WASHINGTON (AP) — Federal Reserve Chairman Ben Bernanke said Wednesday a recession is possible and policymakers are “fighting against the wind” in trying to steady a shaky economy. He would not say if further interest rate cuts are planned.Bernanke’s testimony before the Joint Economic Committee of Congress was a more pessimistic assessment of the economy’s immediate prospects than a report he delivered earlier this year. His appearance on Capitol Hill came amid a trio of economic slumps in the housing, credit and financial areas.

“It now appears likely that gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly,” Bernanke told lawmakers. GDP measures the value of all goods and services produced within the United States and is the best barometer of the United States’ economic health. Under one rule, six straight months of declining GDP, would constitute a recession.

Bernanke said “a recession is possible” but he also said he expects more economic growth in the second half of this year and into 2009, helped by the government’s $168 billion stimulus package of tax rebates for people and tax breaks for businesses as well as the Fed’s aggressive reductions to a key interest rate.

“Much necessary economic and financial adjustment has already taken place, and monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year,” Bernanke said.

To try to limit the damage, the Federal Reserve has aggressively cut a key interest rate, now at 2.25 percent, to spur buying and investing by individuals and businesses. At the Fed’s last meeting in March, however, two members dissented from the Fed’s decision to sharply cut rates, showing a rare division in the often unified front the Fed shows the public. The dissenting officials, who had reputations for being extra concerned about inflation, favored a smaller reduction. Although Bernanke said he hopes inflation will moderate in coming quarters, he acknowledged that high energy prices have clouded the inflation outlook.

Many economists had predicted the Fed might drop it key that rate again when it next meets April 29-30, although Bernanke’s remarks cast some doubt on that scenario.

“We are fighting against the wind,” Bernanke said. The Fed’s interest rate cuts and other actions are working their way through the economy and are having the effect of “at least offsetting significantly the headwinds coming from these financial factors,” he said.

On Wall Street, stocks initially dropped after the Fed chief’s remarks but later turned slightly positive.

Housing, credit and financial woes are threatening to push the country into a deep recession. The situation has emerged as a top concern for presidential contenders and a hot-button issue for Congress. It has thrust the White House and the Fed into crisis-management mode.

Faced with mounting home foreclosures and job losses, Bernanke has been under immense political and public pressure to provide relief and help turn around a faltering economy.

Committee Chairman Sen. Charles Schumer, D-N.Y., peppered Bernanke with questions about the Fed’s moves to aid once mighty Wall Street firm Bears Stearns and then juxtaposed that with what he believed was a lack of help to millions of people at risk of losing their homes.

“I hope that you will use your position to jawbone this administration to get behind the housing relief effort before Congress.” Schumer said. “Addressing the housing crisis head-on will do as much to instill confidence in the markets as lowering interest rates or bolstering regulatory oversight of wayward mortgage lenders and financial institutions. We need to do all of it.”

Sen. John Sununu, R-N.H., countered that government is taking steps to help. “The suggestion that the Fed’s taken action but nothing else has been done I think is a little bit misleading,” he said.

Bernanke urged Congress to take steps to help bolster the sickly housing market — a major source of economic stress — and to aid homeowners in danger of losing their homes.

Many private analysts believe the economy contracted in the first three months of this year, signaling the start of a recession. The government releases first-quarter results later this month. The economy lost jobs in January and February, with many economists bracing for more losses when the report for March is released on Friday. Bernanke said he expected unemployment to move “somewhat higher in coming months.”

“Clearly, the U.S. economy is going through a very difficult period,” he told lawmakers, adding that all the problems have weighed heavily on consumers whose spending is indispensable to economic vitality.

The Fed also has taken a series of extraordinary steps in recent weeks and months to prop up the nation’s financial system, which has been in a state of high jeopardy.

In a controversial move, the Fed backed a $29 billion lifeline as part of JP Morgan’s deal to take over the troubled Bear Stearns, the nation’s fifth largest investment house, which was on the brink of bankruptcy. Bear Stearns had invested heavily in risky mortgage-backed securities that eventually soured with the collapse of the housing market.

Bernanke defended the move. “With financial conditions fragile, the sudden failure of Bear Stearns likely would have led to a chaotic unwinding of positions in those markets and could have severely shaken confidence,” he said. “The damage caused by a default by Bear Stearns could have been severe and extremely difficult to contain.”

Although the taxpayers are on the hook for the $29 billion, Bernanke said he was “reasonably confident we’ll be able to recover the full amount.” He also said that Bear Stearns’ investments that the Fed took control of “are entirely investment grade.”

The Fed’s unprecedented involvement was meant as a one-time event, Bernanke said. “It has never happened before, and I hope it never happens again.”

