Leonard Boswell

The mailer, reproduced below, is very similar to the TV ad. It attacks Boswell for supporting President Obama’s American Recovery and Reinvestment Act, and says the American Jobs Act will mean “more big government spending and tax increases of $450 billion.”

Crossroads Grassroots Policy Strategies has so far spent $186,556 at the KCCI and WHO networks in Des Moines, the local CBS and NBC affiliates. The group has ties to former White House deputy chief Karl Rove.

It’s unclear how much Crossroads is spending on the mailing, or what communities are receiving it. The mailing below was received in Des Moines.

Boswell faces a tough re-election battle against fellow U.S. Rep. Tom Latham (R-Ames), who’s opted to move and take on Boswell rather than face U.S. Rep. Steve King (R-Kiron) in his current district.

According to OpenSecrets.org, the 501(c)(4) “outside spending” group spent $15.1 million against Democrats in the 2009-10 cycle and $479,619 for Republicans. It spent another $1.1 million on electioneering communications. The group doesn’t disclose its donors.

American Crossroads, a related “super PAC,” raised $26.5 million in 2010 and spent $21.5 million. It raised and spent the most out of any independent expenditure-only committees in 2010.

Here’s the American Jobs Act’s impact on Iowa:

* 60,000 businesses would see a payroll tax cut on the first $5 million in wages.
* A $1,580 tax break for a typical Iowa household making $51,000 a year.
* $385.9 million in infrastructure investments, supporting about 5,000 jobs.
* $287.2 million to support up to 4,100 educator and first responder jobs.
* $132.6 million for school improvements, supporting about 1,700 jobs.
* $56.7 million for community colleges.
* $20 million to refurbish local communities.
* Additional help for 34,000 long-term unemployed Iowa workers through extended benefits and training programs.

The U.S. House on Thursday approved a small part of Obama’s jobs plan, an IRS code that withholds 3 percent on certain payments made to vendors by government entities. That was approved, 405 to 16, with all of Iowa’s Congressional delegation supporting it.

But Republicans representing the state in Washington have not embraced the American Jobs Act as a whole. A spokesman for U.S. Rep. Tom Latham (R-Ames) said earlier this week that reining in federal spending and eliminating regulations are key to recovery.

“Much like the president’s failed ‘stimulus’ bill in 2009, the American Jobs Act as a whole will not provide the certainty that the American people and businesses need to begin investing in America again,” said Fred Love.

And U.S. Rep. Steve King (R-Kiron) said after Obama unveiled his plan in September that paying down the nation’s debt and balancing the budget should be the priorities.

“The best thing he could have done would be call for a balanced budget amendment, instead he called for a lot more spending and he called for us to figure out how to pay for it,” King said. “And he told us this is all paid for; well it is if we figure out how to do that here in Congress.”

Andrew Cannon, a researcher for the non-partisan Iowa Policy Project, said it will be hard to reduce the cost of government by 15 percent without affecting the state’s quality of education, for instance.

Andrew Cannon 

“I can tell you that education — whether it’s K-12 funding, funding for community colleges, or funding for our three public universities Iowa — is a large portion of the budget,” Cannon said. “Any further budget cuts are going to touch education. It would be very difficult to touch the budget without cutting education simply because it’s such a large portion of what the state spends its money on.”

Cannon pointed out funding for higher education in particular has seen large cuts over the last 15 years.

“Education costs money,” he said. “If you want quality teachers and quality facilities it’s going to cost money, so it’s hard to imagine having a world class education on a shoestring budget.”

And Mike Owen, assistant director of the Iowa Policy Project, said cutting government spending can not only harm education but the economy as a whole.

Mike Owen 

“You start laying off teachers, start laying off police officers, start laying off street workers, that has a spin-off effect in the economy because people can no longer buy things themselves,” Owen said.

There’s also a question as to whether cuts in general are a good idea, Owen said, because there are rarely obviously wasteful items to remove from the budget.

“You’re going to cut things that are going to encourage job growth or income growth,” he said. “There is no Department of Waste, Fraud and Abuse.”

