Tuesday, September 14, 2010
11:14 AM
Johnson calls Feingold's ad 'disappointing and just plain sad'
Republican U.S. Senate hopeful Ron Johnson says a TV ad from Dem U.S. Sen. Russ Feingold's campaign misleads about the nature of industrial revenue bonds his company received.
The ad uses excerpts from a television newscast on which the $2.5 million loan was first reported.
Johnson said the loan was between his company, Pacur, and a private bank. He said the involvement of the city of Oshkosh was minimal, and taxpayer money was never at risk.
"The Feingold ad claims it was a government loan. That is simply not true," Johnson said in a conference call with reporters today. "I think for Senator Feingold to make that claim, he's either being knowingly dishonest or he's simply ignorant of what an industrial revenue bond is. And either way it's disappointing and just plain sad."
Industrial revenue bonds are offered at below-market interest rate and are exempt from federal taxes. Johnson said accepting the favorable rates aren't a government subsidy, but are like "complying with any other portion of the federal tax code.
"When we deduct for our labor, when we deduct for our materials, it's certainly not considered a subsidy. You're just utilizing what the tax code is," he said.
Johnson was joined by two former state Commerce secretaries, Dick Leinenkugel and Bill McCoshen, and Wisconsin Manufacturers & Commerce VP of government relations James Buchen. Leinenkugel, who served under Dem Gov. Jim Doyle, briefly ran as a Republican for the U.S. Senate seat this spring before dropping out and endorsing Johnson.
Leinenkugel and McCoshen last week wrote an op-ed denouncing the characterization of the loan as a government subsidy.
A two-page excerpt from the loan agreement obtained by WisPolitics states that the city could take possession of the property if the company defaulted on the loan.
McCoshen disputed that, saying that the agreement is between "the local bank, the business and the bondholders. The government's really out of that mix."
Johnson reiterated the loan was between Pacur and the bank.
"Had Pacur defaulted on that the bank would have had the collateral of the equipment and building and the bank would have taken possession of those two things," he said. "There was never any taxpayer money at risk ... the city had no dollars involved either in the loan or at risk ... that's why it's not a government loan."
Johnson said he couldn't estimate how much the company saved by taking out the bonds. The state Dem Party has estimated the company saved $1.1 million.
"I don't know what rate we were really competing against at the time," Johnson said. "I'd have to take a look at the bonds and what was the alternative. All I know is we dealt with the bank, basically."
UPDATE: Feingold spokesman John Kraus issued a statement responding to Johnson's conference call that says the Republican has been "exposed by the media for not shooting straight with people of Wisconsin" and is "is using two former government officials in a desperate attempt to argue that a government program that they ran and Johnson benefited from is not government assistance.”
“The loan program is run by the government," Kraus said. "Johnson applied for the loans with the government. Government approved the loans for Johnson. Government issued the bonds and loaned the proceeds to Johnson’s company. Government signed an agreement for the loans with Johnson. Government subsidized the loans at below market rate for Johnson. Johnson paid government back for the loan. And had Johnson defaulted on the loan, his agreement with government gave government the authority to take control of the company, operate it, and apply the profits to the amount owed.”
-- By Greg Bump
Labels: 2010_fall_primary
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