In addition, the Fed — in the broadest use of its credit authority since the 1930s — agreed to temporarily let big investment firms obtain emergency financing from the Fed, a privilege that previously had been granted only to commercial banks.

Those actions have prompted criticism from Democrats and others who contend that the Fed is bailing out Wall Street and putting billions of taxpayers’ dollars at potential risk. Bernanke and the Bush administration argued that the actions were warranted to avert a potential meltdown in the entire financial system, something that would have devastating consequences for the overall economy.

Asked about the Bush administration’s plan to revamp the country’s creaky financial system, Bernanke said it was vital for the Fed to have sufficient enforcement powers. Under the plan, the Fed would become a top cop in charge of financial market stability but would lose its day-to-day supervision of U.S. banks.

Joint Economic Committee: http://www.jec.senate.gov

Friends:I just wanted to drop you a note to update you on the campaign.We made some terrific progress over the last three months.  For instance, just three weeks ago our opponent, Tom Reynolds, announced that he would not seek re-election.  This makes NY-26 an open seat and one of the most watched races in the nation.   The Cook Report, a non-partisan independent political analyst, listed our race as a “toss up.”  Even conservative pundit Robert Novak said NY-26 is a “lean Democratic takeover” due to a sagging economy, Republican recruiting failures, and a strong Democratic Candidate.We have been working hard, building support, and meeting voters and have a huge advantage with our grassroots organization.  Our Powers Platoon had some major accomplishments this past quarter:

• We are talking with everyday voters and having a conversation that no other candidate in this race is having.
• We kicked off 2008 by accomplishing 30 house parties in 30 days all over the district and had a great reception.
• We are the endorsed candidate in 6 of the 7 counties. 
• We are the only candidate in the race with the endorsement of organized labor.
• We are growing the size of Club 26 every day. 
• We had 37 new members join the Powers Platoon through Club 26 in the month of March.  I appreciate your dedication and look forward to our conference calls to hear your thoughts on New York’s 26th District and what is going on in Washington, D.C.
• We are the only candidate with a grassroots campaign  that is reaching out to voters.  In one day, we hit over 1,200 doors with over 50 volunteers in 20 degree weather.  We are anticipating an even better response now that spring is here in Western New York.  I will provide you with updates throughout April on our progress.
• We are going to report incredibly strong numbers with our financial filing this quarter and I will send you an update soon. 

Your support has been critical to our success this quarter, but the work is just underway.  Over the next quarter we need your help, knocking on doors, hosting house parties, and enlisting new members of the Powers Platoon.  This is a very exciting time in Western New York as the eyes of the nation are on our race.  I am honored to be a part of it and to have your support.  We are in this together and, together, we have the power to change Washington.  Sincerely,
Jon

Sees State’s unfunded mandates as a roadblock to Erie County’s progess 

Kenmore, NY – Erie County 10th District Legislator Michele M. Iannello gave her view of the state of the County today. Iannello gave a mixed review, praising progress made, but criticizing unfunded mandates passed on from state government as a roadblock. The County Executive will deliver his State of the County address today at 11:00am at the Albright-Knox Art Gallery.   

“Things are turning around for Erie County. Over the past few years, we have seen changes made to move Erie County in a new direction. It is clear Erie County’s best days are ahead,” praised Iannello. 

Iannello did not see everything as improving though. She blamed the state government for its own spending and the state’s mandates on county spending. 

“However, the unfunded mandates from Albany are still a roadblock to progress for Erie County. We need the state government to start spending more responsibly and stop passing the burden to the counties and local governments with unfunded mandates,” continued Iannello.  

New York State County Executive Association recently railed against the state for budget proposals that would further increase mandated spending while decreasing state aid to the counties[1].

[1] “Counties warn of tax hikes, cuts in services;” Albany Times Union, March 29, 2008

The Amherst Teen Idol finals at the Boulevard Mall on Saturday 29^th was held this past Saturday.  The event was a huge success. There was standing room only watching the 13 young teens try their hardest to be chosen Amherst Teen Idol.  This yearly event is sponsored by the Amherst Youth Board and Radio Station 102.

This is the first performer, Nick D’Amaro.  He did an outstanding job, and being first I commend him on his composure.

Isabel Trillizio,  a 12 year old took first place.  She  wowed everyone with her song from the play “Wicked, The Wizard and I”.  She has a lovely voice and very good stage presence. All the finalists were very good but her voice stood out.