Branstad spokesman Tim Albrecht said according to projections, the state has already reduced the cost of government by 12 percent from the course it was on prior to Branstad taking office. And Branstad believes growth in jobs and incomes will come from the private sector, not the public sector.

“The governor believes the government’s role in this is to remove crushing regulatory burdens that stifle job creation, and enact pro-growth tax policies,” Albrecht said.

According to the Legislative Services Agency, the 2010 assembly appropriated $5.3 billion from the general fund for fiscal year 2011, and $7.2 billion overall.

Tim Albrecht 

The 2011 assembly appropriated $5.9 billion from the general fund for fiscal year 2012 and $7.1 billion overall. The 2011 assembly also appropriated $5.1 billion for fiscal year 2013 and $5.9 billion overall, with most agencies funded at 50 percent of the 2012 level.

Branstad has been traveling the state pitching a plan to reform education in the state, following a series of meetings on the topic. He’s proposing a change in the way teachers are evaluated and paid, among other things.

Those plans will likely call for additional spending, although the price tag for that is unclear at this point. But Albrecht said through advancement in best practices and technology efficiencies, further savings in the cost of government can be achieved.

“We believe that with our efforts to eliminate job-crushing regulations, encourage economic growth and the addition of new jobs, state government will be well-positioned to serve the needs of its citizens through private-sector growth and subsequent tax receipts,” he said.

Rep. Kraig Paulsen 

House Speaker Kraig Paulsen (R-Hiawatha) noted a 2 percent increase in aid for K-12 schools in FY2013 is already in place, after the Legislature provided 0 percent growth for schools in FY2012.

“We’ve already committed that we’re going to spend more on education, so that’s going to happen,” Paulsen said. “But we probably don’t know if it’s going to be more than what we committed in that. The governor has  a proposal there and we’re going to work on that as well. We’ve still got quite a bit of work to do.”

The state must invest in education at every level so Iowans can add value to themselves and be able to compete for jobs, said State Sen. Jeff Danielson (D-Cedar Falls).

Jeff Danielson 

“You cannot goose egg your schools and expect them to compete for the future,” Danielson said. “There’s no state in the country that can disinvest in education and be successful in the future. That’s not a strategy for success.”

David Swenson 

Iowa State University economist David Swenson said even though Branstad “got the state’s accounts into a terrific mess” in the 1980′s, he’s since taken ownership of the subsequent creation of a rainy day fund, using generally accepted accounting principles and a 99 percent spending limitation.

“He’s demonstrated early on that he’s just absolutely not going to entertain any kind of government expansive discussion unless it involves economic development,” Swenson said.

Of all of Branstad’s goals, he’ll probably be most successful in cutting the cost of government by 15 percent, Swenson said.

“Given the fact that we have a divided House and Senate…I just don’t see any movement towards a more expansive state government,” Swenson said. “I think he’s going to have his way.”

The move is the latest in the back-and-forth action since The Iowa Independent noted on Tuesday the new ad and airtime purchase by Crossroads GPS, a conservative policy and advocacy group founded by Karl Rove.

“Despite the flowery statements pouring out from Leonard Boswell and the Iowa Democratic Party, Leonard Boswell fails to explain why he voted to waste $830 billion on Obama’s first stimulus bill and now enthusiastically supports another round of stimulus spending tied to a $450 billion tax hike,” Nate Hodson, director of state and regional media relations, said in a Crossroads statement.

“Iowans deserve to know why Leonard Boswell continues supporting Obama’s failed policies which waste taxpayer dollars without creating jobs.”

The remarks from Hodson followed responses from the Iowa Democratic Party and Boswell’s campaign regarding the new ad, which were also published by The Independent on Tuesday and linked to in the Crossroads release.

“This morning Karl Rove’s shadowy corporate special interest group American Crossroads, began running ads blaming Congressman Boswell for America’s economic crisis. This blatant attempt to smear and distort the Congressman’s record is downright shameful,” wrote Joshua Sulier in an email from the Boswell for Congress campaign.

