles, told The Vindicator on Thursday the House and Senate bills aren’t desirable.

“Were debating two Republican bills,” he said. “Both of these plans have nothing but cuts for the middle class. No cuts are being asked for wealthiest in the country.”

The Democrats’ sticking point — revenue increases — doesn’t appear to be in the cards, Ryan said. He said the bigger debate appears to be the length of the debt-ceiling increase.

The Republican plan calls for another debt-ceiling increase in six months; the Democrat plan extends the increase through the 2012 election.

“This is a political gimmick to try to have this discussion again before the election. [It] continues to signal instability to the market, and it’s bad for our economy,” Ryan said in reference to a short-term fix. “[And President Barack] Obama is hellbent on not having this argument again before the election.”

Thursday afternoon, Ryan told The Vindicator he wouldn’t vote in favor of the House bill, and said if it passes, it likely would be reconciled with the Senate bill.

The problem with reconciliation, however, is that time is running out.

The deadline is worrying and frustrating some in the Mahoning Valley, such as John A. McNally IV, chairman of the Mahoning County commissioners, who said he believes “98 percent of the citizens out there would just like to see the folks in Washington hammer this problem out, get it done, and quit squawking about it on cable news shows.”

As for the effect of a national default on the county’s investments, McNally said county officials have discussed the matter with their investment adviser.

“If something isn’t solved by the end of this week, we’ll probably have some additional meetings with him to protect the county’s investments to make sure that we are not suffering any losses and to continue to invest wisely,” McNally said.

He said the county could protect its investments by “just making sure that the process that we continue to use for our investments is sound, that we make decisions on how we invest that deal with the economic realities that we’re all facing.”

“We’re not jumping off a cliff here in Mahoning County simply because the folks in Washington sound like that’s what’s going to happen,” McNally said.

County Treasurer Daniel R. Yemma said the county has an $82 million investment portfolio, most of it in government-backed securities, which he characterized as “very safe, historically what is considered safe.”

“We’ve been in constant contact with our investment adviser,” Yemma said, identifying the adviser as United American Capital Corp. in Columbus. “They have assured us that our investments are safe.”

However, Yemma added, “If the government’s credit rating is downgraded, that could affect us longer term.”

Even before the debt crisis in Washington heated up, the county has not enjoyed much of a return on its investments in recent years, he said.

“The strategy is to preserve capital. Preservation of capital always takes precedence over return when it comes to government investments,” Yemma said.

The county has no investments in the stock market, but it has some investments in government-backed bonds, Yemma said.