Graham to Get Involved in SC Stimulus Fight Wednesday

**Wednesday Morning Update**

South Carolina Republican Sen. Lindsey Graham is stepping into the state's tussle over $700 million in federal stimulus money.

Graham plans a news conference Wednesday in Charleston to discuss the authority of state legislators to use the portion of stimulus cash over which governors have first say. Graham recently has suggested that governors, not lawmakers, may control the money. But South Carolina Rep. Jim Clyburn helped write the stimulus bill with Sanford in mind. The Democrat has said state lawmakers should be able to control the money.

South Carolina Governor Mark Sanford has sent a narrower request to The White House asking to use $577 million in stimulus to pay down school bonds.

Sanford is asking the Obama Administration to allow him to use $577 million in stimulus dollars "to pay down the roughly $579 million of principal for State School Facilities Bonds and Research University Infrastructure Bonds over two years."

The governor claims this would save South Carolina $125 million in interest payments over the next 13 years. He is also asking to use $125 million from the federal stimulus to deal with unemployment and retiree debts.

Governor Sanford also called on President Obama to pull "down attack ads" that have been launched against him by the Democratic National Committee.

The governor writes " I have to express my disappointment that our substantive dialogue about the best way to adapt this stimulus to the unique situations of states across this country was interrupted by the Democratic National Committee's launching of a petty attack ad against us even before we had received your response."

The White House denied a waiver request by Governor Sanford on Monday that would have used $700 million in stimulus funds to pay down South Carolina debt. White House Budget Director Peter Orszag said the stimulus law didn't allow for such changes.

State Democrats held a news conference at the Statehouse Tuesday to criticize the governor's refusal to accept the money. State Sen. John Land, D-Manning, said, "I just can't understand him turning down federal money, that we're going to have to help pay back, turning this money down when all other states are saying, 'Please turn it down! I want the money!'"

He said lawmakers will go around the governor and request the money. So if lawmakers will ask for the money despite the governor, why did the Democrats feel it was necessary to call a news conference to attack him? State Democratic Party chairwoman Carol Fowler says, "Well, you know it's a Republican legislature and we don't want to take any chances that some of them might get the idea that it's a good idea not to take that money. It's essential to the people of this state that that money come here."

The text of Governor Sanford's letter that was released to the media on Tuesday morning:

STATE OF SOUTH CAROLINA
OFFICE OF THE GOVERNOR
MARK SANFORD, GOVERNOR

March 17, 2009

The Honorable Barack Obama
President
United States of America
1600 Pennsylvania Avenue, Northwest
Washington, D.C. 20500

Dear Mr. President,

I'd first thank you and Director Orszag for your response of March 16 to my letter of the previous week. Likewise, I have to express my disappointment that our substantive dialogue about the best way to adapt this stimulus to the unique situations of states across this country was interrupted by the Democratic National Committee's launching of a petty attack ad against us even before we had received your response.

I've made clear my opposition to using debt to solve a problem created in the first place by too much debt - and I don't believe this to be an unreasonable position. What I find less reasonable is the way this DNC attack ad returns a nation indeed yearning for change back to the same old politics-as-usual. Because I believe you and I share a common desire to escape this worn-out "attack first" mentality, I'd respectfully ask you to immediately condemn and put an end to this unnecessary politicization of a truly important policy discussion.

In the spirit of moving forward, I'd offer the following as a clarification to our using a portion of the stimulus funds to paying down our state's sizable debt. With regard to the Education Stabilization Fund monies (ARRA § 14002(a)(1)) that must be used "for the support of * education," we think it would be consistent with statutory requirements to use this $577 million to pay down the roughly $579 million of principal for State School Facilities Bonds and Research University Infrastructure Bonds over two years. This would immediately free up over $162 million in debt service in the first two years and save roughly $125 million in interest payments over the next 13 years, which could then be directed towards other educational purposes - just as paying off a mortgage early frees up the typical monthly payment for other uses.

Regarding the $125 million in the Fiscal Stabilization Fund (ARRA § 14002(b)(1)) headed to South Carolina, we'd lay out a few options for your consideration: first, paying down debt related to the state's Unemployment Compensation Trust Fund that currently exceeds $200 million and would directly impact those currently out of work in this struggling economy; second, paying down debt related to state retirees, since that would seem to satisfy the statutory requirement that these funds be used for "other government services"; or third, paying down other bonded indebtedness at the state level.

We trust these alternative proposals fit both the statutory requirements and spirit of the stimulus legislation. Thank you again for your response, and we would again appreciate your opinion as soon as possible given that we believe this course of action will do more to ensure South Carolina's long-term economic strength than would other contemplated uses of the funds.

I also await your response on pulling down the attack ads. A good part of your candidacy was fueled by the hope for change in the way political debate is conducted in our country. On this, actions will speak louder than words - words you have been so gifted in delivering - in determining where you really stand, not as a candidate promising to deliver on change, but as a leader now capable of bringing this change. I look forward to your response.

Sincerely,

Mark Sanford

cc: The Honorable Peter R. Orszag, Director
Office of Management and Budget