The campaign is asking for contributions to raise an additional $10,000 for the campaigns “rapid response fund” to fight attack ads. …

Iowa Democratic Party Chairwoman Sue Dvorsky said the ad shows Karl Rove, who’s behind the Crossroads GPS, is trying to help U.S. Rep. Tom Latham (R-Ames) defend a “record of supporting corporate loopholes and opposing a plan to create jobs and strengthen the middle class.” …

“Tom Latham and Karl Rove think they can buy this election with anonymous, special interest money. They should know better,” Dvorsky said. “Iowans take a serious look at the candidates and the issues facing our state. On all accounts, Congressman Boswell has been a fighter for this state and has the record of fiscal responsibility and leadership to prove it.” …

Latham campaign spokesman James Carstensen didn’t respond to the IDP and Boswell campaign’s attacks on Crossroads and Latham, or on whether the ad is a precursor for a potentially nasty 3rd Congressional District race.

“Congressman Latham is focused on fighting for and advancing policies that will foster job and economic growth,” Carstensen said. “We will wait to focus on politics and elections next year.”

Boswell, a Des Moines Democrat, appeared along with U.S. Agriculture Secretary Tom Vilsack in Des Moines earlier this month to promote the American Jobs Act, and specifically the $50 billion earmarked within the plan for transportation infrastructure like bridges and roads. Earl Agan, president of the Central Iowa Building and Construction Trades Council, estimates the nearly $500 million that would come into Iowa as a part of the proposal would fund more than 6,500 construction workers.

Boswell indicated that at a time when Americans are searching for employment and the nation’s infrastructure needs repair, the Obama proposal could fill both needs.

“I will be doing all I can to push for this much-needed relief. Iowans are counting on us to come together, do the right thing and get people working again,” Boswell said in an Oct. 14 briefing.

“I remain committed to taking care of our middle class and will support legislation that creates jobs and provides Iowa’s families and workers with the tools and assistance they need to get back on their feet and contribute to the recovery of our national and local economies.”

In early September, shortly after Obama’s jobs address to the nation, Boswell said, “In order to invest in job creation, Washington must get on the same page as the rest of America and stop putting corporations and special interests above everyday workers and small businesses. It is clear to most Americans that oil companies are doing just fine without the taxpayer’s help. It is clear to most Americans that Bill Gates and Warren Buffet can afford to pay the same percentage of payroll taxes that their own secretaries pay. It is clear to most Americans that our nation will never recover if the federal government keeps offering tax breaks to companies that outsource U.S. jobs.

“Let’s redirect the taxpayer dollars that fund these luxury handouts and corporate incentives to put Iowans back to work, repair our roads and bridges, update our public buildings, and get Americans making things again. I look forward to the hard work ahead.”

According to an analysis of the stimulus — known officially as The American Recovery and Reinvestment Act — in relation to job creation by the nonpartisan Congressional Budget Office, the government plan, during the second quarter of 2010 alone, increased employment by between 1.4 million and 3.3 million people, compared with what employment would have been otherwise. The CBO also states that well over half a million jobs were funded in each of the other three quarters of 2010. Subsequent analysis by the nonpartisan Annenberg Public Policy Center, which runs FactCheck.org, finds Republican and conservative claims of the plan’s failure to be a matter of opinion and not fact.

“Simply put, more people would be unemployed if not for the stimulus bill,” the analysis reads. “The exact number of jobs created and saved is difficult to estimate, but nonpartisan economists say there’s no doubt that the number is positive.”

“This morning Karl Rove’s shadowy corporate special interest group American Crossroads, began running ads blaming Congressman Boswell for America’s economic crisis. This blatant attempt to smear and distort the Congressman’s record is downright shameful,” wrote Joshua Sulier in an email from the Boswell for Congress campaign.

The campaign is asking for contributions to raise an additional $10,000 for the campaigns “rapid response fund” to fight attack ads.

“Faceless millionaires will not sway this election! Please add $10 to our grassroots fund today,” Sulier wrote. “Together we can prove the people are stronger than the special interests.”

Iowa Democratic Party Chairwoman Sue Dvorsky said the ad shows Karl Rove, who’s behind the Crossroads GPS, is trying to help U.S. Rep. Tom Latham (R-Ames) defend a “record of supporting corporate loopholes and opposing a plan to create jobs and strengthen the middle class.”