Congratulations to everyone who took part in this excellent show. This is the entire list of all the young people who were in this contest.Brooke Mesnekoff, Emily Styn, Carolyn Deppe, Joe Liolos,  Camille Hucthenson, Jesenia Nogueras, Brittany Jones, Joshua Vacanti, Isabel Truillizio, Sarah Rodman Giselle Binette and  Nick d’Amaro.

The history of our world is written  on the bumper stickers of our cars.   The latest recently spotted historical bumper sticker reads, “SPITZER/PATTERSON BRING PASSION BACK TO ALBANY”!

Democratic Chairman Len Lenihan’s Letter to Committee Members Points To Achievements…Asks If Democrats Want “To Go Back To Fighting Each Other” 

Written by Glenn Gramigna, Editor   

Erie County Democratic Chairman Len Lenihan is coming out fighting in response to the recent announcement by Cheektowaga Chair Frank Max that he will challenge him next fall. In a recent letter to county Democratic committee members, Lenihan drew a sharp contrast between the shape the party was in when he took over six  years ago and the much better condition it’s in now.

Among other things, he pointed to the election of Brian Higgins to Congress, Mark Poloncarz as county comptroller and Kathy Hochul as county clerk, the establishment of a 12-3 Democratic majority in the county legislature, and the successful campaigns of five Democratic Supreme Court candidates in the last four years as examples of his achievements. Chairman Lenihan contrasted this record with the fact that Republicans controlled the 27th District congressional seat, the county legislature, and the county comptroller’s office while Republicans elected one SC Justice after another before he came on the scene.

“Do you want to continue moving forward or…do  you want to go back to fighting each other,” he asked. “I look forward to communicating with you regularly over the course of this year so we can continue our success.”

The full text of his letter follows… 

A little over 5 years ago we embarked on an important new journey. Working together our task was to restore credibility and vision to a County Democratic Committee that had lost its way. The challenge was huge!

THEN

• The Erie County Democratic Committee was deeply in debt.
• Erie County had a Republican Congressman in the 27^th District.
• Erie County had a Republican Legislature.
• Erie County had a Republican Comptroller.
• Every Supreme Court Candidate ECDC endorsed against a Republican over a seven year period was defeated.
• Worse yet, our reputation was badly injured by the level of division within our party that was on display for all to see. Many statewide officials and candidates told me they dreaded coming to Erie County out of fear of getting caught up in the civil war that gripped us.

Today, some five years later, I am proud to report to you that by pulling our party together and working in a unified fashion we have arrived at a much different place!

NOW

• Our party debt has been reduced by more than 70 percent: from $ 225K to 65K.
• Democratic Congressman Brian Higgins won the 27^th District after 12 years of Republican domination.
• The Erie County Legislature evolved from an 8 to 7 Republican controlled body to a 12 to 3 Democratic controlled body in 3 short years.
• Democrat Mark Poloncarz took over the Erie County Comptroller’s office after more than 30 years of Republican domination.
• The election of five Democratic Supreme Court Judges in the last four years has put an end to Republican domination of State Supreme Court.
• We made history in 2005 by supporting Byron Brown for Mayor of the City of Buffalo.
• In January 2006, in special recognition of ECDC’s rebuilding and unifying success, the NYS Democratic Committee chose Buffalo and Erie County to host the 2006 New York State Democratic Convention.
• In 2007, we proudly supported Jim Keane for County Executive and we elected a new County Clerk with the victory of Kathy Hochul succeeding Dave Swarts who became DMV Commissioner under Governor Eliot Spitzer.
• Lastly, since we took over, we have provided well over two million pieces of literature and mail services to hundreds of candidates at the town, county and city levels of government resulting in numerous Democratic victories in previously-held Republican seats.

This resurgence was accomplished by the hard work of everyone: you the party leaders; hard-working committed volunteers from throughout Erie County; and a dedicated staff at Democratic HQ who upgraded operations with the latest technology available for political campaigns.

This dramatic turnaround happened for a few basic reasons: We made a decision to start fighting Republicans

— instead of each other. We put principles ahead of personality. We recruited and endorsed candidates that put community first.

2008 brings us new challenges—not the least of which is the election of a new and hopefully Democratic President. In order to keep the progress we have achieved, we must stick to our principles and maintain the unity we have worked so hard to win.

There are those who were part of the past regime who would have you believe that it is time to move back to the way it was. During the course of this year you will have to make a very basic decision. Do you want to continue moving forward with the new culture we have created here at Democratic Headquarters and throughout our party? Or do we want to take the focus off fighting Republicans and go back to fighting each other?

Supporting candidates who believe in our Democratic Party philosophy is important to the future of our Country, State, and Community. I look forward to communicating with you regularly over the course of this year so we can continue our success.

Sincerely,

Len Lenihan

Chairman ~ Erie County Democratic Committee