‘Main Street’ advocates looking for their bailout

At a rally before a day of door-knocking, a band of local officials in green shirts and from distressed communities out West expressed their frustration at how fast Washington reacted to help Wall Street.

The Treasury had found billions of dollars to prop up mortgage giants Fannie Mae, Freddie Mac and the insurance powerhouse American International Group. But the request from the National Forest Counties & Schools Coalition for $500 million a year in federal aid — a small sum of money in the federal budget dedicated to replacing lost revenues due to a prohibition on development on nearby federal forests — had stalled yet again.

{mosads}“Never in my 34 years in Washington have I felt such visceral anger from grassroots clients who were in town to lobby on an issue that didn’t relate to war or peace,” said Gerald Warburg, an appropriations lobbyist for Cassidy & Associates who briefed coalition members before the lobby day.

“One guy stood up and said that [the bailout] makes me want to punch somebody.”

With Congress now considering a massive $700 billion bailout to banks and other financial services institutions dragged down by “illiquid assets,” “Main Street” is lobbying to get its share.

The massive amounts Treasury Secretary Henry Paulson and Federal Reserve Chairman Benjamin Bernanke say is necessary to avert an economic meltdown may eventually force Congress to rein in spending in other areas, as the federal deficit balloons. Barack Obama acknowledged Tuesday that he may have to “phase in” some of his spending priorities rather than rushing ahead.

But for now, lobbyists representing Main Street, a community that apparently includes everyone not directly tied to the financial services industry, are using the unease on Capitol Hill over the massive taxpayer-funded bailout to pressure lawmakers to support other, much less expensive priorities.

Warburg said the bailouts represent IOUs to Middle America that provided a “specific opportunity” to make the case on behalf of his clients. The communities that abut off-limits national federal forest lands have already had to lay off teachers, law enforcement officials, firefighters and city workers due to budget shortfalls.

The lack of economic development dollars used to be made up by commercial user fees, but those receipts have declined in recent years, resulting in the need for further help from the federal government.

The appropriation sought by the forest communities and schools coalition is in a tax extender package the Senate was set to take up on Tuesday. Debate on that measure was postponed, however, as lawmakers continued to debate the administration’s bailout plan.

The Main Street rallying cry is in fact probably the loudest in that ongoing debate over the rescue plan.

Consumer advocates, for example, continued to press Congress on Tuesday to include protections for homeowners who face foreclosure in any Wall Street rescue package.

Banks have stepped up their lobbying efforts to block what they call the “cram down” provision that gives bankruptcy judges the ability to reduce mortgage payments for distressed homeowners. Financial service lobbyists have argued that the provision would raise mortgage rates on other homebuyers.

But consumer advocates say the provision would decrease the number of foreclosures, and that would stem falling home values that are a bigger threat to the larger community.

“Any Wall Street bailout must include help for Main Street,” said Nancy Zirkin, executive vice president of the Leadership Conference on Civil Rights .

In a letter sent to Capitol Hill on Monday night, AARP CEO William Novelli called the bankruptcy provision a “matter of basic fairness.”

“It would benefit all homeowners, not just those at risk of foreclosure, as it would decrease the number of foreclosures, stabilize home values, protect communities and help put the economy back on the path to recovery,” the letter states.

The “help for everyday Americans” advocacy efforts also extended beyond the immediate debate over the bailout.

Labor groups, for example, stressed the need to Congress to adopt a second stimulus package, in addition to the Wall Street rescue package.

“Any taxpayer bailout of Wall Street must be balanced with economic relief for ordinary Americans dealing with the economic consequences of Wall Street’s outrageous conduct and the government’s own inaction,” the labor group wrote Congress over the weekend.

The stimulus package should include money to extend unemployment benefits, a “major investment” in roads and bridges and other parts of the nation’s infrastructure and financial help to states and communities.

The bailout even brought back the debate over offshore drilling, which had dominated congressional debate for much of the summer.

The Institute for Energy Resources , a pro-drilling think tank, criticized an effort by House Democrats to attach a limited expansion of offshore drilling to the continuing resolution that would keep the government running. IER wants the bans on drilling in the Outer Continental Shelf and the Arctic National Wildlife Refuge in Alaska completely lifted.

“This move makes it clear that Congress would continue to stick it to Main Street as they bail out Wall Street,” IER said in a news release critical of a spending measure reportedly crafted by House Speaker Nancy Pelosi (D-Calif.)

Also on Tuesday, the Save our States Coalition, a group affiliated with labor, held two news conferences with reporters to stress the need for additional economic aid to states.

Bridgett Frey, a coalition spokeswoman, said 29 states have budget shortfalls and need additional federal financial aid.

“We are trying to call attention to the fact that Main Street needs economic recovery in addition to Wall Street,” Frey said.