Latham opted to move and take on Boswell in the state’s newly drawn 3rd Congressional District rather than stay in the 4th District and battle U.S. Rep. Steve King (R-Kiron). National political observers say the race could be a bellwether for which party gains control of the U.S. House, and may be one of the most expensive in the country.

According to OpenSecrets.org, Crossroads GPS spent $15.1 million against Democrats in the 2009-10 cycle and $479,619 for Republicans. It spent another $1.1 million on electioneering communications. The group doesn’t disclose its donors.

The group has spent $85,125 so far at KCCI, the local CBS affiliate in Des Moines and the state’s largest network TV station. The group has run ads since late June, and recently spent $13,472 for ads running between Oct. 25 and Nov. 3. At least a portion of the ads being run in Iowa target Democratic U.S. Rep. Leonard Boswell.

American Crossroads, a related “super PAC,” raised $26.5 million in 2010 and spent $21.5 million. It raised and spent the most out of any independent expenditure-only committees in 2010. The super PAC, which must disclose its donors, has raised $6.6 million so far this cycle.

“Tom Latham and Karl Rove think they can buy this election with anonymous, special interest money. They should know better,” Dvorsky said. “Iowans take a serious look at the candidates and the issues facing our state. On all accounts, Congressman Boswell has been a fighter for this state and has the record of fiscal responsibility and leadership to prove it.”

Latham has not yet responded to a request for comment on the ads.

A spokesman for Latham’s office did not directly respond to whether Latham supports an extension of Social Security payroll tax cuts, a major part of the American Jobs Act. On Latham’s website it says he “will oppose — and fight against — any increases in Social Security payroll taxes.”

But the spokesman, Fred Love, said most Americans don’t agree with the tax increases that are also a part of Obama’s jobs plan.

“Even the president acknowledged just a few months ago that raising tax rates while the economy is in such a fragile condition is counterproductive,” Love said. “On this matter, Congressman Latham agrees with the president and believes that raising taxes at this time will only put us in an even deeper hole and further stifle an environment needed for job creation.”

And Latham campaign spokesman James Carstensen didn’t respond to the IDP and Boswell campaign’s attacks on Crossroads and Latham, or on whether the ad is a precursor for a potentially nasty 3rd Congressional District race.

“Congressman Latham is focused on fighting for and advancing policies that will foster job and economic growth,” Carstensen said. “We will wait to focus on politics and elections next year.”

(Editor’s note: This report was updated at 3:35 p.m. to include comments from U.S. Rep. Latham’s office.)

It relieves the U.S. from dependency on foreign oil, some reports say, and it reduces the pollution spewed out the tailpipe.

But, those benefits may take a high human toll.

Over 80 percent of the world’s supply of corn comes from five countries. The U.S. leads the pack, supplying over half of world’s exports, according to a study released Oct. 13 at the World Food Prize in Des Moines.

Three years ago, the world went through a food crisis generated in part by high prices and experts still debate the extent to which ethanol production should be blamed.

Josette Sheeran

There was enough food on the market, but high prices reduced many of the world’s poor to hunger, said Josette Sheeran, the director of the United Nation’s World Food Program. Contributing to the crisis, were countries that cut exports of in-demand crops.

Hunger is not limited to these periods of extreme global crisis. Every ten seconds a child dies of hunger, Sheeran said in a speech in July.

By 2050, there will be roughly nine billion people to feed on this planet. Already, one in seven people suffer from chronic hunger.

“We are living in a post-surplus world,” Sheeran said. “The world has to be a lot smarter about how we are using our supplies.”

The food market is increasingly volatile, the International Food Policy Research Center says. The use of biofuels ties food prices to the volatile oil market and contributes to low supplies.

During the 2008 food crisis, the price of food shot up about 43 percent, according to a release by the U.S. Agency for International Development. Experts worry low food stocks, high demand and food price volatility could lead to future food crises.

While people in many nations struggle to find money for food, most people in the U.S. don’t. They spend roughly 6.4 percent of their budgets on food eaten at home, according to the U.S. Department of Agriculture’s Economic Research Service. But in low-income countries, like Pakistan and Kenya, people spend roughly 45 percent of their budgets on food, the research service reported.

The Food and Agriculture Association says using agricultural land to produce biofuels “substantially affects food production.” As the production of biofuels doubles to meet policy requirements, the impact “would probably be intolerably high…for the next few years until the production of food has increased to meet the growing demand,” the association said in a report released after the 2008 food crisis.

Such numbers provide the backdrop for a contentious food-versus-fuel debate among politicians, farmers and humanitarian aid groups.

U.S. Ethanol Policy Impacts World Food Supply

Government subsidies for ethanol production in the U.S. has become part of the controversy.

A federal subsidy and a protective tariff on foreign imports, which are set to disappear at the end of the year, have buttressed the corn ethanol industry in the U.S. for years.

The subsidy commands $5 billion from the federal budget, which translates to 45-cents per gallon given to blenders who use ethanol. The tariff, a 54-cent tax on imported ethanol, helps to keep U.S. ethanol competitive with ethanol from Brazilian sugarcane and other sources.

To help the industry even more, a federally mandated Renewable Fuels Standard requires the production of 12.6 billion gallons of ethanol this year and 15 billion by 2015.

But those measures may soon undergo major changes. Opposition to the subsidy has emerged in the Republican Party’s presidential nomination campaign. And a bill introduced on Oct. 5 would make the mandate dependent upon the supply of corn. If in effect today, the proposal would lower the Renewable Fuels Standard by 25 percent due to recent low corn stocks, said Rep. Bob Goodlatte (R-Va.) a sponsor of the bill

Dermot Hayes

Dermot Hayes, a professor of economics and finance at Iowa State University, said subsidies won’t have a major impact on ethanol production, because they were mainly used to get the plants built.

However, Hayes, who holds the Pioneer Hi-Bred International Chair in Agribusiness, said if the government shut off all its support for ethanol and the industry got stuck purchasing expensive corn without aid, it would “go broke.”

Lucy Norton, managing director of the Iowa Renewable Fuels Association, said, “We have enough supply to provide crops for all markets.”

Norton said a third of the corn used for ethanol returns to the market as distiller’s grain, a production by-product used as livestock feed. The price of grain, including corn, has increased due to the end of a period of artificially low prices, when the price of corn was below the cost of production, she added.

Jason Hill, an assistant professor in bioproducts and biosystems engineering at the University of Minnesota, disagreed. Hill said the large amount of corn devoted to ethanol not only affects the price of corn, but also soybeans and cotton.

“Acres of cotton are shifted out to make room for soy as soy is shifted out to make room for more corn,” Hill said. “It’s simple economics. Using corn for ethanol rather than feed does have a global effect.”

Jason Hill

Hill questioned whether distillers grain sufficiently replaces corn devoted to ethanol.

“Let’s assume one-third does go into distillers grain,” Hill said. “That still leaves two-thirds.”

He rejected arguments that corn used for ethanol doesn’t come from a food source. Any corn not used for ethanol or eaten as a vegetable or high fructose corn syrup is used for food, because it is fed to the livestock that we eat, Hill said.

“What is a chicken,” former Agricultural Minister for Brazil Roberto Rodrigues asked, when discussing his country’s increased production of poultry in an interview. “It is an egg full of corn and soybeans that flies.”

The Politics of Ethanol

The ethanol industry has boomed in the U.S. largely because of politics, Hill said. There is no credible study proving ethanol decreased greenhouse gases, and that it has only a negligible effect on reducing our dependence on foreign oil, he added.

The Energy Independence and Security Act of 2007 expanded the Renewable Fuel Standard to the production of 36 billion gallons of renewable fuel.

Biofuel from corn is capped at 15 billion gallons, so the corn-ethanol industry is not expected to expand much once the cap is reached in 2015.

The production of corn ethanol is notably inefficient, but the government continues to subsidize its production. Meanwhile, Brazil produces far more efficient biofuel from sugarcane, but representatives from the Brazilian biofuels industry say the U.S. use of tariffs prevent ethanol development.

The gap in energy yield between corn and sugar cane is stark. One unit of fossil fuel energy is required to produce 1.5 units of corn ethanol, according to a study on bioenergy development published by the World Bank. In sharp contrast, the same amount of fossil fuels will produce eight units of sugar cane ethanol.

Cellulosic biofuel, or fuel made from non-food sources like switchgrass, corn stover or forest residues, was supposed to reach 16 billion gallons by 2022 in accordance with the fuel standard. However, a study released by the National Research Council, said meeting this mandate is unlikely as production is not yet possible on the commercial scale.

Lack of Land Seen as the Problem

Hayes argued that whichever way you plant it, land is the scarce resource, not corn.

“Here in Iowa you can grow switchgrass, corn, soybeans,” Hayes said, but planting switchgrass would still take that corn out of production.

A July report commissioned by the Renewable Fuels Foundation concluded that no single factor causes food price increases.

Crystal Carpenter, a senior consultant for Informa Economics, said the report does not argue that biofuels haven’t had any impact, but rather that ethanol is one of many factors, including energy costs, weather, and the economic exchange rate, many of which cannot be controlled.

“But, producing biofuels could be a balancing force to help mitigate volatility in energy prices, and it is one thing we do have control over,” Carpenter said.

Corn Stocks

U.S. markets are linked to foreign markets, even in remote regions of Africa, Sheeran said during a press conference at the World Food Prize. Sheeran described a 2008 visit to Addis Ababa, Ethiopia, where “everything was moving on donkeys.” But, even there, the Internet permeated, she said.

Sheeran said she spoke with a man selling teff, a type of small grain.

“When I asked him how he set his prices, he said, ‘I go on the Internet every morning and check the prices on the Chicago board of trade. I use those prices, but discount them 10 percent since we are a poor nation.’”

Low stocks and high prices in the U.S. spell bad news for foreign consumers.

Devoting over one-third of corn to biofuels contributes to price volatility because the mandates are too rigid to respond to fluctuating supplies, according a report at the World Food Prize by the International Food Policy Research Institute.

Abandoning Ethanol Called Unrealistic

The biofuels industry has become a significant presence in Iowa’s economy. With 41 ethanol plants and 14 biodiesel refineries, the industry supplies roughly 577,000 jobs and provides an income source for farmers, according to the Iowa Renewable Fuels Association.

Ethanol production reduced gas prices by roughly 25-cents a gallon from 2000 to 2010, a study conducted by the Center for Agricultural and Rural Development at Iowa State University says.

“Five years ago, gas was more expensive than diesel prices,” Hayes, a co-author of the study, noted. He said the biggest gas-price declines were in areas with higher ethanol use.

Ethanol provides about 10 percent of the gas moving American vehicles, Hayes said. Stopping ethanol production would require more imports in an already tight oil market, which would raise gas prices by 41 to 92 percent, the study estimates. But, Hayes said the rise would be short-lived.

Hill said the present fuel solution lies more in the field of efficiency and conservation than in biofuels. A one-mile increase in gas mileage would do more for energy independence than the annual production of 14 billion gallons of ethanol would, Hill said.

This story was produced by IowaWatch.org, the news website of the non-profit, non-partisan Iowa Center for Public Affairs Journalism.

Branstad today announced the facility, which will produce amino acids through fermentation technologies. It will be located next to the Cargill facility, and Branstad said he believes other companies will also locate in the area.

“The location will be right next to Cargill and it will be the beginning of a whole bio-refinery complex,” he said. “I think Cargill envisions this to a be bioscience complex similar to what they already have in Eddyville, Iowa and in Blair, Neb.”

The Iowa Economic Development Authority Board approved $1.8 million in direct assistance and tax incentives for the project, and additional incentives are expected from Webster County and an Iowa DOT RISE (Revitalize Iowa’s Sound Economy) grant.

State Sen. Rob Hogg (Photo: Iowa Senate Democrats)

State Sen. Rob Hogg (D-Cedar Rapids) said the new jobs are great news but the governor is still nowhere close to meeting his campaign promise and is actually going in the wrong direction.

“I think he came in promising that he’d be able to do things with job creation and I think the promise was unrealistic,” Hogg said. “I think it was a campaign gimmick to put some number out there and raise people’s hopes to win an election.”

Branstad and Debi Durham, head of the Iowa Partnership for Economic Progress, met with CJ Cheiljedang representatives in January. Lt. Gov. Kim Reynolds then met with them on a trade trip in June, and Branstad visited with them again on his September trade mission to Asia.

“It’s a major investment and it is a result of the direct and hands-on effort that we’ve made at economic development,” he said.

But Hogg said at nine months into Branstad’s administration the state should have 30,000 new jobs. His tally puts the state 15,000 jobs fewer than when he took office in January, and Hogg said cuts to education and economic development will hinder that into the future.

“There’s been this series of things where he’s kind of come in with this new sheriff approach,” Hogg said. “He wants to run everything his own way and the problem with that is we need a bipartisan economic development strategy. My recollection was with the former governor we were having announcements like that every month at least. I haven’t heard that from Governor Branstad because I think we’ve been under-investing in our economic development strategy as a state.”

Branstad also announced today an executive order to create the Iowa Partnership for Economic Progress board, a 15-member body including the chair of the economic authority board; head of the Iowa Innovation Corporation; director of Economic Development Authority Board; and the governor or his designee.

Branstad said the 11 other members of the board — which he will appoint without Senate confirmation — will be individuals who are actively engaged in the private, for-profit sector of the economy or have similar experience. The board’s goal is to develop a strategic vision for economic development and private sector job creation.

The state continues to do significantly better than the nation as a whole, which had an unemployment rate of 9.1 percent in September, said Teresa Wahlert, director of Iowa Workforce Development.

Teresa Wahlert

“However, we recognize that 100,000 Iowans are still unemployed and the department continually works to connect unemployed workers with current opportunities throughout the state,” she said. “Most notably, we have ramped up efforts with direct outreach to Iowans when area employers are looking to hire a significant quantity of individuals into jobs with high wages and excellent benefits.”

But the head of the Iowa Policy Project, a nonpartisan research organization, warned the state has lost 4,600 nonfarm jobs in the last four months. Iowa nonfarm jobs are still 46,000 below the peak level of 1.52 million in May of 2008.

The state was adding an average of 3,500 nonfarm jobs per month for the first five months of the year, but the state has lost nonfarm jobs in three of the last four months.

David Osterberg

“A robust recovery, the likes of which we saw in the 1990s, or the first half of this year, would show consistent growth month to month,” Osterberg said. “We’re nowhere close to that right now.”

Osterberg also pointed out the loss of 2,100 jobs in government in September, which he said has “important public-policy implications.”

“First, we continue to shed public-sector jobs at a time when the economy could use more investment,” he said. “Public infrastructure improvements can boost jobs in manufacturing, construction and supporting industries. Furthermore, when unemployment is high we must keep up services for families that are working fewer hours than they want or in work that does not tap their full potential.”

Osterberg also connected the drop in unemployment in the state is due to a drop in the labor force. The labor force fell by 3,500 from August, to 1.66 million people and is down 9,800 from a year ago.

“This means extending unemployment benefits, expanding work supports for low-income working Iowans and assuring that we have public workers on the job to meet the demand,” he said. “These sorts of investments will stop the erosion of public-sector jobs that also support the economy.”

Tom Hoenig

Hoenig, the son of a local plumber and a graduate of St. Benedict’s College (now Benedictine College) in Kansas and Iowa State University, began serving on Oct. 1, 1991 as a chief executive of the Tenth District Federal Reserve Bank in Kansas City, Kan. He had begun serving as an economist in the banking supervision area for the Kansas City Fed in 1973. This past March he announced his plan to retire from the board on Oct. 1, as required under the Federal Reserve Board’s rules for presidents.

He is a trustee of the Ewing Marion Kauffman Foundation and serves on the boards of Midwest Research Institute and Union Station.

Hoenig was called by U.S. Rep. Ron Paul in July to provide testimony before the Domestic Monetary Policy and Technology Subcommittee, which Paul leads. The hearing, “Impact of Monetary Policy on the Economy: A Regional Fed Perspective on Inflation, Unemployment and QE3,” was called to provide oversight of liquidity operations undertaken by the Federal Reserve and also to explore price stability and employment.

As a member of the banking supervision area during the banking and farm crisis of the 1980s, Hoenig relied on his past experiences while explaining the role of the Federal Reserve and his support of cuts to the federal funds rate as well as other liquidity actions taken in response to the crisis.

“However, though I would support a generally accommodative monetary policy today, I have raised questions regarding the advisability of keeping the emergency monetary policy in place for 32 months with the promise of keeping it there for an extended period,” Hoenig told the subcommittee.

“I have several concerns with zero rates. First, a guarantee of zero rates affects the allocation of resources. It is generally accepted that no good, service or transaction trades efficiently at the price of zero. Credit is no exception. Rather, a zero-rate policy increases the risk of misallocating real resources, creating a new set of imbalances of possibly a new set of bubbles.”

During the farm and banking crisis, he was involved in the closing of more than 300 regional and community banks.

“Farms were lost, communities were devastated, and thousands of jobs were lost in the energy and real estate sectors,” he noted. “I am confident that the highly accommodative monetary policy of the decade of the ’70s contributed to this crisis.”

In addition to his objections to immediate zero rates, Hoenig believes unemployment is soaring at this time at least in part because interest rates were held artificially low during the early 2000s.

“In 2003, unemployment at 6.5 percent was thought to be too high,” he said. “The federal funds rate was continuously lowered to a level of 1 percent in an effort to avoid deflation and to lower unemployment. The policy worked in the short term.

“The full effect, however, was that the U.S. experienced a credit boom with consumers increasing their debt from 80 percent of disposable income to 125 percent. Banks increased their leverage ratios — assets to equity capital — from 15-to-1 to 30-to-1. This very active credit environment persisted over time and contributed to the bubble in the housing market. In just five years, the housing bubble collapsed and asset values have fallen dramatically. The debt levels, however, remain, impeding our ability to recover from this recession. I would argue that the result of our short-run focus in 2003 was to contribute to 10 percent unemployment five years later.”

Monetary policy, he argued before the subcommittee, cannot solve every problem.

“I believe we put the economy at greater risk by attempting to do so,” he added.

A few weeks prior to his testimony, Hoenig was a guest lecturer at Purdue University, his remarks titled “Sowing the Seeds: Monetary Policy and the Ag Economy.” Video of that discussion is embedded below.

The FDIC is an independent agency, created by Congress, tasked with maintaining stability and public confidence in the nation’s financial system. It does so by insuring deposits, providing oversight of financial institutions and managing receiverships. Since the FDIC began insuring deposits in 1934, no depositor has lost any money as a result of a bank failure.

The agency is governed by a five-person board. Members of the body are nominated by the President and confirmed by the U.S. Senate. No more than three members may share the same political affiliation. The board is currently comprised of three members due to retirements.

Hoenig is currently a resident of Kansas City.

The rally, organized by Moveon.org and the AFL-CIO, said Bank of America has become a symbol of greed. The bank recently announced a monthly $5 fee for ATM, and many groups have been critical of the bank for not paying more in taxes.

“This is as close to Wall Street as we can get,” said Wilbur Wilson of Des Moines, who organized the rally. “This company here paid no taxes in 2009 and they foreclosed illegally on people and it’s just not right. That’s why I picked this corner.”

Wilson said people are upset with the banking system, Congress and what he sees as a lack of support for the lower and middle classes.

“I’ve always believed that I am my brother’s keeper,” Wilson said. “I may not be a real religious guy but we are our brother’s keeper. If we cease to remember that we’re nothing more than barbarians.”

Mark Cooper, president of the South Central Iowa Federation of Labor, said the trickle down economics concept won’t work and people need to get behind President Obama’s jobs plan.

“We need to get an influx of money into the economy,” Cooper said. “In essence that’s why we’re out here, that we need to create jobs and it’s not about giving tax breaks to corporations, giving tax breaks to Bank of America.”

Rep. Bruce Hunter (D-Des Moines) said he thinks the Occupy movement spreading across the country along with demonstrations like this one will have an impact on state and federal governments.

“This is just the beginning stages of it and as it becomes more organized and coalesces there will be a message coming out of it and a movement that is it’s time for people to take over their government,” Hunter said.